Skip to main content

tv   Treasury Secretary Mnuchin on Financial Stability Report  CSPAN  February 9, 2018 10:32am-1:29pm EST

10:32 am
presidents ronald reagan, george h.w. bush, and russian leader gorbachev. >> when you look back at 1989, when bush comes in, and then you look at bush and gorbachev in '90 and '91, from gorbachev's point of view, bush is not measuring up to what reagan had been. >> watch american history tv every weekend on c-span3. >> announcer: c-span, where history unfolds daily. in 1979, c-span was created as a public service by america's cable television companies and is brought to you today by your cable or satellite provider. >> on tuesday, treasury secretary steve mnuchin testified before the house financial services committee about the financial stability oversight council's annual report and recent volatility in the stock market. this is about three hours.
10:33 am
>> the meeting will come to order. without objection, the chair is authorized to declare a recess of the committee at any time. all members will have five legislative days to submit materials for the record. this hearing is for the purpose of receiving the secretary of treasury's annual report on the financial stability oversight council. now recognize myself for three and a half minutes to give an opening statement. mr. secretary, there is your first appearance before the house after the tax cuts and jobs act has been signed into law. i want to let you know on behalf of the majority how grateful we are to you and to the president for your leadership and for helping make this act signed into law. it is truly, truly historic. after eight years of failed economic policies that led to the slowest, weakest recovery in
10:34 am
the modern era, the economy is starting to take off. and wages are finally growing again. consumer optimism abounds. so, how ironic but totally predictable that equity markets would now swoon over the prospects of higher interest rates and possible inflation associated with a breakout of economic growth. artificially low interest rates may have benefitted some on wall street, but they haven't been particularly helpful to mainstream. we have always known that the fed would face significant challenges in unwinding its balance sheet when the economy took off. if you're listening, good luck, chairman powell, you volunteered for the job. but today, the underlying economy is strong and getting stronger due to the policies of the trump administration. we're averaging 3% growth again. unemployment remains at a 17-year low. wages just grew at 2.9%.
10:35 am
the fastest in almost a decade. 2 million americans have gone back to work. all of this in president trump's first year in office, and we are just now on the leading edge of the tax cuts and jobs act. let's take a look at the impact on the financial services industry alone. jpmorgan chase recently announced it would be making a $20 billion five-year investment cross its business lines. in addition to increasing wages for their employees, they plan to boost small business lending by nearly 20%. in my moment of dallas, comerica announced it is boosting its minimum wage to $15 and giving a $1,000 bonus to 4,500 employees. nati nationwide is giving its employees a bonus and increasing its 401(k) match. visa is also increasing its 401(k) eligibility and contributions as well. bb&t and raising its minimum wage from $12 to $15 an hour and
10:36 am
giving its employees a one-time bonus of $1,200. hardly crumbs. and these are just a few of the financial services companies that have announced benefits due to the tax cuts and jobs act. again, mr. secretary, thank you, and thank you to the president. unfortunately, tax reform alone will not unleash our nation's full economic potential. why? because for the last eight years, our economy has been drowning in a sea of complex onerous expensive and job-crushing washington red tape. fortunately, the trump administration has aggressively cut needless red tape like few others, but much work remains, including at the financial stability oversight council. fsoc can clearly serve a vital function in promoting financial stability by monitoring market developments, facilitating information sharing across regulatory silos and making policy recommendations to congress to mitigate risk. unfortunately, fsoc has also
10:37 am
proven it can harm our economy through its designation. fsoc simply eviscerated ge capital, one of measuring's great america's great companies. in a dangerous, unlawful, and misguided effort, it attempted to designate met life a sifi. fortunately their decision was found to be arbitrary and capricious and overturned. mr. secretary, i'm encouraged by much of what i read in the fsoc annual report. under a new administration, i look forward to hearing more about it. i recognize the ranking member for four minutes for an opening statement. >> thank you, mr. chairman. and welcome back, secretary mnuchin. i'm looking forward to your testimony today on the annual report of the financial stability oversight council or fsoc. i'm very concerned that the trump administration seems to be determined to remove all nonbank
10:38 am
systemically important financial institutions from fsoc's supervision, regardless of what threats those institutions may pose to our economy. as we all know, one such financial institution, aig, nearly brought down the economy in 2008 and had to be bailed out to the tune of $182 billion. fsoc plays a key role in ensuring the continuing stability of the united states economy, and it must not be weakened or sidelined from dealing with threats posed by risky financial institutions. in addition to testimony on fsoc, it is also important today that the secretary address several outstanding inquiries on vital matters with national securitiplications. mr. chairman, as a general matter, secretary mnuchin's handling of inquiries from
10:39 am
committee democrats has been completely unacceptable. as you know, serious questions have been raised about the finances of president trump, his family members, and his associates and their involvement with russian government officials and oligarchs. as a ranking member of the committee with jurisdiction over the treasury department, i and other democrats on the committee have requested information from the secretary on these matters several times. as the secretary's last appearance before this committee, i asked about a letter that we had written to him regarding president trump's financial ties to russia as well as those of his family members and associates. secretary mnuchin did not answer the letter, and he was not forthcoming in his testimony. since then, we have seen the secretary -- we have sent the secretary two additional
10:40 am
follow-up letters pertaining to the finances of president trump, his family members, and his associates as well as his own handling of law enforcement and regulatory matters that may involve those individuals. the reply that my democratic colleagues and i received from secretary mnuchin's staff just a few days ago did not provide answers to our inquiries and instead encouraged us to go and get the information we requested from other committees with which the treasury had provided documents. despite the fact that the financial services committee has clear jurisdiction over these matters, the secretary seems to think that referring us to other committees is a satisfactory answer to our questions. it is not. relatedly, i'm also very concerned about the trump administration's inaction on the sanctions passed with broad bipartisan support by congress
10:41 am
in 2017 to punish russia for interfering in our democracy. the trump administration has now missed several deadlines related to those sanctions, which is unacceptable. trump's inaction in this area serves to advance the interests of putin, the kremlin, and russian oligarchs to the detriment of the american people. my january 31st letter to secretary mnuchin and secretary tillerson on this matter has gone unanswered as of yet. since secretary mnuchin is here today, it is my sincere hope that he will provide answers to the questions we have on all of these matters, and so with that, mr. chairman, i will yield back the balance of my time. >> chair now recognizes the gentleman from missouri, the chairman of the financial institution subcommittee, for 45 seconds. >> thank you, mr. chairman. and thank you, mr. secretary, for being here today. last year, we made significant
10:42 am
progress on tax and regulatory reform. however, we must continue to improve the efficiency of the regulatory regime that's left too many consumers and small businesses sitting on the credit sidelines. i'm a firm believer in meaningful regulation. at the same time, regulation needs to be spobl and tailored. with regards to risk, for too many years, we dealt with a federal government that tried to purge all risk from the system. i remain unconvinced that the result of those actions has done very much at all to promote financial stability. with regard to fsoc, mr. secretary, i urge you to use your authority to reregulate and support analytical processes. fsoc needs to become a more thoughtful body. we look forward to your testimony. with that, mr. chairman, i yield back. >> the chair now recognizes the gentleman from michigan, the vice ranking member for one minute. >> thank you, chairman and ranking member waters and secretary mnuchin. i appreciate you being here. we haven't met. my hometown is flint, michigan.
10:43 am
and what happened in flint's an example of what happens when we fail as a society to invest in older industrial cities, those towns that are struggling to make that transition to the next economy. the water crisis in flint is a tragedy that is sadly still ongoing. it should be a wake-up call for every american, a wake-up call about what happens when we put balance sheets ahead of the interests of people. yet this administration and your department as well recently have attempted to justify changes in our tax code that by implication will hurt many of these communities. the republican-passed tax bill, while certainly there are winners and losers, and we could litigate that for the entirety of this hearing, one thing we know for sure is that the changes in the tax code are already being used by the administration and by this congress to justify cuts to
10:44 am
programs that are necessary to the revitalization of these already struggling places. that is not acceptable. and there's no way to justify that. what we need in this country is a plan to reinvest and reinvigorate those places. people live there. and the implications cannot be overlooked. we can't just focus on the people at the top who are winning without recognizing there are people who will suffer as a result. >> time of the gentleman has expired. the chair now recognizes the gentleman from michigan, the chairman of the capital market subcommittee for 45 seconds. >> mr. secretary, up here. last week, my fellow michiganer was a guest to the state of the union address and zach's a fourth generation barber as well as starting a number of various small businesses across my district in west michigan. zach describes himself as young but hungry for success and continues to strive for growth and he has said because of this tax cuts and jobs act that he is
10:45 am
actually, quote, saying, our goals can be extended. i'm increasing wages. i'm trying to hire more people. i'm trying to broaden our reach to serve more customers. we're trying to buy buildings instead of rent buildings. zach's is a common story. this bill is not just about providing crumbs to the american people. it's helping young entrepreneurs like zach grow our economy and achieve the american dream. so, we as congress know that we must work hard to do more to make sure that hard-working families in west michigan and across the nation have the opportunity to save and invest is have a better future like my friend zach and zach also knows that what's happening on wall street is a technical correction, hitting wall street, not a fundamentals correction that's hitting main street. far too long, we've been ignoring main street and it's time that we turn that around. so i appreciate you being here together today, and look forward to supporting these young entrepreneurs like zach. >> time of the gentleman has expired. today, we welcome the testimony of the honorable steven mnuchin,
10:46 am
united states secretary of treasury. secretary mnuchin has previously testified before our committee so i believe he needs no further introduction. without objection, the witness's written statement will be made part of the record. the chair wishes to inform mens that regret regrettably, we do a vote series to interfere with our hearing mid-morning, but the secretary has agreed to stay until 1:30. the customary three hours for a secretary. secretary mnuchin, you are now recognized for five minutes to give an oral presentation of your testimony. welcome. >> thank you very much. and it's a pleasure to be here. chairman hensarling, ranking member waters, and members of the committee, thank you for invite megatoday. one of my top priorities as treasury secretary is sustained economic growth for the american people so i'm happy to report that the growth of the economy over the past year was higher than the average of over the prior 20 years and included two
10:47 am
straight quarters of 3% or higher gdp. the president promised robust growth, and he is delivering on that promise. i'm here today to talk about the financial stability oversight council's 2017 annual report. this is an important vehicle for providing congress and the public with the council's assessment and recommendations relating to regulatory developments and potential risks in the financial system. the report emphasizes the importance of economic growth to maintaining a resilient financial system. since the financial crisis, we have had time to assess the effectiveness of regulatory reforms and consider their unintended consequences. the report recommends that the council member agencies address regulatory overlap in du duplication, modernize regulations and tailor
10:48 am
regulations based on the size and complexity of financial institutions. one that i would like to emphasize today is cyber security. the financial system's heavy and increasing reliance on technology increases the risk that significant cyber security incidents could disrupt the financial sector and potentially impact u.s. financial stability. substantial gains have been made, but i want to emphasize the need for sustained attention to these risks. the report makes a number of recommendations, including the creation of a private sector council of senior executives in the financial sector to collaborate with regulators in order to mitigate cyber security risks. turning to our growth policies, the tax cut and jobs act passed last year was our top priority. in this overhaul of the tax code is already having a positive im. because of tax reform, over 3 million americans have received special bonuses or other benefits, and over 300 companies have announced investments in
10:49 am
their workforces. companies are announcing higher wages and increased benefits as well as greater spending on employee training, infrastructure, and research and development. these investments will lead to long-term prosperity as well as companies to bring back cash from overseas, our economy will continue to grow. let me now turn to some specific priorities. i want to commend both the house and congress for their work on financial regulatory reform. i appreciate the work of this committee and the house of representatives to advance the cause of reform by passing hr-10, the financial choice act, and dozens of strongly bipartisan bills. this legislation reflects many of treasury's recommendations from our executive order reports released last year. i encourage the senate and house to work together to move this legislation as quickly as possible. last week, i wrote to congress, providing notification of my determination that a debt issuance suspension period would last until february 28th.
10:50 am
i respectfully urged congress to act as soon as possible to protect the full faith and credit of the united states by increasing the statutory debt limit as soon as possible. hous working towards modernization of the committee on foreign investment in the united states sievious. i support the foreign investment risk review modernization act firm ma and applaud senators cornyn, feinstein and burr and representatives pit ten jer and heck for their leadership on this issue. a modernized cfius will enable to be protect our national security. i look ford to working with the committees to advance firma. one of treasury's core missions is to safeguard the national by using powerful economic tools. we will continue to take frequent and ongoing actions to combat threats from malicious actors. these include terrorist groups, proliferators of weapons of mass destruction, human right
10:51 am
abusers, cyber criminals and rogue regimes like north korea, iran and venezuela. we continue to review intelligence to identify targets with maximum impact, deny them access to the u.s. and international financial system, disrupt their revenue streams and ultimately pressure for a change in behavior. as you're aware, last week the treasury department submitted a series of reports in compliance with sanctions legislation. these reports represent another chapter in our efforts to use our economic authorities to counter the threats that we face. on housing finance, the current situation of indefinite conservatorship for fannie mae or freddie mac is neither a sustainable nor lasting solution. the administration looks forward to working with congress to reform america's housing finance system in a manner that helps consumers obtain the best housing suited for their own personal and financial
10:52 am
situation. while at the same time, protecting taxpayers. i am proud of what we accomplished so far and there is more to do. our country's potential is enormous which is why americans expect their government to enact policies that lou them to succeed and prosper. treasury's collaborationing with congress is vital to that mission and we look forward to working with you every day to making it a reality. thank you and i look forth to answering your questions. >> thank you, mr. secretary. the chair now yields to himself for five minutes. if you draw that micah phone a little bit closer to you. on her way out the door, chair yellen said that equity values are, quote unquote, quite high and that, quote unquote, there are potential dangers there. i don't disgreet with her. i just thought it was a little curious that a fed chair on her way out of the door would say such things but economists as you know have been predicting once the economy took off, that there would be immense pressures on equity markets.
10:53 am
clearly, markets have been roiled. we know that fortunately markets are still up over 20% in the administration but we've had huge volatility over the last few days. could you give us your view on what's going on here? >> sure. mr. chairman, thank you very much for that question. first i would say we are very focused on the long-term economic growth and we believe that the policies that we've enacted including tax reform are very positive for long-term economic growth. we're already beginning to see that in terms of corporate investments back into the united states and the impact on corporate earnings. i think as you said the stock market is up significantly over 30% since president trump was elected. we're monitoring the stock markets, they're functioning very well and we continue to believe in the long-term impact of the stock market so thank you. >> mr. secretary, on page 6 of the fsoc report, you call on
10:54 am
congress to create a more "sustainable housing finance system," for the sake of quote financial stability. we know it has been ten years since the financial crisis and regrettably congress has failed to act. if we once again fail to act and some of us are trying to work on bipartisan housing finance reform but if we fail to act, isn't it true that roughly a year from now, the president gets to the appoint a new fhfa director who will be for a five-year term? is that correct? >> that is correct. >> and isn't it true that the fhfa director is not just the regulator of the gses but also the conservator, isn't that correct, mr. secretary? >> that is correct. >> and isn't it true that as conservator, the fhfa director has broad sweeping powers, for example, i believe, is it not
10:55 am
true that if congress fails to act, the fhfa director could discontinue the gse's harp or home affordable refinance program? isn't that true. >> that is correct, mr. chairman. >> and isn't it also true that the fhfa director could suspend all gse contributions to the housing trust fund if they found that they would "contribute to the financial instability of fannie and freddie, isn't that true. >> that is correct. >> isn't it also true, mr. secretary that stunned 12usc4566, that the fhfa director can essentially choose not terrify enforce the statutory housing goals of the gses if he finds that "the achievement of the housing goal was or is not feasible"? isn't that correct, mr. >> that is correct. >> so i would hope that all
10:56 am
within ear shot have listened carefully at what might happen if we choose not to engage in gse reform. and again, we look forward to working with you, mr. secretary, with the administration, with my friends on the other side of the aisle, in hopes that we can find america a truly, truly sustainable housing finance system, one that helps put people into homes they can actually afford to keep. different question, mr. secretary. today, fsoc is designated for nonbank financial companies as sifis but today only prudential remains designated. as you know, under statute fsoc is requireded to re-evaluate these designations at least annually. can you tell me the last time prudential's designation was last evaluated? >> i believe it will be coming
10:57 am
up but it has not been evaluated is recently. >> is there a specific time frame for its re-evaluation, mr. secretary. >> my expectation is it will be in the near future this year. >> okay. we know that a couple of weeks ago, the administration chose not to -- to drop the government appeal of the metlife litigation. so essentially they have been dedesignated. we know that an article 3 court found the designation process of metlife to be, quote unquote, fatally flawed. but wasn't it the same fatally flawed process that led to prudential's designation? >> mr. chairman, i'm not going to make the comment on prudential but i will make the comment on metlife, as you've said. the majority of the members of fsoc renlded to the justice department to drop the case and we will be working with the committee on revised guidelines for designations.
10:58 am
>> i've read where those revised guidelines i think will include a cost benefit analysis to the economy and its impact on jobs. i look forward to that. my time has expired. the chair now recognizes ranching member for five minutes. >> thank you very much, mr. chairman. pursuant to clause d4 of committee rule 3, i request recognitioning to question the witness for an additional five minutes upon the conclusion of the time allotted to me under the five-minute rule. >> the ranking member is recognized for ten minutes. >> thank you very much. i'd first like to ask about the subject of my most recent letter which is your department's role in section 231 of the countering america's adversaries through sanctions act. congress passed this law on a broadly bipartisan basis with the clear objective of punishing russia for its brazen attack on our democracy. mr. secretary, do you believe
10:59 am
our intelligence agencies as they have said to us that is russia did hack into our dnc and undermine our democracy? do you believe that to be true. >> again, i will broadly say i do believe in the intelligence assessment. i want to refrain from comments specific that are classified but yes, i broadly believe in the assessments. >> thank you. even the findings section of the laut explicitly references the intelligence community's finding that russian president vladimir putin ordered and influenced campaign in 2016 aimed at the united states presidential election. the findings also recognize the intelligence community's warning that moscow will apply lessons learned by mr. putin ordered campaign aimed at the u.s. presidential election to future influence efforts worldwide including against u.s. allies and their election processes.
11:00 am
do you believe that to be true? >> i have no reason not to believe it to be true. >> so given the importance of the law's very purpose, i'm wondering why this administration continues to let key deadlines in the act come and go without taking any action to implement the act and punish russia for its crimes against the american people. now one provision of the law which the administration has ignored is section 231 of the act. this section requires that the president sanction persons he has determined to have engaged in a significant transaction with russia's defense and intelligence sectors on and after january 29th, 2018. as you know, the law also allows the president to waive or delay these sanctions. however, to date, this committee has received no indication that any sanctions have been imposed,
11:01 am
waived or delayed and last week, when you testified before the senate banking committee, you stated that you did not waive or delay sanctions. section 231 of cat sa is clear that the president has six months from the date of enactment to determine which persons are engaged in sanctions with the russian defense and intelligence sectors. after six months, the president must impose sanctions on such persons or waive or delay imposition of the sanctions. yet, despite the packet that the deadline for action has come and gone, knock sanctions have been imposed, waived or delayed pursuant to section 231. how can you explain this? >> the section that i believe you're referring to has been delegated to the state department. so i can't comment for secretary tillerson on that. i can comment on the portion that we were responsible for which was the oligarch report that we did deliver on time and
11:02 am
as i effed in the senate, there will be sanctions coming out of that report. again i want to commend the work that was done on the intelligence report on the classified version. >> who is responsible for delegating what was passed by an overwhelming majority of this house to the state department? >> the president was. >> so the president decided that despite the fact that in the law that we passed, delegated responsibility to the treasury that he decided that he wanted it to be delegated to the state department rather than treasury and this is your excuse for not having implemented the law. is that correct? >> no, it's not my excuse. and again, i believe but we'd be happy to sit down with you and go through the details of this. the president had the authority to delegate within that as he chose fit. again, the portion that you're referring to was delegated to the state department. the other portion was delegated
11:03 am
to us. >> but the final conclusion is that nothing has been done. there has been no waiver that has been no delay, there's not been anything that has been done. you did not waive or delay sanctions. that is the conclusion. whether we're talking about treasury or the state department. is that correct? nothing has been done on sanctions? >> again, there's been on our side, there's been an enormous amount of work done. i want to commend the intel community and there will be sanctions that come out as part of that. i can't comment on the state department's part of the -- >> would you describe the enormous amount of work that the treasury department has done that you just alludeded to? what have you done? >> again, i would encourage to you look at the classified report. it is incredibly extensive. it is a work product of the intel and the treasury. and that work product is now being used for the basis of
11:04 am
developing sanctions. >> are you telling me that in your response to the overwhelming majority of this congress having created law to impose sanctions on russia that undermined our democracy, that your response is classified? is that what you're telling me? >> again, what i've said is, part of the report was unclassified, part of the report was classified. i assure you that as it alleged to the work being done at treasury, there will be sanctions and again, there is a lot of the ongoing work that is being done to develop those sanctions. and we complied with the law on time. >> the congress of the united states does not know what you are doing. the congress of the united states does not expect that your response to the public policy that was developed by us be somehow responded to in a classified way. is there anything that you can tell us that you have done?
11:05 am
>> well, again, the law called for both a classified portion of the report and an unclassified. given that the majority of the work was developed on a classified basis we classified the report i'd encourage you and other members to look at it. it's an extensive amount of work. again, that the first phase was to develop the report and deliver it which we did on time and now we are developing sanctions on it. so i assure you we are very focused on this. >> well, i would encourage you to encourage the president to declassify any information that should be forthcominging to this committee just as he was able to do in the nunes memo, he used his power of the presidents to declassify. i would suggest to you that if information is declassified that should be available to this congress who voted overwhelmingly for sanctions on russia who undermined our
11:06 am
democracy. those sanctions should be not delayed or waived and we should have information about it. let me continue. is it the treasury department's position that no persons are engaged in significant transactions with russia's defense and intelligence sectors? >> again, i'm not going to comment on that because that's not the portion that we're doing the work on. >> would you tell us again what are you doing the work on? >> again, we did the work on what was referred to the oligarchs as well as senior government officials. we detailed in the report where there was evidence of corruption, family relationships, net worth. we complied with a very extensive report that as i said, there's a classified version and an unclassified version and we will be using the intelligence work where there is indications of corruption to follow this up with sanctions which are a very effective tool that we intend to use.
11:07 am
>> are you referring to the work that you did on the oligarchs as the list of oligarchs that you lifted from the forbes reports? >> again, we were very clear that the public nonclassified version is the universe that we looked at and was developed on open source both the oligarchs and the leaders. the classified report goes through that list in a very detailed manner as well as other people that weren't on that list that would have fallen below the billion dollar threshold. again, i would encourage to you review the report. i think you'll be impressed with the findings. >> but let me just ask you, was there any persons identified that was engaged in significant transactions with russia's defense and intelligence sectors? you don't have to give me their names but i want to know, did you identify the treasury department identify any persons?
11:08 am
>> again, that portion of the act is not the work that i'm familiar with. the portion of the act that i'm familiar with is corruption. we did identify people that were involved in corruption and we we will be using that to come out with sanctions. >> let me just continue. last week, it was reported that cia director pompeo met with senior officials in russia's intelligence service, one of whom is subject to u.s. sanctions. and the other of whom is subject to european sanctions. this meeting occurred just prior to the deadline for implementing sanctions on those engaged in significant transactions with russia's defense and intelligence sectors. these are the same april sanctions that the president has refused to act on. as reported in "the washington post," current and former u.s. intelligence officials said they could not recall so many heads of russia's espionage and security apparatus coming to
11:09 am
washington at once meeting with a top american official. are you at all troubled by the curious timing of a meeting between russian intelligence and u.s. intelligence just days before the president failed to take action to implement sanctions pursuant to section 231 of cat sa? >> no, i'm not troubled. i believe that timing was just coincidental. i believe there were various issues that the director wanted to discuss. >> i'm sorry, i can't hear you. >> i said i am not troubled by that. i believe that the timing was coincidental and had nothing to do with the reports. >> the time of the gentle lady has expired. the chair now recognizes the gentleman from the mr. huizenga. >> i'm going to move quickly through a couple things. i need to remind my colleagues that we can going see classified information and that briefings have been offered by the secretary and by others. i also want to touch a little bit on the economic growth that
11:10 am
we're seeing and in my opening statement i talked about zack booker, my constituent and the fundamentals of main street being solid but seeing technical corrections in wall street is okay. but you know, the interesting thing this yarn that somehow president trump inherited this great economy is quite amazing. first of all he had 1.2% growth in the first quarter as he came in to office. that has grown into a 3% growth for the year. never reaching 3% growth in a calendar year with the obama administration. and so i think we have seen the economy respond. fsoc and stability requires broadening of those that participate in the marketplace. that's kind of where i want to go. we have seen a number of public companies decline by 50% since 2000. average number of ipos or initial public offerings has
11:11 am
been about 135 per year versus 450 in 2016, there was only 112ipos. this decline has been very troubling to many of us on the committee both sides of the aisle. the reduction in the number of u.s. listed public companies is a serious issue for our markets and the country more generally. to the extent companies are issuing our public markets, the vast majority of plain street investors willen unable to be participate in their growth. the effect of such an outcome to the society are not good zack isn't ready to bring his barber shops and his other companies public yet but i'm afraid that the zack bookers of the world aren't going to be able to do that in the long run. i'm curious in your opinion, what are the three top impediments that are chilling this ipo market or discouraging companies from accessing capital in the public markets? >> well, thank you. i appreciate the work you're doing on capital markets.
11:12 am
in the report we did, the executive order we go through an extensive review of different things that we think can make it easier for companies to access the public markets particularly smaller companies are with proper regulation. so i would encourage to you we can go through the details with you but there's a long list of things we recommended. >> i recommend that my colleagues take a look at that because i think this is a the glide path and the direction that we need to go. i want to move on to maybe one of those impediments in my opinion the volcker rule. i'm afraid that's had a chilling effect on the liquid wit in the markets and u.s. financial institutions and a couple of quick things in testimony in march of 2017, we had a hearing in capital market subcommittee on the volcker rule and ronald, chairman and ceo of steval testified that "to determine whether an activity was proprietary trade org lefrth market making come compliance
11:13 am
expert would also need to be a psychiatrist trained in determine together intent of each trade by a trader." in an april 7, 2017 speech, the new york fed reserve bank president from william dudley commented "the line between market making and proprietary trading is not always clear-cut which makes regulation in this space difficult," and it may be worth considering even greater discretion to trading decks that facilitate trading business when markets are il liquid and volatile. do you agree with mr. dudley's assessment? >> i do and we are working with the regulators to try to have better definition around the law and the rules so that people can interpret it. >> and do you believe it would make sense for one regulator to take the lead to interpret that guidance? >> i do not. >> okay. i do want to highlight one other quick sort of oddity in this. we have a michigan based energy company that owns an industrial banking in utah where many of
11:14 am
those aisle season and industrial loan corporations are and because of its ownership interest in the bank, energy company is considered a banking entity under the volcker rule and since nonfinancial parents of industrial loan companies are being treated as bank holding companies under the rule, if an investor breaches a 10% holding in owner assumption in this nonfinancial parent it's deemed to be controlling a bank and is then itself subject to the volcker rule. if the volcker rule did not apply to nonfinancial parents of industrial loan companies, do you believe that it poses a systemic rick to the financial system? >> no, i do not. >> thank you very much. i appreciate that. we'll continue to work on that and look forward to working with you, mr. secretary. >> thank you. >> thanks. i yield back. >> chair now recognizes mr. luetkemeyer, chairman of our financial institutions subcommittee. >> thank you, mr. chairman. mr. secretary, thank you for being here again. i just want to also reiterate my support and thanks for working with us on the tax cut bill.
11:15 am
tax reform bill. i've got two quick stories for you. when we were discussing the tax bill with some of my folks back home, i had a small women's business roundtable and at that roundtable when i got done discussing what we were going to try and do one of the ladies ho had a glass shop, 16 employees said if you cut my taxes, we will reinvest that moin and hire more people and expands our business. this weekend i was back home. in your testimony today, you talk about three main people 300 companies announced investments. i'm sure this particular company is not in those figures and there's probably thousands of other folks just like them but they'll give a $500 to all their employees and this is a small business. there's lots of people across the country that are receiving these bonuses and when they say the ripple effect, it's more like a tsunami starting to go across the country from the standpoint of how important this is to the citizens of our country. thank you for that. with regards to your testimony today and something i'm working on myself, one of the things
11:16 am
we're doing is working on data security cyber security. and in your testimony today, you talk about the council is monitoring it the cyber security risks and have a number of recommendations and one of them is a creation of a private sector council of senior executives. can you elaborate a little bit more on fsoc's endeavors in cyber security, data security and some ideas of things you're working on? >> well, thank you. it is an issue i'm very much focused on. i think protecting the financial infrastructure is of critical concern to ours. and our two priorities is one, making sure that the various different regulators are working together, that they're pooling their resources to focus on this issue. and two, that we develop the proper public/private partnerships to be able to be exchange information best practices and also we've been conducting different tabletop exercises in case there is an
11:17 am
event. >> just two more questions along this line. number one, right now we have a sort of patchwork of rules and laws across the country with regards to the states monitoring and having some input with regards to notification. wondering how will you support a streamlining of this number one and number two, obviously the federal government has a problem with data security, as well. we've had a number of breaches that are well-known by the public of information that is held by the federal government and how we would coordinate those, as well. >> so the first part i completely agree with you with the idea and the need for streamlining. i think that is very important. and i am participating along winning dhs and other groups at the national security council on cyber to make sure that we are coordinated across government because as you've said, we are not immune from these issues ourselves and making sure that
11:18 am
what we learn from attacks against us we are also using to protect private industry. >> very good. one of the main objectives of fsoc is to designate systemic important financial institutions. i know i have a bill that deals with this. with regards to some of the mid size the regional banks that are impacted by in that i think they're not part of the problem. they've part of the solution but and one of my solutions to this problem is use the federal reserve's process by which they have a systematically important indicator score. does fsoc take into account this federal are score whenever you're discussing sifis? >> i haven't seen that per se in my experience but we will looking into that and i think that's something that we should consider. >> because it seems like we don't need to reinvent the wheel if the feds are already doing the analytical work of looking at what a systemic important
11:19 am
financial institution is and by their score indicating which ones are and which ones aren't. it would seem to be a helpful tool to fsoc to utilize that. >> we use a lot are work from the fed. they're very helpful and i will look into the scoring issues and follow up with your office. >> i've got about 35 seconds left, mr. secretary. would you like to respond to any questions directed to you a moment ago by the ranking member. >> no, i'm okay for now but thank you for that option. >> mr. chairman, we'll allow the secretary to are my 30 secs. with that, i yield back. >> do you want to yield to a ranking member? >> the gentleman yields back. the chair now recognizes the gentle lady from new york, miss maloney ranking member of our capital markets subcommittee. >> thank you and welcome secretary mnuchin. as you know, yesterday, the stock market suffered its worst day in six years with the s&p down 4.1% and the dow down 4.6%.
11:20 am
and it looks like markets are plunging even further today. you are the chair of the financial stability oversight council. and i want to know, are you concerned about this recent market rout, this recent market turmoil? >> well, first of all, i would just comment they have been quite volatile today. i normally wouldn't be looking at my iphone but given the market moves i'm checking it, it's now up 187 points. we're back up today. i'm not overly concerned about the market volatility. i think the fundamentals are quite strong. i have checked in with market participants this morning before i came to make sure that there was orderly market activity, clearance functioning, no systemic issues. i'm happy to report that i got the green lights. >> well, do you believe, does this have financial stability
11:21 am
implications? >> no, i don't think these types of moves given how much the market has rallied do have financial stability concerns. >> well, the administration has claimed credit for the markets going up. are they going to claim credit when the markets go down? >> again, i think we'll still claim credit for the fact that it's up over 30% since the election. >> well, let's move on to your testimony on cyber security. which you called one of the biggest risks to the financial system. and it is a very serious one and it's a huge problem particularly for virtual currencies like bitcoin and ether and virtual currency exchanges are constantly being hacked. a few years ago, the largest bitcoin exchange in the world was breached and lost over 450 million worth of bitcoin and just two weeks ago, another
11:22 am
virtual currency exchange in japan was hacked and they lost $550 million worth of virtual currency. largest heist in history. a recent report found that about 14% of all of the major virtual currencies have been stolen by hackers and this means that if you hold a major virtual currency, there's a one in seven chance that you've had your money stolen, a staggering statistic. but right now, these virtual currencies, their exchanges aren't subject to any real cyber security standards. just last week, sec chairman clayton said that he thinks some exchanges should be regulated by the sec which would require them to develop cyber security standards and to prevent fraudulent practices like price manipulation. so my question is, given that virtual currency exchanges are collectively holding billions of dollars for u.s. investors which can disappear in the blink of an
11:23 am
eye, if hackers break in, should these virtual currency exchanges be subject to minimum cyber security standards torn protect investors' money? it is a currency but it is being treated by many people as an investment. so i'm very concerned. >> i broadly share your concerns. last year, i set up a subcommittee of fsoccing to specifically deal with cryptocurrencies. we made a lot of progress on that. you've focused on several issues which i agree with, the two issues that i focused on are one, we want to make sure that these exchanges can't be used for moving money to bad people. so in the united states, if you're a bitcoin wallet, you're subject to the same anti money laundering bsa requirements as a bank. we've brought enforcement actions on that. we're working with the g-20 to make sure that those rules are followed in other countries so that these don't become like old swiss numbered bank accounts.
11:24 am
the other area of grave concern is the concern to the consumer. we've recently had futures listed. we've done a lot of work with the regulators to make sure that where there is consumer protection, it's appropriate. and i too share your concerns about the cyber attacks and having people's money that's safe. so this is something we're actively studying and we'd be happy to follow up with your office on your ideas. >> thank you very much. and i do have a draft bill i'd like to share with you. finally, do you think congress should raise the debt ceiling as part of the short-term continuing resolution this week? >> i think that congress should raise the debt ceiling. however they want to do it, i leave it to them. but i would encourage congress to do that. >> time of the gentle lady has expired. the chair wishes to advise members there is a vote occurring on the floor and the chair will attempt to clear two more members and then declare a recess. the chair now recognizes the
11:25 am
gentleman from wisconsin, mr. duffy, chairman of the insurance and housing sub complete. >> thank you, mr. chairman. mr. secretary, are you in the financial services hearing room, not in the twilight zone. not sure if you would know where you're at based on questions that came from the ranking member for ten minutes. here we're at a near 20-year unemployment low. historic lows. african-american unemployment is at an all-time low and a week ago at the state of the union, the people who say they care about their constituents when donald trump brought that up, they all sat down. no applause. they sat there as unemployment is at historic lows to for their constituents and then they come in today and say i don't want to talk about gdp of 3% growth where it was less than 2 under obama. i'm not talking about manufacturing jobs coming back to america. i'm not talking about the great policies over the last year. what i'm talking about is russia. i want to talk about russia.
11:26 am
by the way, when we talk about the economy, did i have friends across the aisle who will say a thousand or $2,000 is crumbs? give me a break. i don't know where you guys live but that's a lot of money where i come from. or if you get a $2,000 extra amount of money in your paycheck over a year, that's a lot of money. to call it constructives or to call our tax code armageddon, that's out of touch. you want to talk about -- you want to talk about russia? and collusion? all you have is the hillary clinton campaign and the dnc including with fusion gps, christopher steele and the russians to take down an american president who fairly won an election. you can talk about uranium one and payoff to the hillary clinton campaign to get an approval or the clinton foundation to get approval for uranium one. if you want to talk about russia. this is ridiculous. that these are the things we're talking about, mr. secretary. i'll ask you questions that are relevant to i think our
11:27 am
committee. yesterday, "the wall street journal" reported that there were 1700 banks that have closed in the last 12 months. did you see that article? >> i did. >> many of those banks came from rural america places where i come from. >> yes. >> what is the root cause of these branch closings and what impact does it have on now communities that are in rural america that may now not be served by a bank? >> i think a general issue is the cost of regulation for community banks and that's why we're hopeful to look at dodd-frank reform that helps community banks. those communities need those banks to lend. >> mr. secretary i thought all those regulations were only for the big banks. are you saying that dodd-frank imposes regulations on the small community banks that serve rural america. >> yes indeed. >> i'm surprised by that. they're going out of business because they can't comply. >> yes. >> or they consolidate and then when the bank they consolidate with says that's not a profitable branch anymore, we're going to close it.
11:28 am
i want to talk about fundamentals. markets are down. a couple bad days in the market. is this in coordination with lack of fundamentals in the economy? do we have problems in the economy with growth or wages or jobs that are being reflected in a down market? >> no, the fundamentals are quite strong. >> how so? what's the disconnect between a market coming down and fundamentals being strong? >> i think you've seen a normal market correction although large, and i think again, there's just a disconnect in the short-term. markets move in both directions. >> strong fundamentals actually bring down a market a little bit recorrect just because you might be concerned about inflation, might be concerned about raising interest rates. could that be a concern for the market. >> it might be as you suggest. >> any concern if the fall yesterday with algorithmic trading that could have heightened the losses that took
11:29 am
place yesterday? >> it definitely had an impact on market moves. >> anything we should be considering based on those market moves from that. >> nothing that i would recommend at this time. >> i want to be clear as my time is about to end. when we talk about fsoc and designating financially our systematically important institutions we now have a threshold on size. is it your intention we should look at the activity surrounding the financial institution opposed to the size? >> it is my recommendation that we should definitely raise the level and we should also look at activities. >> okay. listen, i want to thank you for your testimony. i'm sorry about some of the questions have come your way. i want to applaud your efforts to actually work with us to lower tax rates that have had a huge impact on the american family with the bonuses with the increase in their paychecks. the other side should be dancing in the streets. they should be dancing in the aisles, they should be applaud, had he they are not because this is not about people,
11:30 am
mr. secretary. this is about politics and because they all voted no, they can't celebrate the win for their communities and for our country and i yield back. >> time of the gentleman has expired. the chair again advises all members a vote is occurring on the floor. the chair now recognizes the gentle lady from new york, miss velazquez. >> thank you, mr. chairman. welcome, secretary. you know, the issue of making sure that our democratic institutions are intact should be a responsibility of everyone, and after all, we all voted for the sanctions against russia. almost secretary, the history between the united states and puerto rico is one full of legal, political, economic, and social injustices. while five minutes won't be enough time to go through the list of things where u.s. policy has failed puerto rico, allow me to highlight how your
11:31 am
administration has managed to further worsen conditions. after one of the worst natural disasters, your administration's continued to ignore puerto rico's health care system. a system that is crumbling b our eyes. the difference in medicaid funding such as lower matching rates places a much greater burden on puerto rico than on other states. in addition, president trump fails to see that the new tax law you all brag about is actually harming puerto rico. at a time when puerto rico needs our help to jump start its economy. let us be clear. the newtach law discriminates against puerto rico. removing the special incentives that the island relied on and treating puerto rico as a
11:32 am
foreign country. treating puerto rico as a foreign country. a foreign country that has over 100,000 acduty troops ready at any given time. a foreign countrying that from 1998 to 2016 has paid approximately $74.4 billion in federal taxes. tell me which country around the world pay federal taxes to the u.s. treasury? puerto rico does. yet, because of its treatment as a foreign country, the new tax law imposes a 12.5% tax on the income companies receive from intellectual property. what a way to kill the
11:33 am
manufacturing sector in puerto rico. another example of this unequal treatment is the community disaster loans that were included for puerto rico in the october supplemental. loans instead of grants another insult. don't you agree with me that this is outrageous, that it's cruel, that when a natural disaster strikes and people ask for disaster relief, paper towel is an insult? so mr. secretary, my question for you is, is it acceptable in treasury's opinion to fund and provide disaster relief so soly that it has taken the lives of more than a thousand residents in puerto rico? that over 270 puerto ricans have
11:34 am
committed suicide on the island after maria. that almost 30%, one won't have power until this summer nearly a year after maria. would this be acceptable in houston, louisiana, or florida? i am sure people will be rioting in the streets. do you think the people of puerto rico are any less entitled to restoration of essential services than any other u.s. citizens? so mr. secretary, please tell me, if this is acceptable. >> well, let me first comment that i do share your concerns. it is first of all. >> i want for you to share my outrage. >> any loss of life is a great tragedy. as it relates to the various different topics that you've discussed, i'm personally not familiar with the health care
11:35 am
issues although i will follow up and look into that. >> what about the tax bill, treating puerto rico as a foreign country. >> it is it relates to the tax law and again i've had the opportunity to meet with various business and things, it's -- they have a situation where they're collecting their own taxes in lieu of federal taxes, and the last part i would just say as we are working very closely with the government to get them funding to deal with the results of -- >> the time of the gentle lady has expired. the committee now stands in recess. >> the committee will the come to order. chair now recognizes gentle lady
11:36 am
from missouri, ms. wagner, chairman of the oversight and investigation subcommittee. >> thank you, mr. chairman. as weity here today and hear testimony about the continued onslaught regulations it had on main street america, it's worth noting the positive gains that we've made because of the tax cuts and jobs act. charter communications which has a very large presence, mr. chairman in, missouri's second congressional district upwards of 5,000 employees mr. secretary that represent 5,000 hard working missouri families, they have recently volunteereding to pay everyone of their employees at least $15 an hour. nan addition to increasing investment, increase the investment their broadband network. this is going to absolutely benefit working families and small businesses across my districts, these are pro growth promises that we made and have
11:37 am
delivered on for our constituents. i want to thank you, secretary mnuchin, for your fine work in making sure that all americans keep more of their hard earned money and we continue to grow this economy. now, sir, last week, the subcommittee on oversight and investigation which i chair head a hearing entitled "following the money." how human traffickers exploit u.s. financial markets. during that hearing we talked a lot about the emergence of cryptocurrencies as a financial tool. i know you touched on it briefly but the fsoc annual report identifies a need to further study new products and services such as virtual currencies and to coordinate regulatory approaches. how do you believe these new technologies should be regulated and what role should we in congress have going forward as these new innovations are advanced? >> thank you. my main concern in terms of
11:38 am
regulationing is to make sure that anybody that does business on cryptocurrencies can be monitored from a money laundering, a bsa standpoint and that the institution follows the know your customer rule. so that's our main priority now but we look forward to working with you on potentially other regulations. >> what do you see is fsoc's role in this process, sir? >> fsoc can coordinating the different regulators' response to it. so it's a coordination functionings. >> we look very forward to working with you and your team. >> thank you. >> in this important area that is emerging. now, secretary mnuchin, changing topics here, can you discuss your recommendations to address designation criteria especially when it comes to our nonbank financial companies? the fsoc treasury report recommended that the designation process for nonbank financial companies be more transparent.
11:39 am
including getting input from a company's primary regulator. what are the steps the treasury plans to take to make the designation process more transparent and insure the fsoc is held accountable to congress. >> thank you. so as you noted, we did extensive work in our executive order to the president on this making recommendations. we'll now be working with the committee on suggestions in terms of changing the criteria and then i believe we'll have to put out a notice of rule making before we enforce it, but this is something we're very focused on for this year. >> last march, the subcommittee again on oversight and investigations which i chair held a hearing entitled "the arbitrary and inconsistent nonbank sif if i designation process," and the hearing followed you up on a committee report that provided examples of inconsistencies and departures from frankly fsoc's own rules and guidance when evaluating
11:40 am
nonbank financial companies. i hope this is something that we'll look into and be able to coordinate going forward. do you have any timing on this -- sir. >> thank you. >> thank you. i appreciate it. mr. chairman, i needle back the balance of my time or i shall yield to you if you can like, sir the chair now recognizes the gentleman from california, mr. sherman >> mr. secretary, you were here in july. democrats and republicans gave you questions for the record. and we got responses to those last week. six months. can you commit now that the vast majority, i plan to ask one or two really tough ones but the vast majority of the questions for the record that are asked by democrats and republicans today will be responded to with real answers within 30 days? >> i can tell you that i told my staff i thought our response time was not appropriate. >> can you make the commitment?
11:41 am
i asked to just apologize for past. >> we do everything to make sure it's 30 days. but it won't be as long as last time i can assure you. >> i have a number of questions for the record i need answers. the first relates to the fsoc report to base sif if i designations on activity-based -- an activity-based approach. i want to commend you for moving in that direction and i'm interested in your plans for implementing recommendations to the treasury's asset management and insurance report and the report on nonbank sif if i designation process in particular, the recommendationing that an activities based approach be used so i'll ask you to respond to that for the record. also, we hear that the international association of insurance supervisors is pushing a global standarding that
11:42 am
clashes with our system for state-based insurance regulation and i want to know your reaction to that and whether we can ensure that we're going to promote our own system in that negotiation. >> i can assure you we will. >> thank you. now, last time you were here, i asked you about the armenia tax treaty. didn't expect you to know, i did tell your staff in advance. and we have gotten the most absurd response. i'm an old tax lawyer. i know it's hard work but this is the easiest job they're ever going to have. they responded to judy chu who also raised this by saying that this is a very resource intensive process. here's the model treaty. we've published it. and the government of armenia has said they just want to sit down and use this as the basis and get the treaty done. 28 members of congress have
11:43 am
asked you to do this. can you commit to investing 28 hours of one tax lawyer just 28 hours of that one tax lawyer's time because -- and to start the process i think he or she will finish the process. we're talking about filling in the blanks in a document we already have. can you commit 28 hours of one tax lawyer's time? >> i can commit the 28 hours. >> we will get it done and the benefits will include the exchange of information provisions which will allow the irs to get information about anybody hiding assets in armenia and there be enhance our tax collection process. when it comes to marijuana, we currently have the fin sin guidance and if you were to revoke that, then that would really make it better for armed
11:44 am
robbers in my community because there would be huge amounts of cash at the local marijuana dispensary. can i have, i hope you would respond for the record what you plan to do and i hope that you would indicate that you're interested in keeping our communities safe. i don't want bags of cash at a marijuana dispensary down the street from my constituents. can i count on your answer? >> i can commit to you that we are reviewing it, but i assure you we don't want bags of cash. we want to make sure that we can collect our necessary taxes and other things in other than cash. >> when you were here last time, you assured us that although we didn't designate china as a currency manipulator even though we've lost a lot of jobs to their admitted past currency manipulation, that the trump administration was going to do something about this. in back of you, we've got the chart that shows that every
11:45 am
month that trump has been in office, we've seen an increase in the trade deficit with china. are we just going to talk tough or when you come back a year from now, are we going to see a different chart? >> i think you're going to see a different chart. >> okay. and if we don't, can you then designate them a currency manipulator? >> no, one has nothing to do with the other. one is we are very focused on trade. the currency manipulation independent of that -- >> but they have secured markets by their past manipulation of currency and i yield back. >> time of the gentleman has expired. the chair now recognizes the gentleman from kentucky, mr. barr. >> secretary mnuchin, good to see you this morning. i want to thank you and the administration for the tax cuts and jobs act on behalf of constituents in kentucky's sixth congressional district. a couple quick stories. one is alison, a bank teller at one of the lowest paid bank tellers at a small community bank in ba reia, kentucky.
11:46 am
she went to her supervisor after they adjusted her tax withholding and said i think you've made a mistake. he looked at the check and he said to allison, no, i didn't make a mistake. she sadie get a bonus. and he said actually, i didn't give you a bonus. the vice president said this to the teller. we didn't give you a bonus but you got a raise because of republican tax cuts. then there's karen and karen has been serving me coffee at 5:20 a.m. every morning when i go to the airport to get on that 6:00 a.m. flight to washington, d.c. and she's a hard working person. and she's working the graveyard shift and she wanted to know what the benefits of the tax cut were. so we put her paycheck and all of her information through the tax calculator and when i showed up on monday morning, yesterday morning she had a big smile on her face. and she said, congressman, i'm going to save $1410 every year because of the tax cuts. and so on behalf of karen, on
11:47 am
behalf of allison thank you for these tax cuts. you're making life easier for working people in kentucky. i do want to talk about market volatility we've seen over the last few days, obviously since election day, 2016, the dow jones industrial average has soared from a little over 18,000 to a little over 24,000. i think it's up at this moment today. and, of course, at one point it hit an all-time high of 26,617. that represents an extraordinary bull market. i would agree that in part it reflects renewed investor and business confidence associated with this administration's policies. but i do want to ask about a factor that gets a little less attention but i which explainses the adjustment in the equity markets and that is monetary policy. the federal reserve through quantitative easing and low nominal rates has pursued an unprecedented policy of monetary accommodation. and while this unconventional policy failed to prevent the slow weak growth produced by the
11:48 am
previous administration's fiscal positions it did prop up asset prices. but as this administration has reverses the previous administration's fiscal policies the economy has taken off. you've noted the statistics of record high business and invest esh confidence, consumer confidence, low unemployment and the labor report of wages going up last year and the atlanta fed's projection the first quarter we might see the 5% economic growth in the first quarter of 2018. it's all together appropriate that the new leadership at the fed has begun to address the risk of rising inflation and proceeding with a strategy of montory normalization. if your capacity as chairman of the financial stability oversight council, can you comment on how monetary normalization and a steady predictable well communicated withdrawal of monetary stimulus at this time might keep valuations in line with reality, prevent asset bubbles and promote financial stability? >> well, thank you.
11:49 am
i will comment. we have been working with the fed in following the reduction of hair portfolio and the impact of the markets. as it relates to the overall monetary policy, i will respect the independence of the fed. so i'm not going to comment on its impact on the markets. >> thank you. then mr. secretary, as you know, the world bank's development association is scheduled for its 18th replenishment. committee has studied disturbing cases of management at the bank including sexual abuse and staff incentives that reward pushing money out the door rather than having an impact on global poverty. in light of these facts writing a bank collect for i da 18 would be an insult to the taxpayers of this country. we passed the world bank accountability act which would make spending on i'll da contingent on banking reforms. we developed tough but achievable refors.
11:50 am
to juchbd core how important this legislation, this was the first time in 40 years that congress considered a stand alone i da bill and happens to be consistent with president trump's policies as he said in his state of the legislation to help ensure american foreign policy dollars always serve american interests, and only go to friends of america, not enemies of america. mr. secretary, the house world bank bill delivers on the president's call of action. could you just comment briefly on how you can work with our friends in the senate so that they adopt a similar approach to i.d.a.? >> well, we applaud your work on that and we look forward to working with the senate so that we can get something passed. >> thank you. i yield back. >> gentleman yields back. the chair now recognizes the gentleman from new york, mr. meeks. >> thank you, mr. chairman. chairman, welcome. let me first just ask a couple
11:51 am
of questions because i think that i'm unclear. first, i think i heard you say that you will be asking congress, particularly many of my colleagues on the republican side who generally sometimes don't want to raise the debt ceiling, to make sure they raise the debt ceiling when it expires. is that correct? >> that is correct. >> so, does -- because i don't know sometimes, and listening to folks, i want to get -- does debt matter in our economy? >> it does. >> it does. and does -- what's better for the american economy? because i'm confused on this one also because i've heard especially from the administration both sides, what's better, a weaker dollar, or a stronger dollar? >> i'm not going to comment on the dollar. i think some of my comments were taken out of context -- >> that's why i'm trying to clear it up. if it was -- >> in the long term, a strong dollar is in the best interest of the united states, and that's what i said in my comments. >> okay. because what i had you quoted,
11:52 am
obviously a weaker dollar is good for us as it relates to trade and opportunities. >> again, that was just a statement of fact. there were three parts to it. the first part was that we fundamentally believe in the free markets. where the dollar is in the short term is not a concern. the second one you quoted was just a fact. and the third one was that we fundamentally support a strong dollar in the long term. >> so you support a strong dollar, that's what you're telling us now? >> that is correct. >> the other statements we should not consider. now, in time of recession, is stimulus important or not? >> it depends. >> it depends. well, in times of crises -- because i don't know if you -- well, you were not here, but i was here because i listened to some of my colleagues on the other side. in 2007 when we were having the greatest recession since the
11:53 am
great depression -- by the way, it was a time right before that in 2006 is when the republicans controlled the house, the senate and the presidency at the same time. we had a republican treasury department come over and say we had to do something because things were going crazy. would that have been an appropriate time to try to stimulate the economy when you had that kind of recession? >> again, that would have been one of the things to consider. >> okay. would you have considered it had you been -- >> would have considered it. >> by the way, do you recall what the unemployment rate was in 2007 and '8 and '9? >> i don't recall the exact number, but it was higher than where we are now. >> it was, in fact, it was at the peak because of the
11:54 am
recession, it was at close to 10%. is that not correct? does that refresh your recollection? >> that sounds about right. >> okay. and at the time that president obama left, it was down to about 4.6%, i think it was? does that refresh your recollection? >> sounds about right. >> so it went down. at the time you came in, the unemployment rate at that point was lower than it had been for over the last 12 years or since the last time that bill clinton was president. is that not correct? >> that is correct. >> okay. is it also correct that when you looked at the overall economy and the number of jobs that were being created back in 2006 and 2007 and 2008, we were losing jobs every month. is that not correct? >> that is correct. >> okay. and at the time that you came or the president came into office, we were gaining jobs every month. we were adding jobs.
11:55 am
the obama ---er is, you didn't inherit an economy that was in recessi recession, that was with the lowest employment rate, that was going in the right direction, but when you came in, you inherited an economy that was moving in the right direction. unemployment was going down. jobs were increasing every month. so the experience that you came in was nowhere near the experience that the obama administration had to deal with when they became in office. is that not correct? >> again, the experience that we came in was very, very low gdp growth. >> but that's not what i'm asking you about. the trends in the economy at that particular time, the trends with reference to unemployment, the trends with reference to jobs, the trends with reference to overall economy, it was not an economy that was in recession. it was an economy coming out of recession. that's not what you inherited, not what obama inherited when he
11:56 am
became president. is that not correct, sir? >> the time of the gentleman has expired. the gentleman recognizes mr. williams. >> i still have my business. it's a great time to be on main street. i want to thank you for your hard work on behalf of the american people and your annual report on the financial stability of the oversight council. the rollback of unguided regulations, 2017 is a historic year for the trump administration, the congress, and most importantly the american people. during my travel in the district i represent in texas these past months, i've heard countless encouraging stories about what the tax cuts and jobs means for business owners. some of my colleagues on the other side of the aisle claim these bonus us were akin to crumbs, in texas 27th district those crumbs come in the form of real dollars back in the pockets of working families. in the form of wages for employees and new capital investment for businesses. it is my hope that this past
11:57 am
year serves as a stepping stone for many and more great things to come, and there is still much more work to do, especially from the dodd/frank relief of the destabilizing. destabilizing. i am committed to working with this administration, to you and the trump administration to ensure long term prosperity for our nation and our citizens. the first question would be, mr. secretary, you previously testified before the ways and means committee that the treasury department is reviewing aircraft sale licenses following the iran nuclear deal. i'm encouraged by this administration's focus on the world's leading state sponsor of terror and in your efforts to take a hard line on combatting its destabilizing behavior. to that end the house passed my bill, the strengthening oversight of iran's access to finance act which creates a reporting requirement for the licensing of aircraft sales to iran in an effort to increase congressional oversight and provide transparency for the american people.
11:58 am
so my question, sir, is can you provide any updates on your review of licenses issued for aircraft sales to iran? and is it your opinion that this congress and the american people should know if iran is using passenger aircraft authorized under the jcpoa for terrorist activity? >> well, i do believe that the american people and congress should know -- i don't want to comment right now because we are reviewing classified information as we consider the licenses for this. so, this is undergoing review. >> thank you. the next question would be that we've heard so many great stories since the last several weeks about how the tax bill is bringing businesses back to the united states. yesterday the united nations conference on trade and development reported that the tax bill could spur the repatriation of $2 trillion. can you speak to the effect that repatriation and new investments will have on the u.s. economy and what americans can expect to see in the months and years to come as the tax climate becomes friendly and more welcoming to
11:59 am
investors and businesses? >> well, we believe one of the most important aspects of the tax bill was to go from a worldwide system with deferral which encouraged our companies to leave trillions of dollars offshore to a territorial system and a one-time tax to bring them home. apple has announced $350 billion that will be coming back into the u.s. with major investment into jobs and capex and equipment here. and they're just one of many companies that is going to be doing that. >> a lot of good news. next question would be, i'm certain that our colleagues from the other side of the aisle will highlight the recent volatility. we've heard that today in the market in an attempt to sound an irresponsible alarm about the state of the market. they clearly viewing the markets in terms of single-day performance and not on the long-term performance. if they were to do so, they'd
12:00 pm
concede the last 15 months. you talked about this earlier. the market recorded 84 record highs. both the dow and the s&p are still up by double digits during that period. mr. secretary, from both your time in the private sector -- i'm a private sector guy -- and now as the head of the treasury department, do you believe there to be any cause for alarm? >> i do not. >> okay. thank you for being here. and i'd yield my time back to the chairman. >> i thank the gentleman for yielding. mr. chairman -- i'm sorry, mr. secretary. one of the things i think i saw in the treasury report to fsoc, and since you're wearing two hats here, i guess you're advising yourself, but the treasury report had advocated to fsoc that basically cost benefit analysis needs to be employed in the sifi designation process. can you elaborate on whether or not fsoc is accepting this recommendation?
12:01 pm
and if so, what can we look forward to? >> so, yes, thank you, mr. chairman. that was part of our recommendation. as i mentioned, we are now working with the committee members to review our recommendations and update guidance. so, that is something i hope will be included. >> thank you. the chair now recognizes the gentleman from georgia, mr. scott. >> thank you, mr. chairman. welcome, secretary. you know, when i first opened your report, i was very pleased to see where you had cyber security as your major concern. however, yesterday i became very worried with one of your fsoc members, mr. mulvaney of the cfpb. and i understand that he's pulled back any investigations into equifax, the largest, most significant cyber security attack in this nation's history.
12:02 pm
145 million american families having their birthdays, their social security number, all of that vital information out in the open, and he has pulled back. and i found this out yesterday in reading the report from reuters. are you familiar with that, mr. mnuchin? >> i'm only familiar with what i also read in the press. i haven't spoken to director mulvaney about it, but i will. >> i hope you do, because it's very important. you're chairman, as i understand it, of fsoc. you're chairman. and it's fsoc's duty to keep our financial system secure from these kinds of threats. and we have the head of the cfpb rolling back investigations.
12:03 pm
i not only am asking you to speak with mr. mulvaney, but speak strongly. let him know how bad this looks, and that the american people are very upset that this administration is taking this kind of backward step back from investigating the most dangerous security threat in this nation's history. please do that, mr. mnuchin. do you have any reason why mr. mulvaney would even do such a thing? >> i'm not aware of that, but as i said, it is something i am going to discuss with him and we will take up at fsoc. >> yeah, because it would look
12:04 pm
very hypocritical if on the one hand the administration is so eager in going after cyber security and then on the other hand having the consumer protection agency to back away. and additionally the cfpb has even shelved plans for the on-the-ground test on how equifax even protects its data. so we've got some very, very significant things there. in my final minute and a half, i do want to raise up the issue of the fed tech companies. i am the democratic co-chair, chairman, of the fentec caucus. the fentec industry is going through some remarkable
12:05 pm
chajts challenges, and they're doing some great things just from simply being able to partner with many of our traditional banks and who will not service the under bank and those that need the help the most, but they are partnering with them.the under bank and th need the help the most, but they are partnering with them. and they are also bringing a way for real great technological improvement. but here's the problem. since o.c. has issued or going to issue a charter for their regulation, you have all of these regulators now, the cfp has their group. you have treasury. i don't know if you have your group, but each of these regulatory firms are now converging and coming up with how to regulate this industry. now, when you have three or four different regulators out there beginning to pounce, you're
12:06 pm
going to have overregulation. you're going to quite possibly suffocate this new emerging industry. solid want to ask you how do you see that? and is treasury moving? and as the leader of fsoc, will you take leadership in making sure that fentec companies are not suffering? >> a very brief answer, mr. secretary. i'd remind all members to pay attention carefully to the clock. a brief answer, mr. secretary. >> yes. thank you. we will address that at fsoc. we address your concerns. >> thank you, sir. >> the time of the gentleman has expired. the chairman recognizes the gentleman from maine. >> thank you, mr. chairman, very much. thank you, mr. mnuchin, we really appreciate the great work you're doing. i want to in particular thank you for your leadership in providing tax relief for families and small businesses. a couple weeks ago i i was at our terrific small business in
12:07 pm
maine, the truck stop in harman, right off route 95. the next time you go vacation with your family in maine. this fellow came up to me and said, bruce, thank you very, very much because i get paid on a weekly basis and i get another 27 bucks in my weekly paycheck. now, he did the math for me. he said, bruce, that's about $110 a month. $27 a week, it's about $1,300 per year. that's really important to my family because it pays for groceries for our family for about three to four months out of the year. so thank you very much for your leadership on this, sir, and we look forward to helping more american families. i've been very concerned along with other people on the committee, mr. secretary, about how unfair it is for nonbank, nonbank financial institutions like mutual funds to be possibly designated as a sifi by fsoc when they pose no risk to the economy if they get in trouble. i think it is widely agreed between our discussions and here
12:08 pm
on the committee that we need reforms to the sifi designation process that takes place over at fsoc. now, i think we can agree that it's a good idea for business who is potentially going to be designated a sifi to know why. and if, in fact, they are designated to have an off ramp such that they are able to make those adjustments. and the reason why this is so important, mr. secretary, for small savers and small asset managers in maine is because if you have this burden of additional regulations that are really unnecessary and costly, it drives up the cost to provide their services and drives down the rate of return for someone saving for college, for example. my question to you, mr. secretary, can we agree the best way to deal with this issue is to codify in legislation the reforms we need to the sifi designation process? >> we think that would be a good idea and we believe in transparency. as you said, companies should understand if they are
12:09 pm
designated, why, and what they would need to do to get out. >> thank you, sir. recently your own treasury department issued an asset manager report that recommends completely eliminating stress testing for non-bank financial institutions like mutual funds and insurance companies. now, in my opinion -- i know we've had this discussion, sir -- it doesn't make any sense for someone who is managing money for retirement to have the same stress test requirements or any stress tests at all as a bank that is insuring deposits for maybe those same individuals. i'd like to bring to your attention, mr. mnuchin, if i can, my bill hr 4566 alleviating stress test burdens to help investors act. it passes committee with wide bipartisan support. i'm asking you, sir, do you agree with the treasury's own report and with this committee that it's a good idea to eliminate these stress test requirements for nonbank financial institutions? >> i do agree with, as we put it
12:10 pm
in the treasury's report, yes. >> thank you, sir. last week the treasury produced a list of assets held by russian oligarchs. another bill that i have that is passed out of committee, sir, hr 1638 called the uranium transparency asset act roughly does the same thing. in other words, it looks at the top 70 or 80 political or military leaders in iran, which i may pair then it lick say we awe know is the chief sponsor of terrorists in this world. they recruit, they train, and they fund these terrorists, and they have american blood on their hands. i think it's a great idea as per my bill to make sure we get the information out there to the public, into the world, how these folks have been ripping off their citizens, what they are using those assets for, to shed some light on this issue. now, senator cotton is also taking an interest in this bill,
12:11 pm
mr. mnuchin, and has introduced continuing legislation on the other side of the chamber. can we agree this is a good idea to make sure the world knows what this money is being used for and how it was accumulated? >> i'm not familiar with all the details of the bill, but i look forward to sitting down, but conceptually i think it's the right direction. >> wonderful because you're already doing it for folks over in russia. >> yes. >> lastly, sir, if i may, the two reasons why the economy is doing so well is the great work in repealing red tape and also the tax cuts have been recently enacted in rural maine is critically important that small community banks and credit unions are relieved from additional burdens and red tape. can we get a commitment from you, sir, that you do everything humanly possible to help rural financial institution s? >> yes. >> thank you, sir. appreciate t. >> the time of the gentleman has expired. >> thank you mr. chairman, madam ranking member, and i they the secretary for appearing. mr. secretary, i fear that the
12:12 pm
grand old party, the party of lincoln, get'sburg address, government of the people, by the people, for the people, shall not perish from the face of the earth. the party of reagan. mr. chairman, tear down this wall. i fear that the grand old party has lost its way. i am amazed at the number of members of the grand old party who are defending russian intrusion into a legitimate election for president of the united states of america. the party has lost its way. and i'm concerned about the sanctions that congress
12:13 pm
legitimately desires to have imposed. i'm concerned as to whether they're being imposed. especially as it relates to section 241, which accorded the secretary, the treasury, secretary of state, direct of national intelligence to codify a list of these oligarchs, persons who have by way of corruption achieved great fortune. and this list was to be used so as to identify them and have certain restrictions imposed upon them. it has been reported that the list was compiled by the appropriate members of the government, the experts if you will. but it's also been reported that
12:14 pm
after compilation took place, someone higher up decided that there was a better list that ought to be utilized. there is a suspicion that the person higher up resides in your office. can you give clarification as to what's going on with the list, mr. secretary? >> i don't know what you're implying in any way, so, again, let me be perfectly clear, and i talked about this on the opening. there is a -- again, we fully complied with the law. there was an extraordinary amount of work done. >> mr. saerecretary, if i may intercede, i don't mean to be crude, rude, and undefined, i have to ask you this. is it true there was a list
12:15 pm
presented and that list was changed in some way by persons other than those who had compiled the original list? >> it wasn't changed at all. >> was it added to. >> were there people added? >>. >> yes rkyes, to the list. >> were there -- >> were there people aelded to the list. >> classified? >> were there people added to the list. >> by who, by the intelligence? >> were there people added to the list by any source? you've got news reports saying somebody changed it and they're alleged you are that person, mr. secretary. were there people added to that list? >> let me be clear. >> were there people added to the list? this is a very succinct, a very clear question, it is per zbik usually clear. were there people added to the list? >> i don't know what you're talking about. >> i'm talking about the 241 list of oligarchs, people who by
12:16 pm
corruption obtained fortunes in russia? >> yes, there are people on that list who will be sanctioned. >> were there additional people added to the list? here's the allegation, mr. secretary, that additional paem were added to the list so as to expand the list and cause the oligarchs, the criminals, to be associated with persons who legitimately made money, thereby, solidifying those who have fortunes in russia with president putin, thereby preventeding what we wanted to see happen, sanctions imposed against those who were achieving power and fame and recognition and money by virtue of corruption. >> again, i -- >> were there people added to the list? >> the time of the gentleman has expired. >> let the record reflect -- >> i they the chairman.
12:17 pm
thanks for this hearing, and thank you, mr. secretary, for coming before us today. i want to say my appreciate to you in your first year for working with both sides of the hill on our historic tax cuts and jobs act. just the other day i got a message from a mom who told me that her with holding went down and pay went up to the tune of $229 and she connected it directly with paying her daughter ice biweekly health insurance premium. i think that's exactly what the benefit of the tax plan is, is letting families have more of the money in their pocket to do what they need to do to help their family and to have their priorities met and i got a note friday afternoon from all-pro, which is a commercial painting contractor in benton, arkansas, in my district, that was so supportive of the act, that
12:18 pm
their plans are to buy more ee whim and um prove the compensation of all 27 of their employees. and finally i think something that across arkansas was very beneficial, is two weeks ago the public service commission announcing for our shareholder owned utilities, center point and intergy, that those tax benefits they're getting will passed through directly in lower utility bills for all arkansasens covered by them, and what a great way to say here's a real benefit to your household that's not just seen directly. so thanks for your leadership. i'm sure it was a trial by fire as you left the private sector and came into washington. so thank you. the other thing i wanted to talk about today from a regulatory review and fsoc's responsibility is the complexity since dodd/frank's imposition of
12:19 pm
the so-called volcker rule. we've had a lot of bipartisan discussion on that over the past years and how can we deal with it. chair yellen described it as too complex to deal with it. several bank presidents came to this committee came here to say it was too complex. our new fed chair j. powell state, i thought correctly, that we needed wouija boards on how o comply with the volcker act. i have a bill which intended to improve harmonization and coordination, something you called for in the treasury report and also relieves banks under $10 million from the complexity of the volcker rule. is that something that you still personally support and would advocate for? >> absolutely rngs thank you. >> i want to remind my colleagues that the federal register -- this is the volcker
12:20 pm
rule in the tiny print of the federal register, and all banks are trying to comply with this, mr. secretary, and it's just not doable and when you have federal reserve bank presidents in the country saying they can't administer a rule telling a bank whether they're in compliance or not, we've got a problem. i appreciate your leadership, but it's an fsoc matter that we get that harmonization. the other thing i want to mention, too, is on the subject that my colleagues on the other side of the aisle are talking about and give you a chance to respond, clearly you talked at length about sanctions on north korea, venezuela, and in iran. i want to compliment you again with treasury's work on both sides of the hill to impose and also working with the hill on legislative sanctions here under
12:21 pm
chairman barr's leadership. do you have a sense of timing on when you might follow through with proposed sanctions on the list of russian inside oligarchs that has been so referenced by the other side today? >> sure. i can assure you that we have sources working on it right now, and it will be on a rolling basis over the next couple of months. again, these same resources are working on, as you said, north korea, iran, and venezuela. there have already been significant sanctions done already under our administration. >> this is something i think we have strong bipartisan support on capitol hill, that we use the economic power of the treasury, our trade strength is our united states, and our bipartisan act to have legislation against countries and nonstate actors. so thank you.
12:22 pm
>> the time of the gentleman has now expired. the chairman recognizes the gentleman from illinois, mr. foster. >> thank you, mr. chairman. during the obama recovery, the stock market tripled. household net worth nearly doubled. unemployment was cut in half. trade deficits were reduced. and inflation was kept low. do you expect that your administration will match the obama record. and if not, why not? >> again, obviously when we were coming out of one of the worst recessions, we had those numbers move in specific directions. so we're now more focused on sustained gdp growth, which was subpar in the last administration. >> but you don't expect, for example, that you will do as well in tripling the stockmarket or cutting unemployment. >> again, i'm not going to make any specific comment about where the stockmarket is in the future. it's been up a lot, but, again,
12:23 pm
i'm not going to make any specific comments on the stockmarket. >> i'd like to talk about trade and foreign markets. i've long viewed the trade deals to address currency manipulation was probably short in coming and a major reason i haven't supported them is nations have developed their currency so even the benefits of reduced tafrs and other trade barriers are significantly undermined. one of the duties you have is to periodically designaticembesigns and i think largely because the dollar has been significantly down in the last year, you have not designated any countries as country manipulators, using the objective three-part test that was developed and so i think that is correct. however, there's a real danger that particularly if things go sower in asia, for example, they may resume currency man igs lags
12:24 pm
and we have to be prepare. the question is what action can we take? one proposal that i studied that does not require, it's things we can do ourks comes from fred and joseph at the peterson institute. they argue that the united states could act unilaterally or multi-laterally if possible with a partner like the eu or ecb to simply make countervailing purchases of currency from any country found to be manipulating its currency. according to either our definition or the imf's definition, which are pretty similar. i'm wondering if you've had time to raise this issue. it seems like even announcing a policy that this was a national policy to do this on a unilateral basis would really basically solve this problem.
12:25 pm
i was wondering if you have any thoughts? >> first we're focused on the trade deaf silgs and manipulation. to the extent there is manipulation going forward, we will absolutely call that out. >> we've been calling it out for decades. >> think sometimes in the past we didn't call it out. in any event we look forward to working with you. it's one of the many actuals that we can use against currency manipulators. >> no. i think this is -- actually it really comes from the peterson institute, the thought behind this. when i saw it, i thought this is something we can and should do. >> i think it're very interesting, thank you. >> okay.
12:26 pm
let's see. i'd like to speak about the debt limit. when we spoke last time we were here, you did not support the debt limit as a mechanism for controlling spending, which is something i agree. however, you know -- and the market has learned to tolerate things like government shutdown pretty, you know, by rolling their eyes and not reacting too strongly. but the reaction to a potential default has been huge. during the tea party crisis, we saw multi-million dollars in losses and market value and i think the average american lost more than $10,000 due to the tea party default crisis, so i view this as a completely separate risk and an important one we're staring down the barrel of. so i was just wondering if you've had the thoughts on proposals to permanently get rid
12:27 pm
of the debt limit and other combinations of controlled spending. >> i have. i talked to the president about that. and i think that that's something we should consider. >> the time of the gentleman has expired. i recognize mr. emmer. >> thank you for being here. it's interesting. i want to go back. you said just a second ago our focus has been more addressing gdp growth as one thing that you brought up. i find it interesting. the last gentleman was boasting 1.8 gdp growth, around december when they were leaving office. it's completely different over the past year. not only has gdp gone over 3%, but since election day, you've got the lowest level of
12:28 pm
unemployment in 17 years, wages are finally rising after eight years of stagnation. in fact, 2.9% over the past 12 months is the largest since june of 2009. and it doesn't even account for the bonuses that are due to tax reform. small businesses plan to increase compensation to the highest level in nearly 30 years, according to the nfib. pay gains during trump's first year in office are the best since the great recession. more companies are hiking wages and salaries than at any time over the last 18 years according to the national association for business economics. u.s. manufacturing, expands in the fastest pace in more than 13 years according to the institute for supplied management. u.s. jobless claims are nearing a 45-year low, according to our labor department. back in minnesota on january
12:29 pm
2nd, u.s. bank corps, which is based in arizona, announced a bonus for nearly 60,000 employees. a new minimum wage of $15 an hour for all hourly employees and $150 million to the u.s. bank foundation which is heavily involved in our communities. the company said it would enhance employment insurance and also improving commerce' mobile and digital experiences. this is in great part due to the tax and jobs act which you deserve to be thanked over and over for the leadership that you sh showed, mr. secretary, in making sure that thing got done, and we appreciate it. now, this is just one of the success stories that we have in minnesota, but we're not out of the woods yet. i think you would agree we have a lot of work left to do. we have just begun. you've touched on it here today, the fsoc's 2017 report with some
12:30 pm
other questions. but i want to go at this quote from your report on the importance of tailoring regulations based on the size and complexity of financial institutions. to me it's innan that we just pick a number, whether it's $50 billion or $250 billion, whatever it is, when what we should be doing is looking at the institution, looketiing at their portfolio. if you would take a little bit of time explaining the problems that we encounter, not just the institutions, by failing to tailor these evaluations to this institution, how does that not only impact the institution's ability to do business all the way down to financial service's food chain, but how does it impact the consumer, the mom and
12:31 pm
pop small businesses? >> well, again, as you point out, you know, just to point out on size. a $50 trillion bank and $50 billion bank have different risks. you could have two banks of the same size and one cod be vanilla. we believe in looking at the complexity of the organization and the risks. >> mr. secretary, would joup port -- and there have been efforts in this committee and things have actually been moved out of committee. would you support trying to codify or legislate actually adjustments to how we evaluate -- how you evaluate financial institutions? in other words, putting into law rules that would allow that type of evaluation as opposed to an arbitrary threshold? >> i would.
12:32 pm
and i look forward to working with you on it. >> thank you very much. i see, mr. chair, my time has run out. i'll yield back. >> the gentleman yields back. i recognize the man from washington, mr. heck. >> thank you, mr. chairman. i asked you when working on it to look at our concerns. you have. you've done so. not only done so, you've done so constructively, and i want to publicly acknowledge that and thank you very much for forwarding your work. >> thank you very much. >> now, a key part of making sure that cfius keeps us safe and functions efficiently is ensuring that it's appropriately resourced, that you all have the money to do what you need to do. the results of our collaboration, code name fir ma,
12:33 pm
have provisions in it that help with resources. for exam pechlt it creates a unified budget request. grants special bunting authority and grants authority for filing fees. but you also personally as secretary of the treasury have an important role to play in this regard. i'd like to ask you, sir f you can or are willing to given us a commitment to do everything you can working with the administration and in partnership with cob to make sure cfius has the necessary resources to do its job, especially if we enact cfius modernization legislation. >> i will. and i'm hopeful that we get this passed soon. it's bag priority of ourselves at treasury in working with you. >> and you've demonstrated that. thank you. also when you testified last july, you identified joint ventures as a particularly concerning gap in existing cfius authorities. i'd like to ask if you could
12:34 pm
elaborate on why treasury believes it's particularly important for any cfius mode modernization to cover joint ventures. >> sure. we think where there are risks done with a purchase to the extent a company is able to structure a joint venture, that defeats the intent of the law and that's why we've been working with you and fir ma to fix it. >> how do you see expanded cfius authorities especially with joint ventures interacting with existing areas of the law and obviously i'm referring to export controls. do you believe these can be integrated and work? >> i do, yes. >> i want to go back to something that you said earlier in response to the question about fin sin guidance of banking for marijuanas businesses in states that have approved them either by
12:35 pm
legislative action or by the vote of the people, which is now in a majority of states. what you said, mr. secretary, and i'm quoting you verbatim from just a couple of hours ago, i can assure you we don't want bags of cash. i can conceive of no way in which you can avoid bags of cash if you back down on fin sin guidance. do you have something in line that would enable us to prevent that very perilous circumstance of public safe toy to having bags of cash around that than what fin sin has offered? >> as i mentioned, we have reviewed the specific guidance. we haven't specifically taken it down. again, as i said, we're sensitive to the ir of dealing with the public safety issue and also making sure that the irs and others have ways of collecting taxes without taking in cash.
12:36 pm
>> i'm interpreting what you said. would i be off in that regard? >> again, i want to be careful in my wording in saying that we are reviewing it, but the intent is not to take it down without a replacement that can deal with the current situation. >> very good, sir. lastly, i cannot help but comment on this issue of russian sanctions. mr. secretary, we will know when sanctions are working, when russia stops interfering in western democracy's elections. we know they did in ours in 2016. we know they did in other western democracies since then, germany, france as but two examples, and we know they are as we sit and speak in the mexican national election as attested to by none other than
12:37 pm
the national security adviser to the president. so as you proceed to be a party to these conversations about whether or not to actually carry through on the sanctions that congress adopted, 517-5, please keep in mind they haven't stopped, they're not going to unless or until we actually do what congress asked the adm administrati administration. >> time of the gentleman has expired. the gentleman now recognizes the gentleman from michigan, mr. trott. >> thank you, mr. chairman. thank you, mr. secretary, for your time today. the chairman mentioned earlier the $1,000 bonuses that comerica bank gave to their employees down in dallas. before they moved to dallas, they were headquarters in detroit and they still have thousands of employees in detroit. in fact, we hope -- >> would the gentleman yield on that point? >> the gentleman will yield. >> i was being facetious. as a member of dallas, we're
12:38 pm
very happy where where comerica is located. >> the legislation you helped get through congress helped fiat chrysler to make an important decision, headquartered in my district. they decided to invest $1 billion in michigan, create 2,500 jobs, give each employee $200 bonus and move a plant from mexico back to michigan. so that's going to make a huge difference to people in my district and i thank you for that in that regard. my friend from georgia asked if you heard about cfpb's decision not to investigate equifax. the d.c. circuit decided to throw out all of the penalties and fines that were imposed against phh, over $100 million, by the prior czar who was acting in an arbitrary action when he decided to ignore fast pa and regulation laws.
12:39 pm
but is it por possible they decided not to investigate equifax because they're not authorized to. isn't that responsibility entrusted to the ftc, not the cfpb? >> again, i'm not going to speculate on thanh till i talk with inspector mulvaney on it. >> i don't think they have the authority, which is why they made the decision on it. in any event, i want to congratulate you on a very productive first year. it 'eers clear your background and experience has made you well qualified to do the work you're doing. with that being said, your annual reports did not call for the appeal. as a former bankruptcy attorney, i happen to believe a new sub chapter is a much better way to deal with a solvent financial institution than a political bureaucrat sitting in a secret
12:40 pm
private room. you have a judge who's going to make a decision based on years of precedent and it's going to be open and transparent. i would like your thoughting is a better outcome in the events we have a financial institution with events down the road. >> as i think you know, one of the executive orders that the president signed was for us to review that and we expect that we will be coming out in the next month in our report and recommendations. once we do, i look forward to talking with you about it. >> thank you. one of the problems i had with fsoc, it seemed to be guided principally, to put it succinctly, all business is bad and if you're a bank looking for profit, you must be in regulation or taking advantage of consumers and therefore you're going to write rules
12:41 pm
because the government is so much better at solving problems in the private sector than entrepreneurs. will you describe it briefly to make sure they have a fair shake going forward? >> sure. in general i've met with literally hundreds and hundreds of ceos. spiskly we do belief in proper legislation. we want to make sure banks and other endties do function proper will i. >> thank you, mr. secretary. i want to close by mentioning my friend from colorado, mr. tipton, has a tailor act, where one size doesn't fit all. i yield back to the chair. >> thank you. gentlemen, i want to go back and revisit the volcker ruchlt i want to main shoe. would you advocate that the a
12:42 pm
single regulator take the lead on rural writing and interpretation of volcker as long as the other regulators continue to have a role in the examination process? >> yes. thank you, mr. chairman for clarifying that. i would support there being a lead agency. some people have suggested that be the fed and then have the other agencies play a supporting role so there could be better relationship and leadership on it. >> thank you. the chair recognizes the man from massachusetts, mr. lynch? >> tlink yohank you, mr. chairm. thank you, mr. secretary for your indulgence. i know you've been here quite a while. mr. secretary, i'm just curious, i knoll they have leveled funding for the amount of
12:43 pm
resources for the financial crimes, fin sin. they do a lot of great work with this committee, especially with our anti-terrorism financing subcommittee. there is one weakness, vulnerability that we did encounter on our investigation of some of the country's financial systems in the middle east, and that is that we have on occasion one treasury attacée out of your department covering five or six countries, and obviously countries in that area, in that region that present some level of substantial risk. i'm just wondering if you would be willing to look at the possibility of increasing our people on the ground to work with our embassy personnel to help with the resiliency efforts
12:44 pm
we have in a number of countries where we suspect that terrorists finance financy are intertwined with the financial systems and banking institutions in those countries. >> i would and i would agree with you. in my trip to the middle east, it's on the ground to play a terrific role working with the local governments and the local banks on combatting terrorists' financing. >> you've got very, very good people there. my concern was that they're stretched pretty thin. the result of being stretched thin like that will reduce the efficacy of our counterterrorism financing efforts. one subject that's been a lively
12:45 pm
subject of debate is the export/import bank, and i know that the president when he ran for office, he talked about bringing jobs home and manufacturing. one of the most effective tools we have in government in creating manufacturing jobs here in the united states has been our export/import bank, and we're up against other countries that are expending tremendous resources to give their companies a competitive advantage. recently the president nominated someone with a long record of working to hobble and to actually shut down the export/import bank. i'd just like to find out what your approach might be or what your attitudes might be toward the export/import banks' efforts
12:46 pm
to promote u.s. competitive ps, especially in a manufacturing sector. >> well, i'm indirectly involved in this, but i have spoken to the president and others and he does watt want to open the export/import burba export/import banks for business. i know we want to fill the board. >> okay. let me jum top the metlife defamation suit. i understand that you've dropped the appeal of the metlife dedesignation suit, and i'm just curious if you think that dropping that suit might make the future designation vulnerable to a similar legal challenge? >> again, i think we looked at this purely from a legal standpoint and we decided to drop the appeal.
12:47 pm
metlife could still be subject to designation in the future on not. the decision was made on a legal basis around certain issues. >> but i guess what i'm asking is are we satisfied with the precedent that we might be setting in dropping that appeal? >> i think we are. we consulted with the department of justice and with the other agencies, and i think we're comfortable with that. >> thank you. mr. chairman, i yield back. >> the gentleman yields back. the chair now recognizes the gentleman from california, mr. royce, chairman of the house foreign affairs committee. >> thank you very much, mr. chairman. this question, secretary mnuchin, this question goes to derisking the federal balance sheet and specifically we discussed this the last time you and i spoke before you -- when you were before the committee
12:48 pm
and also in conjunction with gfc reform, but i'll lay out the case here earlier. earlier i looked at inquiring whether gfcess look at transfers with a private sector. e i'm hopeful that the bill will be included the committee's comprehensive reform efforts. we have seen credit risk transfers work not just freddie and fannie, not just in last year's storm event. we saw them pay out billions of dollars. so analysis has shown that there is far more capacity in the financial system world kwooid about $600 billion for increased credit risk transfer. so my thought here is why not look elsewhere in the federal government on the housing front why not wrereplicate transfer ai
12:49 pm
would ask if you would support those efforts. >> well, first of all let me say i look forward to working with yu and the chairman and others on a bipartisan basis for housing reform. i think this is very important. and i do say housing reformer. i do think we need to look at fsa and not just the gfcs. i want to make sure we're karel not at to resolve the tarks payer issue in one area only to find out the market share in one portion of fha has gone way up and we have risks on the balance sheet. >> absolutely. what i plan to do is to introduce legislation to direct the office of management and budget to identify other areas of the federal balance sheet where derisking could be used to protect taxpayers, and i hope
12:50 pm
you could support that effort. also on control reform, a point i was going to make as we discuss our economic security here, moving forward, i share the concern of my colleagues concern here, it is critical backed investments that we look at those investments in u.s. technologies that might pose a national security risk and as you mentioned in your opening, the committee is considering to expand in a way to address this threat. the foreign affairs committee which i share is considering export control reform as a way to tackle the problem. so would you support now authorities to restrict the export of critical technologies to countries that threaten the u.s. national security? >> i absolutely would, thank
12:51 pm
you. >> with that i'll yield back mr. chairman. >> do you yield to the chairman. >> i yield my time to the which i remember. >> i thank you for yielding. i want to go back to the designation process mr. secretary to make sure i'm clear. in the previous administration, f sock seemed to make their december i guess nags without taking in the input of the institution's primary regulator, we know the membership is not really an agency but a head of an agency and we know under the previous administration, there was little to no interaction with the actual company that was the subject of the designation review. as head of fsoc how has your process changed, will the primary regulator be involved in
12:52 pm
this and what exactly is the dialogue and process that will take place with a company subject to a potential designation. >> first of all, we'll look to rely on information for the primary regulator. they are the regulator that understands the company the best and as i mentioned earlier, we're looking to revise the guidelines so there's more transparency when we designate someone. >> can you go into more detail about that, mr. secretary. on your transparency initiative. >> yeah. i believe if people are designated, they should understand why and what they can do to reduce the risk going forward. >> now recognizing the gentlemen from colorado. >> thank you for being here mr. secretary. i have three areas, bitcoins, currencies, marijuana and
12:53 pm
banking -- >> my favorites. >> i thought you would enjoy those. we appreciate your testimony today. let's start with the virtual currencies. we have seen fluctuation in the market particularly over the last year. reaching 19,000 bitcoin in mid december and now around 6,000 today what steps is treasury -- how are you looking at these virtual currencies and what do you think needs to be done, if anything? >> i assure your concerns on it and as i mentioned earlier, two major focuses. we set up a subcommittee of fsoc to make sure we have regulators working together since these are new areas. number one, i want to make sure that anybody who uses bitcoins, we can understand how they are trance acting so that they're
12:54 pm
subject to bsa rules, money laundering and subject to know your customers so in the united states we have those rules and we are working with our counterparts at the g 20, you want to be careful that it can't turn into swiss number bank accounts. so bad guys can't use this. i share your concern about consumers understanding them and to the extent that they are trading on future exchanges and that they have the proper regulation of the underlying market so they can't be manipulated. >> thank you. second question, marijuana and banking. when you were here last, we had a conversation and obviously, we see this industry growing, we're up to 46 states that have some level of marijuana use, whether it is cannabis oil, or medical marijuana or commercial.
12:55 pm
and you know, the chairman and i joust about this from time to time, but obviously, the banking industry needs to provide services to these businesses across all of these states and i don't know if you were surprised by the revocation of the coal memo by the justice department or whether you'd had chances to talk to the attorney general before that occurred, but the genei. is out of the bottle and treasury and justice and the congress need to address this. you said you were going to talk to your friend mr. mulvaney about whatever issue, i suggest to you that you talk to him about the safe act that mr. heck are sponsoring because he was a cosponsor and we hoped he would be the main sponsor but he was
12:56 pm
selected to go to the administration. so obviously, in response to mr. heck you are reviewing the guidances, but there's no kind of going back here and your department is square in the middle of so many banks and so many businesses, either having a safe way and an accountable way to manage this you know just if you have comments to my comments. >> well, yes, first of all, i will follow up with the director mulvaney on the safe act specifically. i did not participate in the attorney general's decision in what he did, but we are consulting with them now and again, we want to find a solution to make sure that businesses that have large access to cash have a way to get them to a depository institution
12:57 pm
for them to be safe. >> thank you. last question. sanctions which you've had an opportunity to address a times already today. just looking a the a story from bloomberg from a couple of days ago. treasury warns unheave l and u.s. sanctions and russian debt. my guess is that you're familiar with. there's a sentence. russians as set climb this week as speculated and the treasury wouldn't recommend sanctions on the country's sovereign date and further, from a report says given the size of russian's economy, the interconnectedness and prevalence in dploebl assets markets it is likely over compliance by global firms and u.s. sanctions the magnitude of scope from expanding sanctions would be problematic, your response? >> i think we're targeting to
12:58 pm
specific sanctions and bad individuals and companies os posed to sangs on the debt. >> recognizing the georgia mr. loudermilk. >> before i get to my questions regarding regulatory review. we hear bad news, but good news, two years ago i went home one weekend and a gentlemen came up to me and shared a story that he did not feel like he could continue on running the small manufacturing business that was in their family for decades. it was so difficult to do business between regulation, lack of access to capital and customers. it wasn't just him but the customers putting pressure on him because of their cost going
12:59 pm
up. after decades of running the business i'm going to retire and my children don't want to be in the business anymore. this weekend i ran into the same gentlemen that came up to me and said, i want to tell you my accountant came to me last week and said next year because of the tax reform bill, you're going to save $100,000 in this business. i'm not shutting it down anymore and i'm looking how to expand. that's a true mainstream story. >> i like those stories. >> it's better to hear thank you for what you have done and we're hearing it all over. i want to discuss a issue that you raised, the importance of retro specktive reviews on agency regulations. many in this room on a bipartisan basis believe we should have regular reviews of
1:00 pm
regulations especially those antiquated, out dated or irrelevant, the banking ago sen sis were responsible for implementing laws so the regulations included in reviews under economic growth and regulatory paperwork act and however, when they created this, they were no longer subject to the reviews. just in the last few weeks we passed, a bill out of this committee on a bipartisan basis that i authored that would include cfpd in the review process. my question is can you further explain why it is important for the regulatory agencies to review rules periodically? >> i think it is very important. rules and regulations are very important but on the other hand they need to be constantly looked at as markets change and
1:01 pm
make sure that we don't over regulate to the extent we can't have growth. >> so being that the changes except them from viewing them in regulations you support the idea of returning cfpd -- >> i do completely. i agree with the change. >> and as i said, we've got strong bipartisan support for this bill, i hope we'll see that when it comes to the floor and we changed the time frame from ten years to seven years and as things change i think it will help consumers by having frequent reviews. and cyber security, i worked in the arena before coming to congress, i'd an i.t. company for years and we were tasked with protecting data and one of the principles we worked off is
1:02 pm
you don't have to protect what you don't have. what that means, if you don't need information, don't keep the information. otherwise you are a risk. and from what i've seen that quite often, the federal government through regulatory agencies puts own res requirements on businesses to keep data they don't need to keep and report it to the federal government which we have seen as our own federal government is by far, a high security risk than a lot of businesses. do you agree with the principles that we should have a review on what to keep and report? >> absolutely. >> mr. chairman i yield the remainder of my time. >> i thank you the gentlemen for yielding. mr. secretary, sea car and defast, are you convinced they are doing more good than harm or do you worry that this
1:03 pm
regulation may end up being a little too heavy handed in its current form? >> i think it's a very complicated regulation and ink it can use reform and clarity. >> i appreciate that. six seconds left, i yield back. now i want to recognize the lady from ohio. >> thank you chairman and secretary mnuchin for being here. we asked a lot of questions about regulatory issues and ranging from cyber security, terrorists to financing and fsoc and it's financial risk and the list goes on and on. i'm going to shift to the people part of it. i'm going to start by referencing from your testimony today about on line three of the first page, you used the word sustained economic growth. and on page four about three
1:04 pm
lines from the bottom, you have stated there is much more work for us to do. our country's potential is enormous, which is why americans expect their government to enact policy that is allow them to succeed and prosper. i agree with that. our ranking member allowed me to sit second chair on omway when you were here before the time ran out and i submit in writing my request to you and that was a year ago asking at that time if you had met with your director of omway. i'm appreciative of a response even though i just got it on friday after seven months so i guess a good staff person got it to you for today. have you met with your director or know who the omni director
1:05 pm
is? >> first of all, let me just say the responses to the questions took way too long and we apologize to the committee. and as it relates to the onmi i plan on meeting with them. so that is no and no, you don't know who it is and you have not met with the omni director? >> while uconn fine, let me read to you that this section of the act mandates that each omni director is to advice the administrator of the u.s. treasury on the impact of the policies and regulations on the agency of minority owned and women owned business and under
1:06 pm
342-gnchts 2 it defines you as the agency administrator. maybe that helps refresh your memory. >> i'm going to have to follow up on my staff on that. >> so you don't know who the person is and you have not met with the person. >> i don't know who the person is off the top of my head and i want to confirm with my staff. >> so that would make you in violation of a direct law of something that you're supposed to be doing. i don't want to belabor this but mr. secretary, this is important to me and mandated and required and when we talk about in your words of enacting policies that allow people to succeed and prosper t is my belief that we have this because there have been people like you and others who have not been components and not following through so we put it in law. this is something that i have
1:07 pm
asked every person that sat in the chair that is required to follow section 342, can you tell me how soon you're going to make this happen? >> i'm going to get back to you tomorrow. you have my commitment on that. >> i appreciate that, let me move to my second question. in this committee and the subcommittee, we have held several meetings on the housing finance, what role should the future reforms in housing finance play with regard to housing and affordable housing? you made reference in your testimony about fanny may and freddy and being in conserveship so what are some of your refor the peoples -- reforms? >> i start on the premise that
1:08 pm
the 30 year mortgage is important to the economy and liquidity of housing and on the other hand we want to have the taxpayers properly protected. so i believe the current situation is not sustainable and i believe that affordable housing is important and whether there are direct or indirect goals and how it is paid for is something that we need to address as part of housing reform. >> time has expired and the chair recognizes mr. davidson from ohio. >> thank you mr. chairman, and thank you mr. secretary and on behalf of our 8th district in the critical role to pass the tax cut and jobs act. i heard story after story of the difference it is making in the lives of hard working families. one story was highlighted from the president state of the union, steve a friend of mine
1:09 pm
and sister and one of the employees corey were here talking about their expansion plans. i was talking to the owner of a c and c business, for competitive niche and automation, talking how much out medication is moving his industry. he was concerned about keeping up with the investment required to stay competitive and didn't understand that we moved past it to get full immediate expensing and he was excited to and talk about how to ramp up the investment plan. that's going to continue to make a difference for companies in our district and thank you. i want to highlight the other good things going on in our economy related to regulatory reform. there are a number of folks that talked about that and what would be great to get your support with the senate getting actions
1:10 pm
on the forms with the choice act. any thoughts on what we can do to advance the cause there with our senate colleagues? >> i'm cautiously optimistic that the chairman and the senator is going to figure out how we're going to get this done. >> thank you for that and the cyber security realm. there's a number of concerns. they've been highlighted by breeches at the fcc disclosed unfortunately well after the breeches occurred. and a lot of data that is vulnerable in the financial markets. we have the consolidated audit trail that is critical for trading irregularities off of algorithm and due to be laurchled without a -- do you have a specific plan to try to coordinate all of ft functional areas that you provide oversight to address cyber security in
1:11 pm
this area? >> we do. >> somehow that taking shape within the department of treasury? is it specific to each subset or is there some macro level coordination? >> well, within treasury and our boour rows, we have common guidelines. irs is picked up on that as it relates to the other independent agencies, we are coordinating with them to make sure they are following the administration's priorities on cyber security. >> thank you. do you see any need for congress to pass legislation to allow government agencies, to oversee third party service providers, like information technology service providers? is there a gap in the regulatory framework? the work thesis is done there
1:12 pm
and taking a long time to get to implementation and there are remaining cyber security concerns including what is the code written to? how do the people that need to interface, interface with a system and there is still no system in place. is there a regulatory approach or something you feel is able to do be done by the department? >> i think it should be able to but we look forward to -- i share your concern on it. >> thank you and then going back to the economy, we've seen great investment and the markets response over the course of the year, dramatically to regulatory reforms to the expectation of tax reform and now the occurrence of tax reform. it's not like president obama's friends like tim cook forgot to make these big investments during the obama economy, they're making the invest minutes now because these things
1:13 pm
are going dramatically upwards. there was a trend of stagnant growth and wages, the trend now is dramatically increased growth and finally traction on wages. do you see -- how do you feel about the out look ahead on that trend? >> ink it's quiting positive. >> thank you and i think the last thing is do you consider china a market economy or not? >> no i don't. >> mr. chairman, i yield. >> the time of the gentlemen expired and the chair wishes to inform members that the chair expects to clear two more members. and release the witness. mr. kihuen is recognized for five minutes. >> thank you, mr. chairman and ranking member and thank you mr. secretary for being here this afternoon. as you might know i represent the fourth congressional
1:14 pm
district of nevada, north las vegas, the epicenter of the foreclosure crisis during the recession. over 60,000 people lost their home including 3,600 in the state of nevada. now, i know you ran one west when the bank was aggressively foreclosing on homeowners including thousands of seniors in the state of nevada, now as secretary of treasury, you are a key voice in the administration's position on house and finance reform. how can we trust you to support responsible reforms that will hold lenders accountable when you yourself were responsible for abusing the system when you lead one west? >> again, ink i talked about this in the past let me state i didn't originate those loans
1:15 pm
they were inherited. when you say we aggressively foreclosed we were required to follow fdic agreements and modifications and i think i have a great understanding of the issues that the homeowners went through and loan modifications started under the fdic at indi mac and we helped expand that. >> you were dubbed the foreclosure king and there's a reason why you made millions of dollars on the backs of my constituents losing their homes. so you've talked about it in the past not on this committee and not with me here. to it is my job to speak on my constituents. a 91-year-old women came up 27 cents short on insurance payment due to confusion about how much
1:16 pm
she ohhed. can you explain why it would make sense to foreclose over a person who ohhed 27 cents. >> that's why we tried to have the laws changed. that was hud loan that we were required to do and raised the limits up to several thousand dollars. it made no sense. we repealed for exceptions and it was a difficult situation. >> mr. secretary, what reforms do you think congress should consider to ensure that people facing foreclose you ares -- >> one west did not originate those loans. ink the most important thing is that banks originate loans that borrowers can afford and under right them properly.
1:17 pm
>> i'll give the rest of my time to the ranking member. >> i'm going to yield the rest of my time to mr. ellison if that's okay with you? >> with my 1:37 i will acknowledge, i have seen spu my colleagues congratulate each other on this tax bill. invoking small business people, baa r baristas and regular folks, but what about the hedge fund, private equity, the president and secretary of the treasury might benefit. have you calculated your own personal benefit from this recent tax bill? >> i don't think i get much benefit at all. i was required to sell almost all of my investments coming into this job. >> it's funny, you were asked by
1:18 pm
jake tapper about this ske and he asked you you know, who is going to benefit and you said the rich will not benefit, in fact you said in high tax states rich peoples taxes will be going up. well, what we know now is that by 2027, nine of ten members of the wealthiest 1% will see their taxes go down. are you prepared to amend your claim that the taxes for the rich were going to go up? >> no, i was commenting on what it was now and we hope those situations in 2027. >> let me reclaim this is going to $1.7 trillion deficit. -- >> the chair recognizes a gentlemen from tennessee, mr. kustoff.
1:19 pm
>> i represent an area in west tennessee and in the memphis area and a couple of weeks ago convened a banking round table of some good community banks in the tennessee area. in one issue that drove the conversation was that of cras or the community reinvestment act. to put it in perspective, one of the banks i met with in the direct talked about how they were required to open up a branch or cra purposes and it's now losing about $100,000 a year. it speaks to the outdated requirements when it comes to brick and more tor facilities. the physical banks. including the in the cra examination criteria unrelated to the cra including compliance with other financial laws or consumer regulations that had
1:20 pm
their own standards and penalties for violations. until my district one example i heard is that these banks are subjected to fair lending questions during their cra exams. mr. secretary, in your role as secretary of the treasury, do you envision modern icing the cra to better suit the needs of the financial institutions and the communities they serve? >> we do. it's something we're working on now. it's something that i actually think we're focused on recommendations as to how we can better serve the community. i think in many places banks are spending a lot of money and not going to the right places. so we're going to work with members in the community and banks to try to come up with proposed solutions. >> thank you, mr. secretary. you begun a review of the cra then? >> we have. >> and do you know when you
1:21 pm
expect to release findings from the report? >> it's over the next couple of months that we would hope to be able to do that. >> will there aspects of your recommendation that will come out that could be accomplished without rule making? >> again, that's something that is as we go through we're going to look at carefully, some of it we may be do through regulators and some require changes and legislation. >> thank you, mr. secretary. in one aspect that i think the banks and my district do well is financial literacy. however, the financial literacy unless it is done in a specific area, it doesn't count towards the cra requirements. is there a way to modernize that? >> that's one of the things we are looking at and one of the things i have experience in as a
1:22 pm
banker, there's tremendous need in financial literacy in the public school systems. >> thank you, mr. secretary. i would like to yield the remainder of my time to the chairman. >> i thank the gentlemen for yielding. >> mr. secretary, one of the things that concerned me about the stress test is the possibility of one imposed view of risk in having all of our major financial institutions tested again with the same set of assumptions. and doesn't it in some respect undermine market discipline if we're subject to a group regulatory, regulatory -- do you have any comments on that? >> it's something we need to be careful on. >> another question.
1:23 pm
i've been concerned also about the cost to investors on mandatory, certain mandatory disclosure requirements. it seems to be targeted at say, social investing and social questions other than what might be considered within the am bent of the traditional materiality concept. and so, do you have an opinion on the say, the proliferation of these requirements and ultimately what impact they could have on capital formation, economic growth? >> i think there should be proper disclosure and as you said, we need to be careful as to what the proper disclosure is. time of the gentlemen has expired, i'd like to thank the
1:24 pm
witness for the testimony today. we'll have five legislative days to submit additional written questions to -- for the witness to the chair which is forwarded to the witness for his response. i would ask mr. secretary that you respond as promptly as able and this hearing stands adjourned.
1:25 pm
later this afternoon a conversation on the trump
1:26 pm
administration plans to rene negotiation yates na fta and the role congress would play in a trade agreement between the u.s. in the case k mexico and canada. live 4:00 p.m. eastern. >> this weekend on "american history tv" on c-span 3, sunday 10:00 a.m. eastern, graduate kenneth carlson and his service in vietnam. >> there was a viewpoint and you can see what was going on over the base and we're watching the rockets coming in and ms ms. arkansas on one side and -- that kind of looks like the fourth of july and i said no it doesn't and she said what do you mean. people are dying when those
1:27 pm
things land that doesn't happen in the fourth of july, and she started crying. >> with the upcoming winter olympics we are featuring, the films on the 8th winter olympics in california. >> and unexpected excitement here. pregame under dogs and now they upset all predictions by winning this game. and earning them the first gold medal won by a u.s. team in hockey. >> and 8:00 p.m. eastern on the presidency. scholars explore the relationships between president ronld raegon, and george bush. >> when you look back at 1989 when bush comes in and you, from the point of view, bush is not measuring up to what raegon has
1:28 pm
been. >> watch "american history tv" every weekend on c-span 3. >> sunday on c-span q and a new york time staff photographer doug mills talks about the photo he took covering president trump. >> he enjoys having us around. despite his constant you know, comments about fake news and the media and so forth. i feel he enjoys having us around because it helps drive his message and the news of the day which he can do everyday and he is constantly driving the message and therefore, having us around allows him to do that. >> q and a sunday night, 8:00 eastern on c-span. >> c-span, where history unfolds daily. in 1979, c-span was

46 Views

info Stream Only

Uploaded by TV Archive on