Transcripts For CSPAN2 Treasury Secretary Mnuchin On Financial Stability Report 20180207

Members will have five days to submit material for exclusion in the record. The hearing is for receiving the secretary of the treasurys oversight. Mr. Secretary this is your first appearance before the house after the tax cut and jobs act has been signed into law. On behalf of the majority we are grateful to you and the president for your leadership and to help make this act signed into law that is historic. After eight years of failed policy that led to the slowest and weakest recovery the economy is starting to take off and wages are growing. Consumer optimism abounds. Its ironic but predictable that equity markets would swoon over the prospects of highest Interest Rates and inflation associated with Economic Growth. Low Interest Rates may have benefited some on wall street but not helpful to main street. We knew the fed would face challenges when the economy took off. If youre listening, good luck chairman, you volunteer for the job. Today the economy is getting stronger due to policies of the Trump Administration. Averaging 3 growth unemployment is a 17 year low. Wages grew at the fastest in a decade. All of this and President Trumps first year in office and were now on the leading area. J. P. Morgan chase recently announced it would be making a 20 billiondollar investment across its business lines. They plan to boost Small Business lending by 20 . In dallas another is boosted minimum wage to 15 giving a 1000dollar bonus to 4500 employees. Nationwide is giving a bonus and ink creasing its 4o1k match bb t is raising its minimum wage from 12 to make 15 an hour and giving employees a onetime bonus of 1200. These are just a few of the companies that have announced benefits to two tax cuts. Again, thank you tax reform alone will not unleash our nations full potential. The last eight years our economy has been drowning in a sea of complex the Trump Administration has cut red tape that work remains including at the Financial Stability Oversight Council. We need to monitor Market Development facilitate sharing and make policy recommendations to congress. Unfortunately can harm our economy through its designation. It is eviscerated ge capital, a Great Company that had capitalized millions of small and Midsize Companies in a dangerous and unlawful effort and attempted to designate metlife and the decision was arbitrary and overturned. Encouraged by what i read in the annual report i look forward to hearing more about it. I recognize the Ranking Member for four minutes. Thank you and welcome back. I look forward to your testimony today on the annual report of the Financial Stability Oversight Council. Im concerned the Trump Administration is determined to removed all nonbank important institutions regardless of whats left or what threat they post our economy. As we know, one institution, aig nearly brought down the economy in 2008 and had to be bailed out to the tune of 182 billion. They play key role in the stability of the economy. It cannot be weekend by doing with threats of risky Financial Institutions. Its also important that the secretary address several outstanding inquiries on vital matters with National Security implications. As a general matter, secretary mnuchins handling of inquiries from democrats have been unacceptable. Serious questions have been raised about the finances of President Trump his family members and associates and their involvement with russian officials financial Crimes Enforcement Networks i and other democrats on the committee have requested information from the secretary several times. At the last appearance i asked about a letter that we wrote regarding President Trumps financial ties to russia as well as those of his family members and associates. He did not answer the letter nor was he forthcoming in his testimony. Since then weve sent to followup letters pertaining to the finances of President Trump and his associates as well as his own handling of lawenforcement and regulatory matters that may involve those individuals. The reply re received from his staff did not provide answers to our inquiries and instead encouraged us to get the information from other committees with which the treasury provided documents. Despite the fact that we have clear jurisdiction over this matter the secretary thinks referring us to other committees is a satisfactory answer, it is not. Im also concerned about the Trump Administration and action on the sanctions packed with broad bipartisan support by congress in 2017 to punish russia by interfering with our democracy. The Trump Administration has missed several deadlines related to the sanctions which is on acceptable. His inaction serves to advance the interest of putin, the kremlin and the russian oligarchs to the detriment of the American People. My january 21 letter has gone on answered as of yet. Since he is here today, its my hope he will provide answers to the questions we have on these matters. With the i will yield back the balance my time. We now recognize the gentleman from missouri. For 45 seconds. Thank you for being here today. Last year we made progress on tax and regulatory reform. We must improve the efficiency of the Regulatory Regime that is left consumers and Small Businesses on the sidelines. Regulation needs to be responsible and taylor. With regard to risk, for too many years the federal government has been trying to purge all risk from the system. I urge you to use your authority to reregulate and promote Financial Stability through analytical processes. I look forward to your chest money and i yield back. Recognize the gentleman from michigan, the vice Ranking Member for one minute. Thank you i appreciate you being here. My hometown is flint, michigan. What happened in flint it is an example of what happens when we fail to invest in older industrial cities. The town struggling to make that transition. The water crisis is a tragedy that is ongoing. It should be a wakeup call for every american about what happens when we put Balance Sheets ahead of the interest people. Yet weve attempted to justify changes in our tax code by implication that will hurt these communities. The republican tax bill, certainly there are winners and losers and we could litigate that, one thing for sure the changes in the tax code are already being used by the administration and congress to justify cuts to programs necessary to the revitalization these already struggling places. That is not acceptable. There is no way to justify that. We need a plan to reinvest to reinvigorate. The implications cannot be overlooked. We cant focus on the people on the top for winning. Your time has expired. My fellow michigans were a guest at the state of the union address. Barber describes himself as a young hungry for success and continues to strive for growth. He is said because of the tax cuts and jobs act he is saying that our goals can be extended. Im increasing wages and trying to hire more people and broaden our reach to serve more customers. Were trying to buy buildings instead of rent buildings. Its a common story. Its not just about providing crumbs to the American People, its helping young entrepreneurs grow our economy and achieve the american dream. We must do more to make sure that we have a better future. He also knows whats happening on wall street is a technical correction here wall street. Far too long weve been ignoring main street. Its time to turn it around. Appreciate you being here. Time has expired. Today we welcome the testimony of stephen the nation, United States secretary of treasury. As previously testified before committee so i believe he needs no further introduction. Without objection your written statement will be made part of the record. I wish to inform members that we do expect a vote to interfere with her here in midmorning. The secretary has agreed to stay until 130, the customer three hours. Youre now recognize for five minutes to give an oral presentation. Thank you. Thank you for inviting me today. One of my Top Priorities is sustained Economic Growth of the American People. Im happy to report the growth of the economy over the pasture was higher than the average over the prior 20 years and included three straight quarters of 2 higher gdp. The president promised robust growth and hes delivering. How to talk about the Financial Stability 2013 annual report. Its important vehicle to provide you with the recommendations relating to regulatory developments and potential risks. The report emphasizes Economic Growth to maintain enough Financial System. Since the crisis will come to assess the effectiveness of regulatory reforms and consider their unintended consequences. We need to modernize outdated regulations and taylor regulations based on the size and complexity of Financial Institutions. It discusses a number of risks like to emphasize the Cyber Security. The Financial Systems increases the risk that significant Cyber Security incidents can disrupt the Financial Sector a potentially impact u. S. Financial stability. Gains have been made but we need to emphasize the need for sustained attention. We make recommendations including the creation of a privatesector counsel Senior Executives to collaborate with regulators to mitigate Cyber Security. Turning to growth, the jobs act last year was the top priority. Its already having a positive impact. The tax reform, over 3 million americans have received bonuses or other benefits and over 300 companiesnotes decreases the workforce. This can be greater spending on the play training, infrastructure and research and development. Will lead to longterm prosperity and companies to bring cash from overseas. Let me turn to specific priorities. I want to commend the house in congress for their work on financial regulatory reform. I appreciate your work by passing hr tank, the financial choice act in dozens of bipartisan bills. It reflects many of our recommendations release last year. Encourage you to Work Together to move the legislation as quickly as possible. Last week i wrote providing notification my determination that a debt suspension. Last until february 28. I urge congress to act as soon as possible to protect the full faith and credit by increasing the statutory debt limit as soon as possible. I support the Foreign Investment risk review modernization act and applaud senators and representatives for their leadership on this issue. It will enable us to protect our National Security. I look forward to working with congress on this. One of the core mission is to safeguard using powerful economic tools. Well take frequent risks. These include terrorist groups, human right abusers, cyber criminals, and rogue regimes like north korea, iran, and venezuela. We continue to review intelligence to identify targets with maximum impact and deny access to the u. S. And Financial System, disrupt Revenue Streams and pressure for a change in behavior. Last week the Treasury Department submitted reports in compliance with sanction legislation. They report another chapter in our efforts to use our economic authorities to counter the threats we face. The Current Situation for fannie mae and freddie mac is neither a sustainable nor lasting solution. The administration looks forward to working with congress in a manner that helps consumers obtain the best housing suited for their own personal financial situation. At the same time protecting taxpayers. Part of what weve accomplished so far. Americans expect their government to policies that allow them to succeed and prosper. I relationship is vital to that mission. We look forward to working with you. Thank you. I look forward to answering your questions. The chair youll strum sells for five minutes. If you could draw that microphone closer to. On her way out the door chair allison that equity values are quite high and there potential dangers there. I dont disagree, i just thought it was curious that they would say such things. Economists have predicted that once it the economy took off there be pressures on equity markets. Clearly markets are still up in the administration but huge volatility over the last few days. Can you give us your view on whats going on. First, were focused on the longterm Economic Growth and believe the policies weve enacted are positive for longterm Economic Growth. Receive that in regards to investments back in the United States. The stock market is up significantly since President Trump was elected. For monitoring the stock markets we continue to believe in the long term impact of the stock market. On page six you call on congress to create a more Sustainable Housing system for Financial Stability. We know its been ten years since the financial crisis in congress has failed to act. If we fail to act in some of us are trying to work on bipartisan reform. Such true that roughly year from now the president gets to the point a new fhfa director to serve for a fiveyear term . Is that correct. Thats correct. Is it true that the directors not just the regulator but also the conservatory . Thats correct. As conservatory the director has broad sweeping powers. For example, i believe if Congress Fails to act the director could just continue the harbor Home Affordable Refinance Program . Thats correct. Is it true that the fhfa director could suspend these to the trust fund if they found it would contribute to the financial instability . Thats correct. Under 12 usc 4566 the fhfa director can choose not to enforce the statutory housing goals of the gses if he finds the achievement of the housing goal was or is not feasible. Thats correct. I hope all have listen carefully what might happen if we choose not to engage in gse reform. And again, we look forward to working with you in the administration my friends in hopes that we can find america a truly Sustainable Housing system. One that puts peoples in homes that they can keep. Different question, today theyve designated for Nonbank Financial Companies but today only prudential remains designated. Have sock is it supposed to evaluate these designations annually. When was the last time it was reevaluated . I believe its coming up but it has not been evaluated recently. Is there a specific timeframe . It will be this year. We know a few weeks ago the administration chose to drop the government appeal of the net life litigation. We know an Article Three Court found the designated process to be fatally flawed. Was that the same process that led to prudentials designation . I wont make the comments on prudential but the majority of the members recommended to the Justice Department to drop the case. Will be working with the committee on revise guidelines. I think theyll include a cost benefit analysis to the economy and its impact on jobs. I now recognize the Ranking Member for five minutes. Thank you. Pursuant to clause d4 of committee row three, a request recognition to question the witness for an additional five minutes upon the conclusion of the time allotted to me under the five minutes. You are recognize for ten minutes. I want to ask about the subject of my most recent letter which is your departments role in section 231 of the counting americas adversary act. Congress passed the law on a bipartisan basis with the objective of punishing russia on its attack on our democracy. Do you believe our intelligence agencies as they have said to us that russia did hack into our dnc and undermined our democracy. You believe that to be true . I believe in the intelligence assessment. I want to refrain from specifics that are classified. Even the finding sections references the findings that russian president , Vladimir Putin ordered and influence campaign aimed at the election. They also recognize the warning that moscow will apply Lessons Learned from its putin Audit Campaign aimed at the u. S. President ial election to influence efforts real worldwide including against allies. Do you believe that to be true. Given the importance of the laws purpose, why does this administration let key deadlines without taking any action to implement the act and punish russia. One provision that has been ignored is section 231 of the act. This requires the president sanctions persons to have been engaged in a significant transaction with russias defense. As you know, the law allows the president to waive or delay the sanctions. But this committee has given no indication that these have been imposed. When you testified at the Senate Banking committee he said that you did not delay. The president has six months to determine which ligation sanctions with the russian defense. After six months the president must impose sanctions on such persons are waiver delay sanctions. Despite this no sanctions have been imposed, waived or delayed. How can we explain this. This section were referring to has been delegated to the state department. I cant, on secretary tillerson for that. I can talk about the oligarch report that we delivered on time. There will be sanctions coming out of that report. And i commend the work thats being done on the. Is responsible for delegating what was passed by an overwhelming majority of the hounds to the state department . The president. So despite the fact that in the law we passed responsibility to treasury he decided that he wanted it delegated to the state Department Rather than treasury and thats your excuse for not having implemented the law . That my excuse and i believe that we be happy to sit down the president had the authority to delegate within the the portion youre referring to was delegated to the state department. The other portion was delegated to us. The final conclusion is that nothing has been done. No waiver, no delay, nothing that has been done. You do not raise or delay sanctions, thats the conclusion. Whether were talking about treasury or the state department. On our side theres been worked on. There will be sanctions that come out as part of that. I cannot comment on the state department. Would you describe the enormous amount of work the state department has done, what have you done . I encourage you to look at the classified report. Its incredibly extensive and thats now being used for the basis. Are you telling me that in your response to the overwhelming majority having created by to impose sanctions on russia that undermine our democracy, that your responses classified . What i said is part of the report was on classified, i assure you as it relates to the work being done there will be sanctions and there is ongoing work being done to develop those and we have complied with the law. The congress of the United States does not know what youre doing. The congress does not expect that your response to the Public Policy developed by us somehow responded in a classified way. Is there anything you can tell us that you have done . The law called for a classified portion of the report and on classified. Given the majority of the work was developed on classified basis its on in the classified. The first phase was to develop the report and deliver it, which we did on time. Now were developing sanctions on it. We are very focused on it. I encourage you to encourage the president to declassify information that should be forthcoming to this committee as he was able to do in the newness memo. He used his powers the president to reclassify. I suggest that if information is declassified the should be available to this congress who voted overwhelmingly for sanctions on russia though sanctions we should have information about it. Is it the Treasury Departments position that no person engaged in significant transaction with russias defense . Thats not the portion that were doing the work on. What are you doing the work on . We did the work on the oligarchs and senior government officials. We detailed the report were evidence of corruption, weve complied with an extensive report and theres a classified version and an unclassified version. Will be using the intelligence work was the indication of corruption that we will follow up with sanctions. Are you referring to the work you did as the oligarch is the list they listed from the forbes report . Again, we are clear that the public, nonclassified version is the universe we looked at and was developed on open source that the oligarchs and the leaders. The classified report goes through that list in a detailed manner and other people [inaudible] that list that fell below that threshold. I encourage you to review the report. I think youll be impressed with the findings. Was there any person identified those engaged in significant transactions with russias defense and sectors. Did you identify any person. That portion of the act is not the work on familiar with. We did identify people that were involved in corruption and will be using it to come out with sanctions. Last week it was reported that cia director pompeo met with senior officials in russia service, one who is subject to your sanctions. The other subject to european sanctions. This occurred just prior to the deadlines of those engaged in transactions with russias defense and intelligence sectors. Theyre the same sanctions the president has refused to act on. Current former officials said they cannot recall so many heads of russia espionage and Security Apparatus coming to washington at once meeting with the top american official. Are you troubled by the curious timing just days before the president failed to take action to implement sanctions pursuant to the sanctions . No. I believe the timing was coincidental. I can hear you. Im not troubled by that. I believe the timing was coincidental. The timing has expired. Went move quickly to a couple things. I need to remind my colleagues that we can go see classified information and briefings have been offered by the secretary and others. I want to touch on the Economic Growth for seen. I talked about sac booker, my constituent seen technical corrections and wall street is okay but this year and that President Trump inherited this great economy is amazing. He had 1. 2 growth in the First Quarter as he came into office. That is grown into 3 growth of the year never reaching that in a calendar year with the Obama Administration. We have seen the economy respond. This requires broadening to participate in the marketplace. Weve seen Public Companies declined by 50 . In 2016 there is only 112 ipos. The decline is troubling to many of us the fcc chairman noted that is a serious issue for markets in the country more generally the vast majority of main Street Investors will be unable to participate in growth. The lasting effect are not good. Sac isnt ready to bring his barbershops public yet, but im afraid the exact bookers of the world will be able to do that. Curious what are the three top impediments killing the market . I appreciate the work youre doing on capital markets. In the report we go through a review of Different Things we think are easier to access the Public Markets with proper regulations. Theres a list of things we recommended. I think the glide path in the direction that we need to go. I look at the liquidity in the markets and in testimony of march of 2017 we had a hearing in the subcommittee and ronald testify that to determine if an activity was proprietary trading compliance expert would have to be a psychiatrist trained. In an april 7 speech the the line between Market Making impropriety trading is not as clearcut which makes regulation difficult and it might be worth greater discretion to intervene when their liquid and volatile. Do you agree with the assessment question. I do are working to have better definition around the l law. Do you think it makes sense for one regulator to take the lead . I do not. I want to highlight another oddity. We have a michiganbased company that owns an Industrial Bank in utah. Because of its owner sit ship interest in the bank its considered a banking entity since theyre being treated as Bank Holding Companies they breach a 10 holding it steam to be controlling the bank and self serving. If its applied to nonfinancial Industrial Loan Companies to think it poses a Systemic Risk . No, do not. Thank you. I look forward to working with you. We now recognize the gentleman from missouri. Thank you. I want to reiterate my support and thanks for working with us on the taxcut bill. When we were discussing the tax bill i had a small womens roundtable. One of the ladies said that if you cut my taxes we will reinvest that money and hire more. This past weekend i was back home and in your testimony you talk about Companies Investing and im sure this company is not in there. But theyll get a 500dollar bonus many people across the country that are receiving bonuses. I think its more like a tsunami going across our country so, thank you for that. With regards to your testimony one thing were doing in my subcommittee is working on Cyber Security. He talk about the Council Monitoring the risks and have a number of recommendations. Can you elaborate on the endeavors and Cyber Security some things are working on . Its an issue focused on. Protecting the financial infrastructure is a critical concern. Our two priorities is making sure various regulators are working together and pooling resources that we are developing the proper partnerships to Exchange Information and best practices in conducting different tabletop exercises. Right now we have a patchwork of rules and laws a cross the country with states monitoring and having import. How will you support a streamlining and the federal government has a problem with data security. With information that is held by the federal government and how we recorded those as well. I agree with the first part with the idea and the need for streamlining. I am participating along with dhs and other groups at the National Security council on cyber to make sure were coordinated across government. We are not immune from these issues. And to make sure what we learn against us to protect private industry. One objective is to look at these institutions. Have a bill that deals with this one of my solutions to the problem is using the Federal Reserve process by which they have the score. To they take into this Federal Reserve score . I have not seen that but we can look into that. Something we should consider. Seems like we dont need to reinvent the wheel seem to be a helpful tool to utilize the. We use a lot of work from the fed. I look into the scoring issues of followup. Would you like to respond to any of the questions that were directed to you by the Ranking Member. Will allow the secretary to reserve my 30 seconds. The gentleman yields back in the chair now recognizes the gentle lady from new york. Thank you. Welcome secretary. Yesterday the stock market suffered its worst day in six years. With s p down 4. 1 in the dow down 4. 6 . It looks like markets are plunging further today. You are the chair of the Financial Stability Oversight Council. I want to know if youre concerned about this recent market turmoil . There have been quite volatile today. I normally would not be looking at my iphone but it is up 187 points. Were backup today. Im not overly concerned. I think fundamentals are strong and ive checked in with Market Participants to make sure there is orderly market activity. And im happy to report i got the green lights. Does this have Financial Stability implications . I dont think these types of moves given how much they have rallied you have financial concerns. The administration is claiming credit when the markets go up, with a claim credit when they go down . Will still claim that its up over 30 since the election. Lets move on. You called this one of the biggest was to the system. Its a serious one in a huge problem particularly for Virtual Currencies like the coin. Virtual currency exchanges are constantly being hacked. A few years ago the largest the Coin Exchange of the world was breached lost over 450 million worth. Two weeks ago another exchange and the japan was hacked and they left 550 million worth. The largest heist in history. Recent report from 14 of the major Virtual Currencies have been stolen by hackers. If you hold the major Virtual Currency theres a wanted seven chance youve had your money stolen. Right now there exchanges are not subject to any real Cyber Security standards. Last week clayton said he thinks some exchanges should be regulated by the fcc which would require them to develop standards and prevent fraudulent practices like price manipulation. Given that the exchanges are collectively holding billions of dollars for u. S. Investors that can disappear in a blanket and i if hackers break in, should these exchanges be subject to Cyber Security standards to protect investors money . It is a currency but its being treated as an investment. I broadly skate share your concerns. Last year i set up a subcommittee to specifically deal with crypto currencies. You focus on several issues that i agree with. The two issues i agree on is that you want to make sure the exchanges cannot be used for moving money to bad people. In the United States if your big coin wallet your subject to the same moneylaundering requirements of the bank. Working with the g20 to make sure the rules are followed another countries so these dont become like old swiss bank accounts. The area of concern is to the consumer. We recently had futures listed and did work with the regulators. I to share your concerns about the Cyber Attacks and havings peoples money that is safe. It is something were studying and we be happy to follow up. Thank you. I have a draft bill i would like to share with you. Should congress raise the debt ceiling as part of the continuing resolution this week. Encourage congress to do th that. I remind you that theres a vote occurring on the floor and the chair will attempt to clear tumor members. I recognize mr. Duffy know. Thank you. You are in the Financial Services hearing, not the twilight zone. Not sure if you know where youre at based on the questions from the Ranking Member for ten minutes. The near 20 year unemployment low. Africanamerican o on employment at an alltime low. People who say they care about their constituents, donald trump brought that out they said down. Then they come in today and say i dont want to talk about gdp of 3 growth, not talking about manufacturing jobs coming back to america, not talking about the great policies of the last year, talk about russia. By the way, when we talk about the economy. I have friends across the aisle will say thousand 2000 as crumbs, give me a break. Thats a lot of money where i come from. If you get a 2000 extra amount of money in your paycheck over your thats a lot of money. To call it crumbs of the tax code armageddon is out of touch. You talk about russia inclusion, you have is the Hillary Clinton campaign Christopher Steele and the russians to take down an american president who fairly won an election. Talk about a payoff to the Hillary Clinton campaign to get approval for uranium one. This is ridiculous. And ill ask a question thats relevant to our committee. Yesterday the wall street journal reported 1700 banks closed in the last 12 months. Did you see that article . I did. Many of those banks came from Rural America. What is the root cause of these Branch Closings what impact does it have on communities and Rural America that might not be served by bank . A general issue is the cost of regulation for community banks. It helps community banks. Those communities need those banks. I thought the regulations were for the big banks. Did dad bank serve regulations on small banks and Rural America is going out of business because they cant comply. Are they consolidate and they said its not profitable branch so working to close it. We talk about the market and markets are down, couple bad days. This is in coordination with lack of fundamentals in the economy . Do we have problems with growth or wages or job that are being reflected in a down market . The fundamentals are quite strong. Also. With the disconnect. I think youve seen a normal Market Correction and i think theres a disconnect in the shortterm. Could strong fundamentals bring down the market little bit because you might be concerned. It could be. Any concern in the fall yesterday with Algorithmic Trading that could fight the losses yesterday . It had an impact on market moves. Anything we should be considering . Nothing we can do right now. Was a your contention that we should look at the activities surrounding the Financial Institution as opposed to the size. We should definitely raise the level look at activity. Thank you for your testimony. Im sorry about the questions that come your way. I applaud your efforts to work with us to lower tax rates that have had a huge impact on the American Families. The other side should be applauding and dancing in the aisles. There are no because its not about people, spell politics. Because they voted no they cannot celebrate the win for the communities and their country. Sinecures time has expire. There is a vote occurring on the floor. I now recognize originally from new york. Thank you and welcome secretary. The issue of making sure our Democratic Institutions are attack should be responsibility of everyone. After all we all voted for the sanctions against russia. The history between the United States and puerto rico is one full of legal, political, and social injustices. While five moments mobile enough time to go through the list of things where u. S. Policy has failed puerto rico, allow me to highlight how your administration has managed to further worsen conditions. After one of the worst disasters your administration ignores the Health Care System and puerto rico. The system that is crumbling before our eyes. The difference in medicaid funding places a much greater burden on puerto rico than on other states. In addition, President Trump failed to see the new tax law you brag about is actually harming puerto rico. At a time when Puerto Rico Needs our help to jumpstart its economy. Let us be clear, the new tax law discriminates against puerto rico, removing special incentives they relied on in treating puerto rico as a foreign country. Treating puerto rico is a foreign country. A foreign country that has over 100,000 activeduty troops ready at any given time. A foreign country that from 1998 through 2016 has faced approximately 74. 4 billion in taxes. Tell me which country around the world pay those 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 received from intellectual property. What a way to kill the Manufacturing Sector and puerto rico. Another example is the Community Disaster loans. Loans instead of grants. Another insult. Dont you greet me . It is outrageous. Its cruel. In missouris second Congressional District, of words 5000 employees or 5000 hardworking missouri families have recently volunteered to pay 15 an hour and in addition increased the investment of the broadband network. The absolute benefit to working families, Small Businesses with progrowth promises with our constituents. And so to make sure all americans can seem to grow this economy. Last week the subcommittee on oversight which i chair had a hearing called following the money of human traffickers to exploit the market. We talked a lot about the emergence of crypto currencies as a financial tool. You touched on it briefly but we identified the need to further study those services through the t17 to create regulatory approaches. How do you think these new technologies should be regulated . And what role of Congress Going forward with broadband . Thank you. The main concern in terms of regulation anybody that does business with crypto currencies can be monitored from a moneylaundering standpoint and it follows the know your customer rule. But now we look forward to working with you on regulation. What is the t17 google in the process . Fsoc is coordinating the different regulators response. We look very forward to working with you in this area that is emerging. So can you discuss your recommendations the designation criteria especially with the Nonbank Financial Companies . With the Nonbank Financial Companies including getting input from the primary regulator. What other steps of the designation process . And how the countable to congress . As you noted we did extensive work with the executive order to the present working with the committee on the suggestion in terms of changing the criteria. But this is something we are focused on. With the committee on oversight and investigation with the arbitrary and inconsistent nonbank designation process. Following up on a Committee Report that provided examples love inconsistencies and partners from the t17 rules i hope this is something we will look into to coordinate Going Forward. Absolutely. I healed back the balance of my time and i guy thing gentlelady. Mr. Secretary were here in july democrats and republicans gave you questions for the record and begot responses to those last week. Next months. Can you commit now that the vast majority of the questions for the record asked by republicans and democrats today will be responded to with real answers within 30 days . I told myself i i told my staff of our response time. Can you make that commitment . We will do everything we can. It will not be as long as last time. I assure you. I have answers long questions for the record and i need answers. First with the tee17 report with the activity based approach from the fsoc and i am interested in your plans to implement those recommendations treasury Asset Management report on those designation process that the activities based approach be used i will ask you to respond to that for the record. Also the International Association of insurance supervisors is pushing a global standard that clashes with our system for the state based insurance regulation and i want to know your reaction to that. And if we can ensure if we will promote our system in a negotiation . I can assure you we will. Thank you. The last time i asked about the tax. I did tell your staff in advance but we got the most absurd response. I am an old tax lawyer this is hard work but this is the easiest job youll ever have. They responded by saying this is a resource intensive process. Here is the model treaty. We published it. And the government of armenia has said they want to use this as the basis. Twenty members of congress have asked you to do this. Can you commit to investing 28 hours of that one tax lawyers time to start the process i think they will finish the process. We are talking about filling in the blanks. Can you commit 28 hours . I can commit 28 hours. We will get it done and the benefits will include the exchange of information provisions will allow the irs to get information about anybody hiding assets. With the enhanced tax collection process. When it comes to marijuana, we currently have citizen guidance, and if you were to revoke that, and that would make it better for the Armed Robbers in my community because there would be huge amounts of cash at the local Marijuana Dispensary. To respond for the record and i hope you would indicate we dont want bags of cash at the Marijuana Dispensary down the street. I can commit we are reviewing it but we do not want bags of cash but to make sure to collect the necessary taxes. You assured us last time although we didnt designate china as a currency manipulator. And then to do something about this and that shows every month that trump has been in office with the trade deficit in china. So will we see a different trum trump . I thank you will see a different one. If we dont . Can you then designate the currency manipulator . One has nothing to do with the other focusing on trade independent of that. Manipulation of currency i yield back. Now the gentleman from kentucky on Monetary Policy subcommittee. Good to see you this morning things to the administration for the tax cuts and jobs act on behalf of the constituents of the kentucky district. Allison is a bank teller one of the lowest paid in a small Computer Community bank and went to her supervisor and said i thank you made a mistake and he looked at the check and said no. She said that i get a bonus . He said i didnt. But in effect you got a bonus, you you got a raise because of republican tax cuts. And then there is karen serving me coffee every morning at the airport 5 20 a. M. In a hardworking person working the graveyard shift and wanted to know what the benefits of the tax cut word. We put her paycheck and her information through the calculator when they showed up on monday morning she had a smile on her face. She said congressman i will save 1410 every year because of the tax cuts. On behalf of karen and allison thank you and your administration. You are making life easier for working people in kentucky. Without market volatility since election day the Dow Jones Industrial average has soared a little over 24000 at one point he had an all time high of 26000. And in part with this administrations policies. But talking about those equity markets is Monetary Policy. In the Federal Reserve with quantitative easing. But that accommodation and while this failed to have that slow growth from the Previous Administrations policy policy does affect asset prices. But the Previous Administration previous policies now it has taken off with record high Investor Confidence and low unemployment with wages going up last year, average 3 gdp with the First Quarter projected 5 First Quarter 2018. It is appropriate that the new leadership and proceeding with the strategy. And with that Financial Stability Oversight Council and with monetary normalization with a withdraw of monetary stimulus. And with the reality to prevent asset bubbles and Financial Stability. We have been working with the fed with the portfolio and the impacts of the markets relating to the Monetary Policy will respect the independence of the fed so i will not comment. Thank you mr. Secretary the world bank is scheduled for the 18th replenishment. This has those disturbing cases of management failures at the vague with massive corruption including sexual abuse and staff incentives pushing winning out the door rather than impact on global poverty. In light of these facts writing a blank check would be an insult to the taxpayers of this country with the World Bank Accountability would make spending contingent to implement reforms. And with those legislation it is over 40 years that congress considered a standalone item bill. And asking congress to pass legislation with American Foreign policy. And not friends of america have enemies of america. And so just briefly that they adopt a similar approach . We applaud your work we will try to get something passed. I you back. Said gentleman recognizes the gentleman from new york. Welcome. Let me ask a couple of questions. First, i think i heard heard you say that you will be asking congress for my colleagues on the republican side to make sure they raise the debt ceiling. Because i dont know sometimes , does that matter in our economy . It does. What is better for the American Economy . I am confused. What is better a weaker or stronger dollar wreck. I will not on the dollar. That is what i am trying to clear up. In the long term a strong dollar is in the best interest of the United States and that is what i said in my comments. Obviously a weaker dollar is good for us with relation to trade. That was a statement of fact there were three parts to it. The first was the fundamentally believe in the free market in the dollar in the shortterm is not a concern, second it is a fact and third that we fundamentally support a strong dollar in the long term. You support a strong dollar. Correct. So the other statements but in the time of recession is stimulus important or not . It depends. In times of crisis, you are not here but i was here listening to my colleague on the other side. 2007 having the greatest recession since the Great Depression and 2006 is when the republicans controlled the house and senate and presidency. We had a republican Treasury Department to say we should do something because things were going crazy. Would that be an appropriate time to stimulate the economy . That would have been one of the things to consider. Word you consider that . By the way you recall what the Unemployment Rate was in 2007, 2008, 2009 . I dont recall the exact number but higher than where we are now. In fact at its peak close at 10 . At the time it was about 4. 6 . Is that your recollection . So at the time you came in the Unemployment Rate at that point was lower from the last 12 years. Is that not correct . It is. Is it also correct when you look at the overall economy in the number of jobs created, back in 2006 through 2008 we were losing jobs. Correct . Correct. At the time the president came into office we were gaining jobs every month. We were adding jobs. You did not inherit the economy in recession or lowest employment rate or going in the right direction. When you came in you inherited the economy moving in the right direction. Unemployment was going down jobs gaining everyone. So the experience was nowhere near the Obama Administration had to deal with when they came into office. The experience we came in with was very low gdp growth. I am asking about the trend at that particular time with reference to jobs and the economy not the economy in recession but coming out of recession. That is what you were handling not what obama had. Correct . Your time has expired. Now the gentleman from texas. Mr. Sec. Thank you for being here Small Business owner in 47 years in texas it is a great time to be a main street. Thank you for your hard work for your annual report from the Financial Stability Oversight Council. So to rule that long rollback 201717 proved to be a historic year. And most important to the American People during my travels i have heard countless encouraging stories what this means for texans and business owners. So for my other colleagues we have heard this is the equivalent to crumbs but in my district that israel dollars dollars back in the pockets of hardworking families. And new Capital Investment for businesses. It serves as a steppingstone especially from the dodd frank destabilizing issue. And know that im committed to working with this agenda with you and the trumpet administration with longterm prosperity for a great nation. You previously testified before the ways and Means Committee so to have an aircraft sale license on the nuclear deal . I am encouraged with your efforts to take a hard line on that behavior is strength that creates a reporting requirement in the effort to increase congressional oversight to provide transparency for the American People. Can you provide updates for Aircraft Sales to iran . And they should know if iran is also using that under the jp see a way for terrorist activity . Be with the members of congress should know. And considering the licenses. We have heard so many Great Stories over the last several weeks how the tax bill bringing business back to the United States. Yesterday the United Nations conference reported the tax bill with repatriation of 2 trillion. Can you speak to that effect in new investments on the u. S. Economy and what americans can expect to see in the months and years ahead. One of the most important aspects of the tax bill was from a worldwide to leave trillions of dollars offshore with a one time tax to bring them home. Apple has announced 350 billion with major investment with cap next and just one of Many Companies that will be doing got. Im certain our colleagues saw that recent volatility clearly they are viewing the markets with single day performance. But in the last 15 months the market recorded 84 record highs with the dow and s p are down by double digits from your time in the private sector and now as head of the Treasury Department do you believe there is any cause for alarm . I do not. I yield my time back to the chairman. Mr. Sec. , one of the things i think i saw in the treasury report to fsoc i guess youre advising yourself wearing two hats but the treasury report had advocated to fsoc the cost benefit analysis needs to be designated in the process so can you elaborate with the fsoc recommendation . That is part of the recommendation we are now working with the Committee Members with the guidance. The chairman recognizes the gentleman from georgia. When i first opened your report to see cybersecurity is your major concern. However yesterday i became very worried with one of your fsoc members mr. Mulvaney. I understand he has called back any investigation. The largest most significant cybersecurity attack in this nations history 135 million American Families with their Social Security number all of that Vital Information out to the open. And i found this out yesterday. Are you familiar . Only with what i also read in the press. I have not spoken to the director about it but i will. I hope you do. To me the chairman of fsoc you are the chairman. And it is the duty to keep the Financial System secure. From these kinds of threats. And then to rollback those investigations. Not only asking you to speak with mr. Mulvaney but to speak strongly to let him know how bad this looks. And the American People are very upset that this Administration Takes this backward step back from investigating the most dangerous Security Threat please do that secretary mnuchin. Do you have any idea why mr. Mulvaney would do such a thing . I am not aware that it is something i will discuss with him that we will take out that fsoc. It would look very hypocritical if on the one hand the administration is so eager to go after but on the other hand the Consumer Protection agency to back away. And additionally cfpb for its plans or how that protects the data. We have some very significant thing. But i do want to raise the issue with the democratic cochair but the industry goes through some remarkable challenges and doing some great things and with those traditional banks that will not service the under bank those that need to help the most. And also with the technological improvement. But since they have issued a charter for the regulation with all of these regulators with treasury where if you have your group so each of these regulatory firms is converging on how to regulate this industry. Three or four different regulators with overregulation to possibly suffocate this new emerging industry. So how do you see that . Is treasury moving and as a leader of fsoc will you take leadership to make sure these companies are not suffering . That brief answer. Please watch the clock all members. Yes we will address that. We share some of your concerns. Your time has expired. The gentleman from maine. Thank you so much we appreciate the great work you are doing thank you for your leadership to provide tax relief to American Families a couple weeks ago one of the terrific Small Businesses in maine right off of route 95 and a fellow said thank you very much because i am paid on a weekly basis now i have a next or 27 in my weekly paycheck. Saying that is 110 a month and 1300 per year. That is important to my family because that pays for groceries. So thank you for your leadership and we look forward to helping more American Families. So how unfair this is for the nonbank institutions to be designated by fsoc with no risk to the economy . It is widely agreed with our discussions to leave those reforms that takes place at fsoc. I think we can agree it is a good idea for business that will be designated. Do you know why . If they are to have that offramp to make those adjustments the reason why it is so important for those small savers or Asset Managers with those additional regulations that drive up the cost of services to drives down like somebody saving for college. My question, so the best way to deal with the issue to codify legislation, the reforms that we need for the designation proces process. We think that is a good idea and we believe in transparency. Recently and then to eliminate stress test from nonbank Financial Institutions. So in my opinion it doesnt make sense somebody who is managing money for retirement let you have those same stress test requirements for ensuring deposits for those same individuals. So to alleviate the stress test passed wide bipartisan support and you agree with the treasuries of newport with no stress test requirements . Yes. We put that in the report. Last week the treasury produced a list of assets held by the russian oligarchs passing out of committee. With the leadership Transparency Act roughly doing the same thing. It looks at the top 70 or 80 political military leaders in iranian lung i ran the chief sponsor they recruit and they train. And to get the information out there how they have been ripping off citizens and using those assets to shed some light on that issue. So now to introduce companion legislation is this a good idea what the money is being used fo for . I am not familiar with the details but conceptually i think it is the right direction. You are already doing it for those in russia. Lastly is why the economy is doing so well to repeal the red tape and also those tax cuts. And it is critically important that those banks are relieved from those additional redtape burdens. Can you do everything humanly possible . Yes. Your time has expired. The gentleman from texas of the investigation subcommittee. Ranking member, thanks to the secretary for appearing. Mr. Secretary, i fear the grand old party, the party of lincoln, gettysburg address by the people and of the people and for the people shall not perish. The party of reagan. Mr. Gorbachev, tear down this wall. Feeling that the party has lost its way. In those that are defending russia intrusion with a legitimate election for the president of the United States of america. The party has lost its way. And that congress legitimately desires to have imposed . Especially with section 241 . Secretary of treasury, secretary of state, director of national intelligence, these oligarchs, the persons who have by way of correction received great fortune. And this was to be used to identify them and have certain restrictions imposed upon them. It has been reported the list was compiled by the appropriate members of the government like the experts and after the compilation took place somebody higher up decided there was a better list that ought to be utilized. There is a suspicion the person higher up resides in your office. Can you give clarification mr. Secretary . I do not know what you are implying in any way. So i will be perfectly clear talking about this at the opening that that we fully complied with the law, there is an extraordinary amount of work done and i encourage all of you. That just a moment but i do have to ask this not to be crude or rude or unrefined but is it true there is a list presented and it was changed by persons other than those that compiled the initial list . Was not changed. Was it added to . Were there people added . Were there people added to the list . Were there people . Were there people added to the list . By whom . Were there people added to the list by any source . The news report says somebody changed and they are alleging that you are that person mr. Secretary. Her people added to the list . I did not add anybody. Were there people added to the list . A very sustained and clear question. Were there people added to the list . I dont know what you are talking about. The oligarch people of corruption in russia and people who ought to be sanctioned. There are people that are on that list and will be sanctione sanctioned. Were there additional people added to the list . Here is the allegation mr. Secretary. People were added to the list so as to expand the list to call the oligarchs, the criminals to be associated with persons who legitimately made money by solidifying those who have fortunes in russia with president clinton thereby why buy what we wanted to see happen those sanctions imposed by those who were achieving power and fame and recognition and renting by virtue of corruption. Were there people added to the list . Your time has expired. Please reflect i did not get an answer. Majority with. Thanks for this hearing in mr. Secretary for coming today and i want to say my appreciation with your first year working with both sides of the hell with our historic tax cuts and jobs act. The other day i got a message from a mom who told me her withholding went down and the pay went up 50 per pay period she connected it to pay for her daughters biweekly Health Insurance premium. That is exactly what the benefit of this tax to let always have more of their money in their pocket to do what they need to do to help their family and have priorities met. Friday afternoon i got a note from a commercial painting architect contractor who was so supportive they went to buy new equipment and improve compensation for all employees. And finally two weeks ago the Public Service commission announces for the shareholder owed utilities that the tax benefits that they are getting by reducing the Corporate Tax rate will be passed through directly in a lower utility bill for all arkansans covered by them what a great way to say heres a benefit to your household not just seen directly but indirectly. Thanks for your leadership. Im sure it was trial by fire coming to washington. Thank you. So another thing from a regulatory point of view and fsoc that complexity from the imposition of the full court rule. We have had a lot of bipartisan discussion over the past years and how can we deal with it . Chair yellen said to complex to implement several Bank President said it was too complex to implement the new fed chair just sworn in said they needed a ouija board to figure out how to comply with the voelker act why have a bill which attempts to improve regulatory harmonization and coordination that you called for in the treasury report to relieve banks under 10 million from the complexity of the voelker rule. Is that something you still personally support . Absolutely. I want to remind my colleagues with the federal register this is the tiny print in the federal register all banks are trying to comply and it is not doable with Federal Reserve Bank President s in the country to say they cant even administer the rule if they are in compliance or not we have a problem. I appreciate your leadership but with the fsoc matter we can get that harmonization. The other thing i want to mention and to give you a chance to respond, talking at length of sanctions and i want to compliment you on treasurys work with the ability to impose to have control that treasury also working with the hill on those legislative sanctions here. Do you have a sense of timing when you might follow through with the proposed sanctions on the list of russian oligarchs referenced by the other side . I can assure you we are working on it right now on the rolling basis over the next couple months the same resources are working on north korea and iran and venezuela also significant russian sanctions already through the administration. This is something we have strong bipartisan support on capitol hill to use that economic power on the treasury, our trade strength and bipartisan ability against the nonstate actors so thanks for your leadership i yield back. The gentleman from illinois mr. Foster. Thank you. During the obama recovery the stock market tripled and not worth nearly doubled unemployment cut in half trade deficits were reduced and inflation kept low. Do you expect your administration will match the obama record and if not, why not . Obviously coming coming out of one of the worst recessions , those numbers were moving in a specific direction so now we are more focused on sustaining gdp growth that was subpar in the last administration. You dont expect you will do as well to triple the stock market or similar . I will not make specific comments where the stock market is in the future. It has been up a lot but i will not make specific comments on the stock market. Talking about trade with those freetrade deals with currency manipulation was the most significant shortcoming as nations have devalued their currencies of those benefits that come from barriers are significantly undermined. One of the duties that you have is to designate countries for currency manipulation because the dollar has been down significantly in the last year. You have not designated any countries as currency manipulators using the threepart test. That is correct but there is danger if things go sour they could use currency manipulation. So what action can we take . So one proposal that does not require any treaty level agreements. The Peterson Institute argues they could argue unilaterally or multilateral to simply make countervailing purchases from any country that is found to be manipulating the currency. According to our definition or the imf which is similar. So if you have time to think about this from previously when you were here but that this is a National Policy on a unilateral basis would basically solve the problem we dont have to have the International Agreement so what are your thoughts on how you might proceed . First of all i can assure you the president and i are focused on the trade deficits and currency manipulation to the extent there is currency manipulation Going Forward we will absolutely call that out. We have been calling that out for decades. Again sometimes in the past we didnt. That was one of the problems. But we look forward to working with you one of the wonderful many tools we can use against currency manipulators. It really comes to the Peterson Institute. I thought this is something that we could and should do. Interesting. Thank you. Speaking of the debt limit you said that you did not support the debt limit as a mechanism to control spending which is something i agree. However, the market has learned to tolerate Government Shutdown by rolling their eyes but to a potential default has been huge with the Tea Party Crisis we saw a multi trillion dollars in a loss of market value and the average american lost more than 10000 due to the default crisis. This is completely separate and very important that we are staring down the barrel. So do you have any thoughts like proposals to permanently get rid of the debt limit in combination with other mechanisms . I talked to the president i think that is something we should consider longerterm. Your time has expired. Thank you mr. Secretary for being here today. It is interesting you set our focus is more addressing gdp growth as one thing that you brought up. That is interesting because the last administration out the door boasting 1. 8 gdp growth. That is completely different over the last year not only is it over 3 , but since election day, the lowest level of unemployment in 17 years, wages are finally rising after eight years of stagnation and 2. 9 over the past 12 months is the largest since june 2009. That doesnt even account for the bonuses due to tax reform. Small businesses will increase compensation to the highest level in 30 years and paid gains are the best since the great recession. More companies are hiking wages more than any time over the last 18 years according to the National Association for business economics and manufacturing expanse at the fastest case in more than 13 years and u. S. Jobless claims near a 45 year low according to the labor department. Back in minnesota january 2 u. S. Bancorp announced a thousand dollars bonus for nearly 60000 employees. A new minimum wage of 15 per hour for all hourly employees and 150 milliondollar contribution to the u. S. Bank foundation which is heavily involved in our communities also enhance Health Insurance offerings and focusing on global and digital experiences. This is in part to the tax and jobs act you deserve to be thanked over and over for your leadership that you showed mr. Secretary for those to get done and we appreciate it. This is just one Success Story from minnesota but we are not out of the woods yet. And you would agree we have a lot of work to do. We have just begun. You have touched on here today, the fsoc 2017 report but with the importance to tailor regulations based on the size and complexity of Financial Institutions to me it is inane whether we just pick a number, whatever it is when what we should be doing looking at the portfolio, the institution if they pose a risk to our system. If you would take some time to explain the problems that we encounter, not do everything you can working within treasury and the frustration and a partnership with congress to make sure that cfius has the necessary resources to do its job especially if we enact cfius modernization modernization legislation. Im hopeful we get passed in. The big priority of ours. You have demonstrated that. Also when he testified last july you identified joint ventures is a particularly concerning gap in existing cfius authority. I would like to ask if you could elaborate on why the treasury believes its particularly important for any cfius modernization to cover joint. We thank where there are risks that would be done to the extent that the company is able to structure a joint venture to get around the current cfius legislation that defeats the intent of the law and thats why we have been working with you to fix that. How do you see expanded cfius authorities especially with respect to joint ventures and are directing with existing areas of the law and obviously im referring to export controls controls. Do you believe these can be integrated . Yes. I want to go back to something you said earlier in response to the question about fen phen guidance on access for marijuana businesses and states that have legally constituted them either through approval of legislative action or by a vote of the people which is now the majority of states. What you said mr. Secretary and im quoting you verbatim a couple of hours ago i can assure you we dont want bags of cash. I can conceive of no way in which you can avoid bags of cash if you back down on guidance. Do you have something in mind that would enable us to prevent a perilous circumstance to Public Safety of having bags of cash which is offered in terms of guidance . As i mention we are reviewing the guidance and we havent taken it down. We are looking at what justice is done and as i said we are sensitive to the issue of dealing with the Public Safety issue and also making sure the irs and others have ways of collecting taxes without taking in main cash. Im interpreting what you just said ineffectively implicitly the current guidance. Would i be off in that regard . Again i want to be careful with my wording. We are reviewing it but our intent is not to take it down without a replacement that can deal with the Current Situation. Very good. Lastly i cannot help but comment on the issue of russian sanctions. Mr. Secretary we will now if sanctions are working when russia stops interfering in western democracy elections. We know they did did with ours in 2016 and they did another western democracies since then. And we know they are as we sit and speak in the Mexican National election as attested to by none other than the National Security adviser to the president so as you perceive to be a party to these conversations about whether or not to actually carry through on the sanctions the congress adopted, keep in mind they havent stopped. They are not going to unless or until we actually do what Congress Asked the administration. The time of the gentleman has expired. The chair recognizes the gentleman from michigan mr. Trott. The chairman mentioned earlier the thousand dollar bonuses that Comerica Bank gave to their employees out of dallas and before the move to dallas they were headquartered in detroit and have thousands of employees in detroit and they moved their headquarters back into detroit and a lot of good things happen. We are very happy where comerica is located. Im want to thank you because the tax reform legislation that you helped get through congress prompted chrysler to make a very important decision headquartered in my district are they decided to invest a billion dollars in michigan create 2500 jobs give each employee 2000 bonus and move their plan for mexico back to michigan so that will make a huge difference there for people and might district. My friend from georgia asked if you had heard about this cfpb decision not to pursue and investigate equifax and another breaking news involving the cfpb in the d. C. Circuit a few days ago decided to throw out all of the penalties and fines imposed against phh over 109 by the prior czar who was asking acting in an arbitrary fashion with statute of limitation laws but respect to equifax is it possible a cfpb decided not to get investigate equifax because they are not authorized to view under grammleachbliley and is that interested the cfp and not the cfpb . Im not going to speculate on that until it had a chance to talk to director mulvaney. No want to congratulate as making an incredible difference to our economy and its clear your background and experience has made you well qualified to do the work you are doing good with that being said or annual report did not call for the repeal of the Orderly Liquidation Authority and is a former bankruptcy attorney i happen to believe a new subchapter in the bankruptcy mode is a better way to deal with solving the Financial Institution than political appointed bureaucrats sitting in a private room. You have an experienced judge whos going to make a decision based on years of precedent and be open and transparent that i like your thoughts on whether to repeal and replacing it with the bankruptcy solution is a better outcome in the event we have a Financial Institution down the road . I think as you know one of the executive orders that the president signed with breast to review that and we expect well be coming coming out within the next month on a report in our recommendations. Once we do that i look forward to talking to you about it. Thank you. With fsoc under the prior demonstrations seem to be largely motivated by Guiding Principles that were basic weight to put us as thankfully all business is bad and if your bank making a profit you must be in need of additional regulation and or must be taking advantage of consumers and therefore we will empower bureaucrats to write rules because the government is so much better at solving problems than the private sector and entrepreneurs. Can you briefly outline some of the reforms are making to make sure corporations have a fair shake at fsoc reform . In general i have met with literally hundreds and hundreds of ceos. Specifically they do believe improper regulation but we are being very clear that we want to make sure that the banks and other regulated entities to function properly. Thank you mr. Speaker terry that i want to close by mentioning my friend from colorado who has the great bill aimed at making sure regulations are tailored to specific businesses and not onesizefitsall. Without i yield back my time to the chair. I think that settlement for yielding. Mr. Secretary want to go back and revisit the old core rule. I want to make sure i understand your views regarding organization, the station of the various agencies. Would you advocate that a single regulator take the lead on rulewriting and interpretation of volcker as long as the other regulations continue to have a role in the examination process . Thank you mr. Chairman for clarifying that. I would support there being a lead agency. Some people have suggested that we have the other agencies play a supporting role so there would be better coordination and leadership. Thank you mr. Speaker 28. The time of the gentleman from michigan has now expired. The chair recognizes the gentleman from massachusetts mr. Lynch. Thank you mr. Speaker to a for your indulgence. I appreciate the generosity of your time. Mr. Secretary im just curious, i know the Current Administration has level funding funding, the amount of resources for financial crimes enforcement fincen. They do a lot of good work with this committee and there is one weakness and one older ability that we did encounter on our investigation of some of the countries Financial Systems in the middle east. That is that we have on occasion one treasury attache out of your apartment covering five or six countries. Obviously countries in that area in that region presents some level of substantial risk and im just wondering if you would be willing to look at the possibility of increasing people on the ground to work with our Embassy Personnel to help with the resiliency efforts that we have been a number of the countries where we suspect that terrorist financing and illicit financing are intertwined with the legitimate Financial Systems in the bank and systems of those countries. I agree with you. My trip to the middle east last summer the treasury attache on the ground played a terrific role working with the local government and the local banks on combating terrorist financing. Do you you have people there that are doing a wonderful job and my concern as well as my colleagues under the site of the aisle is that they are stretched. Thin. We think the result of being stretched thin like that will reduce the efficacy of our counterterrorism financing efforts. One subject that has been a lively subject of debate on this committee is than the importexport bank and i know that the president when he ran for office talked about bringing jobs home and supporting manufacturing. One of the most effective tools we have in government is creating manufacturing jobs in the United States has been the Exportimport Bank. We are up against other countries that are expanding tremendous resources to give their companies a competitive advantage. Recently the president nominated someone with a long record of working to shut down the Exportimport Bank and i would just like to find out what your approach might be or what your efforts might be towards Exportimport Banks effort to promote u. S. Competitiveness especially in the manufacturing or. Im indirectly involved in this but i have spoken to the president if he does want to open the Exportimport Bank for business. I think we want to make sure there are proper reforms there but we are looking to build the board. The matter of the metlife designation suit i understand you dropped the appeal of the metlife designation suit and im just curious if you think dropping that suit might make any future designation of 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. Metlife could still be subject to designation in the future or not so the decision was made on a legal basis around certain issues. I guess what im asking is are we satisfied with the president that we might be setting in dropping that appeal . We have consulted with the department of justice and the other agencies and i think we are comfortable with that. Think you. Mr. Chairman i yield back. The gentleman yields back in the chair recognizes the gentleman from california mr. Royce chairman of the Foreign Affairs committee. Thank you very much mr. Chairman to this question goes to the federal Balance Sheet and specifically, we discussed this the last time you and i spoke before the committee and also in conjunction with the gse reform but i will lay out the case here. I introduce legislation requiring the gse increase credit Risk Transfers with the private sector and im hopeful that the bill included in the committees comprehensive reform efforts. We have seen credit Risk Transfers work not just that fannie and freddie but following last year storm season. If we think about it we saw private insurance payouts afterwards of a billion dollars to the National Flood Insurance Program so analysis has shown theres far more capacity in the Financial System, worldwide about 600 alien. My thought here is why not look elsewhere in the federal government on the housing fund . Replicate Risk Transfer at fha and add ginnie mae is specifically and i would ask if he would support those efforts. First of all let me just say i look forward to working with you and the chairman and others on a bipartisan basis for housing reform. I think this is very important and i do say housing reform because i do think we need to look at fha not just the gses. I want to be very careful that we dont solve the taxpayer issue in one area only to find out that the market share at fha has gone way up and we have taxpayers at risk 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 in the federal Balance Sheet where the risk would be used to protect taxpayers and i hope you could support that effort. Also on export control reform, a point i was going to make, is as we discuss our Economic Security moving forward i share the concern of my colleagues in the foreign governmentbacked investments as critical that we look at those investments in u. S. Technologies that might pose a National Security risk. As you mentioned in your opening the committee is considering legislation to expand cfius in a way to address this threat. The Foreign Affairs committee which i chair is considering export control reform as an additional way to tackle the problem. Would you support new authorities to restrict the export of Critical Technologies and countries that threaten the u. S. National security . I absolutely would. With that i will yield back. Do you yield to the chairman . I yield my time mr. Chairman. I thank the gentleman for yielding. I want to go back to the fsoc designation process mr. Secretary just to make sure im clear. In the Previous Administration fsoc seem to make their designation without taking in the input of the institutions primary regulator. Its not really an agency. We certainly know that under the Previous Administration there is little to no interaction and the Actual Company that was the subject of the designation with with review. As head of fsoc how is your process changed . Will the primary regulator be involved in this process and what exactly is the dialogue or process that will take place and a company that is subject to a potential. First of all we absolutely will look to and rely on information for the primary regulator. They are the regulator that understands the company the best and as i mentioned earlier we are looking to revise the guidelines so there is more transparency when we designate someone. Could you go into more detail about that mr. Secretary on your Transparency Initiative . I fundamentally believe that if people are designated they should understand why they are being designated in what they can do to reduce those risks Going Forward. The gentleman recognizes the gentleman from colorado mr. Perlmutter. Thank you for being here mr. Secretary and i have three hours i want to talk to about. Bitcoin Virtual Currencies. Three of my favorites. Really we do appreciate your testimony today. Lets start with the Virtual Currencies. We have seen tremendous fluctuation in the market particularly over the last year. We have reached some 19,000 bitcoin for instance in middecember and its down around 6000 or so today. What steps how are you looking at these Virtual Currencies and what do you think needs to be done if anything . I share your concerns and i mentioned earlier we set up a subcommittee of fsoc to make sure we have the various different regulators working together. These are new areas. Number one i want to make sure anybody who uses bitcoin that we understand how they are transacting so they are subject to bsa rolls in subject to Money Laundering and sub it to customers. In the United States we have those rules and working with their counterparts at the g20. I want to be careful that this doesnt turn into swiss bank accounts. Bad guys cant use these. The second thing is they do share your concern about making sure that consumers understand them and to the extent that they are now trading on teachers exchanges that the futures exchanges have the proper regulation of the underlying markets so they can be manipulated. Thank you. Marijuana and banking. When you were here last june you and i had a little conversation and we see this industry growing. We are up to 46 days states that have some level of marijuana use whether its cannabis oil for seizures or medical marijuana or commercial. The chairman and i talk about this from time to time but obviously the Banking Industry needs to provide some services to all these businesses across all the states. I dont know if you were surprised by the revocation of the memo by the Justice Department or whether you had a chance to talk to the attorney general before that occurred but the genie is out of the bottle on this and treasury and justice and the Congress Need to address this. You said you were going to talk to your friend mr. Mulvaney on the cfpb issue are maybe the budget or whatever. You should talk to him but to say that the mr. Heck and i are sponsoring because he was a cosponsor of it and we hope he would have been a main sponsor but for the fact that he was selected to go to the administration. Obviously you guys are reviewing your fincen guidances and things like that that there is no going back here. Your department is square in the middle of so many banks and so many businesses either having a safeway and an accountable way to manage this. Just if you have any comments to my comments. Yes, first of all i will follow up with director mulvaney on the say that specifically. I did not participate in the attorney generals decision and what he did but we are consulting with them now. We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution where it can be safe. Thank you. Last question. You have had an opportunity to address it a few times already today but just looking at our story from bloomberg from a couple of days ago treasury warns of upheaval of u. S. Sanctions and i guess you are familiar with it but your russian assets climbed as investors speculated treasury wouldnt recommend sanctions on the countrys sovereign debt and further, from ireport given the size of russias economy and its interconnected is and global asset market is likely over compliance the magnitude and scope and consequences from expanding sanctions would be problematic. Your response. I think we are targeted on specific sanctions to bad individuals and companies as opposed to sanctions on the debt. The time of the gentleman has expired. The gem the chairman recognizes the gentleman from. Mr. Secretary good to see you again in thank you for all you are doing. Before i get to my questions i want to share a little bit of good news. We keep hearing all this bad news for two years ago when i went home one weekend there were several events. A gentleman came up to me and shared with me the story that he did not feel like he could continue on running their small Manufacturing Business that abandon their family for decades. In fact he told me was so difficult to do business between regulation lack of access to capital, customers. His customers are putting pressure on him because of their costs going up. He spent decades running the Small Business and he said im going to retire and shut this business down. My children dont even want to be involved to consist of difficult reading in this business. This weekend i ran into the same gentleman who ran up to me with a smile on his face who said my count and came up to me and said because of the tax reform bill next year you are going to save 100,000 in the business. No longer am i shutting down but im trying to find a way to expand the business. We like those stories. Its a whole lot better to go home and here thank you for what you have done and we are hearing at all over. I want to discuss an issue that you raised on credit unions. He discussed the importance of retrospect does abusive regulations which many in this room on a bipartisan basis believe we should have regular reviews of regulations especially those that are antiquated outdated or irrelevant. In the report you noted before doddfrank many agencies were responsible for implementing Consumer Financial Protection Laws of these regulations were included and reviews under Economic Growth in the regulatory paper asked over doddfrank created the cfpb a consumer regulations no longer subject to these reviews. Just in the last few weeks we passed a bill out of this committee on a bipartisan basis that i authored that would actually include cfpb in the review process. My question is can you further explain why its important for these regulatory agencies to review their rules periodically . Again i think its very important. Rules and regulations are very important but on the other hand they need to be constantly looked at as the markets change and make sure we dont overregulate. Being that the changes in doddfrank exempts cfpb from revealing their own regulations you support the idea of returning to cfpb sex. I do completely. Im not sure why they were against it. There is strong bipartisan support for this bill so i hope we will see it come to the floor. We changed the timeframe from 10 years to seven years and that will help americans by having more frequent reviews. The other area thats very important is cybersecurity. I worked in the cybersecurity arena before coming to congress. I had an i. T. Services company for many years and i also worked in the Intelligence Community and the military would trim both instances we protected data. One of the principles we worked by, work on was you dont have to protect what you dont have. What that means is if you dont need information dont keep information. Otherwise theres a risk. What ive seen is quite often the federal government and regulatory agencies put onerous requirements of businesses to not only keep data that they normally would not keep but also reported to the federal government which we have seen in our own federal government which is by far a higher Security Risk risk. Do you agree with those principles and ideas that they should have a stringent review on what we are requiring of businesses . Absolutely. Thank you. Mr. Chairman i yield the remainder of my time. I thank the gentleman for yielding. Mr. Secretary are you convinced that they are doing us more good than harm or do you worry that this regulation may end up being a little too heavyhanded in its current form . I think its a complicated regulation and he could use reform and clarity. Appreciate that. Six seconds left and i yield back the time that the chair recognizes the lady a lady from ohio. Thank you mr. Chairman Ranking Member and thank you secretary mnuchin for being here. We have asked a lot of questions about regulatory issues and the treasury ranging from cybersecurity to terrorist financing to fsoc and its financial risk. The list goes on and on but im going to shift to the people part of it. Im going to start by a referencing from your testimony today on line three of the first page. Use the words sustained Economic Growth on page four about three lines from the bottom you have stated there is much more work for us to do. Our country is potentially enormous which is why we expect the government to enact policies that allow us to succeed. I agree with that. When you were here before the time ran out so i am writing my request to you and that was over a year ago asking you at that time if you had met with your director of amway. I am or should have so i assume a good staff person prepared you for today so i will now ask you today have you met with your director or do you know who your director is quite. First of all let me just say the response to the questions took way too long and we apologize to the committee. As a relates omni i am planning on meeting with them. Is that no and no . You dont know who the director is a nod you have not that look the director . Why you are conferring let me read to you mr. Secretarys section 342 of the doddfrank act mandate that each on a direct here is to for the u. S. Treasury that would be you. On the impact of the policies and regulations of the agency and minorityowned and womenowned businesses and under section 342g2 of the doddfrank act it defines you as the agency administrator. Does that help refresh your memory . Im going to have to followup with my staff on that. So that means you dont know who that person is and you have not met but the person . I just need a yes or no. I dont 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 the direct law. I dont want to belabor this but mr. Secretary want to let you know this is not only important to me, this is something that is mandated and required and we talk about enacting policies that allow people to succeed and prosper it is my belief that we have to doddfrank because thereve been people like you and others who have not the proponents so thus we put it in the law. This is something that i passed every person that is that in that chair that is required to follow section 342. Can you tell me how soon you are going to make this happen . Im going to get back to you tomorrow. You have my commitment on that. I appreciate that. Let me move to my second question which relates to Affordable Housing. It in the committee and the subcommittee and as you know theres a subcommittee on housing and insurance we have held several hearings on the future of our Housing Finance. In your opinion what role should the future reforms in Housing Finance play with regard to Affordable Housing . You made reference in your testimony about fannie mae and freddie as being in conservatorship. What are some of your reforms . Again i start with the premise that on the one extreme i believe a 30year mortgage is very important to the economy and the liquidity of housing and on the other hand we want to have the taxpayers properly protect it. I believe the Current Situation is not sustainable. I also believe Affordable Housing is things that is important and whether there are direct or indirect goals and how it is paid for something we need to address as part of of housing reform. The time of the gentlelady has expired. I now recognize the gentleman from ohio. Thank you mr. Chairman and thank you mr. Secretary and thank you on behalf of ohios Congressional District for your Critical Role in helping us past the job back very different story after story about the difference its making in the lives of hardworking dam is an Innovative Companies in ohio. One story was highlighted during this president s day to begin in in, their employees talking about their expansion plan. Just talking to the owner of a cnc business a very competitive niche a lot of automation talking about how much automation is moving their industry and he was concerned about his ability to keep up with the investment required to be competitive and did not understand that we have moved past section 179 with immediate expensing. Was very excited to talk to his accountant about how i can ramp up that thank you on behalf of the people of ohio. I want to highlight the other things going on in our economy. Related to regulatory reform. Their number of folks have talked about that and it would be great to get your support for the Senate Getting action on our reforms to doddfrank. Any thoughts on what we can do to advance the cause with their Senate Colleagues . Im cautiously optimistic that the chairman and senator crapo and others can figure out how we can get this done. Thank you for that and in the cybersecurity realm there a number of concerns highlighted like breaches at the ftc disclosed unfortunately well after the breaches occurred and a lot of data and our Financial Markets and the consolidated audit trail, trading a really good layers irregularities often with algorithms. Do you have specific plans to coordinate all the functional areas that you provide oversight over and address cybersecurity in this area . We do. How is that taking shape within the department of treasury . Is it each subset or is there a macro level coordination . Within treasury and are specific girls we have common guidelines so the fcc and the irs and the other independent agencies. We are coordinating with them to make sure that they are following the administrations priorities on cybersecurity. Thank you. You see any need for congress to pass legislation to allow Government Agencies such as ftc fha to oversee thirdparty Service Providers particularly Information Technology Service Providers . Is there a gap in the Regulatory Framework to hold folks accountable . I bring this up because they consolidated audit trail. Its taken a long time. There are remaining cybersecurity concerns including what is the code written to and how to do the people that interface the system is there a regulatory approach or is that something thats able to be done i the department . I think we should he able to but we look forward to following up with you and your staff because i share your concern. Going back to the economy we have seen great investments and we have seen markets respond over the course of the year dramatically to regulatory reforms. The expectation of tax reform and now the occurrence of tax reform. Its not like president obama forgot to make these Big Investments during the obama economy. They are making the investments now because its a fact. These things are growing dramatically upward so while there was a trend of stagnant growth and stagnant wages the trend now is dramatically increased growth and finally some traction on wages. How do you feel about the outlook ahead . I think its quite positive. Thank you and the last thing i would ask is do you consider china a market economy or not . No, i do not. Mr. Chairman i yield. The time of the gentleman has expired. The chair access to clear two more members mr. Kihuen and mr. Mr. Cutoff. Thank you mr. Secretary for being here this afternoon. As you might know i represent the fourth Congressional District of nevada which is North Las Vegas which is the epicenter of the closure crisis during the recession where over 60,000 people around the country lost their home to foreclosure including 3200 in the state of nevada. I know that you ran one west when the bank was aggressively for closing on homeowners including thousands of seniors in the state of nevada. Now as secretary of treasury you are a key voice in the administrations position on Housing Finance reform. How can we trust you to support responsible reforms that will hold lenders accountable when you yourself are responsible for the system when you lead one west. I think that talked about this in. Those loans were inherited and when you say we aggressively foreclose with were required to follow fdic agreements and modifications. I think i have a great understanding of the issues that all those homeowners went through and we are proud of the fact that modifications started under fdic at indie and we helped expand that. There was a reason why you were dubbed the foreclosure king and theres a reason why you made millions of dollars. He talked about this in the past but not on this committee and not with me being here. There was a specific example of a 90yearold woman who claimed Financial Freedom initiative she came up 27 cents short on in shermans payment. Can you explain why it would make sense for foreclosure proceedings against a person to 27 cents . It made no sense and thats why the road ahead and try to have those laws changed. That was a hug month we were required to do in we asked hug to raise the limits up to several thousand dollars. It made no sense and in many cases we appeal to them for exemptions. It was very difficult situation. Mr. s secretary specifically what reforms you think congress should consider to make sure they are not subject to the predatory behavior . Again one west did not originate those loans. The most important thing is that banks originate loans that bar or worse can afford to underwrite properly and that was the biggest problem with the hud crisis. I will give the rest my time to the Ranking Member. Thank you very much but im going to yield my time that you have given to me too but thats okay. With my one minute and 37 seconds i will acknowledge some of my colleagues to congratulate each other on this tax bill youve been invoking Small Business people buries this and youve been invoking bank tellers and regular folks like that. I noticed you didnt mention the Hedge Fund Managers or even the president and the tax benefits to perhaps secretary of the treasury might benefit. You calculated your own personal benefit from this recent tax though . I dont think i get much benefit at all. As you know i was required to sell almost all of my assets. Its funny you were asked by jake tapper about this question and he asked you who is going to benefit and you said the rich will not out of it. In fact he said quote in high tax states rich peoples taxes will be going up. From what we know now by 2027, nine of 10 members of the wealthiest 1 in every state will see their taxes go down. Are you prepared to amend the claim that the taxes are for the rich are going to go up . I was commenting on what it was now and again we hope that those situations. Let me reclaim my time. This tax bill will impose a 1. 4 chilly and art deficit on the national debt. The time for the gentleman has expired. The chair recognizes the gentleman from tennessee mr. Kustoff. I represent an area in the memphis area and they recently a couple of weeks ago received a roundtable with some of my security banks. One issue was the cras or the Community Reinvestment act. To put it in perspective are they banks and met with talked about how they were prior to open a branch for siri purposes. I think this speaks to the requirements of the cra when it comes to physical banks. The regulators have been included in their cra examination unrelated cras in compliance with other financial laws and consumer regulations have had their own standards and penalties for violations. One example is that it urges these banks are being subjected to fair lending questions. Mr. Secretary and your role as secretary of the treasury do envision modernizing the cra and the communities that they serve . Where working on something that i think is focused on recommendations into how we can better serve the community. In many places banks are spending a lot of money and they are not owing to the right places so we will work with members of the community trying to come up with solutions. Thank you mr. Secretary. You gun their review of the cra . We have. Do you know when you expect to release the findings for the report . Its over the next couple of months we would hope to be able to do that. Are there aspects of your recommendation that can be accomplished without rulemaking rulemaking . Again that something as we go through we are going to look at carefully. Some of them we may be able to to the regulators and some may require changes in legislation. Thank you mr. Secretary. The one thing the banks of my district do a bar Financial Literacy. Financial literacy in less than a specific area doesnt count towards sierra a requirements. Is there way to modernize that . Is one of the specific things we are were looking at him one of the things i had explicit fake experience and pretty think theres a tremendous need for Financial Literacy in the Public School systems. Thank you mr. Secretary. Id like to yield the remainder of my time to the chairman. I thank the gentleman for yielding. Mr. Secretary one thing that has always concerned me about the stress test is the possibility of one imposed view of risk to and having all of our major Financial Institutions tested again with the same set of assumptions. Those in some respects this undermine market discipline subject to a group regulatory, regulatory groupthink . Do you have any comments on back . Is something we need to be careful on. Another question, i have been concerned also about the cost to investors on mandatory, certain mandatory Disclosure Requirements that seem to be targeted at social investing and social questions and what might he considered within the ambit of the traditional materiality concept. Do you have an opinion on the proliferation of these requirements and ultimately what impact they could have on capital formation, Economic Growth . I think there should be proper disclosure but as you said we need to be careful as to what that are per disclosure is. The time of the gentleman has expired. I would like to thank the witness for his testimony today. Without objection all members will have five legislative days within which to submit additional materials and additional written questions for the witness to the chair which will be forwarded to the witness for his response. I would ask mr. Secretary that you please respond as soon as you are able. This hearing stands adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] obviously he enjoyed having us around or they really believe its spiked his constant comments about fake news in the media and so forth. I really feel he enjoys having us around because it helps that drive this message and it drives the news of the day which he can do every day and does every day. Hes constantly driving the message and having us around really allows them to do that. Mr. President i rise today to discuss something extremely important in each one