Hensarling the meeting comes toorder. The chair is authorized to call recess at any time and members have five days to submit records. The hearing is for the purpose of receiving the secretary of treasuries annual report on the state of the International Financial system. Before proceeding to that report, i will give you a report on the hollings worth family. Joseph albert holingsworth arrived this morning weighing in at 7 pound, 15 ounces. Mother and baby are doing well. Husband and father is a total wreck but congratulations to our colleague tray hollingsworth. [applause] we will give him an excused absence from this morning. We welcome secretary treasury steven mnuchin. As we know this system rest heavily upon your u. S. Financial system and that system clearly needs improvement. Fortunately, President Trump has outlined a bold, forward looking plan to tackle the Serious Problems facing hard working American Families who have seen their pay checks stagnant and dreams diminish. The economy is nut not close to reaching its potential. Americans remined stuck in the slowest recovery in generations. Our economy grew at a measly 1. 6 when the historic norm is twice that. Clearly, eight years of obama numics has taken a toll. One place it has taken a toll is the competitiveness of our capit capitol markets. If the United States dropped to 17th in a recent world ranking of Economic Freedom. A historic low for nation. This is based on investment freedom and financial freed and Economic Freedom. The Economic Freedom of a number of International Competitors have grown. Z have faith in the spirit of american entrepreneurs and businesses to make necessary risks in growth but todo so the unaccountable washington burr must be held accountable. Our economy will grow healthier for all. The president s executive order establishing the score principles for regulating the u. S. Financial system is vitally important to us all. As the report nets, we have nut empowered americans to mick independent decisions in the marketplace. Save for retirement or build individual wealth. We have not mirrored companies to be familiar with foreign mshth markets. From helping in bank bailout, to tailing regulations for Community Banks and Credit Unions, your recommendations help craft a better regulatory system. The steps you are taking to make sure the competitiveness of the Financial System is a welcome containing change one i fully support. I now yield four minutes to the Ranking Member for an Opening Statement. Thank you very much, mr. Chairman. Welcome, secretary mnuchin. As secretary, you have a wide range of spikts that are of great importance to the economy and American People. These range from safeguarding our Financial System and regarding u. S. Values internationally. It collects and helps Law Enforcement curtail the activity. It is critical for the American Public to learn the extent for which President Trump, his immediately family, and his associates colluded with russia to influence the outcome of last years elections. Serious questions have been raised about suspicious arrangements and involvement with russian government officials, oligarchs and organized crime leaders as the committee of jurisdiction has their own share. You as secretary will assist the committee in fulfilling oversight in assessing President Trumps entanglements are russia even though you indicatedia do take requests from members of Congress Seriously you did not respond to a may 23 rd letter from me and my democratic colleagues requesting copies of all Railroad Records related to the business ties to russia as well as those of his family members and associates. I understand your staff did call yesterday afternoon while preparing for the herring but i am looking forward to hearing directly fromia about thisimateer today. There are also other areas where i have serious concerns. In june, the treasury released a report that recommendations that largely mirrored the wrong chase act and you recommended gutting the Consumer Protection bureau and rolling back doddfrank reforms including rules in place to ensure the stability of our Financial Systems like stress tests and living wills. These recommendations are deeply harmful and short sided giving the progress we have made. One west foreclosed over 36,000 families in california, this president has selected numerous one west officials including you to fill government posts for example joseph outing, affin a former west employee has been hired. Democrats are concern said about a Justice Department settlement with one west. I look forward to hearing from you and what you have to share with us today. I yield back the balance of the tim. The chair recognizes the gentlemen from kentucky, mr. Bar, chairman of our subcommittee for two minutes. Secretary mnuchin, thank you for your service and welcome it your first hearing on the state of the nnl Financial System. As chairman of the Monetary Policy and trade subcommittee which has jurisdiction over international institutions, sanctions and Monetary Policy, i think you are off to a great start. A bill was passed to empower treasury to give muchfeneeded reform. I thank your staff for having worked with us so effectivery on this legislation. Were also looking forward to the positive impact you can have. I would urge you as lead member of ssock to address the extent to which Monetary Policy and the four and a half trillion Balance Sheet continued to distort decisions and enjoying a faster and complete recovery. Robert caplin recently wrote there is a cost to excessive accommodation in terms of limiting returns and creating distortions and investigating and hiring decisions. Monetary policy accommodation is not costly. Perhaps the greatest threats we face are the threats from terrorism around the wormed. I hope to continue to work on key proposals that thwart violent extremism and counter states like north korea and iran. I want to applaud your work in the june treasury report. These reforms allow firms to land an additional 2 trillion in the economy. Again, thank you, and i look forward to your testify. I yield back. The chair now recognizes the agenda gentle lady from wisconsin, ms. Moore, for one minute. I am so disappointed you and the Trump Administration disclose the doddfrank and the treasury fined the agency for a crooked deal while secretary tillerson was the ceo. I heard from state officials that section 1502 conflicts provisions were working just fine. I look forward to your testimony. Young lady yields back. Today we will welcome the testimony of the honorable steven mnuchin. Since this is a new administration and the first time that we have had a cabinet level official testify before our committee i thought it would be prudent to review the committee and house rules on decorum. Members are required under the rules of the house to observe the principles of decorum and courtesy set forth in rule 17 and related provisions in jeffersons manual included by speaking and acting respect ffuy and refraining from language including applying a lack of intelligence. And i would add over the last two years my colleagues on the other side of the aisle have expanded upon the principles on the record to say that no administration witness should be quote unquote badgered or subject to quote i got you politics. The Ranking Member and other democrats on the committee have also said no administration witness should be talked quote to badly, no administration witness should be interrupted, every administration witness should be quote treated fairly, every administration witness has quote right to be able to respond and finally my democratic colleagues every administration witness should be treated with quote acceptable standards of dignity, propriety, courtesy and decorum. Steven turner mnuchin i have a parliamentary inquiry. I would like to know if the witness would like to be sworn in . It is not our custom to swear in administrative witnesses and we didnt with the obama administration. Mr. Chairman, since you took time to talk about how we should conduct ourselves today i would like to remind you and your colleagues how you treated mr. Cord ray and i never heard you take time out to talk about how members should conduct themselv themselves. I would like to make sure i understand you do not wish to swear in this witness . I believe in my tenure we have sworn in one witness. This is the first time Steven Turner mnuchin has appeared. He was sworn in as the secretary of treasury. He was born and raised in new york city and holds a bachelors degree from yale university. He has retail and Banking Experience which he brings to the office in which he now holds. Without objections, the witness written statement will be made part of the record. Secretary mnuchin, welcome to the first appearance before the committee. You are recognized for five minutes to give oral testimony. Thank you very much. Chairman hensarling, Ranking Member waters, and members of the committee i am pleased to be here today and look forward to discussing the important issues for the American People. I would like to begin by addressing treasurys National Advisory committee report. Treasury uses its leadership role in International Financial institutions to help ensure they are carrying out the core amendments. The treasury is focused on keeping the International Financial institutions as cost eeffective as possible. We press on the need to investigate global imbalances. This holds the ims administrative budget hardly flat in real terms. Where it micks sense we will retain a top donor and share holder while addressing priorities across other parts of the government. We will continue to promet access to Economic Opportunities to eliminate poverty and build shared prosperity. When the world is prosperous and stable, america reaps the benefits. I would like to hospital our domestic reform agenda. Let me begin by congratulating the committee on its passage of the choice act. The administration supported house passage of this legislation and we will work with congress to reform the financial regulatory system. Years passed since the financial crisis and this has given us time to see what has worked and what has not. The administration is committed to robust Financial System with a free flow of credit that fuels the engine of american growth. This means allowing community Financial Institutions, friends and Small Businesses access to barrowing. In june, treasury released the first in a series of reports in response to this executive order. Our first report showed Economic Growth and the report focused on regulatory action that can be taken by the executive branch it included a number of legislative recommendations to appropriately align the Government Institution with the president s Core Financial institution. One is tailoring requirements for small, midsize and regional banks that pose little or no risk to the Financial System. The third is a regular to the complex vocal rule. Fourth is statutorctutory chang make the bureau more accountable. We can implement regulatory reforms and legislative remedies for the benefits of Community Banks and midsize institutions. This isnt sustainable and leaves taxpayers at risk. Our Housing Finance policy should be clear and designed the other critical component is tax refirm. We have gone too long without addressing our tax system. Our business rate is one of the most highest in the world and makes businesses less competitive and we are committed to changing that. Lowering the rate and bringing back trillions allows business to invest in this country spurring Economic Growth. Another important comment of strong and robust systems is stopping bad actors and those who finance them. I would like to acknowledge the combat effort to finance trim. Our weapons that are needed to combat them have changed. Our office of Financial Intelligence is ready to work with this committee and i am looking forward to working with chairman pierce and Ranking Member to create historic opportunities for American People. I look forward to working with you. Thank you. Senator yields himself five minutes for questions. Mr. Secretary, you are probably familiar with infrl reserve report in 2016 dealing with the rule that equity of the bond increas increased. You know the director of monetary and Capital Market provided another critique of the rule saying it can impact the ability of institutions to supply credit. We have a recent study conducted by the bank of england saying in their stress simulation material increase in spreads in the Corporate Bond market and in the extreme Corporate Bond market dislocation threatens the markets. As head of fsock, what are your current concerns on the state of Bond Market Liquidity in general and in specific . Thank you very much for that question. Let me acknowledge i see you have the debt clock and hopefully i get out before it knows to 20 trillion. As it relates to your question about the rule, i do share your concerns. I think the biggest problem with the rule is it is complexity and regulatory overlap. It is our attempt not to have proprietary trading with banks, we need to make sure banks understand how the regulation work. Rece recently i was at a g20 meeting and we had economists that came and talked to us and said every trading desk needs a psychiatrist and lawyer to determine how to apply the rule. In any event, as my role of chair this is one issue i am working on and pleased to report we have done preliminary work on it. The regulators also share these concerns. We have it on our agenda tomorrow for the meeting and we will be addressing how we can deal with the regulatory overlap also mr. Chairman as you do know in our report on the executive order to the president we also made concern suggestions for legislative changes to that. Thank you. Mr. Secretary, particularly those on this side of the aisle, we very much deplore what is happening to your Community Banks and Credit Unions. I know some on the other aisle say there is no regulatory problem but in your report and testimony today you mention the term tayloring. Whau are you considering that you can do in the administration to better taylor rules to your Community Banks and Credit Unions . Mr. Chairman, thank you for that question. Let me first say, we are very fe focused in making sure community and regional banks grow. They account for 50 of the assets in the American Financial markets and that is problematic. What we want foodo is make sure there is robust lending, particularly in Community Banks. I have met with many people, these are not republicans or democrats. These are hard working Business People particularly in agricultural communities, particularly in small manufacturing communities that constantly complain that the Community Banks are nut able to lend because they are over burdened by regulatory issues. And i firmly believe that Community Banks no how to make loans. Let me say they should be regulated and cant strive. We are very focused on raising the burden and look forward to working with the community on it. The treasury report recommended raising the threshold for the application of the standards raising it from its current 50 billion threshold to an unspecified amount. It appears that changes can be accomplished without legislation. What did you believe the threshold could be increased to . Do we have your commitment to imelement these changes . Mr. Chairman, my understanding is there has been bipartisan discussions in raising the limit in the previous administration. I hope this is something we should accomplish quickly. I think it should be raised substantially to at least 250300 billion. I would go further saying that and be exement. They will be regulated by properly. I yield five minutes to the Ranking Member. Secretary mnuchin, i want to mock sure that even though you are not sworn in do you realize you are under oath . I do. Thank you. Thank you very much. Are you fam