tv Politics and Public Policy Today CSPAN April 1, 2016 3:00pm-5:01pm EDT
citizens. in the same time, we have the chance that the king is not part of the political game, so all the moroccan have the most important confidence in the monarchy so we can have -- have the feeling that they have -- of course, ask some. the new context today is completely different in origin from the first landing in casablanca in 2003. now we have to face new,
emergent treat, and i think in the more cochran strategy, first of all, we have all this state in this region, militias, revenge groups, sectarian groups, terroristic groups, criminal groups and so -- of course, libya talked about some groups we can say only in libya we have merely 300 militias. and when you go a little bit to this -- all this separatist
ke barkina faso and others. we have a big bed of -- as my friend said, boko haram. we talk less about boko haram, but it's one of the bad, very bad groups. and al shabab. the second point, when we focus on the terrorist groups in the moroccan approach, we never put transnational organized crime. we have in this region very important activity and what we learned that today and i would be -- i would be realistic. i'm not optimistic, not pessimistic. we moving for more stability in this region. and the future in this region is with a lot of uncertainty.
so we have to change. and we have to do our homework. and we must move out just to put some concept but to have some real strategy and to act, all of us, as responsible states. unfortunately, we still have some kind of thinking in this region. and we still have some kind of development role in this region. it will bring more disaster. some people, bad information -- bad informant with some proposal
or solution and it will be a disaster. i think that today we know that we have to -- the foreign fighters. we have 1,500 moroccan foreign fighters in syria and iraq. 495 was killed. 217 from morocco, but we have 1,000 from algeria and we have 5,200 from tunisia, and i can move on. if we go just to the north, you have 1,700 from france, foreign fighters coming from france.
and you have 815 from belgium. 415 from germany. 500 from uk, even sweden 120. i can go around to a lot of other countries because what we know today daesh, for the first time this terrorist group had important numbers in the terrorist groups and today is around 45,000 foreign fighters. what we observe last month, that more than 4,000 are bad from syria and iraq to libya. we know also that a lot of young
people are from the region, who have the opportunity to move to syria and iraq, and now to libya. they have today the capability. they have all what they need as many and they have weapons. so, how we can face this global enemy would only national policies. it would be very difficult, facing a global enemy, we need global responses and we need global strategy. the second element is transnational organized crime and i think in this issue, we
one also came today in subsaharan, can sell it for 24,000 euro. you can open there is no place for other -- other soft rocks or others. nothing. the second element is the proliferation of weapon. one of the consequences of the libya wars was that today we have a lot of open markets in this region. more than ten years ago you
could buy one ak-47 from chinese other begin around 775 dollars. you can have today, ak-47 russian for less than $55. and this proliferation of weapon of not only small -- small arms but we know that a lot of missiles are there, especially some other kind. so, it's a very, very big concern. and we know today that all these groups are working together,
cooperating together and using all the -- we know that the latino and american captives today are very established in sahara. we know we have the opportunity to find somewhere in the southeast of nigeria. some groups were speaking spanish. they use the guide and they use them in this illegal activity. we know also that illegal immigration and smuggling, human smuggling, is very, very important activity and the
terrorist groups use this tragedy, human tragedy, for their goals. for this -- the last point in the moroccan strategy is that we believe that we need the international regiment and international cooperation. morocco is open to this share intelligence, other countries. we had exacts with france, after attacks in paris, in belgium after and before brussels and with -- and with spanish government, with a lot of others and a lot of other countries.
but we believe we need it for our own regiment strategy and not to have external intervention in the region. it will be a bad response and bad solution but in the same time, doing our homework, how can we cooperate in this region. if you still have and we have all the time. share the borders are closed. second example between closed border between morocco and nigeria, it can give you the idea that no way to cooperate against this enemy. i think we need today to act as
responsible state and to move out a lot of paradigm coming from one other history and other area. we have to build the future, and the future will be either all of us safe or all of us victims. and i hope that we will choose the life and we work for the future of our child all over the world. more stability, more comprehensive and more inclusive policies. thank you. [ applause ] >> thank you very much.
we'll try to open up for q&a for the families. please -- yes, sir. >> my question is for general ward. so far the terrorism focused mostly on security and counterterrorism efforts. how could the u.s. and international community deal with poor governments, political exclusion, economic grievances and corruption? >> thank you. i think based on my experience and what i see as a way ahead in a total sense, i talked about how we cooperate and many of our security apparatuses, from intelligence fusion centers and cells to collective training efforts to combined and joint
war fighting activities to address these specific threats. you heard the comment made by a college here on stage with respect to these tactics are important tactics to address bad actors on the scene. we have to do that. and i think we must devote resources to that. at the same time, to address it over time to do those things that are applied to promote long-term stability to get to the root cause of why these things are allowed to exist. we must do more. so, therefore, the thrust of what i talked to with respect to sustained developmental engagement, sustained diplomatic engagement, those are the same things, in my mind's eye, ought to have the same priority, if you will, in a collective way as we move ahead. it's not the u.s. requirement to do it. i believe it is the requirement of the world of nations to
participate in activities that, one, provide an understanding of the region, the area those activities are to exist in. in other words f does things co-mens rat needed by the population. not from our perspective, but from the perspective of those who are there. and then based on that, be deliberate in conducting activities that will address these things, and i use the term, and it's a term that i like, so that's why i use it, that will provide this horizon of hope. can't get everybody and it won't be perfect, but it will sure go a long way to address the conditions that underlie the undercurrent positions that breed these things because folks feel a sense of despair. and it's a long investment. it's a long endeavor. it won't happen overnight. we have to be persistent and focused and we have to remain to it over time for it to see a
result. it's a generational activity in my mind's eye. >> okay, please. sharon? >> i have a question on eventually many of these fighters will return with a lot of combat experience, especially directed told mr. modi, what will be done to manage the returning nationals? >> thank you, sir, for that question. well, actually, it's one of the major issues that we are -- we have to deal with because the returnees are are there are there, and some of them even indulged in some of the acts that have been committed so far.
so, definitely it's how -- strategy that has to be implemented in that regard. and there -- as i said, in my remarks, it's kind of a tricky situation and very sensitive because we have to deal with those people and to give them a special treatment to avoid any further activities and so on, but the issue is also to preserve the -- their rights and to be in line with human rights and so on, which is rather a little bit difficult. so, definitely, there is a special strategy for that. and we are trying to frame these -- well, the thing is that
they be monitored, then they be taken care of and they be followed closely to avoid any -- any relapses or any sort of activities. but, again, it is still a difficult approach, difficult situation that you have to face. >> in morocco we resolve this problem, we have this vacuum, jurisdictional vacuum. now we have the mast, of course, on 215 are now in the prison. i think they are criminal. they, of course, have to respect
their role as other criminals but in the same time we have to protect society. so, we couldn't afford ten years of war, but today we are respecting all what with can have as guarantees to criminals. so, they are criminal and they have to, of course, be treated as criminal. >> commandant, thank you to all of you for your presentations. my question is for general ward. your appeal for having this comprehensive 3-d approach, defense, development, it is something we can fully support. i mean, it's policy in my country. we do it also at under-secretary
level, we have ministry of development, ministry of development, ministry of foreign affairs. we talk on a weekly basis. we operate that way, but my question is the following -- when we do this, it takes long stamina for our societies because here we are in present societies that wants quick results, that wants quick action, that wants to see results today. and innocent a year. and my question is, could you elaborate on -- i think that's a thing that's overlooked but we need to have strategic communication, strategic stamina and how do we keep support in these societies for long-term approach because we all know development doesn't happen overnight. >> yeah, that's a great point. great question. thank you for your services. i'm familiar with what goes on
in your country. obviously, having worked with your forces in these endeavors and the importance of it. two quick things and i won't belabor this. whatever a nation does, the nation will do in its own national interest. so how we develop a narrative that will allow citizens out of our respective nations to include the people in the respective countries where these things go on, so they know these things are in their national security interests and their best interest. we clearly had that problem here in america. and so the narrative that was talked about here with respect to how it's made to be understood that unlike centuries ago when great seas provided barriers, when great mountain ranges provided barriers, when desert ranges provided barriers, no longer the case. with respect to the sahara and the trafficking. these terrorists that are just bad guys use the same routes,
drug traffickers, weapons traffickers, human traffickers. they all use these same systems. those things impact our neighborhoods. doesn't matter if it's in america, in europe, in asia, because of the global commons, where we are with technology, transportation, markets, access to resources, all those things that advantaged populations globally have-v to be dealt with such that we see where we are that our ability to sell a product, to receive a product, may come from any, be it agriculture, technological. this piece of equipment right here, if your neighbor in the netherlands or my neighbor in
michigan knew that -- where its components are from, let's make sure we have access to that. how we develop a narrative that lets every citizen understand that what goes on globally has an impact on them locally. and, unfortunately, if we don't devote time to that, as you said, we are a fast food group of folk, but that doesn't say we must give up -- that we can give up on promoting that narrative. and we must persevere and not give up. like in the korean war when he was charging that hill and he was out of ammunition and he turned and looked at his infantry soldiers and said, our mission is to take the hill. boss, we have no ammunition. he said, well, we've got legs and we've got bay-bonets. fix them and let's go. we have to move forward, even in the face of those who don't want to hear it, but we should not,
because they won't want to hear it, fall away from delivering it. >> obviously, we're all done, right? >> it's just the beginning. >> just the beginning, okay. >> well, if nothing else, doctor you certainly are consistent because you're out of time and i've been asked to speak. so, i'm just going to say thank you to all of you for being with us today. it's been very informative. thank you to all the panelists and the like. and i would say just in passing, obviously, we need a global strategy. obviously, all of the free world has to get involved. obviously, it has to have regional connotations and so on because the regions are very important and they're different and it must be adap fitive alon
the way. we ought to decide now what we want to look like 10, 15 years from now and then turn to and make it happen. one word that hasn't been mentioned today, which i think is crucial, and that's education. we have got to educate in america, our people, and we've got to educate the free world as we know it today on what this cherished idea and what it's all about and what jihad really, really means. we have to go back centuries and really study the history of what this means. we need to understand how the arabic linguist's mind works. above all, it means different things to jihadists. we have to understand also how these words have changed. what jihad in the beginning really meant effort. it's now and it changed in the beginning of the 20th century and the like and it has to do
now with conquering. and so, you know, it's up to us. do we want to be conquered or do we want to remain free? and we are need to remember, many of the free world need security more than freedom and democracy. that's what we have to be able to provide. it's a very complicated issue but it starts n my judgment, with education. thank you. [ applause ] >> thank you. we'll see you next time.
live tonight on c-span, the republican party of milwaukee county dinner. ohio governor john kasich scheduled to speak at 8:30 eastern and texas senator ted cruz at 9:30. and this weekend on c-span's news makers, david mcintosh, who heads the club for growth, his group has endorsed ted cruz for president and is running tv ads critical of donald trump. news makers is on c-span sunday at 10:00 a.m. and 6:00 p.m. eastern. this weekend the c-span cities tour hosted by our charter communications capable partners takes to you long beach, california, to explore the history and literary culture of this port city, located just south of los angeles.
on book tv learn about women's contributions to the world war ii effort from jerry shipski, author of "rosie the riveter in long beach". >> when they were looking to build a plant to reduce aircraft which they thought we would need in world war ii, they picked long beach because steps away we have a wonderful airport that was founded in 1923. it was one of the first airports that had a takeoff and landing in different directions, which the army loved because they can use military planes in a way there that they couldn't use other places. and so happened then is douglas went into full production mode and was turning out planes 24/7. and it was -- it then needed a lot of people to work here. the men went off to war. the women for the first time were brought out of the house and brought into the workforce. at its peak, douglas was employing 45,000 people a day in
the long beach area. and about 48% of those people were women. and on american history tv, we visit the port of long beach and discover the importance of the nation's second busiest container port. >> the port of long beach was established as a formal harbor port of the city in 1911. we're a little over 104 years old. through that time, this port actually started on a wooden wharf and was a lumber terminal that used to come up from the northwest, supply lumber here for the growing city of long beach and the region. in 1940 we had the u.s. navy, the naval station and the long beach naval shipyard was our naval complex. they were here until the early '90s. and, unfortunately, through the base closure process, the naval complex shut down. what we were able to do is take an old federal facility and turn
it into at that time and still is one of our modern container terminals. where we are today, 104 years later, we're sitting on the most modern sustainable marine container in the world. >> watch the c-span cities tour saturday at noon eastern on c-span2's book tv and sunday at 2:00 on american history tv on c-span3. the c-span cities tour, working with our capable affiliates and visiting cities across the country. gave his annual testimony on the before the house financial services committee. he answered questions about terror financing, banking security and the european economy. texas congressman chairs the committee.
the committee will come to order without objection. the chair is authorized to declare a recess of the committee at any time. this hearing is entitled the annual testimony of the secretary of the treasury on the state of the international financial system. before we begin today's hearing, we need to keep in our thoughts and prayers the victims of this morning's attacks in belgium. as well as their loved ones and the first responders who are working to care for the injured and bring justice to those responsible for this terror. i ask that we pause for a moment of silence. thank you.
i will now recognize myself for three minutes for an opening statement. this morning, we welcome secretary lew for his testimony on the imf and international financial system. it's a system that faces serious challenge brought on by spending-driven debt and reckless monetary policies around the globe. fortunately, for hard-working american taxpayers, needed imf reforms were passed by congress in december, even if they weren't the reforms the administration wanted. notwithstanding imf reform, congress reduced the u.s. contribution to the imf for the first time in its history, sun setting over $40 billion in credit lines. congress also restored over the administration's objections a rule that limits large imf loans to countries with unsustainable debt. this rule was first put into place in 2002. unfortunately altered by treasury in 2010 when the imf improperly bailed out greece, a
bailout that has led to nothing but additional bailouts. what remained certain for the international finance system though is the imf will never be able to bail out the united states if we remain on the administration's current spending trajectory. as our monitors show, our national debt is spinning out of control and is undeniably unsustainable. during his time in office, president obama has presided over the five largest nominal deficits in history. he has piled up more debt than any president from george washington to bill clinton combined. a debt that leaves every american family owing on average $153,000. although our witness, secretary officials, constantly attempt to change the subject to declining deficits, three facts remain. number one, the deficits has only declined relative to the historic highs set by this administration. two, every deficit declining or not actually increases the
national debt. and three, under the president's policies, deficits will soon begin rising again, despite a $3.4 trillion tax increase and we approach $1 trillion threshold before the end of the decade. that means the president's legacy will be a debt so large that at the end of his budget we will spend more on debt service annually than what we spend on national defense, medicaid, education and transportation infrastructure. only spending on medicare and social security will be larger than interest on the national debt. according to the national budget office, the president's legacy of debt may very well compromise our national security and increase the likelihood of fiscal crisis. as we all know, it is the poor who will suffer most when this occurred. that is why the national debt and debt ceiling remain deadly serious matters. regrettably and inexcusably, the treasury department, for over
two years, has stonewalled and obfuscated and misled congress. contingency planning for the debt ceiling. why we recently issued a staff report entitled the obama administration's debt ceiling subterfuge. i believe the report clearly shows treasure has sought to withhold from congress and american people information about their contingency plans for the purpose of pressuring congress to acquiesce to the administration's position that there only be a naked debt ceiling increase. or in other words to hasten our national bankruptcy. will include doubt, decline and debt. and his documents continue to be withheld. let us hope that deception will not be added to the list. chair now recognizes the gentle lady from wisconsin. miss moore. ranking member on monetary policy and trade subcommittee for two minutes. >> thank you so much, mr. chairman. welcome back, secretary. i think i ought to begin my comments by bashing my
republican colleagues and defaming them in the worst way they know and that is to thank them for working with you and the obama administration to pass imf reform. i give chairman hensarling a hard time but i've enjoyed working with chairman on the subcommittee and recognize he and other republicans had a big part in making this reform happen. i know that you, too, have worked really hard in getting this over the line and i really think it's going to benefit us in the long run. congress has been behind in the curve, but it was the right thing to do. for the world and certainly this country. i'm pleased christine lagard is again going to be heading the imf.
and i think on balance she's doing a great job. ranking member waters and i join ranking member levin and representative rangel in urging that capital controls policy in the tpp be harmonized with imf guidelines. i was very pleased that it was included in the final agreement. i'm looking forward to our conversation today. i hope that you might talk to us a little bit about money laundering and your efforts to combat that. but at the same time, the other side of that, is of course trying to make sure we figure out how to get remittances in the hands of those that are very needy. i look forward, again, to your testimony. i yield back. >> gentle lady yields back. the chair recognizes the gentleman from michigan. mr. huizenga, chairman of the policy. two minutes. >> thank you, mr. chairman. secretary lew. i'm going to be quick but i
appreciate you appearing here with us today. there's obviously a lot of very important international issues that need to be addressed. one of those i'm extremely concerned about is the problem or the role of the imf in future lending to greece. 2010 greece received an imf bailout under the exceptional access rule. which the imf provided a three-year assistance package totaling $40 million or more than 3,200% of the country's quota. well beyond any limit in place. in 2012, a new $37 billion program superseded that 2010 bailout. under normal access, imf countries can borrow up to 200% of their quota per 12-month period or up to 600% total. with exceptional acts, borrowers can exceed these limits provided their debt is considered sustainable with a high probability of paying off that debt. it's important to note that greece did not meet the criteria for exceptional access lending and the imf has, in fact, conceded that it made mistakes in bailing greece out. as you know, the fund's own evaluation department has found
that internal assessments which permitted greece to take part in the exceptional access framework were inaccurate, resulting from overly optimistic forecasts of debt sustainability, renewed market access and government commitment to reforms. although i'm pleased with the imf systemic exemption for access was repealed. earlier this month, just in january, actually, the imf board replaced it with significant new loopholes that will allow that to continue. backed by the u.s. executive director, they decided that countries like greece can receive assistance even when their debt is not sustainable. with high probability providing there is a reprofiling, quote/unquote, of that debt. this new reprofiling seems to vie lit the spirit of the reforms that were included in the 2015 omnibus which congress eliminated systematic exemption by greece. i've stated before that the treasury department should resist the urge to push the imf towards many -- any more bailouts of greece. i will be introducing legislation today that will prevent future bailouts of
countries that fail to meet the imf's traditional rules. i've let the imf know about that. they're aware of my concerns and this legislative initiative as well. with that, mr. xharm, i appreciate the opportunity. >> chair now recognizes the ranking member for three minutes. >> thank you very much, mr. chairman. i would like to thank secretary lew for coming to testify before us today on the state of the international financial system. imf quota reform package that was adopted after a five-year delay as part of december's omnibus spending bill is an important achievement and a positive reflection on the perseverance of u.s. treasury officials and democratic congressional leaders to get this deal done. previously, the failure of the u.s. congress to approve the imf quota reform had put the world economy and financial system in serious jeopardy. with ratification now complete what is essential to u.s. interest is to restore some impetus to ongoing imf reform
and to repair in part the damage done to the u.s. reputation for leadership. the price the administration paid for the quota reform included a commitment which it achieved to seek to eliminate the systemic exemption, the rule that since 2010 has allowed lending even when there was a risk that the debt was unsustainable. and that was used to support loans for the periphery countries of europe. many believe the fund should revert back to its original exceptional access rules. i'm perfectly fine using such rules as one of many guides. but thinking about policy. i agree that policy should be transparent and systemic as possible. but i am also sure that in a complex, ever changing global economy, policy making cannot be trusted to a simple instrument rule. i believe that the fund should recognize that the problem with rigid predetermined thresholds is they will inevitably conflict
with the unpredictable circumstances of reality and that exceptions are going to be inevitable in some cases. finally, before closing, i want to take a moment to acknowledge the senseless loss of life caused by brutal and tragic events unfolding in brussels today. the attacks on the innocent serve as a painful reminder of how important our efforts are in countering the financing of terrorism. secretary lew, i know you're deeply committed to disrupting the networks that finance terror, and i hope you will share more with us today about areas where increased resources or enhanced authorities may assist you in your work. i look forward to your testimony, mr. secretary, and i yield back the balance of my time. >> gentle lady yields back the baffle her time. today we we will koment testimony of honorable jack lew. secretary lew has previously testified before this committee. so i believe he needs no further introduction. without objection, mr. secretary, your written statement will be made part of
the record and you are now recognized for five minutes to give an oral presentation of your testimony. thank you. >> thank you, chairman hensarling. ranking member waters, members of the committee for the opportunity to testify here today. before i begin, i'd like to say a few words about this morning's events in belgium. the united states condemns in the strongest possible terms today's act of terrorism in brussels. our thoughts and prayers go out to innocent civilians targeted in these horrific attacks. at treasury, we work with foreign governments every day to identify terrorist financing networks in the wake of attacks we work with them even more so. we work especially closely with our counterparts around the world. right now, treasury analysts are reviewing information to try and recover leads on the brussel attacks and we've offered our assistance to belgium authorities. our hearts go out to victims today's events and our commitment to stopping the flow of funds to perpetrators of these kinds of attacks remain steadfast. since my testimony last year,
our economy has continued its record breaking streak of private sector job creation, which has reached six consecutive years and more than 14 million jobs. over the last two years, we've experienced the strongest job creation since the late 1990s. at 4.9%, the unemployment rate is half of its 2009 peak. and we continue on a sound fiscal path from fiscal year 2009 to 2015. the deficit as a share of gdp fell by almost three quarters to 2.5%. the passage of the omnibus spending bill in december has helped to build on this momentum contributing to our economic growth and helping to strengthen our international leadership. the agreement included critical imf quotas and government reforms that helped to preserve the central role of the united states and international economic system and advance our economic and security objectives. that agreement demonstrated we have the capacity to find common ground on difficult issues and it lays the foundation for addressing some of our long-term
challenges. but more work remains to strengthen critical investments in our domestic and national security priorities. the international financial institutions, the imf, multilateral banks and related multilateral trust funds are an important part of the president's approach to bolstering national security and driving long-term prosperity. our investments in these institutions promote our strategic interests in international stability. they help unlock the next generation of export markets for america's businesses and workers while fostering private sector development and enfra practice newership. and they're some of the most cost effective ways to reinforce economic growth at home and respond to critical challenges abroad. the imf remains the foremost international institution for promoting global financial stability. through its three main activities, surveillance, technical assistance and lending, the imf promoting economic stability and helps prevent and resolve financial crises when they occur. this work promotes global growth, enhances u.s. national
security and alleviates provrty in member countries. at a time of increased economic uncertainty, the imf is actively working with countries vulnerable to low oil prices, financial market volatility and other external shocks. to provide policy advice and financing when appropriate. the united states plays a key role in shaping imf policy through its position as the imf's largest shareholder. over the past year, we've supported the creation of an imf debt relief facility for low income countries hit by public health disasters like the ebola virus and encourage the imf to help developing countries mobilize domestic resources for development. at the direction of congress, the united states championed reforms to the exceptional access lending framework to tighten requirements on debt sustainability. our investments in multilateral development banks. like the world bank also support national security objectives. increase economic growth. and reduce poverty. over the years, mdb assistance has nurtured economic reforms. infrastructure and social investments that have driven the growth of some of our most
strategic trade partners. they play an important role in building sustainable and economic growth in emerging developing countries. as vital partners in helping to address national security threats. in addition to meeting our current commitments to the mdb says, it's urgent we work with congress to address our prior unmet commitments, which now approach $1.6 billion. at the world bank, this is particularly urgent. as failure to meet our commitments this year will result in a loss of u.s. shareholding that could impact our veto power, damage our credibility and weaken our ability to shape policy priorities. successful also depends on good governance and a well-functioning state. for over 25 years, treasury's office of technical assistant has provided advice and training to government officials in developing and transitional countries so they can build effective public financial institutions. ota helps countries improve government operations across several areas, including planning and executing budgets,
managing debt, collecting revenue, developing sound banking systems and combating corruption. ota is particularly helpful with our foreign policy, security and economic priorities in ukraine, central america, africa, asia our foreign policy, security and economic priorities in ukraine, central america, africa, asia and other regions. treasury's international programs are some of the most cost effective ways to reinforce economic growth at home and to respond to critical challenges abroad. specifically, u.s. leadership and international financial institutions enables us to influence how and where resources are deployed, often on a scale we cannot achieve through our bilateral programs alone. it's crucial we continue to have bipartisan support for these institutions to ensure our influence remains as strong today as it's been over the past several decades. treasury looks forward to continuing the dialogue with congress on the important role that the international financial institutions play in the global economy. especially as we implement the imf reform legislation and
negotiate replenishments. of several of the mdb windows that serve the world's poorest countries. thank you very much and i look forward to your questions. >> thank you, mr. secretary. now recognize myself for five minutes for questioning. mr. secretary, one thing maybe we can agree on is that tens of millions of our fellow countrymen are unhappy. i think one of the reasons they're unhappy is too often they see an administration that either makes up law, ignores law or lives above the law. they see a congress that they think is helpless or hapless in dealing with that. in that context, mr. secretary, i think you know for almost three years this committee has been seeking documents regarding debt ceiling contingency planning. and information shared with the justice department regarding what some call too big to jail. as i think you're aware, almost one year ago, this committee subpoenaed documents from treasury. in that time, we have yet to receive the documents.
you were ask about this last week in your appearance before the appropriations committee. you said, quote, lawyers are working through the document requests, unquote. mr. secretary, it has been almost three years for these requests. you also mentioned in your appearance before the appropriations committee that you will provide us with, quote/unquote, appropriate material. but mr. secretary with all due respect, article one of the constitution, there's long-standing supreme court precedent that this branch of government has the oversight role. we get to deem what is appropriate for oversight and investigation with all due respect, sir. it is not you. it has everything to do with checks and balances and separation of powers. thus my first question, as the custodian of records, do you understand our subpoena of may 11th, 2015, imposes a legal
obligation on you personally to ensure that the requested records are produced? >> mr. chairman, we recognize the important oversight rule that congress plays. we take seriously the responsibility -- >> mr. secretary, the question is, do you understand a personal legal obligation? is that your understanding? >> mr. chairman, treasury has taken steps to respond to each and every one -- >> i'll ask you again, mr. secretary. do you understand you have a personal legal obligation? if you don't, then i would commend for your study, 2 usc. 192 through 194. and 18 usc 1505. so i'll ask you for the last time. do you understand that you have a personal legal obligation to ensure these requested records are produced? >> mr. chairman, treasury's approach to the committee's inquiries have followed the long standing policy set forth by reagan in 1984. >> mr. secretary, you've had three times to answer the question. i'll move on. has anyone directed you not to comply with this committee's subpoena of may 11th, 2015?
>> mr. chairman, just the other day, we responded in detail to the inquiry from this committee -- >> my question, mr. secretary, is has anyone directed you not to comply with this committee subpoena of may 11th, 2015? it's a simple yes or no answer. >> the letter we sent to the committee indicates, we have been reaching out to the committee, responding -- >> third time, mr. secretary, has anyone directed you not to comply with this committee's subpoena of may 11th, 2015? >> mr. chairman, we have been trying to work with the committee to provide -- >> i'm trying to get you to answer a simple yes or no question. no wonder the american people get outraged. simple yes or no question. have you been directed not to comply with the subpoena, yes or no, please, sir? >> mr. chairman, we have been trying to respond to the subpoena. that's the point i'm trying to make. >> well, for the third time, you didn't answer that question. next question then. have you directed anyone at the treasury department to withhold documents from this committee?
pursuant to the committee's subpoena of may 11th, 2015? >> mr. chairman, if you would just give me a moment to answer your question. we have been -- >> if you'll answer the question, mr. secretary, i'll give you a moment for context but we need to start off with a yes or no. >> mr. chairman, with all due respect, these are not yes or no questions. if you want an answer, i'm happy to give -- >> i don't know how much more simple it could be. have you directed anyone at the treasury department to withhold documents from this committee pursuant to the committee subpoena of may 11th, 2015? if you'll give me a yes or no, mr. secretary, i'll give you a moment for context. >> at my direction, the department staff has been reaching out to the committee. trying to seek an accommodation.
the committee has not followed up with any meetings to try and work through that. >> it's been three years on some of these document requests. >> in many cases, we don't even know what the committee is looking for. >> if i need to provide you with another copy of the subpoena, i would be glad to do it. are you at least certifying then -- are you prepared to certify in writing you're in compliance? because so far, you've failed to do so. you can't tell me you're trying
to comply and then not certify you're in compliance. >> respectfully, what we suggested, the attorneys should sit down and talk with each other, go through the details. i was being diplomatic at the appropriations committee the other day. this committee has not responded to our offers to meet at the attorney level. so we've been trying to be responsive. >> mr. secretary, what do you think would happen to an ordinary citizen, a school teacher, a factory worker, if they decide to -- if they refuse to comply with the legal subpoena? what to you think would happen to them? >> we've been working to comply with the committee's request. >> mr. secretary, with all due respect that just doesn't have credibility. it just doesn't have
credibility. ranking member's recognized for five minutes. >> thank you very much for being here, mr. chairman. the chairman just talked about the american citizens' distrust with government and how angry they are with government. mr. secretary, i believe that if there's anger and distrust, it's because of the way we conduct ourselves here. and when the secretary of the treasury is battered and disrespected, then i think the american people sees that more as the congress of the united states not being able to work with each other, more than some so-called demand for response to pages that have been sent or questions that have been sent or depositions. as i understand it, we've received over 3,000 pages from the treasury since may 11th, 2015. and as i understand it, there were four more depositions that were issued yesterday. and i want you to know, mr. secretary, that we're not consulted at all by the opposite side of the aisle on these depositions. we don't have the kind of cooperation here in this committee that would lend itself to seeking information from you or any of the other secretaries. this has become a game of gotcha. i am hopeful the important issues of the treasury are being worked with every day.
we are in a situation where yes our economy is performing and since 2008, we certainly have made advances, but we are concerned about the volatility of the markets and we want you to concentrate on the real issues. i would hope that your office would not be tied down trying to respond to unreasonable request from this committee. i don't think and i don't believe they're legitimate and i apologize for the way you've been treated here this morning, not being able to answer a question, being interrupted, not accepting that you're willing to have an explanation, and so it should not work that way. and i want to get on with dealing with the real issues that you're confronted with. since initiating free market reforms in 1978, china has been one of the world's fastest growing economies. averaging 9.7% in real domestic product growth. annually from 1979 to 2015, lifting 660 million people out of extreme poverty. china's economy has slowed. its real gdp growth was 7.3% in 2014 and 6.9% in 2015. and it's projected by the imf to fall to 6.0 by 2017.
what are the implications of a slowdown in china for the united states as well as the global economy more broadly? >> thank you, congresswoman waters. china's economy is one of the the two largest economies in the world along with our own. it is not as integrated in the global economy in the way ours is in terms of financial systems, in terms of the interlocking relationships of those financial institutions. but it is a purchaser of vast amount of inputs from around the world. so there's understandably a lot of focus on china's economy because it has a lot to do with what global growth will look like in the future, particularly an emerging economy as it provides so many inputs to china. china's in the middle of a reform process that is very
important to china and it's important to the global economy. as they move towards a more market oriented system, it's going to be bumpier. they'll be more volatility. they'll have to learn how to tolerate some of those disruptions the way those of us more experienced with market economies do. but they're going to have to stick to the reform path because if they don't if they don't open their market, if they don't make the changes, they'll be left with an overhang of overcapacity that will weight them down and make it so some of the doomsday scenarios would then become much more meaningful risk. i think china has a lot of tools. it has a lot of capacity. the question to me is not the question many have asked is china out of tools. they have $4 trillion of foreign reserves. they have enormous resources within their government to deal with policy. what they need to do is not back
away from the reform program. >> thank you, mr. secretary. >> the chair now recognizes the chairman from michigan. mr. huizenga. >> thank you, mr. chairman. i'm going to take a slightly different direction on my questioning. not because i don't believe what the chairman has been saying is extremely important. i'm concerned as well about responses of just even simple letters. i've gotten two dated march 18. one dating back as of last year, like in may. so speed is not exactly been treasury's m.o. here. but my question on the imf, and you address this a little bit in page three and four of your written testimony starting on page two. the greeks obviously have suffered eurozone's highest unemployment rates, 25%, for the past five -- i'm sorry, four years. youth unemployment near 50%. instead of helping reduce greek's public debt to gdp ratio to 110% as planned, the fund has witnessed the debt to gdp ratio climbed to over 175% despite
major restructuring of debt in 2012. clearly imf involvement has done little to improve the lives of greek citizens in part because greek's leaders have been slow walking reforms for years. last december, greek prime minister tsipras was unapologetic criticizing the fund's unconstructive attitude on fiscal and financial issues and he indicated the imf should stay out of any future bailout. he and i agree on that one. you actually mention that at the direction of congress, your written testimony, united states champions reforms and the exceptional access lending framework to tighten requirements on debt sustainability. but then the u.s. led the charge to go against these reforms with inserting new loopholes. i'm just curious and confused as to why you would go a bipartisan congressional directive and go against that with the imf and if the greeks don't want the imf's medicine and if the medicine has
been so ineffective anyway, why should we insist on giving more taxpayer dollars? >> congressman, i think -- let me start with the reforms of the imf. >> very quickly. yes, please. >> the reforms removed the provisions that allowed systemic risk to cause an exception that would allow lending -- this issue you describe. the exceptional access remains very important. it's been the way we've seen assistance provided to many important countries. >> why would we introduce more loopholes? the imf rules stipulate the country must possess the political and institutional capacity to ensure success of an exceptional access loan. government must be competent, committed to the reforms. the greek defense and foreign
ministers, i'm sure you're aware, threatened to flood europe with migrants including potential terrorists if the country didn't get what it wanted in bailout negotiations and the defense minister said, quote if europe leaves us in the crisis, we will flood it with migrants and it will even -- it will be even worse for berlin if in that wave of millions of economic migrants there will be some jihadists of the islamic state too. if they, european creditors, strike us, we will strike them. we might have just seen that in brussels today, isn't that true? >> i think that's a conclusion that i have no basis to comment on and i think we shouldn't jump to statements like -- >> i hope not but when you've got the defense minister of greece threatening europe, our nato allies, how in the world can we allow them to even qualify for this? >> if i can respond to your questions -- >> please, quickly. >> both on the financial and on the larger set of issues in europe. on the financial side there have been many important reforms enacted in greece over the last year. i'm not going to disagree that the process was very bumpy and messy and the whole world was watching it. after an opening set of conversations that was not constructive, the government agrees to settle down and enact more reforms than anyone thought
possible. this is principally a european challenge. it has been all along. it's been important to europe to have imf as a partner. >> so they've settled down but earlier this year, not last year, this year, we've got the defense minister and others making outrageous comments -- >> sir -- >> which i still don't understand why you would lead the parade to try to include -- >> if i can keep separate the financial and the kind of geopolitical for a moment. open the financial side, i think the imf's only going to remain involved if there's ability to do review. which will be based on some debt forgiveness, restructuring, that would be required. if it's sustainable, then it's consistent with the imf rules. if they do that, that will keep a european commitment together. why is that important to us? i think at a time of geopolitical instability, it would not be a good thing for europe or for the united states if we were to see real tensions of europe breaking apart again. >> we see that already. i think this is why i'm going to be introducing a bill today to
try to tighten those loopholes. i would suggest that treasury not go against congress again in a bipartisan manner. you need to work with us in this oversight. so thank you, mr. chairman. >> time of the gentleman has expired. miss moore, ranking member, the monetary policy and trade subcommittee. >> thank you very much, mr. chairman. mr. secretary, you have indicated that our economy is growing very slowly, at 2%. and of course our colleagues here are fond of reminding us that we're $19 trillion in debt of course. we just in the last budget negotiations did another $700 billion in unpaid for tax cuts. some good, some tax extenders that were not so good.
anyway, they're all unpaid for. on top of the wars we didn't pay for. and so we're now over the next couple of decades $2 trillion more in debt from this policy. i guess what my question is, is i also sit on the budget committee. and the solution to this is sort of more austerity. let's, you know, let's block medicaid, let's voucherize medicare, let's cut the social services bloc grant. let's, you know, take the entitlement status away from pell grants and food stamps. and i guess as the secretary of the treasury, i guess i'm wondering if you think austerity is the solution to our deficit problem. >> congresswoman, i think we have to make sure our economy is
growing. part of that means we need a fiscal policy that keeps it going. we also have to take a long-term view and have a sustainable fiscal outlook. if you look at where we started in 2009, there was an economy that was crashing. there was a debt that was skyrocketing and a debt that was out of control growing to over $1 trillion. we brought it under control. it's not down to zero. the deficit is not down to zero. but we've reduced it by three-quarters to 2.5% of gdp. i think if you look at this next ten-year period, we maintain stability and it's a foundation to then look at the challenges of how do you deal with the 20, 30, 40-year challenges. in these next ten years, i think the united states, like the rest of the world, has to focus on the reality that there's insufficient demand in the world. the united states is doing a little better than most of the rest of the world. but you can't grow the global economy by just cutting spending
everywhere. we're seeing that that hasn't worked in other places. in the united states right now, we have great needs. infrastructure, enormous need in this country. we need to have a sound economy in the future. we need it because it puts people to work and good jobs. this is the time to do it. when we have the ability to finance it at very low cost. so i think the question of what we do in the medium and long term, the short term are not the same. i was also the director for three years in the 1990s and i produced surpluses in three years. so i, more than anyone else, understand the value of fiscal discipline. but i also understand you can't do it without a growing economy. last year, the actions you described, in total, helped grow the u.s. economy by roughly half a percent. with the headwinds coming from internationally slow growth, i'm glad we have that extra energy in the u.s. economy. >> thank you so much.
so, i mean, just to be clear, you think our long-term challenges with social security, medicare, medicaid -- i mean, 70% of our economy is spending. so if you take money away from people, is it possible to grow the economy without folk having money in their hands? >> the challenge in the long term has always been having the right balance of revenues and spending to deal with structural issues. i think that if you look at what we've done in the last seven years, we've bent the cost curve on health care. some people don't like the affordable care act. nobody can deny it's kept costs from going up. that has an enormous impact on the federal budget. we've taken tremendous strides to reduce spending. i think too much so on the discretionary side. >> i got 30 seconds. do people need to have money? do you agree that our economy depends on people having money to spend? like raising the minimum wage? like not cutting -- >> i think if you look at the power of the u.s. economy, it's driven by consumer demand and
that consumer demand is important at all levels of the income spectrum. people who work full time ought to be able to be above the poverty line, which is why i think we need to raise the minimum wage. we know that money will be spent. >> thank you so much. i yield back my two seconds. >> gentle lady yields back. the chair now recognizes the gentleman from new jersey, mr. garrett. chairman -- >> thank you, mr. chairman. after listening to the secretary's responses to your questions, or nonresponses, mr. chairman, i think anyone viewing today's hearing would say, mr. secretary, that you are the epitome of what is wrong with washington today. the disdain you have for the american people. the failure of yours to answer the simplest of question is what is wrong with washington and why the public has the view of the bureaucracy and the bureaucrats such as yourself here today.
you know, questions we put to you are basic ones and simple ones. asking sometimes for long answers and sometimes for simple short answers. i got a new phone the other day. i'm just -- curious question, do you use a cell phone, iphone or anything like that, do you carry that with you? >> i carry it but i hardly use it. >> there's almost a simple answer. so in your communications with people, whether on your phone, iphone, e-mails, letters, phone calls or other things, the chairman asked you a simple question. has anyone from the administration ever directed you to not comply with the subpoenas? so it's a simple question of whether through any of these communication devices you have, one way, shape or another, has anyone directed you to do that? that's a yes or no.
>> i answered the question -- >> no, you didn't. >> -- we have been working to comply -- >> excuse me, excuse me, the question was not whether you're working to comply. that was your answer. the question was, has anyone communicated this to you? has anyone communicated that to you, mr. secretary? yes or no? >> congressman, you know, you can make this seem like a yes or no question. i'm not aware of any communications telling me what to do on anything i'm doing here today. >> there you go. >> i'm giving you an answer -- >> that's the -- >> -- what we're doing -- >> thank you, mr. secretary -- >> i would think you would want to know what we're doing. >> the answer is no then. mr. chairman, i think that was the answer you've been trying to get.
i've been trying to get answers from you as well for a long period of time. nine months ago, i contacted -- well, both in committee and through letter, asking you to respond to some of the concerns i have regarding the implications of something else. the isda protocols on bank insolvencies. what they would have on nonbank institutions. so my simple question now, since i haven't heard back, will you assure us if any proposals come up, you oppose any plans that would require u.s. companies to basically give up, waive their protections to u.s. law and sovereignty? >> congressman, i'm going to need you to give me a little more detail what you're asking me about if you want me to answer that question. >> i guess since my time is limited -- >> i'm happy to respond.
i'm happy to respond. i'm just not sure what you're asking. >> we directed that back to you nine months ago. if you're happy to respond, we would ask you to respond to that back then. as far as trying to get information from you is one thing. to you is another. here's the $10 bill. there's a whole discussion going on who should be on the 10 bill. you're familiar with that. >> yes, i am. >> you solicited the american public's opinion quite a bit. >> we got a lot of comments. >> that's great. how come then, when you're dealing with international bodies, you do not solicit for public opinion in the stakeholders in the same manner when you get into negotiations? regarding financial standards and international bodies. will you commit -- >> well we do -- >> will you commit to -- will you commit going forward to do -- ask for input just like you did on the change of the $10 bill, as you would on dealing with international bodies? >> we do reach out to stakeholders as we do our work domestically and internationally. we will continue to do so. >> that's great. that's good to hear.
will you engage in a formal notice and comment period as well? >> i'm not going to comment on -- notice and comment on international proceedings. >> why not? >> because i'm not aware of any appropriate notice and comment process for international proceedings -- >> so could you -- do you have the authority, the power, to establish formal notice and comment periods? >> look, i think that we have a lot of mechanisms for consulting with both public and private sector stakeholders -- >> would you commit to doing this one more -- >> i don't think notice and comment is the answer to everything. we're not doing notice and comment on the $10 bill either. >> this is a little bit more important -- >> you asked me would we do the same thing. >> would you commit to doing formal notice and comment period -- >> i don't think notice and comment is the answer to everything. >> i understand it may not be for everything. but on this area, i'm simply asking you would you commit to doing so? >> congressman, the work that's done in the -- >> the answer is no. >> -- doesn't make u.s. policy. when we make u.s. policy and rules -- >> so when you do -- >> -- go through notice and
comments -- >> when you solicit input, because you said you solicit input, it's you solicit input from who you want to hear from as opposed to all americans who want a formal process. >> i dare say when we solicit input, we get input from many who do not share my view. not just show who share my view. >> i yield back. >> miss maloney, ranking member of our capital market subcommittee. >> welcome secretary lew. i know that this hearing is about international finance. but i'd first like to ask about puerto rico as it has a very pressing economic issue going, facing the country and it impacts on ours. it's in a severe financial crisis which could really explode into a humanitarian crisis. and we know that it now has roughly $72 billion in debt outstanding. additional $43 billion in unfunded pension obligations. and to make matters worse, puerto rico does not have access to chapter 9 bankruptcy or to any restructuring process that would allow it to renegotiate its debt and creditors, its obligations. now, i've been told that treasury is working with the natural resources committee on crafting legislation to address this financial crisis. but as you know, there's a
supreme court case taking place right now. literally they're hearing the arguments, in court today. and that case addresses where the puerto rico is prohibited by section 903 of the bankruptcy code from enacting its own state-level municipal process and regime. other states are also prohibited from enacting their own municipal bankruptcy codes. but they have access to chapter 9. they have access to bankruptcy. puerto rico does not have access to chapter 9. so it's unclear to me as why we subject them to the same prohibition on enacting their own municipal bankruptcy code. so one idea that i feel is worth pursuing and considering is simply carving puerto rico out from the section 903 bans on states enacting their own municipal bankruptcy codes. that way we could, congress
could authorize puerto rico to enact its own restructuring regime for all of its municipalities. and this has precedent in that the supreme court upheld new jersey's state-level municipal bankruptcy in 1942. it was congress that enacted legislation prohibiting states in the future from doing so. but we could likewise enact legislation allowing or carving out the ability of puerto rico to so ask -- to act, but my question really concerns the impact that the economy and puerto rico and the restructuring would have on our very important municipal bond market that finances so much of the improvements in our urban areas. and a lot of critics are arguing
that allowing puerto rico to restructure their debt would have a terrible, terrible consequence in the muni bond market here in america. that it would drive up borrowing costs for other states as well. even though they're not affected by puerto rico's restructuring. liked to know what your response is to these arguments. and also, do you think a territorial bankruptcy regime for puerto rico would harm the broader municipal bond market that is so successful in america. >> congresswoman maloney, there's an immediate crisis puerto rico, it's not a future crisis. for all practical purposes they're in default because they're not paying some of their bond issues and they have big payments due in may and july and we don't see a path for them to be able to make those payments. the need for action is
immediate. i don't believe that it's going to solve the problem. if there's restructuring of just a small piece of puerto rico's debt. a restructuring is going to have to be inclusive of all of puerto rico's debt in order to address the crisis that they have. i think that the work that's being done, having seen the work product of the natural resources committee. is very important and very is very important and very time sensitive. what we think needs to be in it, we think there needs to be an oversight authority that is the gatekeeper. we think there needs to be the ability to restructure all of puerto rico's debt. because even some of their general obligation debt has to be at a minimum rescheduled in order for there to be a solution. and we don't think it's a one size fits all approach. in terms of the impact on the other municipal bonds. you know, three of the leading bond analysts have put out studies that contradict the notion that it's going to have spillover effects on other municipal bond markets. in fact what we know about the municipal bond market is that
each issue is looked upon independently based on the risk and the quality of the credit. and i believe that the worst thing for the municipal bond market would be a disorderly unwinding in puerto rico, which is what will happen if congress doesn't act. >> the time of the gentlelady has expired. the chair now recognizes the gentleman from wisconsin, mr. duffy, chairman of the oversight and investigation subcommittee. >> thank you, mr. chairman, welcome, mr. lew. right over here. >> i can't see you. >> i want to revisit a few of the questions that were asked by the chairman. again, you understand that you have a legal obligation to provide the documents requested and subpoenaed by this committee, to this committee, is that correct? >> congressman, i answered that question already. we are working to respond and i will clarify one thing i said before. i said we did not get any response to our offer to meet. after we received subpoenas last night -- there would have been a response that invited a meeting. >> i don't mean to be offensive. are you having any trouble hearing today? >> i'm hearing you just fine. >> let's try this one more time. do you understand you have a legal obligation to provide documents as -- >> as i said we've been
responsive and we continue to work to be responsive. >> you're not answering my question. is anyone directing you not to comply to our subpoena? >> i responded to that question already. >> what's the answer? tell me one more time. >> i'm not aware of any instructions i'm saying today. you're talking to the secretary of the treasury. i'm giving you -- >> have you directed anyone at treasury not to comply with our document request. >> i'm sorry, i couldn't hear you. >> have you directed anyone at treasury not to comply to our document request? >> no, quite the contrary, at my direction, our staff has reached out -- >> told to comply with us -- >> seeking to have the conversations that would enable us to reach accommodation. >> you've told your staff to comply with the document requests? >> the practice -- >> yes? >> i've told them to -- reach an accommodation with the committee. which requires give and take. >> we have a subpoena that's almost a year old. the document requests, when we try to do it nicely with you, goes back two and a half years. and you have failed to comply
with those document requests. i think anyone sitting in this room listens to the responses you gave the chairman, you gave mr. garrett and you give me, you're not compliant. we asked very simple questions and you say -- i'm not going to answer your question. but you come and say listen -- >> will the gentleman yield? >> i will not. >> you come in and say i'm trying to work with you, i'm trying to answer your questions and be compliant. when you don't even answer simple questions that this committee poses to you. you indicated i think in your -- >> can i ask you a question, did you read the letter that we sent you last week? >> yesterday? i want to talk about what you sent me yesterday. are you aware you sent me -- >> march 18th we sent you a letter. >> you sent me a document dump last night, yesterday. are you aware of that? >> we've been providing documents on a regular basis. >> okay. so you provided 1,035 pages, correct? >> i didn't count the pages, congressman. >> does that sound about right?
>> we sent a lot of pages. >> you're trying to comply with our subpoena. >> we sent thousands of pages. >> in the 1,000 pages sent to our committee this week, you can look up at the board, 664 of those pages were news clippings, letters to members of congress, crs reports, hearing transcripts and public information. another 223 pages was private-sector research from finch, barclays, merrill lynch. another 109 pages was from the bipartisan policy center. and then 39 pages was a memo on the 1985 debt limit impasse. this isn't the documents that we requested. this is public information you're just throwing our way to try to say listen, we've sent you thousands of pages, though it's thousands of pages of noncompliant material. one of the emails that you sent us, i think is consistent with all of your compliance and your testimony today. at the very top you'll notice it
says spam. you're sending spam emails from treasury in trying to tell this committee that you're complying. let me ask you this, we've asked you to provide employees of treasury, anwall, randall duvalk. patrick pinchman. and you've refused to allow them to come and be interviewed by this committee, is that correct? >> congressman, we've tried in repeated communications with this committee to arrange meetings to reach accommodations to be able to provide information. and when we got a response last night -- last night after the better part of a year. >> we asked for documents and as those who oversee, you should comply or you should assert a privilege. >> the process of responding to these requests is well established. it involves give and take it involves give and take. >> are you asserting a privilege? >> excuse me? >> are you asserting a privilege
in why you haven't complied with our document request? >> we have not yet had the conversations we should have between counsel. hopefully that will begin immediately. and we'll be able -- >> look at the answers you gave us today. does anyone here believe that you're going to actually comply with our requests that are two and a half years old? that you can't even acknowledge that you understand that you have the legal obligation to provide these documents? >> mr. chairman -- mr. chairman -- >> you are -- >> the time of the gentleman has -- >> unanimous request. >> gentlelady will state her request. >> unanimous request for a recess. >> object. >> chair now recognizes the gentleman from texas, mr. hinojosa for five minutes. >> thank you, chairman and ranking member waters for holding this hearing on the annual state of the international finance system. welcome secretary lew. i'm pleased that you are testifying today.
because this hearing gives us on this committee the opportunity to discuss the net bank in san antonio, texas. the net bank was created in 1994, as part of nafta, to alleviate the environmental concerns and economic problems that would be created by the movement of commerce and people to the u.s./mexico border region. since its creation over 20 years ago, the bank has made a tremendous improvement to some of the most impoverished communities in both nations, including towns and colonials in my congressional district and along the u.s./mexico border from brownsville to el paso and all the way to california/mexico border. the bank's investments have brought life-saving, potable drinking water to millions of people, many of whom faced
health-threatening conditions due to unsafe sources of drinking waters. so that that leads me to the first question. january 2015 during the high-level economic dialogue, president obama and mexican president pena neato, agreed to double the bank's current capital from $3 billion to $6 billion, split evenly between the two nations. can you tell us why the bank is seeking to double its capital? >> congressman, the administration is looking for this capital increase because it will allow the united states to continue supporting these kinds of infrastructure projects on our border that are so important. it deepens our relationship with mexico, it addresses environmental issues that are cross-border issues and it is an important aspect of our economic life to have those issues addressed and only we in mexico are the parties of interest. which is why the nat bank and the u.s.-mexico relationship is
so different. >> in june of 2015, moody's rated the net bank as aa 1, reflecting the bank's strong capitalization and liquidity position, as well as noting the support of the bank receives from both the united states and mexico. moody's rated the bank's outlook as stable. so do you expect the bank will maintain that strong financial position moving forward? >> congressman, the rating agencies have changed their methodologies in a way that for idiosyncratic reasons could have an adverse impact on nat bank. they're looking at whether it's concentrated activity. when you're talking about two countries, only two countries being involved in all the activity on one border, it, by
its basic nature, is concentrated activities. most the international financial institutions are diversified. i think importantly there are no nonperforming loans. so if you look at the core quality of the credit, it's very strong. i don't know what the rating agencies will do. >> i like that response on how strong it is. since 2010, the bank's lending portfolio and debt issuances have grown significantly. has the increased lending portfolio had a negative impact on the bank's financial position? >> as i said, there are no nonperforming loans. so i think the bank remains in a strong financial position. >> what steps has the bank taken to ensure that its debt issuances do not become an oversized liability for the bank? >> i think the key is for there to be careful review of projects, to make sure that each project that's funded can sustain the debt that's going to it. given the amount of work that
needs to be done on the u.s./mexico border. there are a lot of good projects before get to anything that would be questionable. >> i agree with you. there are a lot of good projects on both sides. in 2011, i introduced hr-2216, entitled the north american development bank enhancement act. a bill to allow the bank to expand its mandate beyond the environmental infrastructure projects. would the treasury support efforts to expand the bank's mandate this year, 2016? >> congressman, i'm not familiar with the expansion proposal. i'm happy to look at it. i think that the definition, as it is, permits some expandability. because transportation for example is part of it reducing emissions, so things like transportation, water, sanitation, renewables are all part of it. but i'd be happy to look at the proposal. >> i yield back. >> the chair now recognizes the gentleman from missouri, mr. luetkemeyer, chairman of our housing and insurance subcommittee.
>> thank you, mr. chairman. mr. lew, i've got a couple of questions on a different subject here, with regard to specific designations you testified last week before the appropriations committee with regard to arbitrary thresholds for specific designations. kind of like to get a clarification. do you believe, your response was that you oppose raising the bank threshold to specific designations to $500 billion? >> i couldn't hear the last thing you said. >> last week at the house appropriations committee, you, your response to arbitrary threshold, asset thresholds was that you oppose raising the bank specific threshold to $500 billion, is that correct? >> i commented on that issue. last year there was a proposal to go to $500 billion. $500 billion is a very large financial institution. the number is now 50. there's been a lot of debate, should it go from 50 to 100.
what i said is there's a big difference between 100 and 500. >> i guess the question becomes assets is one thing. i think we need to be looking at this based on the risk and asset makeup and liability makeup of each one of these institutions. would you agree to something like that? >> i think there are a lot of different criteria, aside from size, that raise questions of risk. >> i think that size is an important criteria. the larger the institution, the more likely it is to be systemic. >> with regards to nonbank specifics. we've had two companies that sold off major books of business, an effort to escape the designation. and yet they have not been dedesignated. don't you think it would be helpful to have an off-ramp of
some sort to be able to do that so that these businesses know how and what they need to do to get dedesignated. >> first, congressman, i don't think that the reason that those decisions are made are to get dedesignation. i talked to the ceo of one of those firms who said expressly, it was not. it was a business decision for reasons of sticking to the core business of a technology and manufacturing company. there is a process for dedesignation. there's an annual review. and if a company sheds risk and comes in for review on an annual basis, that's the way to get dedesignated. we look forward to seeing applications that reflect that kind of, of change. >> okay. with regards to another issue, insurance, international insurance legislation. we're working on my committee to put some guardrails with regard to the conversation takes place at the iais, to uphold and advocate for our system of regulation. do you have any objections for that on mission to make sure we protect the insurance industry in this country? >> can you clarify which proposal you're talking about? >> we haven't dropped the bill yet. we're working on a bill to try to put guardrails on the discussion so those -- >> i'm not sure which
discussions -- >> with the iais. >> on what subject? >> capital standards. >> for insurance. >> all other insurance supervision. >> we have been working -- i assume you're talking about insurance. >> right. >> we've been working to negotiate an agreement to make sure we don't end up in a place where other countries can set standards that would require -- >> you support what we're doing, i would take it? >> i think the right thing to do is complete the covered agreement to have prudential issues addressed and not get into a situation where there's conflicting capital kinds of standards. any action in this area should be action we take in the united states. >> well i think we're putting the cart before the horse, i think we need to make sure we have the ability to protect our folks first before we engage in any sort of agreements, period. but appreciate the comments. with regards to paying our nation's bills, the new york fed
serves as the treasury's fiscal agent, is that correct? >> correct. >> did you know that since 2011, the fed has conducted so-called tabletop debt ceiling exercises that contemplated prioritizing payment on principal and interest on debt? >> yes. >> when did you learn that? >> i don't recall. >> did the treasury direct the new york fed to conduct these tabletop exercises? >> congressman, during the period when we were at risk of going into default, there was a lot of analysis being done of what mechanically would work. my understanding of these exercises is that they were checking to see if the pipes would work. >> you're aware of that then. the problem then is two separate occasions, october 10th, 2013 and may 7, 2014, you appeared before the senate and the house, indicated something contrary to that. >> i didn't. what i said at the time and what i believe now is we've never gone into a world where congress has failed to extend the debt. we've never been in a world where there's been a question on whether you --
>> you fail to acknowledge -- >> i know what i said. >> you fail to acknowledge these exercises were going on. >> i know what i said. what we have learned since then is that the technical capability is there. we don't know if it works. it's never been tried. i don't want to be the one who finds out and i hope nobody here wants to find out. >> i yield back. >> the chair now recognizes the gentleman from georgia, mr. scott. >> thank you very much, over here, mr., secretary lew. it might be appropriate for us particularly with wlapd in brussels. before i get to that are you aware, mr. lew, that there have been documented 73 -- i think it's 73 individuals working at
america's airports with ties to isis. >> congressman, i know that there has been work done to identify risks in this area. >> let me suggest this. cox media has media outlets, newspapers, television stations all across this country. i would like to ask if you might contact them and get the full report on that report. cox media wsb television is the local affiliate in atlanta, georgia. we did an interview on that. my whole point is this. in this financing of terrorism,
we have to start looking at other end of it. in other words there's the money laundering of it. but then they have these contractors that subsidize the work at the airports. this is the same incident that happened abroad not too long ago where a baggage handler come and put the bomb right on the plane. the reason i'm saying that is this has no greater -- our greatest tragedies have been because of that. we've got to do everything we can to let the american people know that our airports are safe. so on that end, if your staff
would -- and my staff could assist you as well. i think it's important for you to have that report. >> i'm happy to look at it, congress mangman. department of homeland security works vigilantly -- >> my point is, you have the money end. i'm not talking about that end. we are failing in our efforts. now, we passed a bill that i sponsored called the international financing hezbollah act. are you familiar with that one? >> yes. >> all right. now, in that act, we directed the president to direct and to identify, to investigate, to use treasury, to use the fbi, to use all of our brilliant -- the cia. investigative powers to identify
sources of funding, the dummy companies. so with that in mind let me ask you your application of the law and what is your report on how isis and these other terrorist organizations are getting their funding? >> congressman i have less than a minute. i'll do my best. we have an extensive operation, the best in the world to track terrorist activity. we support friends around the world when they're trying to track down financial ties. we work extremely closely with the intelligence community on leads. we have the ability to track when we get identification of individuals who need to be tracked. it all flows from the intelligence that we get. we're working on hezbollah to identify additional targets.
isil, it's slightly different. it's a re internal system. if i could get another minute i would be delighted to answer it. >> i want to ask you this. the iran agreement makes available to iran a huge cash load of over $100 billion. they are the number one sponsor of terrorism and particularly to hezbollah. >> mr. chairman these questions about isil financing and iran -- >> please give a brief answer, mr. secretary. >> isil financing, the structure has changed as isil has grown. they seized territory, took the money out of vaults and they had it. that will not sustain them. they have too much territory, too many needs and we've been too effective at hitting some of those vaults.
they ex-tort money from the people who live there. we try to shut down banks and limit money exchanges. we're using military operations to blow up every aspect of the oil industry whoa can. it's been successful enough that some areas, they have to cut in half to pay their fighters. we work every day to find every lead we can. on iran if i could take 30 seconds -- i'm happy to. >> please, mr. secretary. go ahead. >> the notion of the amount of money going to iran has been greatly over stated in a lot of places. at some level it looks like there's 100 billion that goes to iran. no more than 50 could actually go because of encumbrances on the money. the government of iran may get access to $30 billion. they have hundreds of billions of dollars of domestic needs.
we will continue to take action of funding of terrorism, human rights violations. we'll do our level best to make sure -- >> my point is, is there any mechanism in place to make sure that none of that money goes into the hands of groups like hezbollah? >> we have ongoing sanctions in those areas and we're continuing on designating and enforcing those sanctions. >> thank you, secretary lew. >> i apologize for going over. >> those were topics of great interest to members on both sides of the aisle. financial institute subcommittee. >> thank you, mr. chairman. i'm interested in a lot of questioning you initiated in your questioning. i would like to see if maybe you get more answers than you got the first time. >> if the gentleman would yield to the chairman. so, mr. secretary, i too -- let's go back to document
production. you stated you felt you had been reasonable in this process. i accept that. i hope you understand there is a level of frustration for document request that have been pending, in some cases two to three years. a subpoena, which is almost one year old. we have had over a dozen questions for the record that were produced from last june's hearing that we have yet to receive information from your department. you saw the chart that was placed by chairman duffy on the monitors that showed that basically when we requested documents, most of what we received were news clips and speeches. yes, mr. secretary, there is a level of frustration here. a question that chairman duffy asked, which i do not believe you answered -- if you did, then forgive me. i wish to know -- i am unaware -- i am unaware that
treasury has asserted any executive privilege with respect to any of the documents that have been subpoenaed. so i am unaware that treasury has invoked any executive privilege. are you aware if executive privilege has been asserted with respect to any of the documents subpoenaed? if so, do you have a list of those documents? >> you know, congressman, we have tried to reach out to have conversations to clarify what's requested, to seek accommodation, to work in the spirit of president reagan's directions with how to deal with congressional oversight in a respectful and responsive way. we wrote in december, in january. we wrote again last week. it was only after four additional subpoenas were delivered that we got a call back to try to -- >> i'll accept what you're saying, but you're not answering the question. are you aware that executive
privilege has been asserted? >> i'm not aware of any executive privilege. >> that's the only question that i've been asked. >> you know as well as i do that's the end of the process not the beginning. >> it's a process that's been going on for almost three years. >> the process of accommodation requires conservations that haven't even begun. we've reached out, initiating conversations. we've received no response. >> i assure you a subpoena had not been issued had we not had to wait years. >> but in december we offered -- >> this is a matter of days to weeks, mr. secretary. this has been going on for months and years. >> maybe we can get to a better place and find a path to accommodation, which is always our goal. >> mr. secretary, you testified before our committee on may 7, 2014, that the administration had never made any decision to prioritize debt payments.
>> that's correct. >> do you agree that you testified to that? pull up chart number six, please? i think you are well aware, we are in possession of a number of documents that have fed, a various email communications, amongst and by federal reserve officials. this one dated september 17th states treasury is adamant, they will make p & i, principal and interest payments, not considering the possibility of missing debt payments. number 7, please. this one dated friday, september 20th, treasury continues to be adamant. they will make principal and interest payments on the debt this is a slightly different position than prior exercises where prioritization of debt payments was not specified. chart 8. as you may have heard, this one is dated monday september 23rd. as you may have heard, unlike the 2011 planning around prioritizing payments and rolling maturities, the treasury
has said they will make all principal and interest payments this time around. so you were aware of these tabletop exercises, correct? you testified to that earlier today? >> mr. chairman, the tabletop exercises were not in pursuit of, pursuance of a decision that had been made. they were exploring how to answer the questions that you've asked me. is it technically possible -- >> the documents that were just presented, have you seen these documents? have you seen these documents? >> only in recent months. i was not at the time. i was -- >> pull up -- >> pull up chart number 2, please. >> mr. chairman, could i just respond to your question? the real point here is we should never be in a position where we have to make decisions about whato do when you default. to default on social security or medicare instead of principal and interest, you're still in default. the president only the president can make a decision what to pay and what not to pay. >> mr. secretary, i agree with that assessment. but i think you know that roughly half the times that congress and the modern era has
voted on a debt ceiling, it has included some type of spending restraint to take us off the path to bankruptcy as well. last chart, chart number 2. memo dealing with federal reserve governor powell. two interesting comments from powell. he understands why treasury wants to maximize pressure on congress by limiting communications about contingency planning. mr. secretary, did you direct somebody to maximize pressure on congress by limiting communications about contingency planning. >> no, what i've said to this committee and other committees of congress is yes, we look at what is technically possible. we don't know if it works. we believe it would be a grave mistake and a disservice to this country to ever default. that's my view now, it was my view then and it will be my view in the future it would be a mistake if congress goes down this path again. it will hurt our country. >> it's interesting evidence from the new york fed about what the motivations of treasury was. time of the gentleman from texas has expired. the chair now recognizes the
gentleman from missouri, mr. clay. >> thank you. thank you, mr. chair. and thank you, mr. secretary for your appearance today. you know, we must not forget that, that this administration brought us back from the brink of an economic collapse in 2008. that was not brought on by this administration. but this administration helped repair a budget and economy that was on the brink of collapse. i wish my colleagues on the other side of the aisle wouldn't forget that and recognize the good that has come out of this. mr. secretary, how would you assess the effectiveness of the financial action task force in identifying key terrorism
financing risk and issuing universal recommendations? or addressing them? >> congressman, i think fada is a very important organization that establishes norms and practices that if followed around the world would create the ability to do what we do in the united states more broadly. candidly, we are far ahead of many other countries in terms of having the capacity to take those authorities and implement them effectively. one of the things that i think we have to do and the imf has a big role to play, and fada itself has a big role to play, is provide the kind of technical assistance to make sure we build up the capability around the world. so the countries that want to be cooperative have the actuals they need. we have a meeting at the u.n. in december, where for the first time in the history of the u.n. security council, finance ministers met. i chaired the meeting and we had unanimous vote to designate isil in the same category as al qaeda. which exposed anyone having even
an intermediary role to sanctions. it's all rooted in the ability to see it and act on it. fada was at that meeting, fadif is following up with countries to help build the capability. but i don't want to exaggerate where other countries are. we're ahead of our most sophisticated colleagues, and we offer a lot of assistance, for example in western europe. when they need leads to be followed up on. >> and in light of what happened today in brussels, i'm sure there is a need for expansion of fadif. >> we have reached out to offer assistance, as we did after the bombings in france. and we do on an ongoing basis, sharing information between when it's appropriate. >> thank you so much. and at this time i'd like to yield the balance of my time to the ranking member, ms. waters. >> thank you very much. i'd just like to give you an opportunity to share with us your attempts to cooperate and your desire to work with us in a
reasonable manner. >> thank you, congresswoman waters. you know, the range of requests from this committee has been many. we've provided thousands of pages of material. and as has been noted, we provided an additional 1,000 pages of material just this week. in december on december 17th and january 21, we invited committee staff to meet, to discuss what other information the committee needs. you know, on the debt limit alone we provided the committee over 3800 pages of documents on this topic. over the last three months, we've tried to reach out to the committee to find out what further materials would be useful. in the interim we did identify some additional materials on our own. you know, i have a great deal of respect for the oversight function that congress plays and it's appropriate for congress to play. we seek to find accommodation to provide information.
and would only ask for those kinds of conversations that are necessary to go through the accommodation process to proceed. >> have you received a response from this committee when you've reached out to them to attempt to come together and have some discussion around these issues? >> well only yesterday evening, but that was after four people on the treasury staff received subpoenas for interviews. we didn't have conversations that would help us work it through before that. >> i think what i heard today you're still offering. >> we remain available and anxious to have those types of conversations. >> you and your staff are the available? >> the right level is for counsel to counsel. that's how these things have been worked out for 40 years that i've been part of. >> perhaps before you leave you could speak directly to the chairman and reinforce your desire to be responsive and to talk and to have these discussions. perhaps that would be helpful. perhaps there's some misunderstanding about what
efforts you've made to try to accommodate the many, many requests. and the subpoenas and all of that. i do appreciate your willingness to do this. and again, perhaps maybe a conversation directly with the chairman might help. >> thank you, congresswoman. >> the time of the gentleman has expired. the chair now recognizes the gentleman from south carolina, mr. mulvaney. >> secretary lew, i want to continue the conversation about the debt ceiling. not because i want to beat a dead horse, but mostly because i continue to be amazed in my eyes at an administration that i perceive as wanting to create the threat of a financial crisis. we've already established in your previous visits here, that your comments to the contrary notwithstanding that the technical ability to prioritize did exist and does exist. that issue has been put to rest. >> testified to that effect at this committee last year. >> i'm giving you the benefit of that doubt, mr. lew. when we're going to agree, you might as well let me do it
because it's not going to happen that often. i want to talk about something else today though, if we could bring up the first slide. >> you have said on several occasions that no decision has been made to prioritize. this is an e-mail september 17th. we got these from internal e-mails at the new york fed. the treasury is adamant they will make p and i payments. they continue to be adamant they will make payments on the debt. next line. as you may have hurbd, unlike the 2011 planning around prioritization payments, the treasury has said they will make all p & i payments at the next time. september 27th, even though the treasury has directed the reserve banks, they intend to make all p and i payments, et cetera. that's september of 2013. two weeks later you went to the senate and said that no decisions had been made to prioritize. in may of 2014, several months later, you came to this committee, and brought a letter
from the previous day. you testified to the same thing that says we stress that no decision regarding what to do in a situation was made during the recent debt limit impasses, i will leave it to others to speak to the truthfulness of that statement and the truthfulness of what you have said to this committee. it's not what i want to focus on today. i want to focus on the next piece of the puzzle. >> congressman, if i might -- >> i will, but and i'll give other folks a chance, i'm trying not to take the -- >> when somebody questions the truthfulness of a statement i think i'm permitted an opportunity to respond. >> it's not what i want to talk about. >> you've mischaracterized what i said. >> in fairness -- >> order, mr. chairman. >> the gentlelady will state her point of order. >> the clerk will stop the clock. >> thank you. >> i have a point of order that the committee is not exercising proper decorum. >> may i speak to the point of