yesterday's session but is looking next today. a lot of focused today isn't just on the big picture and washington it continues to be on retail. there was a sigh of relief at the result of walmart, with the benefiting from their online sales strategy after the acquisition of jet.com. the measure of their goods sold online rose 69% in the first quarter and they saw u.s. comparable sales rise for the 11th straight quarter. we have l brands, the owner victoria's secret, beating estimates, so those shares are trading higher. children's place beating estimates, as well. however, on the flip side, we have ralph lauren, which although learning speed estimates, it is reported an 11% drop in comparable sales. and athena, what a drop, the owner of ann taylor. 38% decline after they slashed their profit forecast. its prior forecast had been 37 to 42 cents. is the worst performer in the s&p 500 today. brazil, we have been watching politics in the u.s. and rizzo -- and brazil as there is a brooding potential scandal involving bribery and the president. we are seen the brazilian stock market is triggering circuit breakers as it falls and pauses. it is down by 10%. we have a number of the stocks that trade in the u.s. trading lower. the brazilian bank all are falling, as is the brazilian currency. mark? continue.p's troubles the stoxx 600 is down for its third consecutive day. yesterday was the biggest drop since september last year. earlier, it was down another 1.2%. it is down near .6 right now. 192 billion euros have been wiped off this index in the last couple of days. the two day spike in volatility on the v stocks, the occluded the of the -- the equivalence of the vix. some earnings to tell you, burberry beating estimates. they are cost-cutting, improving consumer trends in china, and they are on track toward the goal of cutting costs by 100 million pounds. by 2019. which owns gucci, reports faster than expected growth in the first quarter. incoming burberry chief executive is going to face pressure to secure a larger share of that growth for burberry when he starts his new job in july. retail gaining more than expected in april. nice weather prompting britain's to splurge on their homes and gardens. is it sustainable? this week, we have seen inflation rise the most since september 2013. real earnings fell this week the first time in 2.5 years. retail sales up by 2.3% last month. sterling is rising. breaking through 130 for the first time since september. analysts are not convinced it has too much further to rise. the blue line is the year and forecast and the white line is the dollar to sterling. , so much of brexit the economy, here is the surprise index for the u.k. dropping to its lowest level since june of last year on may 15. strong retail figures sales today. vonnie: you are watching pictures of the hearing room. secretary treasury due to testify. his first congressional testimony since being sworn in as treasury secretary. we want to bring in a round table. mckee forchael bloomberg news, christine outside the hearing room in washington, d.c., washington correspondent kevin cirilli. kevin, there is an overshadowing going on, the deepening of political crisis potentially overshadowing this hearing. it is one thing for democrats, they are not too worried, but how will republicans question the secretary of treasury this morning? kevin: the hearing is being overshadowed by the controversy surrounding the fallout of the actions regarding the ongoing investigations, now with a special prosecutor, regarding the campaign's connections to russia. i have spoken to democratic sources to tell me that they could potentially raise this question with secretary mnuchin. he walked into the hearing room moments ago behind me, but republicans are caught now between a rock and a hard place because at the same time they had to walk this tightrope of whether or not to go against president trump or to measure and support the special prosecutor. vonnie: you are seeing the ranking member sharon brown giving opening statements. will they fear into territories into territories that are not typically covered? michael: i suspect not. democrats are better off letting ,he president make his own news since it is always benefiting them the way it has been these days. as for the treasury secretary, his statement is out and it is the kind of generalities you would expect. he talks about currency manipulation. as a currency manipulator. they are working on trade deals, they want free and fair trade. he mentions tax reform. he says he has 100 people working to craft a plan. all of that may not happen this year, but the interesting things that might happen at the end of the month, we get a report on what principles should be in financial regulation. the treasury department was task to do that by the president and maybe they will get details on what he thinks a new dodd-frank version would look like and that might be of interest to financial markets today. also, he briefly mentioned reform. they said on the hill that they would let congress decide, so we will see the gets into specifics on that. vonnie: mark? mark: christine, further to michael's point, what do you think a new dodd-frank law might look like? whatever going to hear from treasury secretary today? christine: i would start i saying most of the people we have been speaking to today in the wall street community are not expecting any budget side of changes to go forward. they're not counting on it and they are comfortable with the fact that a lot of new regulatory appointments have been made that they are hoping will be more friendly to them, that there will be a relaxation of some of the rules and the way they are interpreted. i am thinking of some of the stress test, that criteria, things around capital and how it is measured. that is given a lot of confidence to the wall street community that they will be a shift in tone from regulators and a reduction in their compliance cost and having to deal with this. we heard from the administration and they are emphasizing increasing lending to support economic growth, reducing bureaucracy and red tape for companies, so to the degree that that happens to congressional action, obviously, with taking away the consumer financial protection bureau, i think the banks will support that but nobody is counting on that. vonnie: that is the one area where made the congressional approval isn't needed and what we might see something done in 2017. it do you envision happening, should it happen? christine: while there is distraction around the russian investigation, that may benefit the financial community because they mayhese changes, not want a lot of attention given to them. if there is a relaxation of some of the guardrails around the financial community, that isn't something they want those democrats to be making noise about and publicizing. vonnie: thanks to all of our roundtable members. let's listen now to the secretary treasury. >> chairman crapo, ranking member brown and members of the committee, it is an honor to appear before you today for the first time as treasury secretary. during my confirmation hearing, i promise to work with congress to maintain prosperity are all americans. i want to reaffirm that commitment to you today. let me begin by discussing the treasury's recent report on foreign exchange policies of our major trading partners. ,nsuring that american business consumers and workers face a level playing field is one of the essential components of this administration's agenda. engagereign governments in currency manipulation, and mix the playing field uneven, which is why we monitor these practices. after careful study, the treasury department has found no major trading partner met the criteria for currency manipulation during the reporting time. we will continue to follow this issue and have established a monitoring this of economies that weren't less attention -- that warrants close attention, comprising china, germany, japan, korea, switzerland and taiwan. we are committed to rethinking our foreign agreements and trading practices to ensure they are free and fair to american business and workers. in my discussions with the imf and finance ministers of the g-20, i've emphasized the school and will continue to do so. and willize this goal continue to. it has been more than 30 years since we have had comprehensive tax reform in this country. combined with often imprudent regulations crafted in the midst of the crisis, the entire american prosperity has slowed. i believe a goal of the percent gdp or higher economic growth -- 3% gdp or higher economic growth is achievable if we make reforms to taxes and regulation. there are about 100 people working on the issue of tax reform. bring reliefl to to middle-income americans and make american business competitive again. we will do this while simplifying the tax system. on regulatory reform, treasury is preparing its initial response to the president's executive order on core principles regulating the united states financial system. these principles provide a roadmap for the administration's approach to financial services regulation. we have taken a systemic approach in our meeting with stakeholder groups to hear what works, what doesn't work, can be improved. our initial report contains recommendations to provide relief for community banks and make regulations more efficient, effective and tailored. housing finance reform is another priority. this has been an unresolved issue for too long. once we are -- one we are committed to fixing. we will ensure there is ample credit for housing and we do not put taxpayers at risk rate this committee has done extensive work on this, along with your work on community financial institution regulatory relief. my hope is we can partner on both of these issues. i look forward to working with the congress to develop a solution. finally, another area crucial to treasury is our commitment to combating terrorist activities and financing. we've announced sanctions against individuals and entities regimesed with these like syria, iran and north korea. this work is essential to the administration's efforts to keep americans safe. the first few months of this administration had been significant. we had worked hard to develop and implement policy that would allow the economy to grow. this will make the dream of prosperity a reality for all americans. thank you. secretary mnuchin. i went to thank you for your responsiveness to this committee. we appreciate your willingness. certainly, your expertise and assistance can help us get to the right results. i want to take my first question -- ask my first question about housing finance reform and the status quo. week,ndicated last director walked of the fhfa director kate it this was critical for congress to deal with. my question to you is do you agree the status quo was unsustainable and congress must move on this issue? secretary mnuchin: i do agree completely with that. we are committed to working with on housinglution reform. i think we need to fix fannie and freddie. we are committed to make sure there is proper liquidity in the housing markets. it is an important part of the american economy and we need to make sure there is ample credit for the middle class to buy homes. at the same time, make sure that taxpayers are not at risk. the treasury has a big line outstanding to those entities. chairman: thank you. during the 113th congress, there was a conference of housing reform bill. we had to make a lot of compromises to achieve the bipartisan registration. as the committee focuses on housing finance or form, what do you think are the compromises that he to be achieved? secretary mnuchin: i think we are open to working with you, as i have suggested. we need to find a solution that creates necessary liquidity, while making sure we do not put taxpayers at risk. while we have been busy working on tax reform and focusing on regulatory issues during the second half of this year, i will focus on housing reform and look forward to speaking to many of you on ideas. chairman: one of the big issues on housing financing a form is whether there should be an explicit government guaranty provided through the housing system. that such ave guarantee is necessary, and if so, do you -- how do we deal with implementing adequate taxpayer protections in exchange for any government guaranty? is early mnuchin: it for me to make a conclusion on whether a guarantee is necessary. that is something we would like to study carefully. if there is a guarantee, we would want to make sure there is inle credit and real risk front of that guarantee so taxpayers are not at risk are you thank you. i want to move to the executive order -- at risk. chairman: thank you. i want to move to the executive order our need to pay attention to the five minutes for questioning because i am confident every senator wants to have his or her opportunity to speak with you. up thequickly bring order that president trump signed in february, outlining the principles for regulating the u.s. financial system. it requires you to report within extent and which existing laws and regulations promote those principles into mannerst -- prohibit in consistent with them. i agree with those corporate supposed and in looking for it working with -- on those core principles and look forward to working with you. can you talk about some of the findings we may expect to see in your report? secretary mnuchin: yes. we have a large group at treasury working on this. emphasize things i ahead of time was we wanted to make sure we reached out to different groups and got feedback that this wasn't something the treasury was designing on its own. i know certain people prefer to this is a review of dodd-frank. it is much broader than that. we have met with over 16 different groups. many of them having 50 to 100 people. we have had community banks, small and medium-sized banks, we have had working groups with each one of the independent regulators to make sure we have input from them, and we will issue a series of reports. the first on coming out shortly on banking. one of the big focuses, we will make sure as we have different regulators, we have proper coordination between them and this is something i have been working on at the stock, where i took my responsibility seriously. chairman: thank you, senator brown? senator brown: your nomination gush onon generate 19, january 19, you stated the bank you are affiliated with did not engage in robo signing and misconduct related to mortgage practices. since there has been news, including reports in ohio from one of our state's most conservative newspapers, some 1900 signings in ohio reports that one west did engage in robo signing. earlier this week, your company said with the department of justice for $89 million, related to violations of federal law, do you stand by that january 19 testimony? secretary mnuchin: yes. as you know, i am no longer on the board of cit, so i only have access to public information. i would like to comment on the financial freedom settlement, which was in the recent press. identified byere my management team and self-reported to fha when the became aware of them. these are issues that existed prior to us taking over. we sent ancerned, team to see the fha commissioner and we dealt with that. we also took reserves and as soon as we learned there were issues, we put in policies to correct those issues immediately. secretary brown: my question was, you said that one west -- forgetting this settlement, you said they did not engage in robo signing straight do you stand by that statement that you said under -- signing. do you stand by that statement you said under oath? secretary mnuchin: i do. questions issue to me after that hearing, we responded on the definition of but we expected robo signing. i am no longer at the bank. secretary brown: chairman crapo mentioned the executive order and you gave us in detail. as you and your team at treasury work, are you reviewing the reforms made to the mortgage market that would address practices that took place like in indymac and one west? you mentioned all the banks you brought in the room, but there are customers, community people that you did not mention. the practice is they took place at indymac, protecting harmfulrs, bending servicing practices, evaluating borrowers. thoseu looking at reforms? secretary mnuchin: there will be a series of reports and we will make recommendations on things that impact home mortgages. brown: as i sit do these hearings, so many of my colleagues have suffered this collective amnesia, i do not want you to suffer from the same affliction. another question, meeting with stakeholders of housing finance reform, how many industry groups have you, not your staff, have you met with versus consumer groups? secretary mnuchin: first, let me imment on your other thing, will not forget those issues. i lived with them seriously from the problems at indymac and i spent years trying to fix those in work on home loan modifications. in regards to industry groups, i ofe met with several groups industry leaders and community areas. we have worked with them and we have had several meetings of large groups that have come in. senator brown: could you spell out will get back to this committee within the week the chairman usually calls on to delineate with whom you have met with? you give us a diversity of meetings with small, medium and large banks. there are customers, community groups, all of that. if you would spell out specifically whom you have met with and get that to this committee about the executive order, if you'd be willing to do that? mnuchin: we would be more than happy on a confidential basis. senator brown: i would honor that. esther secretary, you committed -- mr. secretary, you committed to senator hatch you'd respond to all committee member questions. i wrote to you on march 2 and have not received an answer about potential conflicts of interest in the ownership and administration. today, there is a front-page story in mainstream media, the --l street journal, that about the president's business partners and financial entanglements with the russian bank on the sanctions list. i would pose the question i asked in finance and follow-up whenever two on march 2, when you get a complete -- go to get the complete list of trunk businesses to inform that any russian in settlements are with moneyssociation laundering and the like? would you commit to us to get a list of trump business associates and financial ties the curse of the threat they could have to ensure they are benign? secretary mnuchin: i did review before i came to make sure my stuff out fully responded to all the inquiries from you and the committee, and i believe we have. if there are outstanding questions you had from letters that you sent us, make sure you follow up with me after this and we will make sure we are responsive. in regards to your specific question, if you send me a note on what you are looking for, we will review whether it is appropriate to come from us or summer owls, you're happy to be responsive. senator brown -- from us and we are happy to be responsive. senator brown: thank you. i will follow up, but we once a complete list -- people in this country are troubled by the president's business connections. they are troubled when the president's family goes to another country to do business in american taxpayers -- and american taxpayers provide security. academic oran political exercise, it is about the national security of this country and people wanting, needing to know that information. i reiterate how important it is. lastly, we listened to the nominee for terrorism and financial crimes all on those issues and we want to make sure his ties do not affect their ability, the secretary for treasury, terrorism and financial crimes nominee, to do their jobs. thistary mnuchin: i take responsibility seriously. i reviewed the cases weekly. writing reports to me. i can assure you it there any cases that involve the president for any members of his family, that they would be treated very seriously and we would review them like anything else. senator brown: but the public needs to know as you review them. thank you. chairman: thank you. senator: thank you for being here, and i know you heard secretary chairman crapo's commitment to housing reform in his opening comments. i know you have some tax reform issues and others to deal with, but it is my sense you are committed to dealing with housing finance reform in an appropriate way, is that correct? secretary mnuchin: that is correct and it is something hope we can do in a bipartisan basis. >> i think the only way to do it appropriately where you deal with charred issues necessary to go beyond -- to deal with the itrter issues this to do through congressional action, correct? secretary mnuchin: my preferences to do it working with you and your colleagues. i will say that the treasury has a lot of exposure and taxpayers are at risk, but my strong preference is to do it as you describe. >> i talked to you about a and i had aghts ago conversation about the capital cushion and other issues and i believe that he feels strongly about the positions he has laid out. i discussed that with you last night and i know your position, but seems like we have got another 75 days or so to figure out the appropriate result to that, correct? secretary mnuchin: that is and i appreciate you talking to me about that issue. opportunity to meet with him several times. last time, we talked about the dividend extensively and i told him it was our expectation that treasury that they would pay us the dividend and we hope to continue to do so per the agreement. i think most of the models that have been put forth to resolve the issues that have continued to exist with fannie and freddie, most call for an explicit guarantee because of the fact there was an implied guarantee, which caused the situation where there were public losses. if there is any guarantee put in place after a large amount of capital being put in front, that is something that should be priced, should it not? secretary mnuchin: if we end up with the situation where the government is issuing a guarantee, no different than insurance,nce or fha the government and taxpayers should be compensated for that risk. there has like to say been a lot of work, senator has spent alf great deal of time on this issue. as i mentioned last night, to have the secretary of treasury like you that knows this much on this topic, i look at this as an opportunity to resolve this issue because of your knowledge and your interest to the committee. when we attempted this in 2013, we did so in a fashion complicated, difficult, even though we passed something to bring that to the mainstream on the floor and in front of the american people. my sense is there has been a lot of work to streamline since. i will say i feel for the first to alignal opportunity just not the interest of u.s. taxpayers and the fact we went to have a housing finance system that is robust, but one that more fully aligns the public sector interest in the private sector interest. i have talked to you a little about some potential proposals last night on the phone, but i want to thank you for your interest in this in the forward that iseting the work the last piece of work, the one piece of work that should have been front and center on financial reform when we did it in 2010, and i went to thank you for your concern, your interest in the involvement in bringing this to a close. secretary mnuchin: thank you. i'm committed to work with you. thank you for joining us today. you noted in your testimony the importance of the work done in the treasury following to identify disrupted terrorist activities by targeting financial networks. this work is critical and depends on cooperation of our allies, specifically through intelligence sharing. off the recent revelation president trump sharing classified information given to him by an ally butchered without its knowledge, do you have concerns about the effect it will have on our relationships? i cannot mnuchin: comment on what information was shared or not, since the only thing i know is what i read in the press. i will say i am probably spending 50% of my time on tf issues.ues -- on tfi i think it is the most important issue right now as part of my job. i assure you i take it seriously. i have had to foreign trips anding with the g7 and g-20 in each one of those meetings with my counterparts, i have discussed this and i'm happy to report that we are in a close working relationship with our partners and our allies on this issue. something i think and be incredibly effective in stopping terrorism throughout the world. >> thank you. has asked you to review the liquidation authority and establishment of dodd frank act. as you know, the statuary purpose of the loa is to provide the necessary authority to liquidate companies that pose a financial risk to the united states and mitigate such risks and minimize the hazard. i would like to highlight some of the provisions and ask if you support them. big,e case of the make a you support the responses? secretary mnuchin: we are going through an extensive review of ola as instructed by the president. we are just starting that process. i have had discussions with many finance ministers and governors throughout europe. this is something important to them, as well. it would be premature for me to make comments on any aspects of it. we are doing a review. i'm open-minded to looking at these and i look forward to wishing a report and we would be more than happy to update you once we have done the work area and -- work. >> let me recognize your answer and put on the record two other issues. form of a it in the question, understand your responsibly similar to your initial response rate -- response. do you expect them to be responsible for the affiliate? secretary mnuchin: i would save the general matter -- that is a good policy that has been instituted. we would lookg into. i support that. >> do you think taxpayers should bring a losses or exercise any authority under olm? secretary mnuchin: i would say that is an objective but i would reserve comments until we complete the review. we do not want to put taxpayers isrisk in any way and that one of the reasons we are looking at the core principles. rathertax plan is tourist in details but it suggests some of the highest income americans would receive significant tax cuts and the majority of tax relief to the remaining americans would be rather miniscule or small. thathere is a possibility in the proposal, there could be some increases on individual families or taxpayers. i committed to ensuring there will be no increase on families or individual taxpayers less than $260,000 a year. -- $260,000 a year? secretary mnuchin: tax reform is something we are working on with the house and senate, but i can assure you the president's objective in mind jet to -- and my objective is to create a middle income tax cut and we do not raise taxes on the middle income. if anything, the opposite. we are trying to create a middle-income tax cut. >> would it be equivalent to the tax cut enjoyed by the richest americans? who make up the highest 1%? secretary mnuchin: we are working on details. one of the things we have done is propose getting rid of almost every single deduction, which is something used by the church in return for a slight reduction in taxes. is 95% of to americans will not need to use itemized reductions and we will be able to fill out simple fight tax returns and we look forward to working with you as you progress. >> thanks. thank you, mr. chairman. mr. secretary, thanks for joining us. i want to take a moment to complement you on the extraordinary accessibility. you have been before groups of us, members of the finance committee. i lost track of the number of times you have been on the hill to get input on various issues. you have been available by phone. you have posted medians at the white house and that is a welcome change from the previous regime. for youreful accessibility and responsiveness. i want to commend you for reiterating the goal that we should be striving to create an environment in which a consistent growth above the percent area -- about 3%. it is an important goal. as a quick follow-up to comments from the senator from rhode island, i would like to underscore as you do this review of the ola and olf, i hope you keep in mind this convoluted construct, which contemplates a is ayer bailout, it creature of the five we do not have an adequate resolution mechanism in bankruptcy. some of us have worked on legislation that would give us a the confidence we could resolve, even a large, complex firm in bankruptcy, so he would not need for taxpayer funds to be put at risk indirectly to the olf, nor all these punishment mechanisms the fdic would subjectively decide to impose, of which the senator from rhode island mentioned. in this general topic, i wanted to address one of the egregious problems with the uthe ep soc, and it has to do with these too big to fail firms. there are several obvious problems with the way that had been run and i'm hoping to get your assurance it will be run differently. where a prospective designee would have no idea the criteria by which they would be designated, a second is a complete lack of a defined, so-called stringent regulation, which is the dodd-frank scripted punishment for being designated, no clear offramp, no mechanism that which you could, once designated, change your business. this is to be relieved of the designation, and even toms like asset managers had be worried about designated and they do not mediate credit risk, fund themselves with deposits, have the kind of risk profile that banks have, so can you assure us that and your aadership, it will not launch new wave of designations and be run in this opaque fashion, and could you share how you intend to lead it since it exists in statute? secretary mnuchin: i take my responsibility of chair seriously, not only on designation issue but it is also an important for them, or we can talk about issues across the regulators. cybersecurity is something i'm focused on we are working with regulators in other areas. on your question, the president has signed an executive order where we are reviewing the designation process. it is early in that work but i do support the concept of transparency and i believe that if a company is being designated, they should understand what would be designated. be de- i believe there should be transparency, generally. >> quickly on the cfpb, i remain concerned that the way this entity was structured has left i an accountablet and it behaves as -- left it on accountable. the house finance committee had to take steps to discover the nature of their processes in indirect auto lending, despite the statute permits them to regulate auto lending. to fail tonued produce a timeline that we have requested to explain their involvement in the discovery of the wells fargo abuses, where it jumped in atcfpb the end to take credit for what others have done and the director has yet to respond to qfii's i submitted over one year ago. i think this lack of responsiveness is the logical consequence of an entity that a court has determined is unconstitutional in construct. i hope you agree to work with us to change the governance of this entity, naked subject to appropriations and -- make it subject to appropriations. secretary mnuchin: yes, we will work with you on that. >> senator menendez. >> welcome. a deal ofent spent time on the campaign trail highlighting those neighborhoods and communities throughout the country that seldom reap the benefits of expansion but are burdened by economics. after your confirmation hearing, you said "i share your commitment to bring back jobs to these communities that have been so gravely affected the economic conditions they had no part in creating. i will ensure rule america is no longer left -- rural america is behind." left with that, let me ask you about community development financial institutions. partners that have stepped up to inject capital, create jobs, loans, bankings services, in those forgotten communities, in 2016, cdfi has made over 39 thousand loans and investments, totaling more than overbillion, financed 11,000 small businesses and over 33,000 affordable housing units. explain how it is possible to reconcile the president's promises and your commitments with the administration's plan to eliminate the community development financial institution from the foundation on which these investments are made possible? secretary mnuchin: first, let me again say i'm committed to work with you on helping these communities in having with the president during the campaign. i had the opportunity to see this and the opportunity at one to see see -- at onewest where these loans have been made. in regards to your question, the president's budget has as a priority to make sure that we reinstitute proper spending for the military. the president is concerned that we have not made those proper investments over the last number of years and that required a huge investment on part of the government, so we had to make difficult decisions and where we live try to save money on other areas, while i share some of your concerns with the cdfi's, we had to look at this a different priorities. there is private capital -- but i do share your concerns. >> let me respond to that because i believe in a strong defense. we spend more than the next seven countries combined and we can do better, but not at the cost of everything that makes america worthy of fighting and dying for and not at the cost of millions of americans who languish in an economic situation for which none of us would want to live in. when i looked at the budget justification that was put out by the administration, the justification proposed in the budget outlined as to why it should be zeroed out. it is not an accurate description of the program statutory purpose. it said this was to "jumpstart an industry." that wasn't the case, it was created to promote access to capital and promote economic growth. we disagree on the value of the program because in my mind, when there are more than 50 million americans living in communities with high percentages of adults were not working and many who have no high school degree, every block has a few vacant homes and incomes are stagnant, these communities need investments that will allow them to start small businesses, create jobs and purchase homes. days is what i thought i would .ind with the administration giving in your desire to do national defense does not make any sense on behalf of the people we want to defend. and createdefend economic opportunities. even the banking industry -- they said work that was the focus of this conversation, they are positioned to understand local credit. as we go into the 2018 fiscal cycle, i hope you can be an epic it within the administration for something that would meet the president's goal and your own goal. i hope to be able to work with you to make that happen. lastly, i wrote a letter in march two concerning the possibility the administration would be forced to deal with an offer from russia's state-owned oil company to require critical energy of the structure in the united states. last year, in this way left -- venezuela's larger company pledged 50% of citgo shares as a collateral to its loan. i received a response friday evening and it doesn't say anything. it recites relevant statutes and standards. would it concern you, mr. ela'stary, if venezu oil company defaults on the debt, and brescia has a majority stake if they had not purchased additional shares -- and russia has a majority stake if they have not purchased additional shares, with three refineries in three different states, nine pipelines about the country, wouldn't that be something that concerns you? secretary mnuchin: let me be clear in stating this is an issue i am aware of, not just from your letter but from other people who have raised the concern. this, like anyu other national security issue, will be reviewed. national security issues were discussed in other settings and at the appropriate time, and as issues progress, we would be more than happy to have a confidential discussion. >> allegory to that. >> senator scott. >> good to see mr. tillis with us today. good to see you healthy here. [applause] that is what i do not run at 8:00 a.m. in the morning, however. [laughter] excuse me. i will talk to you later. good to see you, mr. secretary. i spent about 20 years in the insurance industry. that may not be as close to making the lego batman movie, but i was pleased to see the president's copy to review the designation -- call for you to review the designation authority. examining these designations is good public policy. at the end of the day, insurance companies are not banks and mission of the treated as such. under existing law, it includes an independent member with insurance expertise. most members can have their vacancies on the councils filled by whoever takes the place. but unfortunately, such a provision does not exist for the independent member with insurance expertise. term ends,rrent there will be no one to take its place and no voting expertise, and do you believe congress should express this discrepancy between the vacancies of the caps off members, and if so, -- of the fsoc members, and if so, how would you do so? secretary mnuchin: i think it is important we have someone on fsoc that represents and has experience in the industry knowledge. i would be happy to work with you on that issue. we are aware of this term is coming up and if you or anybody has suggestions for someone to replace him, we would be happy to listen. i share your concern and we want to make sure we keep that spot on fsoc. >> i assuming you make your presentation to the president on your view, you would bring that issue up to the president? secretary mnuchin: yes. >> i want to thank chairman crapo and ranking member brown, who are committed to solving this issue, as well. if we work as a committee, i think we can solve this discrepancy that is unusual and did not practical. thank you. -- and not practical. thank you. >> thank you, mr. chairman. thank you for being here, secretary mnuchin. i appreciate your presence. i have moran and something called the clear act. have you had a chance to look at that? secretary mnuchin: i only looked at it briefly but i would be happy to get together with you and go through it. >> it is a bipartisan bill. there are a number of democrats that are willing to work with you and republicans to work with you to try to get some relief for community banks. if you could look at that and get back to us, i would like that. secretary mnuchin: i would be more than happy to. i can assure you want of the things that will be in the report to the president is really for community banks. >> there is a bill out there fairnesse marketplace act. it deals with requiring small businesses to reflect sales tax on behalf of local governments when selling goods over the internet, are you familiar with the bill? secretary mnuchin: i am. >> do you want the president have a position on that bill? secretary mnuchin: i have not discussed it with the president so i do not know his view. i think this is something we need to look at and i share certain concerns of years on it. >> how about a national sales tax? is that something the administration supports? secretary mnuchin: we have had no discussions on a national sales tax. it is not something we are inclined to do. cohou, along with director en, announced a tax plan and debriefing of the document. it isn't specific but that is ok. nonpartisan experts have said this plan could cost $5.5 trillion. i do not think any of us here think it is a good idea, saddling the kids would additional debt, even senator mcconnell recently said the plan cannot add to the debt. could you commit to this plan, this tax relief plan would not add to the debt? secretary mnuchin: let me assure you we would never propose a plan with that would cost $5 trillion, ok? there were only specific parts of the plan that were released so i do not know how it could be a sponsor we scored. what i have said repeatedly is any plan we put forward, we believe should be paid for with .conomic growth and concerned as to whether some of the models will contribute enough growth and dynamic scoring, but only present details, we think it should be paid for. >> a couple of things. first, the budget that the president put out -- quite frankly, and senator menendez talked to part of it, it does not bode well for rural america, if you're talking about economic payth, for rural america to for the tax plan, we have some huge problems. i am just telling you it ain't going to happen with that budget. i will be honest with you. of dynamicsspicious growing because it has not been the first time we have been here. often times, through dynamics scoring, the end product looks hits, itwhen reality is not that way at all. if you are concerned about the you are -- i believe i would ask, this needs to be done prudently. secretary mnuchin: i can assure you i'm concerned about the debt . i'll give you my 10 second commercial on the debt limit, which we need to raise and look forward to working with all of you. >> we look forward to working with you, too. gse reform has been brought up several times. do you support a 30 year fixed rate notes? secretary mnuchin: i do. >> you have talked about protecting taxpayers and i think it is solid. would your support for that go away if there was some taxpayer risk with the gse rebuild? secretary mnuchin: again, i think the 30 year mortgage has been a fundamental part -- >> yes, no doubt. secretary mnuchin: as long as most people can remember. >> eight days a big deal. secretary mnuchin: if we end up with a scenario where we need some kind of explicit guarantee, i would expect it would be paid for and i would expect it would hopefully never be hit. no different then there is an insurance fund it. >> ok. soc, on a number of changes with transparency and designation process, you have talked about some, making public the calculation for stage one evolution, providing more information to companies as they go through annual reviews, would you support those changes into law? secretary mnuchin: we are looking at recommendations, but i think that is one of the things we will look at and >> potentially recommend. thank you. -- and potentially recommend. >> thank you. >> thank you for your willingness to serve. you bring unique experience from the private sector to this office of treasury. neednow well that we meaningful bank reform. you have been in the banking business. us have pushed for overall conference of bank reform, but it seems to me a lot of the smaller banks and regional banks that to my knowledge have been here 31 years on this committee and chairman three times, that they do not pose a systemic risk to this country, you know, the small and regional banks. do you support in concept would you work with us to try and bring some meaningful, fundamental bank reform to our system? secretary mnuchin: absolutely. i think regional banks and community banks are critically important to lending. these are the banks that know is needed,ties, what and they know how to make loans. we should make sure they can do it without undue regulatory burden, without putting taxpayers at risk. >> aren't they mainly the banker for the small and medium-sized business in this country, which are the job creation machines? secretary mnuchin: they are. >> on the tax reform, which we all have interest in, we talk about the corporate rate -- 35% is too high, of course, nobody pays 35%, as we know -- but i wrote this up several times, most of the small and medium-sized businesses that we were talking about in this country are taxed under subchapter s code, is that correct? secretary mnuchin: that is. >> if we are talking about tax relief for the biggest of the biggest, what are some of your proposals or what are you working on? you have a lot of smart people working on this. for the small businesses and so forth because i would not want to support a big reduction just for the biggest of the biggest and do nothing for our basic base and job creation, small to medium-sized businesses. are you working in that area? secretary mnuchin: yes, we shape concerns and i have referred to this as a business way instead of a corporate rate. we have a i just want to emphasize that we are committed to make sure that rich people don't use passed throughs as a loophole to avoid the rates. singlery accountant and lawyer

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