Coins and Digital Assets. Concerns over insurance and real estate markets and risks posed by using Artificial Intelligence in the Financial Sector on the Senate Banking committee of, this is about two hours and 15 minutes. The committee on banking, housing will come to order. Secretary yellen , who has been flexible on the schedule and we had to change the time from yesterday to today, she has to leave at 11 30 and we will respect that. I will enforce the five minute rule on myself and everybody else. For a long time it has been clear what gets rewarded on wall street, bigger risks mean profit and that means more Stock Options which means fatter bonuses and then we end up with a wall street culture that glorifies a it leads to an economy of excess and a shrinking middle class. That is how we got east palestine. And the ceo of stellantis making three times what the average worker makes. We saw that plan play out with poorlyrun banks putting profits above Risk Management. And Small Businesses all over the country worry about how they can make their payroll. Regulators had to step in, they always do, to protect the economy as the executives walked away pretty happy. 2008 was the same story but on a bigger scale. Wall street took big risks with americans money, just like Silicon Valley banking did. They could make even bigger bets by exploiting even more. Risktaking built up in the shadows until it was too late to contain. Chaos on wall street put 9 million americans out of work. Millions lost their homes and they lost their wealth to foreclosure. My zip code, 44105, had more foreclosures than any other zip code in the United States of america. There were big, barely supervised companies, swallowing up american jobs. Some would like to dismiss this. It is all in the past, all once per century catastrophe, we dont need to worry about that anymore. But 2008 showed us how wall street is trying to hide the same risk behavior. They are not going to give up new ways of getting around the rules so they can make bigger bets to make your profits. We let them get away with it. Americans pay the price, workers pay the price. That is why 14 years ago, we created Financial StabilityOversight Council, over all of our regulators. The distinguished secretary treasurer chairs. And there is a response to financial risk wherever it develops. Other regulators only please some kinds of oversight, they take a 3625 view. The job is to close gaps in the system, covering blind spots that any agency might have making sure that safeguards are in place. It plays a Critical Role in stopping the next aig from blowing up our economy. It ends the cycle of bailouts and golden parachutes with workers always stuck with the consequences. Nonbanking financial companies, insurance companies, clearinghouses, hold nearly 20 trillion in assets. Over the last decade, they have grown larger and larger. These days these companies are responsible for a lot of the activity on wall street. Others demand the biggest employers to make huge bets with billions of dollars, often using money from workers pensions. It would be all too easy for one of them to drive down our Financial System. They have the same deeprooted temptation to take on more risk for a big day as anyone else on wall street, we know that if one of these firms collapse, executives will be just fine but most of the country wouldnt. And that is why it is so important. When they try to evade the watchdogs, it is not a surprise that wall street and its well funded allies always try to kill anything that tries to hold it accountable. They have plotted viciously from us implementing dodd frank. After we passed it, the chief financiers, the chief lobby years, for the Largest Group of Companies Said now it is halftime, now it is halftime. Now they have tasked the lobbyists, forcing them to sit on their hands. They want to take away some of the most important tools for keeping our economy safe from reckless behavior. Ipsos fights hard against what they are doing, nervous that ipsos can bring accountability to parts of wall street that continue to operate in the dark. The last administration worked total handcuffed ipsos by undermining its ability to impose safeguards. The message in the last administration was clear, ipsos is not really watching and will not really act, how long that was. It is changing. They are in a far better position now, to make sure that wall street does not crush main street. There is a new emerging risk to the Financial System. These are risks we have talked about in the committee, Digital Assets, Artificial Intelligence, as well as the old risks. Like shadow banks. Wolf is monitoring out the commercial market is shadowing the Banking System, an important concern given what we have seen just this week that secretary yellen is responsible, too, for the critical work to safeguard National Security by cracking down on illicit finance. I look forward to collaborating with her on the ways that bad actors make combat the efforts, including these tools, ultimately, we cannot allow another financial crisis, wherever the risks may come from, to set workers and consumers back. We need hard work, not financial speculation. We need a system that works for everyone, not just corporations, hedge funds, and not just the lobbyists who have far too much influence on this committee. We know that we are still far from that economy. You only have to look at corporate profiteering in the last few years. Every time americans go to the grocery store, they pay for those executive bonuses. Every time americans go to the grocery store, they pay for the stock buybacks and they pay for the executive bonuses. We see that with the big banks, millions of dollars in apr campaign, making sure that taxpayers do not have to bail out another bank later, all to keep their lifestyle and all to keep their lifestyle high. Since i have been chair of the committee, we have worked every day. Instead of real economy, that is why this committee tasked the bipartisan recuperation act to break down. That is also why we considered ipsos. Secretary yellen, thank you once again for rearranging your schedule to be here today. I look forward to hearing what thanks for being here than a any questions. We will have lots of questions about the economy in the state of affairs. It seems like some of them live in the ultimate universe. They are really just shaking their heads and they can understand what people in washington simply cannot see. Two thirds of americans do not have 1000 in a savings account. The Biden Administration and biden economics has decimated and destroyed even leveled family after family. Inflation is at 18 and its not coming down at all. Food up 20 energy up 40 . When you are raised in a family like i was with a single parent household mired in poverty is a crisis. A crisis brought to us by the Biden Administration and people who philosophically believe that the bigger government somehow leads to more success. The taking money out of their paycheck so that people here can figure out how to spin this better than they can is going to lead to a Better Future for their kids . Thats what we call in South Carolina hogwash. We also have the responsibility to take a look at legislative matters concerning the trafficking of deadly drugs across our southern border to sanctioning International Bad Actors like you ran. Iran. I wish you were here after those devastating attacks on october the seventh. I am ashamed to know that this a ministration in your Department Help iran fuel and fund their terror proxies. The American People in our israeli allies deserve accounting for this reckless release of 6 billion in august. After october the seventh another 10 billion not to mention the relaxing of the sanctions that allowed hundreds of billions of dollars to flow because of the oil revenue. That is devastating. Many of our allies and you a letter demanding answers on how you can continue to provide iran millions of dollars that we know funds terrorism throughout the middle east and destroys and devastated and even eliminated so many israeli citizens. Our strongest ally in the middle east. Partially funded by resources that have been released by this administration. And the department of treasury. I have not seen a sense of urgency or accountability. We find that frustrating. Look at what is happening around the globe. Since october there have been over 150 attacks by terrorist groups against american servicemembers. As tragic as that is, it also led to the loss of the lives of two navy seals and three members of the u. S. Army. 30 servicemembers have been injured and these were American Patriot who put their lives on the line. And we should have their backs. And right now, no one fears u. S. Deterrence, because there is no u. S. Deterrents to fear. And that lack of deterrence allows funds to be released to known terrorist regimes. The Biden Administrations policies accepted america from a position of strength on the world stage to a position of weakness, the billiondollar paydays to our adversaries must stop, it is time to defend american servicemembers and interests abroad and this starts with ending any payments, any defending america is not just about looking overseas, it is also about here at home. From our border crisis to the federal emergency, we must use our economic tools to stop the flow of fentanyl coming into this country, 75,000 american lives have been lost to fentanyl. When we have known National Security threats crossing the southern border and fentanyl production facilities popping up across mexico with the help of the chinese hill presses, chinese workers, and precursors , we have a massive problem. Too Many Americans live lives with family members lost. The devastation that so many families feel today is undeniable because of fentanyl. My friend lost his son last year, less than a year ago to fentanyl. We can do so much more and there is little action taken to stop what we know is a killer across the southern border. I look forward to hearing your thoughts on how to stop this crisis and how we end this crisis now. We see this administration placing partisan issues above the American People. The result of bidenomics is devastated, energy prices, food prices, lack of savings, we have to ask ourselves, how can American Families achieve the American Dream when so many of them have so little money in their savings account . How can the average millennial afford to become a firsttime homebuyer when Interest Rates are so high because inflation is not transitory, it is permanent, brought to us by the Biden Administration . We should not do what we have do seen done on a global stage from you on this administration. Focus more on leading the European Countries or helping the European Countries devastated American Business climate policies. Go to china and spend more time talking about Climate Policy than we do i. P. Theft. This sounds like a lot but you have been given an awesome responsibility to improve the economy, protect americans, and lead us to a Better Future, said that, we have seen proposals that allow this government to spy on american accounts with as little as 600 in transitions transactions. I will end with this, i know your jurisdiction is by nature crimes enforcement network, we have seen and heard of abuses from this using their power to track americans for shopping at Sporting Good stores, purchasing bibles, and making transactions with political keywords. I sent you a letter asking about these allegations but the Treasury Department said had been providing materials instructing people to search American Financial transactions human terminology using terminology that reveal political interests. If true, this is a gross misuse of power, fincen was created to stop Money Laundering and not spy on americans and not created for political motivation. I conclude with this, america deserves better. With the department then what the Biden Administration and department of treasury has delivered. Secretary yellen, please proceed. Thank you for during this committee. Good morning. Members of the committee, thank you for inviting me to testify. Over the past three years, the Biden Administration has driven on historic recovery, gdp growth is strong and inflation has declined significantly. We have also achieved a healthy labor market. The prime age Participation Rate is up two Percentage Points from january of 2021. The Unemployment Rate remains below 4 . Continuing the longest streak in 50 years. Real wages have increased, household median wealth has as well, by 37 between 2019 and 2022. That is the largest threeyear increase on record. Families are now putting their additional income in accumulated savings back into the economy. Our continued economic strength depends on a solid and resilient u. S. Financial system. Throughout 2023, the Financial StabilityOversight Council monitored a wide range of risks. Including risks stemming from commercial and Residential Real Estate sectors and from global geopolitical conflicts and technological developments. When two regional banks failed last march, we acted quickly to prevent contagion to banks with similar vulnerabilities and to maintain confidence in the Banking System. The council also increased transparency this year, issuing an analytic framework and, for the first time, providing the r public with indepth information on how it monitors, assesses, and response to potential financial risks. Let me now highlight five areas of ongoing work that are further detailed in the councils 2023 annual report. First, they are focused on risks from the Banking Sector and from nonbank Financial Institutions. It supports member agencies plans to review where the capital measures appropriately reflect the Banking Institutions ability to absorb losses. Improve resolve ability in large and complex or interconnected banks, and address vulnerabilities from uninsured deposit levels and depositor composition. Nonbank Financial Institutions are an important source of capital in Financial Markets but also pose potential risks to the Financial System, including risks related to liquidity mismanagement and leverage. Securities and Exchange Commission initiatives focused on hedge funds, money market funds, and other Investment Funds are an important step forward here. Second, the council is focused on member agencies enhancing assessment efforts and increasing coordination around climate related Financial Stability risks from increasingly severe and frequent climate related events. Financial regulators continue to promote disclosures that allow investors the Financial Institutions to consider these risks and their investment lending decisions. Third, a key focus has been bolstering protections against Cyber Security risks. The council promote sharing timely and actionable Cyber Security information including through ongoing partnerships between state and federal st agencies and the private sector. Fourth, the council is closely monitoring the increasing use of Artificial Intelligence and Financial Services which brings potential benefits such as reducing costs and improving efficiencies, and potential risks sklike cyber. Financial institutions, regulators, and Market Participants should continue deepening their expertise and monitoring capacity in this area. Fifth, the council is focused on Digital Assets and related risks such as crypto asset platforms and stable coins, potential vulnerabilities for the crypto asset price volatility and proliferation of platforms acting outside of or out of compliance with applicable laws and regulations. Applicable rules and regulations should be enforced and congress should pass legislation to provide for the regulati