tv Treasury Secretary Mnuchin Testifies on State of International Financial... CSPAN April 10, 2019 1:29pm-2:03pm EDT
history. >> there are many key questions. should 16-year-olds and 17-year-olds have a say on issues that could govern their lives? at the same time are they mature enough to make decisions that could guide the future of america as a whole? >> the only fair that young people should have a say in the policies that run their lives. that's democracy. >> you can watch every winning student cam documentary online at studentcam.org. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2019] >> treasury secretary steven mnuchin testified before the house financial services committee. he was asked about the house request for president trump's tax returns and late in this nearly three-hour hearing, secretary mnuchin had an exchange with chairman maxine waters over whether he'd continue to answer questions or leave for another meeting.
ms. waters: the committee the committee will come to order. without objection the chairs authorized to declare a recess of the committee at any time. at today's hearing we are receiving the annual testimony of the secretary of treasury. on the state of the international financial system and i will now record myself for four minutes to give an opening statement. to date this committee convenes for a hearing to receive the annual testimony of treasury secretary steven mnuchin on the state of the international financial system. i would like to start by talking about the international
development association or ida which is the arm of the world bank that provides grants and highly loans to the world's poorest countries. i am concerned through its new private sector that is today is transferring to $.5 million to the world banks private sector investment arm. the international finance corporation that is subsidizing private firms selective without competition on the basis of unsolicited proposals it is likely to prioritize financial returns over positive development impacts which will be difficult to monitor. it also stands in conflict with the world banks own principles that calls for subsidies to be justified, transparent, competitively based, focused on impact and guarded against risk
seeking opportunities. my message to treasury and the world bank is that unless these transfers stop or at a minimum are competitively based and fully transparent down to the amounts of aid going to firms and projects the administration's request for congress to authorize the general capital increase will not be a committee priority. now i would like to turn to treasury implementation of u.s. sanctions. the secretary also must provide this committee with complete answers today regarding the treasury department's actions to the list companies associated with the russian old guard. he is a criminal and who should not be let off the hook from sanctions that were put in place to punish bad actors. i am very concerned that the
agreement the treasury implemented sends exactly the wrong message. other russian oligarchs and putin himself because he was still will do a great deal of influence over his previously sanctioned companies. including at the summit last summer when trump in explicitly cited with putin over his own justice department when the fbi indicted 12 russian intelligence officer for conspiracy to interfere in the 2016 u.s. presidential elections. very troubling it appears that this dynamic may be effecting sanctions policy with the trump administration's treasury department for enabling russian bad actors moreover congress mandated several sanctions to be placed on russia.
the treasury has still not implemented these including sanctions required by the chemical and biological weapons act that the administration have a statutory deadline to impose by last november. treasury secretary steven mnuchin must explain these decisions in his public testimony today and addressed several other important issues. i expect you to be forthcoming with this committee and i also understand despite our efforts to accommodate your schedule you have now made another engagement this evening, this is unacceptable. if you are unwilling to state today with a full duration of this hearing the committee will compel your return for multiple additional hearings in the month of may. now the chair recognizes the ranking member of the committee the gentleman from north carolina mr. mchenry for five minutes.
>> welcome back to the committee treasury secretary steven mnuchin. you come before this committee at a precarious time for global markets. i wrote you in january right after the event in the uk parliament regarding brexit. in that letter i raised questions about uncertainty of a prolonged brexit and that effect it would have on financial institutions, the market, cross-border trading and financial services and insurance contracts. after three failed attempts the prime minister of great britain continues to work towards friday's deadline on brexit . the long and uncertain path towards brexit is coupled with a possible slowdown in germany . i am concerned about the overexposure of german banks and what this means for u.s. financial institutions. this is a serious thing for systemic risk. for example last month forbes
on the deutsche bank and commerzbank merger indicating both banks were in such deep trouble that even a merger couldn't help either one of them. that is problematic. the global issues aren't just limited to the uk or europe. in china the error of double- digit growth [ indiscernible - low volume ] thanks to the state-run allocation of capital they disregard for the rule of law and a regime that favors the theft of intellectual property over homegrown ideas we see that coming home to roost. moreover should we be concerned, this is actually a pretty interesting question i think were the of a discussion, should we be concerned that china has joined the bloomberg -- aggregate index opening their $13 trillion debt market to investors? the move is expected to bring in more than $180 billion in
investor capital to china. what does this move mean for global markets? what effect does it have? notwithstanding these risks, traditional threats of global stability remain, whether they emerge from international terrorism, weapons, proliferation or illicit financed woes. treasury plays a critical role by administering sanctions and protecting u.s. financial systems. areas of bipartisan on capitol hill and we view the treasury as important to this that is why we've given you this authority. we think it should be used responsibly but forcefully with clear objectives of national interest. finally i want to make a special note of the committee on foreign investment in the united states. is quickly becoming a model for other countries looking to stream investments for national security risks treasury responsibility under this law
has a significant impact on the global investment environment. through bipartisan work here on capitol hill we made significant changes to cfius in a way that targeted legitimate national security threats while preserving and even championing the united states open investment climate. in fact just last week cfius unwound two deals involving chinese investors. i look forward to working with the chairwoman to ensure that piece of legislation is faithfully implemented and regulations can form with congressional intent. i will yield the balance of my time. >> i would like to thank the gentleman for yielding and thank you for being here. i want to take this opportunity to highlight the need to reauthorize the export import bank that expires in october. that bank supports american exports and american jobs and
competition for international markets is fierce and the united states companies are already operating with a disadvantage. china's support for export credit finance agency dwarfs!. i look forward to working with you to make sure we reauthorize this very important agency and institute reforms that will strengthen it its ability to help american workers compete on the global playing field i am also looking forward to your testimony with regard to global uncertainty sanctions international development and the bank secrecy act. thank you for being here. i yield back the balance of my time. >> thank you. the chair recognizes the subcommittee chair for one minute. >> thank you madam chair and thank you esther secretary for
appearing and thank you for the service to our country. when you took this job you like members of congress swore on an oath to faithfully defend the constitution against all enemies foreign and domestic. under these unusual times the oath is being tested and it is my opinion that many of our important institutions are being threatened. i think this hearing is the opportunity for you to tell us about how you are holding on to these institutions. hopefully you will provide candid answers to questions on your role and decisions impacting our citizens and frankly the entire world. that included dangerous and wrong headed care of policy that reduces america's income at a rate point one $4 billion each month according to the federal reserve. the same policies the u.s. chamber of commerce says threatened 2 million american jobs. we will also have hopefully a
better understanding of how this administration decides to remove sanctions against russia and or north korea. these two countries that have been identified in our unclassified worldwide thread investment as primary threats to our national security. i look forward to reading questions with you later. thank you. >> thank you very much. at this time i want to welcome to the committee our witness treasury secretary steven mnuchin . he has served in his current position since 2017, he has testified before the committee on previous occasions and i believe he does not need anti-any introduction. or witnessed a will will be made part of the record. you are now recognized for five minutes to present your oral testimony. >> thank you very much and it
is a pleasure to be with you. chairwoman watters ranking member mchenry and members of the committee. it is good to be here with you today to discuss the state of international financial system the national advisory council on international monetary and financial policies report to congress, and the key priorities of the treasury department. i am proud to report president trumps program of tax cuts, regulatory relief and improved trade deals is a resulting in the strongest economic growth the american economy since 2005 and the best jobs market in generations. i would also like to comment on opportunity zones which are important key components of the tax cuts and jobs act. they will help more americans benefit from our strong economy. opportunity zones offer capital gain relief for investments in distances and distressed communities. we are seeing a great deal of enthusiasm for this policy all across the country and it is leading to revitalization and restoring the promise of
prosperity to more workers and families. the administration is making trade with our international partners a top priority. i urge all members of congress to support the passage of the us-mexico candidate agreement it will create the highest standards ever negotiated to protect intellectual property rights of entrepreneurs, provide strong support for the small and medium-size businesses, encourage manufacturing and opening markets for american agricultural products. we are also making progress negotiating with china to rebalance our economic relationship, into unfair trade practices, open their economy to american companies and protect our critical technology. we remain focused on several economic issues related to national security. we are implementing the foreign investment risk review modernization act. this legislation which passed with overwhelming bipartisan
support modernizes the committee on foreign investment in the united states known as cfius review process and enhances it in its ability to analyze transactions for national security risks preserving our commitment to open investment environments. the treasury is combating the abuse of our financial system by rogue regimes, terrorist organizations, hypercritical's and other illicit actors. the united states government with international partners are putting unprecedented pressure on the illegitimate regime in venezuela. we will continue to target this regime and support the interim president as he seeks to restore security and prosperity in his country. me treasury is using its authority to combat human rights abuses and corruption. we are pleased with many members of this committee has supported our sanctions and other actions and i assure you the administration will continue to aggressively target malign actors around the world.
turning to policy developments impacting international financial since institutions. we are advancing reforms to more efficiently alleviate poverty and foster stability and growth in emerging markets. we are working constructively at the g7, g 20 , world bank and other partners to foster that transparency that will reduce the risks of crisis in developing countries. as you are aware the ames to conclude the this year. we believe the overall resources are currently adequate for accomplishing its goals. we are beginning discussions with other shareholders on this issue. finally we are requesting authorization for the funding of the world banks capital increase. in connection with this we successfully negotiated a comprehensive reform act package including lending measure limits and future need to limit future capital increase and focus resources on
poor countries. we are also requesting authorization for the planned shared purchase in the north american development bank with the goal of working more closely with mexico to improve economic conditions. i look forward to your questions and discussing ways to create more jobs and more opportunities for hard-working american families. thank you very much. >> thank you very much. secretary chairman neil requested the presidents tax returns last week section 6 103 of the internal revenue code state that. when the committee makes such a request the secretary shall furnish in return or return information specified as such request. you have been asked to comply with the law today and i can imagine you may feel your job is on the line as secretary. yesterday president donald trump forcibly altered secretary nielsen and added to a long list of cabinet level
officials that he forced out including chief of staff john kelly, secretary of state rex tillerson and attorney general jeff sessions. treasury secretary steven mnuchin will you comply with the law by the deadline tomorrow and furnish the tax returns even if you means you may be fired by this president for doing so? >> first of all thank you very much for that question. i had the opportunity to answer similar questions this morning when i testified earlier today. as i previously said i want to acknowledge we have received the request and as i said before we will follow the law and we are reviewing it with our internal legal department and i would leave it at that. >> thank you but i guess you're basically saying you followed the law and you are not afraid you will be fired if in fact you released the returns? >> i am not afraid of being
fired at all. >> very good. >> having said that again i want to be clear, i've said we will follow the law. >> okay i am please you're not afraid of being fired. treasury secretary steven mnuchin since president donald trump took office numerous press reports have alleged top associates and campaign officials attempted to negotiate the listing of u.s. lifting the u.s. sanctions against russia. now i understand when you lifted sanctions against a major a limo company largely owned by russian oligarch you also directly benefited one of your former business associates and close friends with whom you owned it also seems he was a close relationship with. i have in my possession a series of letters that transfers change with
congresswoman jackie spear that contained it to this issue. treasuries response denies reports that you sold your ownership in our pde to mr. stating you sold your share to a third-party unconnected to mr. the matter does not comment on his company, purchasing an interest in a related company rat pack entertainment at the exact same time. who is the third-party you sold your shares to? >> first of all let me just say the relationship with he is not a close associate here someone i met. >> did you sell it to him as a third party? >> rat pack entertainment? >> i have no connection with rat pack entertainment whatsoever nor can i comment on
nor am i aware of the specifics of the ownership of rat pack entertainment, is a completely separate entity. >> so rat pack was and is in no way related to rat pack entertainment is that correct? >> rat pack entertainment was a passive investor and rat pack dune. >> so there is a connection between rat pack june and rat pack entertainment? >> rat pack was an investor in rat pack dune. i was not an investor or associated with rat pack. >> so when we ask about whether or not the third-party was involved with rat pack entertainment at the same time one had nothing to do with the other is that right? >> that's right. the third-party had nothing to do with rat pack. >> who is the third-party you sold your shares to? >> that was a confidential transaction sold to a third
party. >> was in a russian oligarch? >> i assure you there is not any russian oligarch. >> why is it you cannot share that information with this committee? >> i don't think it is relevant. >> i think it is relevant because of your involvement with russian oligarchs even before you became treasury secretary and you are in the position now where you are dealing with sanctions that replaced all of these oligarchs and it appears you are delisting on lifting sanctions and it may be a conflict of inches. don't you think you need to straighten that out? >> i don't believe i've ever met a russian oligarch nor did i ever do business with a russian oligarch. i would just comment that i believe he was from a different country not a russian oligarch. >> so you never met or spoke with or had any conversations mr. or anybody about sanctions is that correct?
>> that is correct. i never met either of them. >> not met but had a conversation? >> i'm not had any conversation with either of them. >> you've never been involved with any oligarch in terms of your previous business is that right? >> that's right. >> i am going to have the record record that the third- party you sold your shares to you refuse to reveal to this committee is that right? >> that is correct. >> let us continue. >> the gentleman from north carolina mr. mchenry is recognized for five minutes.
>> treasury secretary steven mnuchin i don't have any questions about your executive producer credentials but i think you did well with american sniper, the lego movie and most recently wonder woman. congratulations to you at your box office success. actually i thought it was much funnier but the crowd apparently didn't. thank you for your testimony. as i alluded to in my opening i wrote you this past angry about brexit and in that letter i reference the financial oversight board's annual report and a number of outcomes related to brexit that could trigger distress. would you describe what work you and other regulars have been doing with u.s. financial institutions as well as regulators abroad to prepare
appropriately for disorderly brexit? >> let me just comment first of all i think it is surprise many of is that we are sitting here today still waiting to see how this plays out. over the last year and specifically the past two months i've been working very closely with the appropriate regulators to make sure that our financial institutions are prepared for a hard brexit. several weeks ago i was in the uk and i met with both the prime minister as well as the chancellor philip hammond and discussed it as well as the head of the bank of england. we are very carefully monitoring these developments. i think u.s. financial institutions are prepared but i think there could be some significant disruptions in the markets and in trade as a result of a hard exit. >> is our government prepared?
>> i believe we are prepared although i would just say i think there will be many aspects of a hard brexit and we've encouraged both parties to see if they can have a resolution that works. >> how does this week's actions yesterday and today's actions with the uk government and their conversations with the eu, how does that relate to your activities? have you heightened activities this week as a result? >> i have not been privileged to that conversation going on yesterday and the day before but as i said i've been actively involved in this over the past six months and i think at this point we need to be prepared for a hard brexit is a very realistic outcome. >> okay. with that in mind you are prepared friday if there is a hard brexit as far as your
footprint in treasury, he worked to see that we've done all we can do in preparation? >> that is correct and we coordinated with the federal reserve, the fdic and other appropriate -- >> tomorrow the committee is holding a hearing with the seven largest financial institutions in the united date and from your perspective states and from your perspective how would you describe the u.s. financial system currently? >> i think the financial system broadly is very well- capitalized and it is in very good shape. >> so the knowns are well provided for? >> they are but the unknown unknowns are what we worry about. >> that is the nature of financial institutions. some have described the banking environment as size equals survival and as it relates to dodd frank that has clearly been the case where we have fewer small financial institutions because of
regulatory burden, can you describe the cause of that regulatory burden? >> i think it is quite significant and i think you know we worked with this committee and with the senate last year on reforms to dodd frank to make sure community banks and regional banks can compete fairly. i think it is important we have a robust regional bank and community banks system and that we don't end up with just a small number of banks in the country. it is a greater competition. >> absolutely. >> what role do financial institutions play in enforcing sanctions? >> u.s. financial institutions are critical in enforcing our sanctions. >> so it is an enormous benefit for us having financial institutions to international trade? >> absolutely. the u.s. reserve currency is very important and there are many benefits we have from that
and that is one of the reasons why our sanctions are such powerful national security tools. >> so if u.s. financial institutions do not play that role in sanctions how would sanctions enforcement ocher? >> it can't occur without but u.s. financial institutions and other institutions connected to the u.s. system, that is critical you described embarrassing situations that is iris technology footprints, we look forward to working with you to ensure there is proper funding so that the irs can of it technology footprint and thank you for making that publicly known. i yield back. >> thank you. the gentleman was also the entrepreneurship and capital markets is recognized five minutes. >> thank you.
treasury secretary steven mnuchin when you testified to this committee two years ago i asked about beneficial ownership. you said you look forward to working with us on a solution to this issue and then when you testified last year you said and i quote, we have to figure out beneficial ownership in the next six months, i don't want to be coming back here next year and we don't have this so we need to work with congress on a bipartisan basis on this". mr. secretary we have been working on a bipartisan basis on this issue and i think we are close to an agreement. the treasury did provide us technical feedback and we have incorporated all of your recommendations and i want to thank you for that. you have seen the most recent draft of the bill and i know you are still going through it but i just want to ask you, do you think we are headed in the right direction? >> i do believe generally you
are headed in the right direction and i appreciate your work on this. i hope this is something on a bipartisan basis we can get accomplished both here and the senate. as i said in the past there is many of things i am proud of our accomplishments to date, this is not one of them and i mrs. maloney: switching topics, you said in testimony this morning that your team had communicated with the white house counsel's office with congress' request tore the president's tax returns, but there isn't supposed to be any communication with the white house about this. the process was designed to avoid interference with the white house. now i know that you said this morning that you personally weren't involved in those discussions with the white house, but obvious your team told you about those communications. so what did your team tell you about these communications with
the white house? secretary mnuchin: first of all, let me say as i commented this morning and i repeat, i have had no direct conversations with the president or anybody else in the white house about this. as i volunteered this morning, i did make clear our legal department has consulted with the white house as they would and as i believe would be normal. that is not taking direction from the white house. i don't believe that is interference. it was widely publicized that we were going to receive the request and consulted with them before it. it was not specific to anything related to the president's tax returns other than the expectation of getting this request. mrs. maloney: did your team ask for the white house's permission to release the president's tax returns? did the white house ask your team not to release the tax returns? secretary mnuchin: we would not ever ask for the white house's
permission on this, nor did they give us the permission. as i said, we consulted, which i believe was appropriate, of our legal department. mrs. maloney: i think the fact that there was any communication with the white house about this is deeply troubling and certainly violates the spirit of the law, if not the letter of the law. and i think we need to get to the bottom of this. and i yield back. ms. waters: the chair advises members that votes have been called on the floor. the committee will recess for votes and resume immediately following. the committee stands in recess. [captions copyright national cable satellite corp. 2019] captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org