Transcripts For CSPAN3 Treasury Secretary Mnuchin On Financi

Concerns over Marijuana Companies and banking. This is just under three hours. The committee will come to order without objection the clair is authorized to declare a recess of the committee at any time. All members have five legislative days within which to submit materials to the chair. This hearing is for the purpose of receiving the second of treasurys annual report on the Financial Stability of oversight counsel. Now recognize myself for 3 1 2 minutes to give an Opening Statement. Mr. Secretary this is your first appearance before the house. After the tax cuts and jobs act has been signed into law. I want to let you know on behalf of the majority, our grateful we are to you and to the president for your leadership and for helping make this act signed into law. It is truly, truly historic. After eight years of failed economic policies that led to the slowest weakest recovery, the economy is starting to take off in wages are finally growing again. Consumer optimism abounds. Interest rates and possible inflation associated with a breakout of Economic Growth. Artificially low Interest Rates may have ben filtefited some on street but theyre not particularly helpful to main street. We have always known that the fed would face significant challenges in unwinding the Balance Sheet when the economy took off. If youre listening, good luck, chairman powell. You volunteered for the job. Were averaging 3 growth again. Unemployment is at a 17year low. Wages grew at 2. 9 . The fastest in almost a decade. Two million americans have gone back to work. All of this in President Trumps first year in office and were just now on the leading edge of the tax cuts and jobs act. Lets take a look at the impact on the Financial Services industry alone. J. P. Morgan chase recently announced they would be making a 20,000,000,005 Year Investment across the business lines. In addition to increasing wages for the employees, they plan to boost Small Business lending by nearly 20 . And my hometown of dallas, comerica announced theyre boosting the minimum wage to 15 and giving a 1,000 bonus to 4500 employees. Nationwide is giving its employees a 1,000 bonus and increasing the 401 k match. Visa is increasing the 401 k eligibility and contributions as well. Bb t is raging the minimum wage from 12 to 15 an hour. And giving the employees a one time bonus of 1200. Hardly crumbs. And these are just a few of the Financial Services companies that have announced benefits due to the tax cuts and jobs act. Again, mr. Secretary, thank you and thank you to the president. Unfortunately, tax reform alone will not unleash our nations full economic potential. Why . Because for the last eight years our economy has been drowning in a sea of complex, onerous, expensive and job crushing washington red tape. Fortunately the Trump Administration has aggressively cut needless red tape like few others but much work remains including at the Financial Stability oversight counsel. They can clearly serve a vital function and promoting Financial Stability by Monitoring Market developments, facilitating sharing and making policy recommendations to congress to mitigate risk. Unfortunately, they have proven they can harm our economy through the designation of sifis. They eviscerated ge capital ushgs o, one of americas great companies. They capitalized millions of companies from local bakeries to furniture stores, its just gone. In a dangerous effort, it attempted to designate metlife a sifi, an insurance company. The decision was found to be arbitrary and overturned. Mr. Secretary, im encouraged by much of what i read and the annual report. Under the new leadership of a new administration, i look forward to hearing more about it. I now recognize the Ranking Member for four minutes for an Opening Statement. Thank you, mr. Chairman. Welcome back, secretary. Im looking forward to your testimony today on the annual report of the Financial Stability oversight counsel. Im very concerned that the Trump Administration seems ton determined to remove all nonbank systemically important Financial Institutions from fsocs supervision regardless of what threats those institutions may pose to our economy. As we all know, one such Financial Institution aig, nearly brought down the economy in 2008 and had to be bailed out to the tune of 182 billion. Fsoc plays a key role in ensuring the continuing stability of the United States economy. And it must not be weakened or side lined from dealing with the threats posed by risky Financial Institutions. In addition to testimony on fsoc, it is also important today that the secretary are a dress several inquiries on vital matters with National Security implications. Mr. Chairman, as a general matter, the secretarys hand willing of inquires from Committee Democrats has been completely unacceptable. As you know, serious questions have been raised about the finances of President Trump, his family members, and his associates and their involvement with russian government officials and ole i gashgs. As a Ranking Member of the committee with jurisdiction over the Treasury Department, financial crimes and enforcement network, i and other democrats on the committee requested information from the secretary on these matters several times. As the secretarys last appearance before this committee, i asked x. About a letter that we had written to him regarding President Trumps financial ties to russia as well as those of his family members and associates. Secretary did not answer the letter. He was not forthcoming in his testimony. Since then, we have seen the secretary we have sent the secretary two additional follow up letters pertaining to the finances of President Trump, his family members, and his associates as well as his own hand willing of Law Enforcement and regulatory matters that may involve those individuals. The reply that my democratic colleagues and i received from the secretarys staffer just a few days ago did not provide answers to our inquiries and instead encouraged us to go and get the information we requested from other committees with which the treasury provided documents. Despite the fact that the Financial Services committee has cleared jurisdiction over the matters, the secretary seems to think that referring us to other committees is a satisfactory answer to our questions. It is not. Relatedly, im also very concerned about the Trump Administrations inaction on the sanctions passed with broad bipartisan support by congress in 2017 to punish russia for interfearing in our democracy. The Trump Administration has now missed several deadlines related to those sanctions which is unacceptable. Trumps inaction in this area serves to advance the interest of putin, the kremlin, and russian oligarchs to the detriment of the American People. My january 31st levtter to the secretary on this matter has gone unanswered as of yet. Since secretary is here today, it is my sincere hope that he will provide answers to the questions we have on all of these matters. And so with that, mr. Chairman, i will yield back the balance of my time. The chair now recognizes the gentleman from missouri. The chairman of the Financial Institution subcommittee for 45 seconds. Thank you, mr. Chairman. Thank you, mr. Secretary, for being here. We made significant progress on tax and regulatory reform. We must continue to improve the efficiency of the Regulatory Regime that left too many consumers and Small Businesses sitting on the credit sidelines. Im a Firm Believer in the meaningful regulation. At the same time, regulation needs to be responsible and tailored. With regards to risk, for too many years we dealt with federal government that tried to purge all risk from the system. Remain unconvinced that the results of the actions has done much aat all for Financial Stability w regards to fsoc, mr. Secretary, i urge you to use your authority to reregulate and promote Financial Stability through analytical processes. Fsoc needs to become a more thoughtful body. I yield back. Gentleman yields back. The chair recognizes the gentleman from michigan, the vice Ranking Member for one minute. Thank you, chairman and secretary. I appreciate you being here. We havent met. My hometown is flint, michigan. And what happened in flint is an example of what happens when we fail as a society to invest in older industrial cities, those towns that are struggling to make that transition to the next economy. The water crisis in flint is a tragedy that is sadly still on going. It should abe wakeup call for every american, a wakeup call about what happens when we put Balance Sheets ahead of the interest of people. If this administration and your department as well recently attempted to justify changes in our tax code, my implication will hurt many of these communities. The republican passed tax bill, while certainly there are winners and losers, and we could litigate that for the entirety of this hearing, one thing we know for sure is that the changes in the tax code are already being used by the administration and by this congress to justify cuts to programs that are necessary to the revitalization of these already struggling places. That is not acceptable. And theres no way to justify that. What we need in this country is a plan to reinvest and reinvigorate those places. People live there and the implications cannot be overlooked. We cant just focus on the people at the top who are winning without recognizing there are people who will suffer as a result. Zach booker is a fourth generation barber and as well as starting and owning a number of various Small Business as cross my district and west michigan, zach describes himself as a young, hungry for success and continues to strive forever growth. Because of the tax cuts and jobs act that he is actually saying our goals can be extended. Im increasing wages. Im trying to hire more people. Im trying to broaden our reach to serve more customers. Were trying to add more locations. Were trying to buy buildings instead of rent buildings. Zach is a common story. This bill is not just about providing crumbs to the American People. Its helping young entrepreneurs like zach grow our economy and achieve the american dream. We have to make sure they have an opportunity to save and invest. And zach also knows, mr. Secretary, that what is happening on wall street is a technical correction hitting wall street not a fundamental as correction that is hitting main street. Far too long weve been ignoring main street and its time we turn that around. So i appreciate you being here together. Today. And i look forward to supporting these young entrepreneurs like zach. The tichl the gentleman laz expired. We welcome the secretary of the United States secretary of treasury. Secretary is previously testified before our committee. I believe he needs no further introduction. Without objection, the witnesss written statement will be made part of the record. The chair and we are with our hearing amid morning. And the secretary has agreed to stay still 1 30, the couple om aairy three hours for a secretary. Secretary, youre now recognized for five minutes to give an oral presentation of your testimony. Welcome. Thank you very much. Its a pleasure to be here. Chairman, Ranking Member and members of the committee, thank you for inviting me today. One of my Top Priorities is treasury secretary is to sustained Economic Growth for the American People. So im happy to report that the growth of the economy over the past wreer is the high every than the average of the prior 20 years and included two straight quarters of 3 or higher gdp. The president promised robust growth and he is delivering on that promise. Im here today to talk about the Financial Stability Oversight Councils 2017 annual report. This is an important vehicle for providing congress and the public with the councils assessment and recommendations relating to regulatory developments and potential risks in the Financial System. The report emphasizes the importance of Economic Growth to maintaining a resill yenlt Financial System. Since the financial crisis, weve had time to assess the effectiveness of regulatory reforms and consider their unintended consequences. The report recommends that the Council Member agencies address regulatory overlap and duplication, modernize outdated regulations and taylor regulations based on the size and complexity of Financial Institutions. The report discusses a number of risks that the council is monitoring, one i would like to emphasize today is cybersecurity. The Financial Systems heavy and increasing reliance on technology increases the risk that significant cybersecurity incidents could disrupt the Financial Sector and potentially impact u. S. Financial stability. Substantial gains have been made. But i want to emphasize the need for us is stained attention to these risks. The report makes a number of recommendations including the creation of a private Sector Council of Senior Executives in the Financial Sector to collaborate with regulators in order to mitigate cyberSecurity Risks. Turning to our growth policies, the tax cut and jobs act passed last year was our top priority. In this overhaul of the tax code is already having a positive impact. Because of tax reform, over three million americans have received special bonuses or other benefits and over 300 companies have announced investments in the workforces. Companies are announcing higher wages and increased benefits, employee training, infrastructure and research and development. These investmentes will lead to long term prosperity as well as companies to bring back cash from overseas, our economy will continue to grow. Let me now turn to some specific priorities. I want to comment you for work on financial regulatory reform. We appreciate the work of this committee and the house of representatives. To advance the cause of reform bypassing hr10, financial choice act and dozens of strongly bipartisan bills. This legislation reflects manufacture treasuries recommendations from our executive order reports released last year. I encourage the senate and house to Work Together to move this legislation as quickly as possible. The period would last unwilling february 28th. I urge them to protect the full faith of the United States by increasing the statutory debt limit as soon as possible. The house and senate have been working towards modernization of the committee on Foreign Investment and the United States. I support the Foreign Investment risk review modernization act and applaud senators corn in, feinstein and berr and heck for leadership on this issue. A modernized plan will enable us to protect our National Security. I look forward to working with congress. One of treasuries Core Missions is to safeguard the national by using powerful economic tools. We will continue to take frequent and on going actions to combat threats from malicious actors. These includes 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, deny them access to the u. S. And International Financial system, disrupt the Revenue Streams and ultimately pressure for a change in behavior. As youre aware, last week the Treasury Department submitted a series of reports and compliance with sanctions legislation. These reports represent another chapter in our efforts to use our economic authorities to counter the threats that we face. On Housing Finance, the Marijuana Companies<\/a> and banking. This is just under three hours. The committee will come to order without objection the clair is authorized to declare a recess of the committee at any time. All members have five legislative days within which to submit materials to the chair. This hearing is for the purpose of receiving the second of treasurys annual report on the Financial Stability<\/a> of oversight counsel. Now recognize myself for 3 1 2 minutes to give an Opening Statement<\/a>. Mr. Secretary this is your first appearance before the house. After the tax cuts and jobs act has been signed into law. I want to let you know on behalf of the majority, our grateful we are to you and to the president for your leadership and for helping make this act signed into law. It is truly, truly historic. After eight years of failed economic policies that led to the slowest weakest recovery, the economy is starting to take off in wages are finally growing again. Consumer optimism abounds. Interest rates and possible inflation associated with a breakout of Economic Growth<\/a>. Artificially low Interest Rates<\/a> may have ben filtefited some on street but theyre not particularly helpful to main street. We have always known that the fed would face significant challenges in unwinding the Balance Sheet<\/a> when the economy took off. If youre listening, good luck, chairman powell. You volunteered for the job. Were averaging 3 growth again. Unemployment is at a 17year low. Wages grew at 2. 9 . The fastest in almost a decade. Two million americans have gone back to work. All of this in President Trump<\/a>s first year in office and were just now on the leading edge of the tax cuts and jobs act. Lets take a look at the impact on the Financial Services<\/a> industry alone. J. P. Morgan chase recently announced they would be making a 20,000,000,005 Year Investment<\/a> across the business lines. In addition to increasing wages for the employees, they plan to boost Small Business<\/a> lending by nearly 20 . And my hometown of dallas, comerica announced theyre boosting the minimum wage to 15 and giving a 1,000 bonus to 4500 employees. Nationwide is giving its employees a 1,000 bonus and increasing the 401 k match. Visa is increasing the 401 k eligibility and contributions as well. Bb t is raging the minimum wage from 12 to 15 an hour. And giving the employees a one time bonus of 1200. Hardly crumbs. And these are just a few of the Financial Services<\/a> companies that have announced benefits due to the tax cuts and jobs act. Again, mr. Secretary, thank you and thank you to the president. Unfortunately, tax reform alone will not unleash our nations full economic potential. Why . Because for the last eight years our economy has been drowning in a sea of complex, onerous, expensive and job crushing washington red tape. Fortunately the Trump Administration<\/a> has aggressively cut needless red tape like few others but much work remains including at the Financial Stability<\/a> oversight counsel. They can clearly serve a vital function and promoting Financial Stability<\/a> by Monitoring Market<\/a> developments, facilitating sharing and making policy recommendations to congress to mitigate risk. Unfortunately, they have proven they can harm our economy through the designation of sifis. They eviscerated ge capital ushgs o, one of americas great companies. They capitalized millions of companies from local bakeries to furniture stores, its just gone. In a dangerous effort, it attempted to designate metlife a sifi, an insurance company. The decision was found to be arbitrary and overturned. Mr. Secretary, im encouraged by much of what i read and the annual report. Under the new leadership of a new administration, i look forward to hearing more about it. I now recognize the Ranking Member<\/a> for four minutes for an Opening Statement<\/a>. Thank you, mr. Chairman. Welcome back, secretary. Im looking forward to your testimony today on the annual report of the Financial Stability<\/a> oversight counsel. Im very concerned that the Trump Administration<\/a> seems ton determined to remove all nonbank systemically important Financial Institutions<\/a> from fsocs supervision regardless of what threats those institutions may pose to our economy. As we all know, one such Financial Institution<\/a> aig, nearly brought down the economy in 2008 and had to be bailed out to the tune of 182 billion. Fsoc plays a key role in ensuring the continuing stability of the United States<\/a> economy. And it must not be weakened or side lined from dealing with the threats posed by risky Financial Institutions<\/a>. In addition to testimony on fsoc, it is also important today that the secretary are a dress several inquiries on vital matters with National Security<\/a> implications. Mr. Chairman, as a general matter, the secretarys hand willing of inquires from Committee Democrats<\/a> has been completely unacceptable. As you know, serious questions have been raised about the finances of President Trump<\/a>, his family members, and his associates and their involvement with russian government officials and ole i gashgs. As a Ranking Member<\/a> of the committee with jurisdiction over the Treasury Department<\/a>, financial crimes and enforcement network, i and other democrats on the committee requested information from the secretary on these matters several times. As the secretarys last appearance before this committee, i asked x. About a letter that we had written to him regarding President Trump<\/a>s financial ties to russia as well as those of his family members and associates. Secretary did not answer the letter. He was not forthcoming in his testimony. Since then, we have seen the secretary we have sent the secretary two additional follow up letters pertaining to the finances of President Trump<\/a>, his family members, and his associates as well as his own hand willing of Law Enforcement<\/a> and regulatory matters that may involve those individuals. The reply that my democratic colleagues and i received from the secretarys staffer just a few days ago did not provide answers to our inquiries and instead encouraged us to go and get the information we requested from other committees with which the treasury provided documents. Despite the fact that the Financial Services<\/a> committee has cleared jurisdiction over the matters, the secretary seems to think that referring us to other committees is a satisfactory answer to our questions. It is not. Relatedly, im also very concerned about the Trump Administration<\/a>s inaction on the sanctions passed with broad bipartisan support by congress in 2017 to punish russia for interfearing in our democracy. The Trump Administration<\/a> has now missed several deadlines related to those sanctions which is unacceptable. Trumps inaction in this area serves to advance the interest of putin, the kremlin, and russian oligarchs to the detriment of the American People<\/a>. My january 31st levtter to the secretary on this matter has gone unanswered as of yet. Since secretary is here today, it is my sincere hope that he will provide answers to the questions we have on all of these matters. And so with that, mr. Chairman, i will yield back the balance of my time. The chair now recognizes the gentleman from missouri. The chairman of the Financial Institution<\/a> subcommittee for 45 seconds. Thank you, mr. Chairman. Thank you, mr. Secretary, for being here. We made significant progress on tax and regulatory reform. We must continue to improve the efficiency of the Regulatory Regime<\/a> that left too many consumers and Small Business<\/a>es sitting on the credit sidelines. Im a Firm Believer<\/a> in the meaningful regulation. At the same time, regulation needs to be responsible and tailored. With regards to risk, for too many years we dealt with federal government that tried to purge all risk from the system. Remain unconvinced that the results of the actions has done much aat all for Financial Stability<\/a> w regards to fsoc, mr. Secretary, i urge you to use your authority to reregulate and promote Financial Stability<\/a> through analytical processes. Fsoc needs to become a more thoughtful body. I yield back. Gentleman yields back. The chair recognizes the gentleman from michigan, the vice Ranking Member<\/a> for one minute. Thank you, chairman and secretary. I appreciate you being here. We havent met. My hometown is flint, michigan. And what happened in flint is an example of what happens when we fail as a society to invest in older industrial cities, those towns that are struggling to make that transition to the next economy. The water crisis in flint is a tragedy that is sadly still on going. It should abe wakeup call for every american, a wakeup call about what happens when we put Balance Sheet<\/a>s ahead of the interest of people. If this administration and your department as well recently attempted to justify changes in our tax code, my implication will hurt many of these communities. The republican passed tax bill, while certainly there are winners and losers, and we could litigate that for the entirety of this hearing, one thing we know for sure is that the changes in the tax code are already being used by the administration and by this congress to justify cuts to programs that are necessary to the revitalization of these already struggling places. That is not acceptable. And theres no way to justify that. What we need in this country is a plan to reinvest and reinvigorate those places. People live there and the implications cannot be overlooked. We cant just focus on the people at the top who are winning without recognizing there are people who will suffer as a result. Zach booker is a fourth generation barber and as well as starting and owning a number of various Small Business<\/a> as cross my district and west michigan, zach describes himself as a young, hungry for success and continues to strive forever growth. Because of the tax cuts and jobs act that he is actually saying our goals can be extended. Im increasing wages. Im trying to hire more people. Im trying to broaden our reach to serve more customers. Were trying to add more locations. Were trying to buy buildings instead of rent buildings. Zach is a common story. This bill is not just about providing crumbs to the American People<\/a>. Its helping young entrepreneurs like zach grow our economy and achieve the american dream. We have to make sure they have an opportunity to save and invest. And zach also knows, mr. Secretary, that what is happening on wall street is a technical correction hitting wall street not a fundamental as correction that is hitting main street. Far too long weve been ignoring main street and its time we turn that around. So i appreciate you being here together. Today. And i look forward to supporting these young entrepreneurs like zach. The tichl the gentleman laz expired. We welcome the secretary of the United States<\/a> secretary of treasury. Secretary is previously testified before our committee. I believe he needs no further introduction. Without objection, the witnesss written statement will be made part of the record. The chair and we are with our hearing amid morning. And the secretary has agreed to stay still 1 30, the couple om aairy three hours for a secretary. Secretary, youre now recognized for five minutes to give an oral presentation of your testimony. Welcome. Thank you very much. Its a pleasure to be here. Chairman, Ranking Member<\/a> and members of the committee, thank you for inviting me today. One of my Top Priorities<\/a> is treasury secretary is to sustained Economic Growth<\/a> for the American People<\/a>. So im happy to report that the growth of the economy over the past wreer is the high every than the average of the prior 20 years and included two straight quarters of 3 or higher gdp. The president promised robust growth and he is delivering on that promise. Im here today to talk about the Financial Stability<\/a> Oversight Councils<\/a> 2017 annual report. This is an important vehicle for providing congress and the public with the councils assessment and recommendations relating to regulatory developments and potential risks in the Financial System<\/a>. The report emphasizes the importance of Economic Growth<\/a> to maintaining a resill yenlt Financial System<\/a>. Since the financial crisis, weve had time to assess the effectiveness of regulatory reforms and consider their unintended consequences. The report recommends that the Council Member<\/a> agencies address regulatory overlap and duplication, modernize outdated regulations and taylor regulations based on the size and complexity of Financial Institutions<\/a>. The report discusses a number of risks that the council is monitoring, one i would like to emphasize today is cybersecurity. The Financial Systems<\/a> heavy and increasing reliance on technology increases the risk that significant cybersecurity incidents could disrupt the Financial Sector<\/a> and potentially impact u. S. Financial stability. Substantial gains have been made. But i want to emphasize the need for us is stained attention to these risks. The report makes a number of recommendations including the creation of a private Sector Council<\/a> of Senior Executives<\/a> in the Financial Sector<\/a> to collaborate with regulators in order to mitigate cyberSecurity Risk<\/a>s. Turning to our growth policies, the tax cut and jobs act passed last year was our top priority. In this overhaul of the tax code is already having a positive impact. Because of tax reform, over three million americans have received special bonuses or other benefits and over 300 companies have announced investments in the workforces. Companies are announcing higher wages and increased benefits, employee training, infrastructure and research and development. These investmentes will lead to long term prosperity as well as companies to bring back cash from overseas, our economy will continue to grow. Let me now turn to some specific priorities. I want to comment you for work on financial regulatory reform. We appreciate the work of this committee and the house of representatives. To advance the cause of reform bypassing hr10, financial choice act and dozens of strongly bipartisan bills. This legislation reflects manufacture treasuries recommendations from our executive order reports released last year. I encourage the senate and house to Work Together<\/a> to move this legislation as quickly as possible. The period would last unwilling february 28th. I urge them to protect the full faith of the United States<\/a> by increasing the statutory debt limit as soon as possible. The house and senate have been working towards modernization of the committee on Foreign Investment<\/a> and the United States<\/a>. I support the Foreign Investment<\/a> risk review modernization act and applaud senators corn in, feinstein and berr and heck for leadership on this issue. A modernized plan will enable us to protect our National Security<\/a>. I look forward to working with congress. One of treasuries Core Missions<\/a> is to safeguard the national by using powerful economic tools. We will continue to take frequent and on going actions to combat threats from malicious actors. These includes 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, deny them access to the u. S. And International Financial<\/a> system, disrupt the Revenue Streams<\/a> and ultimately pressure for a change in behavior. As youre aware, last week the Treasury Department<\/a> submitted a series of reports and compliance with sanctions legislation. These reports represent another chapter in our efforts to use our economic authorities to counter the threats that we face. On Housing Finance<\/a>, the Current Situation<\/a> of indefinite conservatorship for fannie mae and freddie mac is neither a sustainable or lasting solution. They look forward to working with congress to reform americas Housing Finance<\/a> system in a manner that helps consumers obtain the best housing suited for their own personal and financial situation. While at the same time protecting taxpayers. I am proud of what we accomplish so far and there is for to do. Our countrys potential is enormous which is why americans expect their government to enact policies that allow them to succeed and prosper. Treasurys collaboration with congress is vital to that mission and we look forward to working with you every day to make it a reality. Thank you and i look forward to answering your questions. Thank you, mr. Secretary. The chair now yields to himself for five minutes. Mr. Secretary, if you koshcould draw that microphone closer. On our way out the door, chair yellen said that equity values are quite high and that there are potential dangers there. I dont disagree with her. I just thought it was a little curious that a fed chair on her way out the door would say such things. But economists have been predicting once the economy took off that there would be immense pressures on equity markets. Clearly markets have been royaled. We know that fortunately markets are still up over 20 in the administration. But weve had huge volatility over the last few days. You could give us your view on whats going on here . Sure. Mr. Chairman, thank you very much for that question. First i would say were very focused on the long term Economic Growth<\/a> and we believe that the policies that weve enacted including tax reform are very positive for long term Economic Growth<\/a>. Were already beginning to see that in terms of corporate investments back into the United States<\/a> and impact on corporate earnings. I think as you said, the stock market is up significantly over 30 since President Trump<\/a> was elected. Were monitoring the stock markets. Theyre functioning very well. And we continue to believe in the long term impact of the stock market. So thank you. Mr. Secretary, on page six of the fsoc report, you call on congress to create a more sustainable Housing Finance<\/a> system for the sake of Financial Stability<\/a>. We know it has been ten years since the financial crisis and recreditbly congress has failed to act. If we once again failed to act and some of us are trying to work on bipartisan Housing Finance<\/a> reform, but if we failed to act, isnt it true that roughly a year from now the president gets to appoint a new fhfa director who will serve for five year term . Is that correct . That is correct. And isnt it true that the fhfa director is not just the regulator of the gses but also the conservator. Isnt that correct . That is correct. Isnt it true that as conservator, the fhfa director has broad, sweeping powers. For example, i believe is it not true that if Congress Fails<\/a> to act the fhfa director could discontinue the gses harp or home affordable refinance program. Isnt that true . That is correct, mr. Chairman. Isnt it also true that fhfa director could suspend all gse contributions to the Housing Trust<\/a> fund if they found that they would contribute to the financial instability of fannie mae and freddie mac . That is correct. Isnt it also true, mr. Secretary, that under 12 ufc 4566 that the fhfa director can essentially choose not to enforce the statutory housing goals of the gses, if he fines that the achievement of the housing goal was or is not feasible. Isnt that correct, mr. Secretary . We look forward to working with you, mr. Secretary, with the administration and my friends on the other side of the aisle in hopes we can find america a truly, truly sustainable Housing Finance<\/a> system. One that helps put people into homes that they can actually afford to keep. Different question, mr. Secretary. Today fsoc designated four Nonbank Financial Companies<\/a> as sifis. Today only prudential remains designated. As you know, under statute, fsoc is required to reevaluate the designations annually. Can you tell me the last time prudentials dez ig nation was last reevaluate sfld. I believe it will be coming up. But it has not been evaluated recently. Is there a specific time frame for its reevaluation, mr. Secretary . My expectation is that it will be in the near future this year. Okay. We know that a couple weeks ago the administration chose not to to drop the government appeal of the metlife litigation. So essentially they have been designated. We know that an article 3 court found the designation process of metlife to be fatally flawed. But wasnt it the same fatally flawed process that led to prudentials designation . Mr. Chairman, im not going to make the comment on prudential. Ill make the comment on metlife as youve said. The majority of the members of fsoc recommended to the Justice Department<\/a> to drop the case. And we will be working with the committee on revised guidelines for designations. Ive read where the revised guidelines, i think, will include a cost benefit analysis to the economy and its impact on jobs. I look forward to thafrment t. My time has expired. The chair roycecognizes the rang member. Per sunlt to clauss d 4 of Committee Rule<\/a> 3, i request to question the witness an additional five minutes. The Ranking Member<\/a> is recognized for ten minutes. Thank you very much. I first like to ask about the subject of my most recent letter which is your departments role in section 231 of the countering americas adversaries through sanctions act. Congress passed this law on a broadly bipartisan basis with the clear objective of punishing russia for the brazen attack on our democracy. Mr. Secretary, do you believe our intelligence agencies as they have said to us that russia did hack into our dnc and undermine our democracy . Do you believe that to be true . Again, i will broadly say i do believe in the intelligence assessment. I want to refrain from comments specific that are classified. But, yes, i broadly believe in the assessments. Even the findings section of the law explicitly references the Intelligence Community<\/a>s finding that russian president putin ordered an influence campaign in 2016 aimed at the United States<\/a> president ial election. The findings also recognize the Intelligence Community<\/a>s warning that moscow will apply Lessons Learned<\/a> from its putin Audit Campaign<\/a> aimed at the u. S. President ial election to future influence efforts worldwide including against u. S. Allies and their election processes. Do you believe that to be true . I have no reason not to believe it to be this administration continues to let key deadlines in the act come and go without taking any action to implement the act and punish russia for its crimes against the American People<\/a>. Now, one provision of the law, which the administration has ignored, is section 231 of the act. This section requires that the president sanction persons he has determined to have engaged in a significant transaction with russias defense and intelligence sectors on and after january 2018. It also allows the president to waive or delay these sanctions. However, to date this committee has received no indication that any sanctions have been imposed, waved or delayed. Last week when you testified before the Senate Banking<\/a> committee, you stated that you did not waive or dlie sanctions. Section 231 is clear that the president has six months from the date of enactment to determine which persons are engaged in sanctions with the Russian Defense<\/a> and intelligence sectors. After six months, the president must impose sanctions on such persons or waive or delay imposition of the sanctions. Yet, despite the fact that the deadline for action has come and gone, no sanctions have been imposed, waived or delayed pursuant to section 231. How can you explain this . The section that i believe you are referring to has been delegated to the state department. So, i cant comment for secretary tillerson on that. I can comment on the portion that we were responsible for, which was the oligarch report that we did deliver on time. And as i testified in the senate, there will be sanctions coming out of that report. And again, i want to commend the work that was done on the Intelligence Committee<\/a> on the classified version. Who is responsible for delegating what was passed by an overwhelming majority of this house to the state department . The president was. So, the president decided that despite the fact that in the law that we passed, delegated responsibility to treasury, that he decided that he wanted it to be delegated to the state Department Rather<\/a> than treasury, and this is your excuse for not having implemented the law. Is that correct . No, its not my excuse. And, again, i believe but wed be happy to sit down with you and go through the details of this. The president had the authority to delegate within that, as he chose fit. Again, the portion that youre referring to was delegated to the state department. The other portion was delegated to us. But the final conclusion is that nothing has been done. There has been no waiver. There has been no delay. There has not been anything that has been done. You did not waive or delay sanctions. That is the conclusion. Whether we are talking about treasury or the state department. Is that correct . Nothing has been done on sanctions . Again, there has been on our side there has been an enormous amount of work done. I want to commend the Intel Community<\/a> and there will be sanctions that come out as part of that. I cant comment on the state departments part of the package. Would you describe the enormous amount of work that the Treasury Department<\/a> has done that you just alluded to . What have you done . Again, i would encourage you to look at the classified report. It is incredibly extensive. It is a work product of the intel and the treasury. And that work product is now being used for the basis of developing sanctions. Are you telling me that, in your response to the overwhelming majority of this congress, having created law to impose sanctions on russia that undermined our democracy, that your response is classified . Is that what youre telling me . Again, what i said is part of the report was unclassified, part of the report was classified. I assure you that as it relates to the work being done at treasury, there will be sanctions. And again, there is a lot of ongoing work that is being done to develop those sanctions and we complied with the law on time. The congress of the United States<\/a> does not know what you are doing. The congress of the United States<\/a> does not expect that your response to the Public Policy<\/a> that was developed by us be somehow responded to in a classified way. Is there anything that you can tell us that you have done . Well, again, the law called for both a classified portion of the report and an unclassified. Given that the majority of the work was developed on a classified basis, we classified the report. Id encourage you and other members to look at it. Its an extensive amount of work. Again, that the first phase was to develop the report and deliver, which we did on time. And now we are developing sanctions on it. So, i assure you we are very focused on this. Well, i would encourage you to encourage the president to declassify any information that should be forthcoming to this Committee Just<\/a> as he was able to do in the nunes memo. He used his power of the president to declassify. I would suggest to you that if information is de classified, they should be available to this congress who voted overwhelmingly for sanctions on russia who undermined our democracy. Those sanctions should be not delayed or waived and we should have information about it. Let me continue. Is it the Treasury Department<\/a>s position that no persons are engaged in significant transactions with russias defense and intelligence sectors . Again, im not going to comment on that because thats not the portion that were doing the work on. Would you tell us again what are you doing the work on . Again, we did the work on what was referred to the oligarchs as well as senior government officials. We detailed in the report where there was evidence of corruption, family relationships. We complied with a very extensive report that, as i said, there is a classified version and an unclassified version, and we will be using the intelligence work where there is indications of corruption to follow this up with sanctions, which are a very effective tool that we intend to use. Are you referring to the work that you did on the oligarchs as the list of oligarchs that you listed from the forbes report . Again, we were very clear that the public nonclassified version is the universe that we looked at and was developed on open source, both the oligarchs and the leaders. The classified report goes through that list in a very detailed manner as well as other people that werent on that list that would have fallen below the billion dollar threshold. Again, id encourage you to review the report. I think youll be impressed with the findings. But let me just ask you, was there any persons identified that was engaged in significant transactions with russias defense and intelligence sectors . You dont have to give me their names, but i want to know, did you identify did the Treasury Department<\/a> identify any persons . Again, that portion of the act is not the work that im familiar with. The portion of the act that im familiar with is corruption. We did identify people that were involved in corruption and we will be using that to come out with sanctions. Let me just continue. Last week it was reported that cia director pompeo met with senior officials in russias intelligence service, one of whom is subject to u. S. Sanctions. And the other of whom is subject to european sanctions. This meeting occurred just prior to the deadline for implementing sanctions on those engaged in significant transactions with russias defense and intelligence sectors. These are the same sanctions that the president has refused to act on. As reported in the washington post, current and former u. S. Intelligence officials said they could not recall so many heads of russias espionage and Security Apparatus<\/a> coming to washington at once, meeting with a top american official. Are you at all troubled by the curious timing of the meeting between russian intelligence and u. S. Intelligence just days before the president failed to take action to implement sanctions pursuant to section 231 of cts a . No, im not troubled. I believe that timing was enn incidental. Im sorry, i cant hear you. I said i am not troubled by that. I believe the timing was coincidental to the report. Time has now expired. Chairman will represent m mr. Hizenga. Thank you, mr. Secretary. Ill move through a couple of things. First i need to remind my colleagues that we can go see classified information and that briefings have been offered by the secretary and by others. I also want to touch a little bit on the Economic Growth<\/a> that were seeing and in my Opening Statement<\/a> i talked about zach booker, my constituent and the fundamentals of main street being solid but seeing technical corrections in wall street is okay. The interesting thing, this yarn that somehow President Trump<\/a> inherited this great economy is quite amazing. First of all, he had 1. 2 growth in the First Quarter<\/a> as he came into office. That has grown into a 3 growth for the year, never reaching 3 growth in a calendar year with the Obama Administration<\/a>. And so i think we have seen the economy respond. Stability requires broadening of those that participate in the market place and thats kind of where i want to go. We have seen a number of Public Companies<\/a> decline by 50 since 2000. Average number of ipos or initial Public Offerings<\/a> has been 135 per year versus 450. In 2016 there was only 112 ipos. This decline has been very troubling to many of us on the committee. Both sides of the aisle. Fcc chairman noted, the reduction in the listing of Public Companies<\/a> is a serious issue for our markets and the country more generally. To the extent companies are shoeing our Public Markets<\/a>, investors will be unable to participate in the growth. The potential of lasting effect in the economy and society are in two words, not good. Zach isnt ready to bring his barber shops public. But im afraid the zach bookers of the world arent going to be able to do that in the long run. Im curious in your opinion, what are the three top impediments that are chilling this ipo market or discouraging companies from accessing capital in the Public Markets<\/a> . Well, thank you, and i appreciate the work youre doing on Capital Markets<\/a>. In the report we did the executive order, we go through an extensive review of Different Things<\/a> we think can make it easier for companies to access the Public Markets<\/a>, particularly Smaller Companies<\/a> with proper regulation. So, id encourage you to kind of we can go through the details with you, but there is a long list of things we recommended. Yeah, and i recommend that my colleagues take a look at that because i think this is the glide path and the direction that we need to go. I want to move on to maybe one of those impediments, in my opinion the volcker rule. Im afraid thats had a Chilling Effect<\/a> on the liquidity in the markets and the u. S. Financial institutions, and a couple of quick things. In testimony in march 2017, we had a hearing in Capital Markets<\/a> subcommittee, and on the volcker rule, ronald, chairman and ceo of steeple testified that, quote, to determine whether an activity was proprietary trading or a legitimate Market Making<\/a> compliance expert would also need to be a psychiatrist trained in determining to the intent of each trade by a trader. Now, in an april 7, 2017 speech, the new York Fed Reserve Bank<\/a> president William Dudley<\/a> commented, quote, the line between Market Making<\/a> and proprietary trading is not always clearcut, which makes regulation in this space difficult and, quote, that it may be worth considering even greater discretion to trading desks that facilitate client business to intervene when markets are illiquid and volatile. Do you agree with mr. Dudleys assessment . I do, and we are working with the regulators to try to have better definition around the law and the rules so that people can interpret it. Do you believe it would make sense for one regulator to take the lead to interpret that guidance . I do not. Okay. I do want to highlight one other quick sort of oddity in this. We have a michiganbased Energy Company<\/a> that owns an Industrial Bank<\/a> in utah where many of those il season corporations are. Because of its ownership interest in the bank, Energy Companies<\/a> considered a banking entity under the volcker rule and since nonfinancial parents of industry alone companies are being treated as Bank Holding Companies<\/a> under the volcker rule, if an investor breaches a 10 holding in ownership and its a nonfinancial parent it is deemed to be controlling a bank and is then itself subject to the volcker rule. If the volcker rule did not apply to nonfinancial parents of industrial loan companies, do you believe that it poses a Systemic Risk<\/a> to the Financial System<\/a> . No, i do not. Thank you very much. I appreciate that and well continue to work on that and look forward to working with you, mr. Secretary. Thank you. Thanks. I yield back. Gentleman yields back. Chair now recognizes gentleman from missouri mr. Luke meyer, chairman of our Financial Institutions<\/a> subcommittee. Thank you, mr. Chairman. Mr. Secretary, thank you for being here again. I just want to also reiterate my support and thanks for working with us on the tax cut bill, tax reform bill. When we were discussing the tax bill, some of my folks back home, i had a small womens business round table. We were discussing what we were going to do. One woman said she had a glass shop. If you cut my taxes, congressman, we will reinvest that money and hire more people and expand our business. This past weekend i was back home talking to the Small Business<\/a> and in your testimony today you talk about three main people received bonuses, 300 Companies Announced<\/a> investments. Im nsure this particular compay is not in those and thousands are like it but theyll give 500 bonus and this is Small Business<\/a>. There are lots of people across the country that are receiving these bonuses and the Ripple Effect<\/a> is more like a tsunami starting to go across our country, how important this is to the citizens of our country. Thank you for that. With regards to your testimony today and something i am working on myself, one of the things were doing in my subcommittee is working on Data Security<\/a> and Cyber Security<\/a>. And in your testimony today you talk about the council as monitoring the Cyber Security<\/a> risks and have a number of recommendations and one of them is the creation of a private Sector Council<\/a> of Senior Executives<\/a>. Can you elaborate a little bit more on the endeavors in Cyber Security<\/a>, Data Security<\/a> and some ideas of things youre working on . Well, thank you. It is an issue im very much focused on. I think protecting the financial infrastructure is of critical concern to ours. And our two priorities is, one, making sure that the various different regulators are working together, that theyre pool being theing their resources to focus on this issue. And, two, we develop the Public Private<\/a> partnerships to be able to exchange information, best practices. And also weve been conducting different table top exercises in case there is an event. Just two more questions along this line. Number one, right now sort of a patch work of rules and laws across the country with regard to states monitoring and having some input with regards to notification, wondering how will you support a streamlining of this, number one. And number two, obviously the government has a problem with Data Security<\/a> as well. Weve had a number of breaches that are well known by the public, of information that is being held by the federal government and how we would coordinate those as well. So, the first party completely agree with you with the idea and the need for streamlining. I think that is very important. And i am participating along with dhs and other groups at the National Security<\/a> council on cyber to make sure that we are coordinated across government. As you said, we are not immune from these issues ourselves and making sure what we learn from attacks against us we are using to protect private industry. Very good. One of the main objectives of fsoc is to designate important Financial Institutions<\/a>. I know i have a bill that deals with this with regards to some of the midsize regional banks that are impacted by this. I think theyre not part of the problem. They are enveloped as part of the solution. And one of my solutions to this problem is using the Federal Reserve<\/a>s process by which they have a systemically important indicator score. Does fsoc take into account this Federal Reserve<\/a> score whenever youre discussing sifis . I havent seen that per se, but we will look into that and i think that is something we should consider. It seems like we dont need to reinvent the wheel if the feds are already doing the analytical work of looking at what an important Financial Institution<\/a> is and by their score indicating which ones are and which ones arent, it would seem to be a helpful tool for fsoc to implement that. They are very helpful. I will look into the scoring issues and followup with your office. Thank you. I have 35 seconds left, mr. Secretary. Would you like to respond to any questions that were directed to you a moment ago by the Ranking Member<\/a> . Im okay for now, but thank you for that option. [ laughter ] mr. Chairman, well allow the secretary to reserve my 30 seconds. With that i yield back. Do you want to yield to the Ranking Member<\/a> . The gentleman yields back. The chair now recognizes the gentle lady from new york, ms. Maloney, Ranking Member<\/a> of our Capital Markets<\/a> subcommittee. Thank you. And welcome, secretary mnuchin. As you know, the stock market suffered its worst day in six years with the s p down 1. 4 and the dow down 4. 6 . And it looks like markets are plunging even further today. You are the chair of the Financial Stability<\/a> oversight council, and i want to know, are you concerned about this recent market rout, this recent market turmoil . Well, first ill just comment they have been volatile today. I normally wouldnt be looking at my iphone, but given that the market moves, im checking it, its now up 187 points. So, were back up today. Im not overly concerned about the market volatility. I think the fundamentals are quite strong. I have checked in with Market Participants<\/a> this morning before i came to make sure that there was orderly market activity, clearance functioning, no systemic issues and im happy to report that i got the green lights. Well, do you believe, does this have Financial Stability<\/a> implications . No, i dont think these types of moves, given how much the market has rallied, do have Financial Stability<\/a> concerns. Well, the administration has claimed credit for the markets going up. Are they going to claim credit when the markets go down . Again, i think well still claim credit for the fact that its up over 30 since the election. Well, lets move on to your testimony on Cyber Security<\/a> which you called one of the biggest risks to the Financial System<\/a>. And it is a very serious one, and its a huge problem, particularly for Virtual Currencies<\/a> like bitcoin and ether and Virtual Currency<\/a> exchanges are constantly being hacked. A few years ago, the Largest Bitcoin Exchange<\/a> in the world was breached and lost over 450 million worth of bitcoin and just two weeks ago another Virtual Currency<\/a> exchange in japan was hacked and they lost 550 million worth of Virtual Currency<\/a>. The largest heist in history. A recent report found that about 14 of all of the major Virtual Currencies<\/a> have been stolen by hackers, and this means that if you hold a major Virtual Currency<\/a>, there is a one in seven chance that youve had your money stolen, a staggering statistic. But right now, these Virtual Currencies<\/a>, their exchanges arent subject to any real Cyber Security<\/a> standards. Just last week sec chairman clayton said that he thinks some exchanges should be regulated by the s. E. C. Which would require them to develop Cyber Security<\/a> standards and prevent practices like price manipulation. My question is given Virtual Currency<\/a> exchanges are collectively holding billions of dollars for u. S. Investors, which can disappear in the blink of an eye if hackers break in, should these Virtual Currency<\/a> exchanges be subject to minimum Cyber Security<\/a> standards to protect investors money . It is a currency, but it is being treated by many people as an investment. So, im very concerned. I broadly share your concerns. Last year i set up a subcommittee of fsoc to specifically deal with cryptocurrencies. We made a lot of progress on that. Youve focused on several issues, which i agree with. The two issues that i focused on are, one, we want to make sure that these exchanges cant be used for moving money to bad people. So, in the United States<\/a>, if youre a bitcoin wallet, youre subject to the same antiMoney Laundering<\/a>, bsa requirements as a bank. We brought Enforcement Actions<\/a> on that. Were working with the g20 to make sure that those rules are followed in other countries so that these dont become like old swiss numbered bank accounts. The other area of grave concern is the concern to the consumer. Weve recently had futures listed. Weve done a lot of work with the regulators to make sure that where there is Consumer Protection<\/a> its appropriate. And i, too, share your concerns about the cyberattacks and having peoples money thats safe. So, this is something were actively studying and wed be happy to followup with your office on your ideas. Thank you very much. And i do have a draft bill id like to share with you. And finally, do you think congress should raise the debt ceiling as part of the shortterm continuing resolution this week . I think that congress should raise the debt ceiling. However they want to do it, i leave it to them, but i would encourage congress to do that. Time of the gentle lady has expired. The chair wishes to advise members there is a vote occurring on the floor and the chair will attempt to clear two more members and then declare a recess. The chair now recognizes the gentleman from wisconsin, mrmr. Mrmr. Mr. Duffy, chairman of the housing subcommittee. Thank you, mr. Secretary. You are in the Financial Services<\/a> hearing room. You are not in the twilight zone. Not sure if you know where youre at based on the questions that came Ranking Member<\/a> for ten minutes. Here were at a near 20year unemployment low. Historic lows. Africanamerican unemployment is at an alltime low. Hispanic unemployment at an alltime low. A week ago the people at the state of the union who say they care about their constituents, when donald trump brought that up, they all sat down. No applause. They sat there as unemployment is at historic lows for their constituents. And then they come in today and say, i dont want to talk about gdp of 3 growth where it was less than 2 under obama. Im not talking about manufacturing jobs coming back to america. Im not talking about the great policies over the last year. What im talking about is russia. I want to talk about russia. And by the way, when we talk about the economy, did i have friends across the aisle who will say a thousand or 2,000 is crumbs . Give me a break. I dont know where you guys live, but thats a lot of money if where i come from. Or if you get a 2,000 extra amount of money in your paycheck over a year, thats a lot of money. They call it crumbs, or to call our tax code armageddon, thats out of touch. You want to talk about russia . And collusion . All you have is the Hillary Clinton<\/a> campaign and the dnc colluding with fusion gps Christopher Steele<\/a> and their russian s to take down an american president who fairly won an election. You want to talk about russia, you can talk about uranium one and a payoff to the Hillary Clinton<\/a> campaign to get an approval or the Clinton Foundation<\/a> to get an approval for uranium one if you want to talk about russia. This is ridiculous these are the things were talking about, mr. Secretary. And ill ask you questions that are relevant to i think our committee. Yesterday the wall street journal reported there were 1700 banks that have closed in the last 12 months. Did you see that article . Difficult. Many of those banks come from Rural America<\/a> where i come from. Yes. What is the root cause of these Branch Closings<\/a> and what impact does it have on now communities that are in Rural America<\/a> that may now not be served by a bank . I think a general issue is the cost of regulation for community banks, and thats why were hopeful to look at doddfrank reform to look at community banks. Those communities need those banks to lend. Mr. Secretary, i thought those regulations were for the big banks. Are you saying the doddfrank actually imposed regulations on the Small Community<\/a> banks that serve Rural America<\/a> . Yes, indeed. Im surprised by that. Theyre going out of business, right, because they cant comply. Yes. Or they consolidate and when the banks they consolidate with say, thats not a profitable branch any more, were going to close it. I want to put up the fundamentals. Markets are down. Couple bad days in the market. Is this in coordination with lack of fundamentals in the economy . Do we have problems in the economy with growth or wages or jobs that are being reflected in the down market . No, the fundamentals are quite strong. How so . Whats the disconnect between a market coming down and fundamentals being strong . I think youve seen a normal market correction, although large, and i think again there is a disconnect in the short term. Markets move in both directions. Could strong fundamentals actually bring down a market a little bit, recorrect because you might be concerned about inflation or concern about a raise in Interest Rates<\/a> . Could that be a concern for the market . It could be as you suggest. Any concern in the fall yesterday with Algorithmic Trading<\/a> that could heighten the losses that took place yesterday . It definitely had an impact on market moves. Anything we should be considering based on those market moves from that nothing that i would recommend at this time. Okay. I want to be clear as my time is about to end. When we talk about fsoc and designating financially systemically important institutions, we now have a threshold on size. Is it your contention that we should actually look at the activity surrounding the Financial Institution<\/a> as opposed to the size . It is my recommendation that we should definitely raise the level and we should also look at activities. Okay. Listen, i want to thank you for your testimony. Im sorry about some of the questions that have come your way, but i want to applaud your efforts to actually work with us to lower tax rates that have had a huge impact on the american family, with the bonuses, with the increase in the paychecks. The other side should be dancing in the streets, dancing in the aisles, they should be applauding, they are not because this is not about people, mr. Secretary. This is about politics. And because they all voted no, they cant celebrate the win for their communities and for our country and i yield back. Time of the gentleman has expired. The chair again advises all members that vote is occurring on the floor of the chair now recognizes the gentle lady from new york, ms. Velasquez. Thank you, mr. Chairman. And welcome, secretary. You know, the issue of making sure that our Democratic Institutions<\/a> are intact should be a responsibility of everyone. After all, we all voted for the sanctions against russia. Mr. Secretary, the history between the United States<\/a> and puerto rico is one full of legal, political, economic and social injustices. While five minutes wont be 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 Natural Disaster<\/a>s, your administration continues to ignore puerto ricos health care system, a system that is crumbling before our eyes. The difference in medicaid funding such as lower matching rates, places a much greater burden on puerto rico than on other states. In addition, President Trump<\/a> fails to see that the new tax law you all brag about is actually harming puerto rico. At a time when Puerto Rico Needs<\/a> our help to jump start its economy. Let us be clear, the new tax law discriminates against puerto rico, removing the special incentives that the island relied on, and treating puerto rico as a foreign country. Treating puerto rico as a foreign country, a foreign country that has over 100,000 active duty troops ready at any given time. A foreign country that from 1998 to 2016 has paid approximately 74. 4 billion in federal taxes. Tell me, which country around the world pays federal taxes to the u. S. Treasury . Puerto rico does. Yet because of its treatment as a foreign country, the new tax law imposes a a 12. 5 tax on the Income Companies<\/a> receive from intellectual property. What a way to kill the Manufacturing Sector<\/a> in puerto rico. Another example of this unequal treatment is the Community Disaster<\/a> loans that were included for puerto rico in the october supplemental. Loans instead of grants, another insult. Dont you agree with me that this is outrageous, that its cruel . That when a Natural Disaster<\/a> strikes and people ask for Disaster Relief<\/a>, paper towel is an insult . So, mr. Secretary, my question for you is, is it acceptable in treasurys opinion to fund and provide Disaster Relief<\/a> so slowly that it has taken the lives of more than a thousand residents in puerto rico . That over 270 Puerto Ricans<\/a> have committed suicide on the island after maria . Thats almost 30 wont have power until this summer, nearly a year after maria. Would this be acceptable in houston . Louisiana or florida . I am sure people would be rioting in the streets. Do you think the people of puerto rico are any less entitled to restoration of essential services that an any other u. S. Citizen . So, mr. Secretary, please tell me if this is acceptable . Well, let me first comment that i do share your concern. It is i want for you to share my outrage. Any loss of life is a great tragedy. As it relates to the various different topics that youve discussed, im personally not familiar with the health care issues, although i will followup and look into that. What about the tax bill . Treating puerto rico as a foreign country . As it relates to the tax law, again, ive had the opportunity to meet with various business and things. Its they have a situation where they are collecting their own taxes in lieu of federal taxes. And the last party would just say is we are working very closely with the government to get them funding to deal with the result of the time of the gentle lady has expired. The committee now stands in recess. [ gavel ] [ gavel ] the committee will come to order. Chair now recognizes gentle lady from missouri, ms. Wagner, chairman of the oversight and investigation subcommittee. Thank you, mr. Chairman. As we sit here today and hear testimony about the continued onslaught regulations have had on main street america, its worth noting the positive gains that weve made because of the tax cuts and jobs act. Charter communications, which has a very large presence, mr. Chairman, in missouris second Congressional District<\/a>, upwards of 5,000 employees, mr. Secretary, that represent 5,000 hard working missouri families. They have recently volunteered to pay every one of their employees at least 15 an hour. And in addition to increasing investment increase the investment in their broadband network, this is going to absolutely benefit working families and Small Business<\/a>es across my district. These are progrowth promises that we made and have delivered on for our constituents. I want to thank you, secretary mnuchin, for your fine work in making sure that all americans keep more of their hardearned money and we continue to grow this economy. Now, sir, last week the subcommittee on oversight and investigation, which i chair, held a hearing entitled following the money, how human traffickers exploit u. S. Financial markets. During that hearing we talked a lot about the emergence of cryptocurrencies as a financial tool. I know you touched on it briefly, but the fsoc annual report identifies a need to further study new products and services such as Virtual Currencies<\/a> and to coordinate regulatory approaches. How do you believe these new technologies should be regulated, and what role should we in congress have Going Forward<\/a> as these new innovations are advanced . Thank you. My main concern in terms of regulation is to make sure that anybody that does business on cryptocurrencies can be monitored from a Money Laundering<\/a>, a bsa standpoint, and that the institution follows the know your customer rule. So, thats our main priority now, but we look forward to working with you on potentially other regulations. And what do you see as fsocs role in this process, sir . Fsoc is coordinating the different regulators response to it. So, its a coordination function. We look very forward to working with you in this important area. Thank you. That is emerging. Now, secretary mnuchin, changing topics here, can you discuss your recommendations to address designation criteria, especially when it comes to our Nonbank Financial Companies<\/a> . The fsoc treasury report recommended that the designation process for Nonbank Financial Companies<\/a> be more transparent, including getting input from a companys primary regulator. What are the steps the treasury plans to take to make the designation process more transparent and ensure the fsoc is held accountable to congress . Thank you. So, as you noted, we did extensive work in our executive order to the president on this, making recommendations will now be working with the committee on suggestions in terms of changing the criteria. And then i believe well have to put out a notice of rule making before we enforce it, but this is something were very focused on for this year. Last march the subcommittee again on oversight and investigations, which i chair, held a hearing entitled the arbitrary and inconsistent nonbank sifi designation process. And the hearing followed up on a Committee Report<\/a> that provided examples of inconsistencies and departures from frankly fsocs own rules and guidance when evaluating Nonbank Financial Companies<\/a>. I hope this is something that well look into and be able to coordinate Going Forward<\/a>. Do you have any timing on this, sir . Absolutely. Thank you. I appreciate it. Mr. Chairman, i yield back the balance of my time or i shall yield to you if you would like, sir. I thank the gentle lady. She yields back her time. The chair now recognizes the gentleman from california mr. Sherman. Mr. Secretary, you were here in july. Democrats and republicans gave you questions for the record, and we got responses to those last week, six months. Can you commit now the vast majority, i plan to ask one or two tough ones. The vast majority of the questions for the record that are asked by democrats and republicans today will be responded to with real answers within 30 days . I can tell you that i told my staff i thought our Response Time<\/a> was not appropriate i ask you we will do everything to make sure its 30 days. It wont be as long as it took last time. I can assure you. Okay. Because i have a number of questions for the record and i need answers. The first relates to the fsoc report to base sifi designations on activitybased approach. I want to commend you for moving in that direction. And im interested in your plans for implementing recommendations to the treasurys Asset Management<\/a> and insurance report and the report on nonbank sifi designation process in particular the recommendation that an activitysbased approach be used. So, ill ask you to respond to that for the record. Also we hear that the International Association<\/a> of insurance supervisors is pushing a global standard that clashes with our system for statebased insurance regulation, and ill want to know your reaction to that and whether we can ensure that were going to promote our own system in that negotiation. I can assure you we will. Thank you. Now, last time you were here i asked you about the armenia tax treaty. I did tell your staff in advance. And we have gotten the most absurd response. Im an old tax lawyer. I know its hard work, but this is the easiest job theyre ever going to have. They responded to judy chu who also raised this by saying that this is a very resourceintensive process. Heres the model treaty. Weve published it. And the government of armenia has said they just want to sit down and use this as the basis and get the treaty done. 28 members of congress have asked you to do this. Can you commit to investing 28 hours of one tax lawyer, just 28 hours of that one tax lawyers time . To start the process, i think he or she will finish the process. Were talking about filling in the blanks in a document we already have. Can you commit 28 hours of one tax lawyers time . I can commit the 28 hours. We will get it done and the benefits will include the exchange of information provisions which will allow the irs to get information about anybody hiding assets in armenia and thereby enhance our tax collection process. When it comes to marijuana, we currently have the fin sen guidance. And if you were to revoke that, that would really make it better for Armed Robbers<\/a> in my community because there would be huge amounts of cash at the local Marijuana Dispensary<\/a>. Can i have i hope youd respond for the record what you plan to do, and i hope that you would indicate that youre interested in keeping our communities safe. I dont want bags of cash at a Marijuana Dispensary<\/a> down the street from my constituents. Can i count on your answer . I can commit to you that we are reviewing it, but i assure you we dont want bags of cash. Want to make sure that we can collect our necessary taxes and other things in other than when you were here last time, you assured us that although we didnt designate china as a currency manipulator, even though weve lost a lot of jobs to their admitted past currency manipulation, that the Trump Administration<\/a> was going to do something about this. In back of you weve got the chart that shows that every month that trump has been in office, weve seen an increase in the trade deficit with china. Are we just going to talk tough or when you come back a year from now, are we going to see a different chart . I think youre going to see a different chart. Okay. And if we dont, can you then designate them a currency manipulator . No, one has nothing to do with the other. One is we are very focused on trade. The currency manipulation independent that is based upon by their past manipulation of currency. I yield back. The time of the gentleman has expired. The chair recognizes the chair of the monetary and policy trade subcommittee. Secretary mnuchin, good to see you this morning. I want to thank you and the administration for the tax cuts and jobs act in the kentucky Congressional District<\/a>. Alison is a bank teller at one of the lowestpaid bank tellers of a Community Community<\/a> bank in barea, kentucky. She went to the supervisor after they adjusted her tax withholding. She said, i think you made a mistake. And he looked at the check, and he said to alison, no, i didnt make a mistake. She said, did i get a bonus . And he said, actually, i didnt give you a bonus, the bank, the vicepresident said this to the teller. We didnt give you a bonus but in effect you got a bonus, you got a raise because of republican tax cuts. And then there is karen. Karen has been serving me coffee at 5 20 a. M. Every morning when i go to the airport to get on the 6 00 a. M. Flight to washington, d. C. Shes a hard working person. And she is working the graveyard shift. She wanted to know what the benefits of the tax cut were. We put her paycheck and all of her information through the tax calculator and when i showed up on monday morning, yesterday morning she had a big smile on her face. And she said, congressman, im going to save 1410 every year because of the tax cuts. And so on behalf of karen, on behalf of alison, thank you and your administration for these tax cuts. Youre making life easier for working people in kentucky. I do want to talk about the market volatility that weve seen over the last few days. Obviously since election day 2016, the Dow Jones Industrial<\/a> average has soared from little over 18,000 to a little over 24,000 and i think its actually up at this moment today. Of course, at one point it hit an alltime high of 26,617. That represents an extraordinary bull market. And i would agree in part it reflects renewed investor and Business Confidence<\/a> associated with this administrations policies. But i do want to ask about a factor that gets a little less attention but which explains the adjustment in the equity markets over the last few days and that is monetary policy. Obviously for the better part of the last decade, the Federal Reserve<\/a> through quantitative easing and low nominal rates has pursued an unprecedented policy monetary accommodation. And while this unconventional policy failed to prevent the slow weak growth produced by the Previous Administration<\/a>s fiscal policy it did prop up prices. If this administration reversed the fiscal policies, the economy has taken off. You noelted the statistic of record High Consumer<\/a> confidence, low employment and the labor department, wages going up last year average 3 gdp output in the atlanta feds projection in the First Quarter<\/a> we might see 5 Economic Growth<\/a>. In the First Quarter<\/a> of 2018. So, i would just say its altogether appropriate that the new leadership at the fed has begun to address the risk of rising inflation and is proceeding with a strategy of monetary normalization. My question is this, secretary. In your capacity as chairman of the Financial Stability<\/a> oversight council, can you comment on how monetary normalization and a steady predictable well communicated withdraw of monetary stimulus at this time might keep valuations in line with reality, prevent asset bubbles and promote Financial Stability<\/a> . Well, thank you. I will comment we have been working with the fed in following their reduction of their portfolio and the impact of the markets as it relates to the overall monetary policy, i will respect the independence of the fed. So, im not going to comment on its impact on the markets. Thank you. And then, mr. Secretary, as you know, ltd world Banks International<\/a> organization is scheduled for its 18th replenishment. This committee has examined disturbing cases of management frail youre at the bank which brought about massive corruption including sexual abuse and staff incentives that were pushing money out the door rather than having an impact on global poverty. In light of these facts, writing a blank check for ida 18 would be an insult to the hard working taxpayers of this country. Last month the house passed our World Bank Accountability<\/a> act which would make spending on ida 18 contingent on implementing reforms. I want to thank treasury staff for working closely with us on developing tough, but achievable reforms. To underscore how important this legislation is, this was the first time in 40 years, secretary, that congress considered a stand alone ida bill. It also happens to be consistent with President Trump<\/a>s policies. As he said in his state of the union address, quote, i am asking congress to pass legislation to help ensure American Foreign<\/a> policy dollars always serve american interests, and only go to friends of america, not enemies of america. Mr. Secretary, the house world bank bill delivers on the president s call of action. Could you just comment briefly on how you can work with our friends in the senate so that they adopt a similar approach to ida . Well, we applaud your work on that and we look forward to working with the senate so that we can get something passed. Thank you. I yield back. Gentleman yields back. The chair now recognizes the gentleman from new york, mr. Meeks. Thank you, mr. Chairman. Chairman, welcome. Let me first just ask a couple of questions because i think that im unclear. First, i think i heard you say that you will be asking congress, particularly many of my colleagues on the republican side who generally sometimes dont want to raise the debt ceiling, to make sure they raise the debt ceiling when it expires. Is that correct . That is correct. So, does because i dont know sometimes, and listening to folks, i want to get does debt matter in our economy . It does. It does. And does whats better for the American Economy<\/a> . Because im confused on this one also because ive heard especially from the administration both sides, whats better, a weaker dollar, or a stronger dollar . Im not going to comment on the dollar. I think some of my comments were taken out of context thats why im trying to clear it up. If it was in the long term, a strong dollar is in the best interest of the United States<\/a>, and thats what i said in my comments. Okay. Because what i had you quoted, obviously a weaker dollar is good for us as it relates to trade and opportunities. Again, that was just a statement of fact. There were three parts to it. The first part was that we fund amount atly believe in the free markets. Where the dollar is in the short term is not a concern. The second one you quoted was just a fact. And the third one was that we fundamentally support a strong dollar in the long term. So, you support a strong dollar, thats what youre telling us now . That is correct. The other statements we should not consider . Now, in time of recession, is stimulus important or not . It depends. It depends. Well, in times of crises because i dont know if you well, you were not here, but i was here because i listened to some of my colleagues on the other side. In 2007, when we were having the greatest recession since the Great Depression<\/a> by the way, it was a time right before that in 2006 is when the republicans controlled the house, the senate and the presidency at the same time. We had a republican Treasury Department<\/a> come over and say we had to do something because things were going crazy. Would that have been an appropriate time to try to stimulate the economy when you had that kind of recession . Again, that would have been one of the things to consider. Okay. Would you have considered it had you been i would not. By the way, do you recall what the Unemployment Rate<\/a> was in 2007 and 8 and 9 . I dont recall the exact number, but it was higher than where we are now. It was, in fact, it was at the peak because of the recession, it was at close to 10 . , is that not correct . Does that refresh your recollection . That sounds about right. And at the time that president obama left, it was down to about 4. 6 , i think it was . Does that refresh your recollection . Sounds about right. So it went down. At the time you came in, the Unemployment Rate<\/a> at that point was lower than it had been for over the last 12 years or since the last time that bill clinton was president. , is that not correct . That is correct. Okay. Is it also correct that when you looked at the overall economy and the number of jobs that were being created, back in 2006 and 7 and 8 we were losing jobs every month. Is that not correct . That is correct. Okay. And at the time that you came or the president came into office, we were gaining jobs every month. We were adding jobs. The obama sir, you didnt inherit an economy that was in recession, that was the lowest employment rate, that was going in the right direction, but when you came in, you inherited an economy that was moving in the right direction. Unemployment was going down. Jobs were increasing every month. So, the experience that you came in was nowhere near the experience that the Obama Administration<\/a> had to deal with when they became in office. Is that not correct . Again, the experience that we came in was very, very low gdp growth. But thats not what im asking you about. The trends in the economy at that particular time, the trends of unemployment, the trends with reference to jobs, the trends with reference to world economy, it was not an economy that was in recession, it was an economy coming out of recession. Thats what you inher ited, not what obama inherited when he became president. Is that not correct, sir . The time of the gentleman has expired. The gentleman recognizes mr. Williams. I still have my business. Its a great time to be on main street. I want to thank you for your work on behalf of the American People<\/a> and your Financial Stability<\/a> in the oversight council. The roll back of unguided regulations, 2017 is an historic year for the Trump Administration<\/a>, the congress and most importantly the American People<\/a>. During my travel in the district i represent in texas these past months, ive heard countless encouraging stories about what the tax cuts and jobs means for business owners. Some of my colleagues on the other side of the aisle claim these bonus us were akin to crumbs, in texas 27th district those crumbs come in the form of real dollars back in the pockets of working families. In the form of wages for employees and new Capital Investment<\/a> for businesses. It is my hope that this past year serve as a stepping stone for many and more great things to come and there is still much more work to do, especially from the doddfrank relief of the destabilizing. I am committed to working with this administration, to you and the Trump Administration<\/a> to ensure long term prosperity for our nation and our citizens. The first question would be, mr. Secretary, you previously testified before the ways and Means Committee<\/a> that the Treasury Department<\/a> is reviewing aircraft sale licenses following the iran nuclear deal. Im encouraged by this administrations focus on the worlds leading state sponsor of terror and in your efforts to take a hard line on combatting its destabilizing behavior. To that end the house passed my bill, the strengthening oversight of irans access to finance act which creates a reporting requirement for the licensing of Aircraft Sales<\/a> to iran in an effort to increase congressional oversight and provide transparency for the American People<\/a>. So, my question, sir, is can you provide any updates on your review of licenses issued for Aircraft Sales<\/a> to iran . And is it your opinion that this congress and the American People<\/a> should know if iran is using passenger aircraft authorized under the jcpoa for terrorist activity . Well, i do believe that the American People<\/a> and congress should know i dont want to comment right now because we are reviewing classified information as we consider the licenses for this. So, this is undergoing review. Thank you. Next question would be weve heard so many Great Stories<\/a> since the last several weeks about how the tax bill is bringing businesses back to the United States<\/a>. Yesterday the United Nations<\/a> conference on trade and development reported that the tax bill could spur the repatriation of 2 trillion. Can you speak to the effect that repatriation and new investments will have on the u. S. Economy and what americans can expect to see in the months and years to come as the tax climate becomes friendly and more welcoming to investors and businesses . Well, we believe one of the most important aspects of the tax bill was to go from a worldwide system with deferral which encouraged our companies to leave trillions of dollars offshore to a territorial system and a onetime tax to bring them home. Apple has announced 350 billion that will be coming back into the u. S. With major investment into jobs and capex and equipment here. And theyre just one of Many Companies<\/a> that is going to be doing that. A lot of good news. Next question would be, im certain that our colleagues from the other side of the aisle will highlight the recent volatility. Weve heard that today in the market in aarn attempt to sound the alarm about the state of the market. They are viewing the markets in terms of single day performance and not on the long term performance. If they were to do so theyd concede the last 15 months, you talked about this earlier, the market recorded 84 record highs. Both the dow and the s p are still up by double digits during that period. Mr. Secretary, from both your time in the private sector im a private sector guy and now as the head of the Treasury Department<\/a>, do you believe there to be any cause for alarm . I do not. Okay. Thank you for being here. And id yield my time back to the chairman. I thank the gentleman for yielding. Mr. Chairman im sorry, mr. Secretary. One of the things i think i saw in the treasury report to fsoc, since youre wearing two hats here. I guess youre advising yourself. But the treasury report had advocated to fsoc that basically cost benefit analysis needs to be employed in the sifi designation process. Can you elaborate on whether or not fsoc is accepting this recommendation . And if so, what can we look forward to . So, yes, thank you, mr. Chairman. That was part of our recommendation. As i mentioned, we are now working with the Committee Members<\/a> to review our recommendations and update guidance. So, that is something i hope will be included. Thank you. The chair now recognizes the gentleman from georgia, mr. Scott. Thank you, mr. Chairman. Welcome, secretary. You know, when i first opened your report, i was very pleased to see where you had Cyber Security<\/a> as your major concern. However, yesterday i became very worried with one of your fsoc members, mr. Mulvaney of the cfp p. And i understand that hes pulled back any investigations into equifax, the largest, most significant Cyber Security<\/a> attack in this nations history. 145 million American Families<\/a> having their birthdays, their Social Security<\/a> number, all of that Vital Information<\/a> out in the open, and he has pulled back. And i found this out yesterday in reading the report from reuters. Are you familiar with that, mr. Mnuchin . Im only familiar with what i also read in the press. I havent spoken to director mulvaney about it, but i will. I hope you do, because its very important. Youre chairman, as i understand it, of fsoc. Youre chairman. And its fsocs duty to keep our Financial System<\/a> secure from these kinds of threats. And we have the head of the cfpb rolling back investigations. I not only am asking you to speak with mr. Mulvaney, but speak strongly. Let him know how bad this looks, and that the American People<\/a> are very upset that this administration is taking this kind of backward step back from investigating the most dangerous Security Threat<\/a> in this nations history. Please do that, mr. Mnuchin. Do you have any reason why mr. Mulvaney would even do such a thing . Im not aware of that, but as i said, it is something i am going to discuss with him and we will take up at fsoc. Yes, because it would look very hypocritical if on the one hand the administration is so eager in going after Cyber Security<\/a>, and then on the other hand, having the Consumer Protection<\/a> agency to back away. And additionally, the cfpb has even shelved plans for the on the ground test on how equifax even protects its data. So, weve got some very, very significant things there. In my final minute and a half, i do want to raise up the issue of the fed tech companies. I am the democratic cochair, chairman, of the fentec caucus. The fentec industry is going through some remarkable challenges and theyre doing some great things. Just from simply being able to partner with many of our traditional banks who will not service the under bank and those that need the help the most, but they are partnering with them. And they are also bringing a way for real great technological improvement. But heres the problem. Since o. C. Has issued or going to issue a charter for their regulation, you have all of these regulators now, the cfp has their group. You have treasury. I dont know if you have your group, but each of these regulatory firms are now converging and coming up with how to regulate this industry. Now, when you have three or four different regulators out there beginning to pounce, youre going to have over regulation. Youre going to quite possibly suffocate this new emerging industry. So, i want to ask you, how do you see that . And is treasury moving . And as the leader of fsoc, will you take leadership in making sure that fentec companies are not suffering . A very brief answer, mr. Secretary. Id remind all members to Pay Attention<\/a> carefully to the clock. A brief answer, mr. Secretary. Yes. Thank you, we will address fsoc. We address your concerns. The time of the gentleman has expired. The chairman recognizes the gentleman from maine. Thank you, mr. Chairman, very much. Thank you, mr. Mnuchin, appreciate the great work youre doing. I want to in particular thank you for your leadership in providing tax relief for families and Small Business<\/a>es. A couple weeks ago i i was at our terrific Small Business<\/a> in maine, the truck stop in harman, right off route 95. The next time you go vacation with your family in maine. This fellow came up to me and said, bruce, thank you very, very much because i get paid on a weekly basis and i get another 27 bucks in my weekly paycheck. Now, he did the math for me. He said, bruce, thats about 110 a month. 27 a week, its about 1,300 per year. Thats really important to my family because it pays for groceries for our family for about three to four months out of the year. So, thank you very much for your leadership on this, sir. We look forward to helping more American Families<\/a>. Ive been very concerned along with other people on the committee, mr. Secretary, about how unfair it is for nonbank, nonbank Financial Institutions<\/a> like mutual funds to be possibly designated as a sifi by fsoc when they pose no risk to the economy if they get in trouble. I think it is widely agreed between our discussions and here on the committee that we need reforms to the sifi designation process that takes place over at fsoc. Now, i think we can agree that its a good idea for business who is potentially going to be designated a sifi to know why. And if in fact they are designated to have an off ramp such that they are able to make those adjustments. And the reason why this is so important, mr. Secretary, for small savers and small Asset Managers<\/a> in maine is because if you have this burden of additional regulations that are really unnecessary and costly, it drives up the cost to provide their services and drives down the rate for someone saving for college. My question to you, mr. Secretary, can we agree the best way to deal with this issue is to codify in legislation the reforms we need to the sifi designation process . We think that would be a good idea and we believe in transparency. As you said, companies should understand if they are designated, why, and what they would need to do to get out. Thank you, sir. Recently your own Treasury Department<\/a> issued an asset manager report that recommends completely eliminating stress testing for nonbank Financial Institutions<\/a> like mutual funds and insurance companies. In my opinion, i know we had this discussion, sir, it doesnt make any sense for someone who is managing money for retirement to have the same stress test requirements or any stress tests at all as a bank that is insuring deposits for maybe those same individuals. Id like to bring to your attention, mr. Mnuchin, if i can, my bill hr 4566 alleviating stress test burdens to help investors act. It passes committee with wide bipartisan support. Im asking you, sir, do you agree with the treasurys own report and with this committee that its a good idea to eliminate these stress test requirements for nonbank Financial Institutions<\/a> . I do agree with, as we put it in the treasurys report, yes. Thank you, sir. Last week the treasury produced a list of assets held by russian oligarchs. Another bill that i have that is passed out of committee, sir, hr 1638 called the yu rinne yurani transparency asset act roughly does the same thing. It looks at the top 70 or 80 political and military leaders in iran which i may parenthetically say we all know is the chief sponsor of terrorists in this world. They recruit, they train, and they fund these terrorists and they have american blood on their hands. I think its a great idea as per my bill to make sure we get the information out there to the public, into the world, how these folks have been ripping off their citizens, what they are using those assets for, to shed some light on this issue. Now, senator cotton is also taking an interest in this bill, mr. Mnuchin, has introduced continuing legislation on the other side of the chamber. Can we agree this is a good idea to make sure the world knows what this money is being used for and how it is accumulated . Im not familiar with all the details of the bill, but i look forward to sitting down, but conceptually i think its the right direction. Wonderful because youre already doing it for folks over in russia. Lastly, sir, if i may, the two reasons why the economy is doing so well is the great work in repealing red tape and also the tax cuts have been recently enacted in rural maine is critically important that Small Community<\/a> banks and Credit Unions<\/a> are relieved from additional burdens and red tape. Can we get a commitment from you, sir, that you do everything humanly possible to help rural Financial Institution<\/a> s . Yes. Thank you, sir. Appreciate t. The time of the gentleman has expired. 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<\/a> 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<\/a> 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<\/a> commission announces for the shareholder owed utilities that the tax benefits that they are getting by reducing the Corporate Tax<\/a> 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<\/a> 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<\/a> Bank President<\/a> 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<\/a> 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<\/a> on a unilateral basis would basically solve the problem we dont have to have the International Agreement<\/a> 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<\/a> 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<\/a>. 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<\/a> by rolling their eyes but to a potential default has been huge with the Tea Party Crisis<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a>. 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<\/a> election as attested to by none other than the National Security<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> has been the Exportimport Bank<\/a>. 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<\/a> and i would just like to find out what your approach might be or what your efforts might be towards Exportimport Bank<\/a>s 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<\/a> 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<\/a> committee. Thank you very much mr. Chairman to this question goes to the federal Balance Sheet<\/a> 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 Transfer<\/a>s with the private sector and im hopeful that the bill included in the committees comprehensive reform efforts. We have seen credit Risk Transfer<\/a>s 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<\/a> Insurance Program<\/a> so analysis has shown theres far more capacity in the Financial System<\/a>, worldwide about 600 alien. My thought here is why not look elsewhere in the federal government on the housing fund . Replicate Risk Transfer<\/a> 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<\/a>. 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> there is little to no interaction and the Actual Company<\/a> 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<\/a> . 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<\/a>. 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<\/a>. Three of my favorites. Really we do appreciate your testimony today. Lets start with the Virtual Currencies<\/a>. 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<\/a> 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<\/a> and sub it to customers. In the United States<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a>. 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<\/a> Protection Laws<\/a> of these regulations were included and reviews under Economic Growth<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a>. 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<\/a>. In your opinion what role should the future reforms in Housing Finance<\/a> play with regard to Affordable Housing<\/a> . 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<\/a> is not sustainable. I also believe Affordable Housing<\/a> 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<\/a> for your Critical Role<\/a> 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<\/a> 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<\/a> action on our reforms to doddfrank. Any thoughts on what we can do to advance the cause with their Senate Colleagues<\/a> . 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<\/a> 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<\/a> such as ftc fha to oversee thirdparty Service Providers<\/a> particularly Information Technology<\/a> Service Providers<\/a> . Is there a gap in the Regulatory Framework<\/a> 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<\/a> 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<\/a> of nevada which is North Las Vegas<\/a> 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<\/a> 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<\/a> 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<\/a>. 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<\/a> people buries this and youve been invoking bank tellers and regular folks like that. I noticed you didnt mention the Hedge Fund Managers<\/a> 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<\/a> 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<\/a>. 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<\/a> in the Public School<\/a> 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<\/a> 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<\/a> 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<\/a> . 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. 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