Scott Bessent testifies at House hearing on economy and global finance system

[0:01] Mr. Secretary, please proceed. [0:04] In recent weeks, the United States brought that leadership to Asheville, North Carolina, [0:07] where we welcomed the world for our G20 finance ministerial. [0:12] For decades, [0:30] Would anybody else like to do that now and get it over with? [0:36] All right. The committee will reconvene. Mr. Secretary, you're recognized. [0:41] For decades, multilateral forums like the G20 accumulated sprawling agendas while losing sight [0:48] of their core emissions. Under President Trump, we are getting back to basics. [1:19] Growth is the condition on which durable... Mr. Secretary, please suspend. Yeah. Mr. Secretary, [1:41] you're recognized. Growth is a condition on which durable prosperity depends, [1:47] and our chair's statement achieved broad agreement on the need to promote it. [1:50] I'm also pleased that we reached consensus from economies representing more than two-thirds of [1:55] global GDP to address excessive and persistent imbalances, advance financial literacy, improve [2:02] the global sovereign debt architecture, and support regulatory modernization. In substance and in [2:08] spirit, these priorities reflect the administration's approach to international institutions by ensuring [2:13] that American time and resources serve American interests. We are also bringing that same discipline [2:19] to the IMF and World Bank, so they remain true to their core mandates and are better positioned to [2:24] promote economic growth. Of course, as growth guides our leadership on the world stage, [2:30] it is the force that is carrying our great nation into a new era of strength here at home. [2:35] President Trump's economic turnaround is especially impressive given the severity of the situation [2:40] he inherited from his predecessor when inflation soared to a 40-year high and middle-class families [2:46] were torched with price increases of 21.5 percent or more. Under President Trump, the private sector [2:53] has created over 1 million jobs. Real wages are outpacing inflation. The bottom 25 percent of wage earners [3:00] are seeing larger wage increases than those at the top. And the working family's tax cuts has delivered the [3:07] largest share of tax relief directly to millions of low- and middle-income Americans. Over 64 million tax [3:14] returns claimed at least one of President Trump's signature new tax cuts. No tax in tips, no tax in [3:20] overtime, no tax on American car loan interest, and an enhanced deduction for low- and middle-income seniors. [3:27] Through Tax Day, working families received over $325 billion in refunds. More than 40 million families [3:35] have claimed the permanently doubled and expanded child tax credit. And as important as what this [3:41] legislation has achieved is what it prevented. If opponents of the working families tax cuts had [3:48] had their way, our economy would have absorbed the largest tax hike in history – over $5 trillion. [3:55] Each of these improvements points to a structural renewal of America's capacity to build, to produce, [4:00] and to prosper. U.S. manufacturing is roaring back to its fastest pace in years. August marked eight [4:07] consecutive months of domestic manufacturing growth. Business activity has surged to a 52-month high. [4:14] And as companies allocate trillions to building and expanding across the U.S., the Atlanta Fed now [4:20] projects third-quarter GDP growth to surpass 4 percent. A new industrial super cycle is moving from [4:27] investment into production and from blueprints into paychecks. Finally, the strength of the [4:34] of our economy has allowed the United States to wage the greatest economic isolation campaign in the [4:39] history of the world against the Islamic Republic of Iran and its enablers. President Trump has taken [4:46] action that his predecessors have long deferred against a regime that devotes itself to death to America [4:53] and seeks nuclear weapons to do just that. Under his leadership, America is no longer managing the [4:59] Iranian threat. We are ending it. And America's economic resurgence is reinforcing our capacity to do so [5:06] from a position of strength. Together, the growth we are advancing abroad, the prosperity we are building [5:12] at home, and the might we are unleashing against our adversaries are bound by the same conviction to [5:18] restore American strength and service of the American people. That is the purpose of our economic [5:23] leadership and the principle that will continue to guide it. Thank you, and I look forward to your [5:28] questions today. Thank you, Mr. Chairman. We'll turn to member questions. I recognize myself for five [5:33] minutes. Mr. Secretary, when the then FinCEN Director Gatke was before the committee in July, [5:41] she testified that she was in discussions with Treasury leadership regarding updating the suspicious [5:47] activity report and currency transaction reporting thresholds, which as you know from your years in [5:54] the private sector are decades out of date. We heard the same under the testimony from the Biden [6:00] administration. A Treasury report to Congress on updating the thresholds is now five years overdue. [6:08] So, Mr. Secretary, what's your view on trying to tackle this issue of raising the threshold limits on [6:16] suspicious activity reports and CTRs? Chairman Hill, a very important question and thank you for asking. [6:24] We believe that we must get this right because, as you said, it has gone on for years and we want to do [6:33] that with a combination of potentially raising the thresholds and also giving credit to institutions for [6:41] the duration that they have known their clients. So, we are in the midst of this and, as always, we will be [6:48] looking after our smaller financial institutions, small banks and community banks to obviate any excess [6:57] expense that they are doing it while maintaining the safety and soundness of our financial system. [7:01] I think that's important and I also think, just to answer the question from big or small, [7:06] that the information being provided is being used and helpful in our fight against the cartels and global [7:12] terrorist illicit finance because a lot of financial institutions don't get the attitude that that's [7:19] the case. And I'm sensitive to law enforcement that's demanding that they wish the CTR limit were a dollar [7:25] so that they could look at every single possible category. But your leadership, I think, will be [7:30] important. We'd like to make progress on this. It's a priority for the committee. We also appreciate your [7:35] work as noted in your statement about cutting Iran's murderous regime off from workarounds of the existing [7:43] sanctions. Your Operation Economic Outcast is finally seeking to bring that game of hide-and-seek to close. [7:50] However, I'm concerned that China clearly and the UAE have done too little to sever themselves from trade and [7:59] money movements from Iran. What discussions are you pursuing with those two governments, [8:04] particularly, to get them in line with your goals? I think that we have seen some very [8:11] forward-facing statements from the UAE. They've announced that they have cut off financial [8:16] transactions and trade with Iran. And one of my deputies was just there and had a very good discussion [8:29] with all the members of their financial system. And as you would see, two weeks ago, [8:35] we sanctioned the branches of an Egyptian bank in Dubai, and that bank will be closing. That bank [8:44] transferred more than $1.8 billion since 2025 to Iran. So our message has been, and it has been heard, [8:53] that we know who you are. You know who you are. Stop. So we now have a cadence. We have sanctioned three banks. [9:00] With China, we have had some very good private discussions, and I look forward to those continuing [9:07] this weekend. When I meet my Chinese counterpart, the Vice Minister, Willy Fung, and I'm sure it will [9:16] continue during President Xi's state visit. I appreciate that. I think that'll be an important [9:23] agenda item for the bilateral discussion. Mr. Secretary, you also know that the Supreme Court [9:29] is recently reviewing petitions that they review the Corporate Transparency Act. I personally support [9:36] the Supreme Court reviewing this act because I think the private sector needs a definitive answer [9:41] on the Corporate Transparency Act. I want to thank the Treasury and the Administration for [9:46] targeting it in line with the work of Mr. Davidson, but I hope that if the Department of Justice [9:52] contacts the Treasury that you wouldn't object to that review at the court. Let me turn to the IMF [10:00] in the time I have remaining. My opening statement was about going back to basics for the IMF, [10:07] and I don't want to see China added, increased its allocation in the special drawing rights basket [10:15] of currencies. I think that's a mistake. It's not a market economy. It doesn't have a freely traded [10:20] currency. You called out China with the all 19 countries called out China at your G20 meeting. [10:28] Would you agree that the IMF needs to hold China more accountable? [10:32] I believe that the IMF is in the advanced discussions with China on the nature of their [10:40] imbalances and the potential threats to global financial stability that those imbalances may pose. [10:48] Thank you. I yield back. I recognize the ranking member of the full committee, [10:51] Mrs. Waters of California, for your question. [10:53] Thank you very much. Secretary of State, Americans and small businesses feel the pain of your reckless [11:02] economic policy. They're paying sky high prices for beef, gas, electronics, and really everything [11:09] on and around the kitchen table. With the administration's chaotic tariffs, reckless war in Iran, [11:16] and other unsound policies, the average American is paying $3,500 more than they otherwise would be for [11:25] for groceries, gas, energy, and health care. And that was the number before President Trump started an [11:33] unnecessary trademark with our neighbors and allies in Canada now. Thanks to retaliation on wood and [11:40] lumber, even the kitchen table itself is unaffordable. Yet Trump is not concerned about all of this. The [11:46] President has said repeatedly that there is no affordability crisis, that it's a hoax. He has said that he [11:53] literally does not care that Americans are paying more for gas and diesel caused by his war of choice [11:59] with Iran. For your part, you launched a so-called economic D-Day against Iran, but markets barely blinked. [12:07] Crude oil prices continue to increase, and you have dismissed the effects on American households and [12:14] businesses. While middle and lower income Americans feel the painful effects of the K-shaped economy, [12:21] you claim that neither it nor the economic difficulties exist. So, Secretary Besson, you have dared the [12:28] markets to bet against you, claiming that, quote, I am the house now, quote, unquote. So, despite your [12:35] feeble efforts, there continues to be a sell-off of U.S. Treasuries with 30-year Treasury yields rising to [12:43] levels that have not been seen since 2007. Just yesterday, in fact, the 10-year Treasury hit 5%. [12:52] Mr. Secretary, do you agree that these high Treasury yields or interest rates on Americans' bonds [12:59] means that loans paid by families to fix a roof or buy a car will also be expensive? Yes or no? [13:08] The U.S. bond market has been the best performing major bond market in the world. [13:13] Yes or no, Mr. Secretary. And we have had record—reclaiming my time—reclaiming my time—reclaiming [13:20] my time—reclaiming my time—reclaiming my time—reclaiming my time—reclaiming my time—you keep talking, [13:26] I'll keep reclaiming my time. And I'm asking you, Mr. Secretary, turn it to your trade policy. If tariffs [13:33] are not inflationary, as you claimed in your previous testimony, then why has inflation increased by more [13:39] than 3% over the past year? Do you deny that inflation is too high at 3%? Yes or no? [13:48] The Representative Waters—yes or no, Mr. Secretary. You're not making sense—yes or no, Mr. Secretary. [13:53] If you believe the tariffs are inflationary—reclaiming my time—reclaiming my time—reclaiming my time—reclaiming my time—reclaiming my time—reclaiming my time—reclaiming my time—reclaiming my time—I didn't hear you, Mr. Hill. What'd you say? [14:05] I said it's the gentlelady's time. Does the time belong to the gentlelady? Indeed. Indeed it does. [14:11] And so that's not good enough, sir. You and President Trump, the so-called conservatives, [14:17] you have overseen an increase in the debt to a record $40 trillion—40 trillion. You have promised [14:25] reduced deficit but delivered only higher numbers and paying for American households. And this is so [14:31] outrageous when you and others have claimed to be about getting rid of the deficit. Well, [14:39] but maybe none of that matters if President Trump continues to blindly push for AI and data centers [14:46] with absolutely no safeguards. He's doing this even as causing threats skyrocket for Americans. [14:52] Did you hear what Bill Gates had to say? Did you hear what Elon Musk had to say? Did you hear about [14:58] Anthropic? Did you hear about Amo Day? They all said stop it. Watch it. AI is dangerous. You got to be [15:06] careful. Did you hear any of that? Yes or no? They could stop anytime they want to. Did you hear any of [15:11] that? Yes or no? Reclaiming my time. Reclaiming my time. Did you hear what your friends had to say? What the [15:20] big billionaires had to say? Did you understand that they said we're moving into a dangerous period of time? [15:27] We need to watch it. We need to slow down. Did you hear that? [15:31] This administration has been at the forefront of examining the models. We began model examination [15:36] via more than five or six months ago. Your friends said watch it. Be careful that we're moving into [15:43] a dangerous time on AI. And if you don't admit that, it means that you're not willing to stand up [15:50] to the truth because you heard it. You know they're saying it. These are the guys that you all work with. [15:55] These are the guys that you have to be more billionaires and trillionaires. [15:59] These people want regular women's time is expired. [16:01] People want you to give them regulatory. You don't have any more time. [16:03] The chair now recognizes the vice chairman of the full committee, Mr. Huizeng of Michigan, [16:07] for five minutes. Thank you, Mr. Chairman and Secretary Bessent. This has become a common theme. Would you [16:12] like to respond on my time? That keeps eating into my time because you can't actually answer the [16:16] question. I'll give you 30 seconds if you'd like to respond to any of that. To which piece? There's so many. [16:22] Well, it's a smorgasbord. I understand. Well, we can move on. [16:28] Interestingly enough, the idiocy that we saw earlier, I'm going to be doing a hearing in the [16:33] Foreign Affairs Committee today titled Trojan Horses, Covert Foreign Malign Influence Operations, [16:40] which will be discussing organizations like Code Pink and the Singham Network, which has funneled [16:47] hundreds of millions of dollars into the U.S. to fund idiots like this so that they can come [16:54] and do things like this performance art that they are trying to do. So that is my apologies, [17:02] but I guess you can expect more. And maybe we'll see if a few of these people can get arrested twice [17:07] in a day when they show up at my two o'clock hearing. So, Mr. Secretary Besson, I understand [17:12] Treasury Department and the broader administration have several major tech security efforts running [17:17] at the same time from work at NIST and the new quantum readiness task force to the launch of the [17:23] AI and cybersecurity vulnerability clearinghouse called Gold Eagle. How is Treasury making sure [17:29] these efforts work together while avoiding siloed or duplicative efforts? [17:34] So, we have an effort across the government, all departments. The Treasury began with the [17:43] financial services for which we are responsible, but whether it is the Department of War, the [17:50] cybersecurity, the White House Office of Technology, we have been closely coordinating for more than six [17:56] months on this. Who's lead on that? It is an interagency process. Okay. Is there a lead within [18:02] the interagency or not? I would say Sean Cairncross and Michael Kratzios. Okay. All right. These efforts [18:13] may prove critical in protecting our financial plumbing. There's a lot of discussion about that [18:18] specifically regarding the Gold Eagle Clearinghouse. Is there anything that you can share or plan to [18:23] publish in the near future about how entities in the financial services sector from traditional [18:28] financial institutions to the layer one blockchain networks can qualify to participate? I think it is [18:35] important these, you know, the discussion that we're having here on the layer one blockchain networks as [18:39] well. No, I think that's very important and that, as you would have seen in the news, that as soon as [18:47] the news of Mythos came out, I gathered the largest banks who happen to be in D.C. at Treasury to begin [18:54] discussing this, the largest banks that have very good cybersecurity resilience and they have been very [19:01] helpful in terms of creating more resilience and that is moving down the capitalization chain from [19:08] super regionals to regionals to small and community banks and then we are populating that out into the [19:14] service providers. Is the real concern amongst the working group the plumbing side of this? Well, [19:21] it's the plumbing and it is the patching of a lot of open source code. Yeah, okay. I want to work, [19:29] move on to something a little bit different. You know, you and I previously discoursed in various [19:37] publications about our shared aspiration for the three percent target. I happen to chair, some co-chair, [19:44] a bipartisan fiscal forum, the BFF. We chose that on purpose, by the way, and we have introduced, [19:50] with my colleague Scott Peters from California, we've introduced a resolution that Congress should [19:55] adopt this fiscal target of three percent of a budget deficit, no more than a three percent of gross [20:02] domestic product or lower. I believe this is the most practical, tangible goal we can set to turn, [20:09] to finally turn the tide on our national debt. In fact, we have up to 20 evenly bipartisan co-sponsors [20:15] in the Senate companion bill. What's your current outlook on the three percent target? And can you [20:21] even explain why this first step is not just critical to the international financial finance system, [20:26] but also to families and workers across our nation? Well, the reason the three percent is important, [20:31] because at three percent is when we start bending the debt curve and actually start paying down debt. [20:38] The important thing to look at is what you're referring to, Representative Huizinga, is the deficit [20:45] to GDP, which actually, in the first fiscal year, the Trump administration came down from the astounding [20:52] level of about 6.3 percent. The calendar year was 6.8 or 6.9, and the Biden, the breakaway spending, [21:00] we brought it down to about 5.7, 5.8 percent for the fiscal year. So we actually did have a fiscal [21:07] contraction, and we would have continued that fiscal contraction this year, but for the tariff refunds. [21:13] If you want to be interrupted again, show up at my subcommittee hearing at two o'clock today. [21:16] The gentleman yields back. The chair recognizes the ranking member of our subcommittee on capital markets, [21:21] Mr. Sherman of California. You're recognized for five minutes. Mr. Chairman, I want to thank you for [21:26] focusing our attention on China, its special drawing rights, its access at least until 2031 to the World Bank, [21:34] but we were alerted to concerns about China just a few minutes ago when we had a code pink style. [21:43] I assume it was code pink disruption of this hearing, and I should point out that code pink [21:48] is chiefly financed by China and the Chinese Communist Party. One more reason to be concerned about [21:58] China's role in international finance. The war has driven up gas prices and has driven up interest [22:06] rates. Before this war, the 10-year was at 4 percent. Now it's virtually at 5 percent. Last year, [22:14] I urged the administration to fill our strategic petroleum reserve. They did not. As a result, [22:21] we have not been able to respond to the Strait of Hormuz problem as effectively as we could. [22:29] Now we have those of the administration talking about a Bitcoin reserve. No country that has ever won [22:37] a war in history had a Bitcoin reserve. But if you don't have an oil reserve, and if you don't have [22:44] reserves of rare earth minerals, then you are at strategic risk. Certainly any money that we would [22:51] put in a Bitcoin reserve, which we could lose in a day, should instead be in strategic reserves of [22:58] things we actually need to run the economy. We are told that tariffs don't drive inflation. [23:07] Boy, do we need financial literacy in this country. This hearing's focus is significantly on the role of [23:15] the US dollar. The role of the US dollar is undermined by an incredibly erratic federal [23:22] administration that makes us the laughing stop of the world. It is exacerbated by the crazy tariff [23:29] policies. Now we have a war with Canada. And the crypto bros made it clear that the whole purpose of [23:36] crypto was to displace or partially displace the dollar as the world's reserve currency. What I'm [23:44] particularly concerned about is that in the Senate, they are considering the Clarity Act without [23:51] plugging the loophole in stablecoin. The deal with stablecoin was that we'd allow stablecoin, oh my [24:02] god, but at least we would prohibit interest on it. Now the crypto guys have spent tens of millions on [24:09] legal fees to evade that prohibition on crypto and on interest on stablecoin. A recent study has shown [24:17] that that could lead to a $1.5 trillion reduction in bank deposits, meaning that the primary way that [24:25] we finance small business in this country would have $1.5 trillion less, not to mention that there'd be [24:31] $1.5 trillion less to deal with the Community Investment Act. And finally, of course, the stablecoin [24:40] is a system designed to be ultra secret to defeat law enforcement and to ignore and evade our know your [24:49] customer laws. Now, Mr. Secretary, one of the core principles of U.S. banking systems, accountability rests [25:00] with identifiable people and institutions, yet many DeFi protocols and decentralized stablecoin arrangements [25:08] operate through decentralized governance, autonomous mechanisms that lack accountability. Given the [25:16] record of the number of DeFi exploits reported in the first half of this year and the use of AI and [25:22] exploiting code, are you concerned that a growing share of global financial activity could migrate to [25:29] systems where there's no accountable party and no know your customer requirements? What implications [25:36] would this have for our efforts against illicit finance and what effect would it have on the [25:42] integrity of the international financial system? Well, that's why I'm pushing the passage of the [25:47] Clarity Act, because it gives Treasury more authorities to seek out this evasion. The Clarity Act [25:56] that emboldens and makes more popular the rival to the U.S. dollar, which is crypto, or at least they are the [26:09] newest rival to the U.S. dollar. And they've said that their purpose, it's as if America owns Coke, [26:17] and your suggestion is, let's invest and glorify Pepsi. We don't need the competition, especially when we're [26:24] doing such a terrible job of running our economy and of looking strong in the world, and I yield back. [26:29] The Chair recognizes the gentleman from Wisconsin. Mr. Fitzgerald, you're recognized for five minutes. [26:35] Mr. Secretary, thanks for being here today. I want to go back to China, if I could, a little bit more [26:42] basic kind of approach. The IMF is supposed to promote, obviously, global financial stability, but it [26:51] appears kind of on a regular basis China continues to use opaque lending practices. They manage kind of [26:59] the exchange rate, and they're certainly delaying debt restructuring, I guess you would call it, [27:06] in developing countries. What are we doing or what can we do to use our influence, the United States use [27:15] its influence at the IMF to hold China more accountable, and make sure that Beijing doesn't [27:23] continue blocking all these debt restructurings and distorting? They're basically distorting kind of the [27:29] international system, right? I was wondering if you could give us your thoughts on that. [27:34] So, Congressman, very important problem. We addressed it at the G20, and we will see the first debt [27:41] restructuring since then, and it is because, look, the Chinese system of lending includes many tolling [27:51] agreements, many hidden provisions, and transparency in debt restructuring is the ultimate feature for [28:01] successful debt restructuring. The IMF has joined us in believing that that must happen and that we must [28:08] have transparency. It is also my opinion that this widely talked about Belt and Road initiative has [28:16] gone from a lending operation to a collection operation as they have bankrupted many or are [28:22] bankrupting many of their borrowers. And so let me follow up. So at the G20, I know the discussion's [28:28] happened, but just the efforts by China and really other countries in reducing kind of the reliance on [28:37] the dollar. So can you just kind of tell us why maintaining the dollar status as the primary [28:45] reserve currency matters? I know that seems like, you know, this is the Financial Services Committee [28:50] that—what is your opinion on that and what's your take on that? Well, contrary to the gentleman from [28:56] California, the U.S. is, in fact, the leader, and the leader does not fear competition. Competition makes [29:05] us better. And we have thus far dismissed competition. What we have seen is as the share of global [29:13] transactions, the U.S. dollar continues to thrive. The share of global transactions in dollars actually [29:21] went up this year. And the only thing that we have seen is a diminishment in the reserve assets, [29:27] and that is just through the decrease mostly of Russia and China in their reserve holdings. [29:36] But we have seen many other countries. And as a matter of fact, we just had the two of the most [29:42] successful treasury auctions in 20 years, which speaks to the credibility of our system and what this [29:49] administration is doing and the global competence in us. What it will oftentimes focus on [29:55] on what the administration can do? What should Congress be doing to preserve not just the dollar [30:03] as the currency, but just to stabilize the markets overall? Well, we will be talking about a fiscal [30:10] consolidation that is coming. And as the previous representative asked me, that is important. [30:19] We have to get our house in order. And as I say, a strong dollar is not a price on its screen. It is a [30:25] set of behaviors. And what we have seen in this administration, where we are creating regulatory [30:31] certainty, tax certainty, trade certainty, and energy certainty, that is bringing in trillions of [30:38] dollars into the U.S. So it is to help us fortify those policies. Very good. Thank you for being here [30:44] today. I yield back. The gentleman yields back. The chair recognizes the ranking member of our [30:50] subcommittee on digital assets, Mr. Lynch of Massachusetts. You're recognized for five minutes. [30:54] Thank you very much, Mr. Chairman. And I want to thank the secretary for being here. [31:00] Mr. Secretary, as secretary of the treasury, you have direct influence on the ability to advise the [31:09] president on matters of AI, not only from an economic standpoint, but also from a regular [31:16] regulatory standpoint, as well as a national security standpoint. Sometimes when I hear the [31:23] president talk about AI, and I have the honor of being the ranking Democrat on this this committee [31:29] on on AI and crypto. When I listen to the president, I do not believe he has a I don't think he has a [31:41] grasp of what we're dealing with with AI. I'll be honest, I don't think the president could spell AI [31:49] if I gave him the first letter. He is he is calling it a hoax. I think your your own leadership at Treasury [31:58] and the things you have tried to do and anticipated are far more logical and thoughtful than what I'm [32:10] hearing from the White House. And I think I'm not trying to put you on the spot here, but I know you [32:18] have suggested some things in the area of AI that are thoughtful and cautionary and deliberate. [32:29] And yet I hear the president saying this is all a hoax, you know, and I'm just I'm just trying to [32:36] figure out do you think the president understands that that when we talk about building an AI, [32:43] we're not manufacturing it like a car. Sometimes he he talks in those terms. We're really growing. [32:50] We're growing AI in a lab. And and and and now based on the statements from Anthropic and OpenAI and others, [33:00] including Elon Musk, it's it's it's we're having a control problem. We're having an alignment problem. [33:11] You know, this this incident with hugging face, we've we've we've lost control. Do you think the [33:19] president understands that that it is not as simple as as what he has described? Do you do [33:29] do you understand? Do you think the president understands that it probably doesn't matter [33:36] whether the good guys develop a super intelligence or the bad guys develop a super intelligence? [33:43] If you don't have control of that entity and it has preferences and goals that are inimical to the [33:54] existence of humanity, it won't matter. It's the entity itself that they're creating that is going to [34:03] prove there's going to present the threat to us and to to your kids, grandkids, [34:10] all of our humanity in general. Does the president get that, Mr. Secretary? [34:15] Well, Congressman, I look forward to working with you on this. And I the I do take exception. [34:22] It does matter whether the good guys or the bad guys have this as a person who manages the China, [34:27] the relationship with China on AI. It matters a great deal. [34:31] But Mr. Secretary, here's my point, though. We're having control problems. So if we build something [34:38] we can't control and the Chinese build something they can't control and the entity itself is what [34:45] is the danger to us all. At the end of the day, if if we create a super intelligence that is beyond [34:54] our control and does not follow our instructions, it has been very difficult on the value loading [35:02] piece of this, where we try to we try to imbue the AI with with with values that humans have, [35:10] that we have as a democracy. We have failed in that. That has been impossible to do so far. And yet we've got this race. And I hear from my and I have great respect for Mr. Hill and my Republican colleagues on this. [35:23] We keep hearing about this race, this race against China. We can't slow down. We need to beat them. [35:32] Well, we don't control the entity that we're trying to create. And neither does China. I bet they've had breaches. They've had breaches, but they haven't reported them. [35:43] Anthropic has. Open AI has, you know, Elon Musk has. Congressman Kimi had a breach and sent [35:51] Chinese weapons plans back to Anthropic. What I'm saying is I hope there's a way that you might be able to [36:00] talk sense to the president about AI and the threat that you and I know it presents. [36:06] I would just say that the president is completely aligned with Jensen Wang, the CEO of NVIDIA. [36:12] The chair, your gentleman's time has expired. The chair recognizes the gentleman from New York, chairman of the House Homeland Security Committee. Mr. Garbarino, you're recognized for five minutes. [36:23] Thank you, Chairman Hill and Secretary. Thank you for being here. And again, thank you for your work on getting salt in the one big, beautiful bill that put a lot of money back in my constituents' pockets. [36:33] That was a lot of your work, Congressman. Well, but with your partnership and your meeting, we got across the finish line. So thank you very much for that. [36:41] I want to talk about foreign banking organizations. From 2020 to 2023, they underwrote approximately $11 trillion, more than 40% of the financing raised in the United States. [36:53] They also employ more than 200,000 U.S. workers and contribute $30 billion in payroll. Secretary, given these substantial contributions, what steps is Treasury taking, including through its coordination with [37:04] financial regulators to ensure our policies continue to attract foreign investment and allow foreign banks to compete on a level playing field, helping ensure the U.S. remains the world's financial center? [37:14] Representative, that is an excellent question because the U.S. has, around the globe, we have a very unusual regulatory system in that we have three federal regulators, the Federal Reserve, the FDIC, and the Office of the Comptroller, the Currency. [37:30] Then there are state-level regulations. So we are trying to make sure that all the regulators are aligned with best practices and tailoring regulation for both the risk in the system and the size of the banks. [37:48] That's great. I mean, as we know, regulation for banks is very important, but when you overregulate like the EU and some other places do, you know, you lose investment. We want to make sure we're protected but actually still have investments. I love that you're doing that. [38:01] That's why they're trying to unify their capital markets and be more like us. [38:04] Everybody wants to be like us. [38:09] I have another question. Under U.S. generally accepted accounting principles, clearers are treated as agents rather than principals, meaning client cleared trades typically do not come onto the clearers balance sheet. [38:20] Many U.S. broker dealers that are subsidiaries of foreign parent companies must also comply with the International Financing Reporting Standards, or IFRS, which has not made the same clarification. [38:31] Absent IFRS guidance, those firms could be required to carry cleared trades on their balance sheets, significantly impairing their ability to participate in the Treasury market. [38:42] I'm concerned that excluding major market participants because of accounting inconsistency could restrict Treasury market liquidity and run counter to the goal of the Treasury clearing mandate. [38:52] We do not want international standard-setting bodies hindering the successful implementation of our Treasury clearing efforts. [38:59] Do you share this concern, Secretary, and would you be willing to weigh in where possible to help this get corrected before the go-live date? [39:06] Yes. So we'd be willing—we'd be willing—with pleasure to work with your staff on this. [39:12] And we are dedicated to keeping the U.S. Treasury market the deepest, the broadest, and the most robust. [39:20] So we want to make sure that we prioritize safeguards, but we also want to prioritize our standing in the world. [39:30] Thank you very much for that, and we look forward to working with you and your team on that. [39:34] Now turning to digital assets, as Treasury implements the Genius Act, Congress was deliberate in distinguishing between financial intermediaries and developers of decentralized technologies that do not custody customer assets or control transactions. [39:50] Secretary Besson, how is Treasury ensuring its regulations preserve those distinctions and do not inadvertently impose intermediary-style requirements on software developers or other technology providers? [40:03] So, Congressman, we're in the rulemaking process right now, and I can't comment on that, but we have taken substantial input from Congress and stakeholders as we aim to keep America the crypto capital of the world. [40:16] So I understand that we are in the rulemaking process, but again, I just want to make clear Congress did intend that they were excluded. [40:22] So when in the rule drafting, just please remember that. [40:27] And last, I want to return to retirement security. [40:31] In 2022, Secure 2.0 became law to help create more opportunities for Americans to save for retirement. [40:38] Secretary, can you provide an update on the implementation of Secure 2.0 and how those efforts fit into the President's executive order? [40:44] Yes. [40:45] Yes. [40:46] We are, again, working to implement that and to do that in a safe and sound manner as quickly as possible. [40:55] Okay. [40:57] Do we have a timeline? [40:58] Sorry? [40:59] Is there a timeline? [41:00] Yeah. [41:01] My staff will contact your staff. [41:03] Okay. [41:04] I appreciate that, Mr. Secretary. [41:06] I am out of time, so I yield back. [41:08] Chairman Yields back. [41:09] Chairman Yields back. [41:10] Chairman Yields back. [41:11] Chairman Yields back. [41:12] Chairman Yields back. [41:13] Chairman Yields back. [41:14] Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being with us today. [41:20] There is so much that I'd like to address in the short time that I have. [41:25] I think that the greatest concern that the American people have right now, it's not just [41:30] the crippling economy by the illegal terrorists, the consequences of the illegal war, the people [41:38] who are struggling every day to make ends meet. [41:41] But it is the endless corruption and the selling off of the American people's priorities for the benefit of Trump and his family and his cronies. [41:53] And in just the last few days, I couldn't believe the news that was coming out that Jared Kushner is pursuing his own business deals while he's supposed to be engaging in Middle East peace talks. [42:08] The Russian oligarch paying for a post wedding celebrations. [42:15] The 60 Minutes show that exposed the video footage of people offering pardons as long as they'd give Trump hundreds of thousands of dollars. [42:26] The corruption is unprecedented in every way, and there are real consequences to everyday Americans. [42:33] We're also very concerned about January 6th, violent insurrectionists being paid out and trying to exempt Trump and his family members from a deal that you are overseeing with the IRS, [42:49] from any pursuing, exempting them from any crimes that they might have committed in the past. [42:59] So I want a commitment from you. [43:01] I've sent a letter asking for information on this. [43:04] I have yet to receive a response. [43:06] But can you commit right now, today, that there is a legal revocation of the IRS deal that you are overseeing? [43:16] And will you please give us a commitment that you will give us these documents that we're requesting? [43:22] Representative, you were confused that I do not oversee it. [43:25] It is done by the Department of Justice, and we take instruction from the Attorney General. [43:30] But, Mr. Secretary, you oversee the IRS. [43:33] You oversee the dollars coming in and out of the Treasury. [43:36] The Attorney General supersedes that authority. [43:38] Okay, Mr. Secretary, you oversee—you're supposed to protect the American people and our tax dollars. [43:45] Can you commit that you will not distribute any of these funds right now for all of us today? [43:51] Well, it's the subject of litigation, so I can't talk about it, but I'm not sure which funds you're talking about. [43:56] Okay, Mr. Secretary, any funds that would pay out January 6 insurrectionists, whatever people—whatever fund we want to call it, [44:04] any taxpayers going out to pay out these insurrectionists, as well as exempting Trump and his family from any investigations with their dealings. [44:15] Again, that's in litigation, but it is a matter for the Attorney General. [44:19] All right, Mr. Secretary, the hardest part of my job right now is being in my district and having to speak to people directly about the impacts of this administration and what it's having on their daily lives. [44:33] I am shocked when I see you on TV talking about how the K economy is done, that the economy has never been better. [44:42] That couldn't be further from the truth. [44:45] People are struggling to make ends meet. [44:48] The skyrocketing tariffs are hitting businesses with an unexpected average $25,000 a month. [44:54] In Colorado, Canada is our greatest trading partner, so huge implications for the trade war that Trump has pursued—50% tariffs on products that we rely on. [45:09] So our families are getting healthcare ripped away. Our economy has been crippled from failed policies. [45:19] And yet, we hear you—what I hear from people is that you're one of the smart people in the administration. [45:27] You know better. You know what's happening to the people across this country. [45:32] And yet, you continue to stand and say Trump's talking points. [45:36] And my ask is that we deserve—we need better. [45:40] You are a voice that we need of reason and a check on Donald Trump when we feel like we have none. [45:48] Mr. Secretary, I want to read a couple of stories. [45:56] I have countless stories from people reaching out to my office about the consequences every day. [46:02] Margie says, my husband and I both have good jobs but with childcare costs that are hitting more than our mortgage and grocery bills that feel like it goes up every week. [46:12] It's been brutal, and these two things are just the tip of the iceberg. [46:15] It shouldn't be this hard for a family of four to survive. [46:18] The gentleman's time has expired. [46:20] The chair recognizes the gentleman from New York. [46:23] Mr. Lawler, you're recognized for five minutes. [46:25] Thank you, Mr. Chairman. [46:26] Mr. Secretary, thank you for being here, and thank you for your leadership on Operation Economic Outcast. [46:32] Could you please describe the impact Operation Economic Outcast is having on the Iranian economy as we speak? [46:39] Well, Congressman, I would just quote the President of Iran, the Speaker of the Parliament, and the Head of the Central Bank, [46:47] who said that the economy is in dire straits. [46:50] He was warning both his hardline IRGC compatriots and the Iranian people. [46:58] So we have seen the currency collapse. [47:00] We have seen inflation through the roof. [47:03] And unbelievably, in a country with the third highest energy resources in the world, they now have three to four hour gas lines because they have to import their fuel. [47:15] So the economic outcast is possible because of the blockade. [47:19] So the combination of the blockade and the months that we spent mapping the nodes through the payment system that we are cracking down on them. [47:31] And I believe that these violent outbursts that we are seeing from them is a result of a wounded and cornered animal. [47:38] Appreciate it. [47:39] Keep up the strong work on that front. [47:41] I want to raise an issue related to Holocaust-era restitution. [47:46] There's growing evidence that certain Swiss bank accounts holding assets belonging to Holocaust victims and their families were never accounted for or included in the original 1998 Swiss bank settlement. [47:58] And testimony to that effect was made to the U.S. Senate earlier this year. [48:02] Mr. Secretary, given Treasury's role in overseeing matters of international finance and asset recovery, are you aware of these reports on unaccounted for accounts? [48:13] Yes. [48:14] Yes, sir. [48:15] And do you believe it would be appropriate for the department to revisit or press for the settlement to be reopened or expanded to ensure these assets are properly identified and returned to survivors and their descendants? [48:27] Our International Affairs Department would be happy to work with your staff on that, Congressman. [48:31] Great. [48:32] Thank you. [48:33] The Treasury Department has been very active in the AI space, both within the financial sector itself and more broadly in the tech stack. [48:39] Can you share more information about Treasury's involvement with efforts to create baseline standards for AI developers and how banks should be thinking about AI within their institutions? [48:50] Yes. [48:51] Yes. [48:52] So, as I said earlier, this began back in March, and we have engaged on a daily, weekly, and monthly basis. [49:01] We have—we began with the largest banks and with their chief information officers, with their leadership, and we have transferred much of that into Project Gold Eagle, which is a clearinghouse [49:20] for everything that we learn about resiliency within this, and we continue to engage with them. [49:26] And I can tell you that the financial sector have been—from the largest banks to the smallest banks, from domestic banks to international banks, have been very good partners, and they are working on resiliency. [49:39] Appreciate it. [49:40] The European Union has been attempting to assert regulatory authority on American enterprise through the Corporate Sustainability Due Diligence Directive. [49:49] CS3D would force U.S. companies, many with only modest European exposure, to comply with sweeping EU-mandated supply chain audits, liability standards, and ESG-driven operational changes. [50:02] Given the administration's stated goal of restoring strong economic growth, how do you assess the impact of this kind of foreign regulatory overreach on America's ability to reach a sustained 3% growth rate? [50:15] Well, Congressman, I used to be a lifeguard, and one of the first things they teach you on lifeguarding is that a drowning person may grab you and try to pull you down with them. [50:24] So, at the G20, we offered an agenda of growth, which includes substantial deregulation, and we hope that the EU will follow a fantastic report from the former head of the ECB, Mario Draghi, on how they can solve their growth problems. [50:42] But the way to do it is not to encumber the dynamic economies. [50:47] It is for them to free themselves. [50:50] In New York and California, they have very aggressive escheefment practices and try to sweep unclaimed property into the state to effectively pay for their bloated budgets. [51:06] How are you and the administration going to protect the Trump accounts from being swept up by California and New York in these grandiose escheefment practices that they have put forth? [51:21] Rep Liccardo and I are working on the SAFER Act and would love to work with you on that. [51:25] Yes, that could be a problem. [51:28] Again, drowning people try to pull everyone down with them. [51:33] Mr. Secretary, let me ask you to respond to Mr. Lawler in writing on that question. [51:38] The chair recognizes the ranking member of our subcommittee on oversight investigations. [51:42] Mr. Green, you're recognized for five minutes. [51:44] Thank you. [51:45] Thank you for appearing today, Mr. Secretary. [51:48] Quick question for you. [51:51] At the purchase of a meme coin, what does one get to evidence the purchase? [51:58] Sorry? [52:01] A person purchasing a meme coin. [52:03] At the time of purchase, you get something to evidence the purchase? [52:08] I assume it's an electronic receipt. [52:10] An electronic receipt. [52:12] And how does one acquire value after having purchased a meme coin? [52:19] Again, value can take many different things. [52:23] How does one acquire value when one buys gold? [52:25] How do you acquire value when you buy a piece of gold? [52:27] Let's talk about the meme coin right now. [52:31] You would get it through appreciation. [52:34] Or many people may just buy it for capital stability. [52:39] Well, some people buy it assuming that they'll make some sort of profit as a result of the purchase. [52:47] And is it fair to say that that profit, in many instances, will be based upon another person buying at a higher price? [52:56] That's the way a market system works, Congressman. [52:59] Well, in this market system, the President's dollar meme coin allowed him to make $635 million last year. [53:11] Investors lost $3.81 billion. [53:15] The coin fell from $75 at launching to $1.65. [53:22] Those purchases that were made by persons buying the meme coin, they purchased a digital token, which amounts to nothing. [53:36] They don't get anything beyond the token in the wallet. [53:42] Nothing more than that. [53:45] And there is this term that I'm not fond of, but it's a term that's utilized. [53:52] The term is the greater food theory. [53:55] It takes someone who's willing to pay more for nothing than the original investor for the person to make a profit. [54:05] It's speculative. [54:08] But it's also called something else. [54:10] It's called a Ponzi scheme. [54:12] These things have been legalized under this administration. [54:20] Ponzi schemes have cost persons lots of money, and people who impose them have gone to jail. [54:30] They've been prosecuted. [54:32] But in the Trump world, we now have legalized this scam to the extent that when a person buys the Trump coin, there's a transaction fee that's paid. [54:46] When it's sold, there's a transaction fee. [54:48] The president makes money on the purchase and on the sale. [54:55] And if the president happens to have taken a few of these coins himself at the genesis of this process, he makes a profit when it goes up. [55:06] And if he takes his profit off the top, as other investors do who buy in early, they do well. [55:14] But the masses of people, they're the people who are losing the $3.81 billion. [55:22] These schemes have not traditionally been legal. [55:28] How do you justify legalizing these Ponzi schemes? [55:36] Well, Representative, I'm unfamiliar with this. [55:40] I don't think it meets the criteria for a Ponzi scheme. [55:44] A Ponzi scheme is a different kind of financing scheme. [55:47] Well, excuse me if I may just ask you. [55:49] Pardon me for interrupting. [55:50] But explain to me how it differs from a Ponzi scheme when the profits that are made are dependent upon someone else paying more for what you purchased, which is nothing. [56:03] We'll call it a digital token. [56:06] So how is that different from a Ponzi scheme? [56:10] Every market is dependent, if you want to make money, on someone paying more, whether you sell your house, whether you sell stock. [56:19] If I may, if it's gold, you have a tangible asset. [56:24] They are tangible assets. [56:27] This is an intangible asset. [56:30] It doesn't exist except in the minds of people. [56:33] The equities and bonds are an intangible asset. [56:36] Well, this one is the one that the president has used to take advantage of people. [56:41] I would hope that our country would see that the president is a corrupt person. [56:48] I yield back. [56:49] The gentleman yields back. [56:50] The chair recognizes the chair of our subcommittee on housing and insurance. [56:53] Mr. Flood of Nebraska, you're recognized for five minutes. [56:56] Thank you, Mr. Chairman. [56:57] Mr. Secretary, when you appeared before the House Ways and Means Committee in June, Congressman Hearn raised the issue of third-party litigation financing. [57:06] You said at the time that you look forward to working with him on the issue, especially where foreign money is coming into our system, sponsoring lawsuits, and paying no taxes. [57:15] More recently, you warned Wall Street on X that, quote, tax rules should reward investment, not abusive financial engineering, end quote. [57:24] And said Treasury would not tolerate financial products designed to exploit the tax code. [57:29] Well, I think that specifically describes third-party litigation to a T. [57:36] These transactions allow investors to take ordinary income from litigation recoveries and convert it into capital gains income through financial fiscal engineering. [57:46] Mr. Secretary, will you commit to having the Treasury and the IRS examine the tax treatment of third-party litigation financing, including arrangements that have foreign investors? [57:57] I'm concerned that we've got sovereign growth funds that are gaming our justice system and getting these nuclear verdicts and then paying themselves back big time. [58:06] So my question is, will you work with us to ensure that TPLF proceeds are subject to the appropriate U.S. tax treatment? [58:20] I look forward to working with you and your staff on that, and I have long believed that this is a malignancy within our legal and financial system. [58:28] And it should be stated that you look at home insurance premiums in America, they have been skyrocketing. [58:33] Yes, weather peril, but also third-party litigation financing is also driving that. [58:38] Second question, Mr. Secretary, some of my colleagues today have claimed that crypto will destabilize the U.S. dollar. [58:45] But I have a hard time understanding how a payment stablecoin under the Genius Act that must be backed dollar by dollar in a U.S. financial institution, [58:56] how could that undermine the very dollar that it's tied to? [58:59] I know you're working hard to implement Genius. [59:01] How do you expect this statutory framework for stablecoins to strengthen the dollar's position as the world's reserve currency, [59:08] which is one of the reasons we all voted for it, how to increase the global demand for dollar-denominated assets [59:14] and ensure that this emerging technology ultimately reinforces, not threatens, the strength of the U.S. dollar? [59:21] With stablecoins, the highest-demand stablecoins are indeed U.S. dollar-backed. [59:27] So we believe that as we finish the rulemaking, which we're in the midst of now and working on congressional intent [59:36] and speaking to the stakeholders, that we will see an increase in demand for U.S. safe-haven assets, U.S. dollar assets, [59:46] especially Treasury bills, and that will likely buttress the U.S. dollar vis-à-vis other currencies, [59:54] especially as other countries implement the central bank digital currencies, [1:00:00] which could be seized at any moment, as we have seen in numerous cases. [1:00:04] Thank you very much for that. [1:00:06] As you know, the Bank Secrecy Act is the top regulatory cost center for financial institutions, [1:00:12] and I'm pleased that the administration is looking at modernizing AML controls with a new program rule. [1:00:18] When it comes out, will it be strong enough to actually change supervisory practice on the ground level? [1:00:23] To focus on risk? [1:00:27] Yes. [1:00:28] What we are seeing is that many of the suspicious activity reports that we see are even ex-post. [1:00:36] And much to my dismay, when I arrived at Treasury, we also saw that many of the SARs, [1:00:42] which are in the hundreds of thousands to millions filed every year, end up in a digital filing cabinet. [1:00:49] So, at FinCEN, we are operationalizing FinCEN so that we can both follow the leads, follow pathways on those, [1:00:58] and communicate with local law enforcement in a more robust way. [1:01:03] I want to touch on community banks which don't have the resources or large compliance teams [1:01:07] and fewer BSA reports a month could make a big difference. [1:01:11] A threshold increase would meaningfully reduce the compliance burden for them. [1:01:16] Is that something we can include in the final AML rule? [1:01:21] We are working on that now, and we are working on both perhaps a threshold increase based on the length of time the customer has been with an institution. [1:01:33] And, Congressman, as you know, no one knows their customers better than small and community banks. [1:01:39] Right. [1:01:40] So, how can we integrate their knowledge and the fact that they do know their customer, they see them, [1:01:46] as opposed to we find that most of the deficiencies are with the very large banks. [1:01:53] Thank you very much. [1:01:54] Mr. Chairman, I yield back. [1:01:55] The gentleman yields back. [1:01:56] The chair recognizes the ranking member of our subcommittee on housing and insurance. [1:02:00] Mr. Cleaver of Missouri, you're recognized for five minutes. [1:02:03] Thank you, Mr. Chairman. [1:02:08] Mr. Secretary, thank you for being here. [1:02:16] The President bowed at the Republican convention, mid-decade, mid-term convention in Dallas, [1:02:27] that he would give $5,000 to each American if Republicans win the election. [1:02:42] I think he called it a Trump dividend. [1:02:48] First of all, you know, I'm concerned about the direction we're going in terms of one part of our government taking complete control over the government. [1:03:07] We know that things like this happened before, but do you believe that the President can make a declaration about $5,000 for each American without the consent of Congress? [1:03:30] We are currently examining that at Treasury. [1:03:34] And when the Republicans win in November, if we need to, I look forward to working with Speaker Johnson on it. [1:03:40] On what? [1:03:42] If necessary, on the $5,000 dividend. [1:03:46] So it is a thing. [1:03:48] I'm not sure what a thing means. [1:03:52] It is a thing when it is real. [1:03:58] The President's declaration about $5,000 per American is real, so it's been researched. [1:04:07] The President's intent is very real. [1:04:10] As a Treasury Secretary, I'm sure you, do you have any apprehensions about a $1.8 trillion deficit that would be impacted even more negatively if every American received $5,000 from the federal government? [1:04:34] Well, first of all, I think putting more money in the American people's pocket should be an objective for everyone. [1:04:42] And I believe there are ways to do it that would not affect the deficit. [1:04:49] Yeah, and ways to do it without involving Congress. [1:04:54] Again, that if Congress is needed, I look forward to working with Speaker Johnson. [1:04:59] If not, then not. [1:05:01] Well, spending begins on the House of Representatives, and $5,000 per person, it would seem to me, would have to move through the legislative body. [1:05:15] We're seeing a slow, in my estimation, dangerous reduction in the equality of the three branches of the government. [1:05:28] And I always think about 1973, the War Powers Act. [1:05:35] I think the bombing was secretly taking place in Cambodia without the knowledge of people in Congress. [1:05:43] And so, I'm not sure. [1:05:47] Well, I'm assuming you're meeting with Mr. Speaker Johnson now, working out some details. [1:05:53] Sorry? [1:05:57] Are you working out details with Speaker Johnson on the $5,000? [1:06:01] If it becomes clear that we need congressional authority, I will meet with Speaker Johnson. [1:06:09] And I look forward to it. [1:06:14] There was also a pledge for $2,000 for individuals before this by the president. [1:06:21] And it's concerning. [1:06:23] If we can move. [1:06:25] My time is gone, but I am very concerned about releasing unchecked superintelligence when people are declaring that it's an existential threat to humanity. [1:06:40] Senator Kennedy has suggested that we pass some kind of law that would require a kill switch. [1:06:50] Are you familiar with that? [1:06:52] I'm not, sir. [1:06:53] Well, a kill switch, based on what the Senator has suggested, would be the switch that would be the ultimate switch that would shut down AI if this threat surfaced. [1:07:10] The reality of the threat. [1:07:12] Time has expired. [1:07:13] Invite the Secretary to respond in writing to that question. [1:07:17] The Chair now recognizes the gentleman from Iowa. [1:07:20] Mr. Nunn, you're recognized for five minutes. [1:07:22] Thank you very much, Mr. Chairman. [1:07:24] Secretary Besson, thank you very much for spending time with us today here in D.C. [1:07:28] Most importantly, thank you for coming to places like Iowa and hearing frontline folks share with you how the investment of rural capital, which this committee has done, which you have led, has really helped impact local lenders, whether they're banks, [1:07:42] credit unions, small businesses, take root and really grow. [1:07:46] You spent some time with me recently in Des Moines, and you heard directly from folks who have said, you know, the lending options available to them because of your leadership here, the rollback in regulation, is helping them grow businesses. [1:07:58] We had one of our companies had their best year ever as a direct result of both the tax cuts, but the rollback of red tape. [1:08:06] I want to say thank you very much for your leadership. [1:08:08] Most importantly, thanks for hearing from folks right in the middle of America on how much this helps grow the heart of the heartland. [1:08:14] Representative, it was a pleasure to be there, and it's really a tale of two states. [1:08:19] I've been in Minnesota, which is top five for personal income tax, top five for corporate income tax, and the people who are leaving, and the businesses that feel trapped, as opposed to Iowa, which is booming. [1:08:34] That's right. [1:08:35] I also want to highlight and I want to thank my colleague across the aisle, Emmanuel Cleaver here, on efforts we've done for things like rural housing. [1:08:43] And this is an area where making sure all of America gets the opportunity to have an American dream. [1:08:49] The Treasury has been a partner in making sure that our local lenders have the access to capital necessary to make that successful. [1:08:56] I also want to speak today on something that I think has really driven what we have been a leader here on the Financial Services Committee. [1:09:03] We've led in both crypto, we've led in digital assets, including stablecoin, and now we're looking at this artificial intelligence that has exploded in the last year alone. [1:09:13] Our committee has passed unanimously my AI Plan Act to be able to identify ways that the federal government can learn from what's happening both in the private sector, [1:09:23] while at the same time not putting prohibitive restrictions on innovation here in the United States. [1:09:29] I also think it's unique that the Treasury has an opportunity here to help us wage an America-first innovation, [1:09:36] while stimming the tide from groups like China, a near competitor in this space, from getting tactical advantages in the AI space. [1:09:44] That's everything from making sure that chips are made here in the United States, [1:09:48] to also ensuring that foreign actors don't take an opportunity to leapfrog America's frontier AI models. [1:09:58] Secretary Besson, I wonder if you could speak to us about what the Treasury is doing to help keep America's competitive advantage, [1:10:05] increase our innovation, while at the same time, as was noted here, not allowing technology to get ahead of our capability to best help the American people. [1:10:13] Good. Congressman, thank you for that question. [1:10:17] And we are trying to maintain the optimal growth rate, so we are solving for both the innovation and safety. [1:10:28] And we have been working on that for more than six months since these large language models, since the release of Mythos, [1:10:35] which was the first, what I would say, step function increase in AI as we approach AGI. [1:10:45] And one of the things I would say is that we need to develop more of an open source, more open source models in the U.S. [1:10:55] We can't let these large labs have regulatory capture, because that will stop innovation. [1:11:02] One of the ways we can push back against China, because the Chinese models, they distill from the U.S. models, [1:11:08] which is a polite, scientific word for steel. [1:11:13] And the more we develop our own open source models here, or open models here, then we will be able to eventually, the Chinese models, people will not use them. [1:11:26] Because, again, you know, you are seeing in many of the Chinese models, many of the Chinese models think they're Mythos. [1:11:33] That's right. That's right. [1:11:34] They think they're Claude, so. [1:11:36] Mr. Secretary, I think you're absolutely right in the sense that made-in-American AI is good not only for the entire world, [1:11:41] it's one of the best safeguards we have to make sure the Communist Party of China doesn't become the mainstay for the future of artificial intelligence. [1:11:49] I'll end with this. [1:11:50] Mr. Chair, one of the efforts that we're trying to lead here is not only what we can do to make sure our partners in China, [1:11:55] when they come to the United States at the end of this month, know that we are committed to this, [1:11:58] that they find no harbor, and that we will be soft on this issue, but also Congress must lead. [1:12:05] And this is one of the reasons that we are presenting a letter to both the House, Republican, and Democrat leadership, [1:12:11] as well as the Senate, to make sure that we have a commission focused specifically on aspects that we can do [1:12:17] to make sure artificial intelligence becomes first and foremost here in the United States, [1:12:21] and national security is prioritized. I'd like to enter into the record. [1:12:24] Without objection. [1:12:25] Thank you very much, Mr. [1:12:26] The gentleman's time has expired. [1:12:28] The chair recognizes the ranking member of our House Intelligence Committee, Mr. Himes, from Connecticut. [1:12:32] You're recognized for five minutes. [1:12:34] Thank you, Mr. Chairman, and thank you very much, Mr. Secretary, for being here. [1:12:38] And purportedly, we're here to talk about international monetary stuff. [1:12:41] The chairman and I were just in Bolivia. [1:12:43] Bolivia is hanging on by a thread, waiting for them to approve an IMF deal. [1:12:47] I just hold that up as an example of how important it is that you provide the leadership that, of course, [1:12:52] keeps our neighbors stable and safe. [1:12:54] That's not what I want to talk about, though. [1:12:56] What I want to talk about is – let me start. [1:12:58] Did you attend the midterm convention in Texas last weekend? [1:13:03] I did. [1:13:04] You did? Okay. [1:13:05] I'll tell you, I saw two things at that convention. [1:13:07] Number one, it's a little bit like you quoting the Atlanta Federal Reserve as a GDP projection for the third quarter. [1:13:14] The Atlantic Federal Reserve has a GDP projection that is double what the survey of professional forecasters is saying it will be at 2.5%. [1:13:23] So I saw a lot of happy talk about the economy, which, by the way, is political malpractice. [1:13:27] When the American people – and this is in the Michigan Consumer Sentiment Survey – see consumer sentiment lose 20 points since the beginning of the Trump administration, [1:13:36] you have a political problem. [1:13:38] I don't expect you to comment on that, but you have a political problem, which is why my friends on the other side of the aisle are not talking much about the economy today. [1:13:45] Congressman, there's a survey problem because Democrats are now poisoning the survey. [1:13:49] Mr. Secretary, you're better than that. [1:13:52] Reclaiming my time. [1:13:54] I'm data-driven. [1:13:55] Reclaiming my time. [1:13:56] It disappoints me to see somebody of your stature use the word conspiracy in the Congress of the United States. [1:14:02] As long as we're going there, the other thing that I heard in Texas was that we're all communists. [1:14:07] Now, that was interesting to me. [1:14:08] I would be the first communist in history to have spent a dozen years in the banking business. [1:14:13] Mr. Foster, my friend here, built a business, employed lots of people. [1:14:16] We're not communists over here, but I do worry about the other party. [1:14:19] There's been 10,000 Ivy League PhDs written on what precisely communism is, but can we agree, just yes or no here, can we agree that communism substitutes the control of the government and the ownership of the government over the hand of the free market? [1:14:37] Is that a reasonable working definition of communism? [1:14:40] Yes. [1:14:41] Okay, good. [1:14:42] Good. [1:14:43] So, can you think of any other administration since Franklin Delano Roosevelt that has taken equity stakes, government ownership in 39 companies? [1:14:52] That's a figure by the Council on Foreign Relations. [1:14:54] Can you think of another administration that has the United States government owning 39 American companies? [1:14:59] Congressman, as you said, since Franklin Roosevelt, that we are in the fight of our life. [1:15:09] It's a simple question. [1:15:10] No, no, no. [1:15:11] For strategic industries, we've had market failures. [1:15:13] The Biden administration completely- [1:15:15] Okay, okay, okay. [1:15:16] Mr. Chairman, I have five minutes here. [1:15:18] I'm not going to argue with you on whether that's a good idea. [1:15:21] I'm a free market guy, so I think it's a terrible idea. [1:15:24] Tariffs are- [1:15:25] Well, that's why we have no critical minerals. [1:15:28] That's why the- [1:15:30] Mr. Secretary, I do have a question at the end of this. [1:15:33] The government now owns 39 companies. [1:15:35] The government has imposed tariffs. [1:15:37] I don't like tariffs. [1:15:38] Whether you think they're a good idea or a bad idea, they are an intervention in the free market. [1:15:43] You yourself did a massive intervention in probably the most important market to the capital markets, [1:15:48] which is the treasury market. [1:15:50] The president recently, $5,000 for a vote. [1:15:53] Now, in the legal world, that would be called a bribe. [1:15:56] But you could think of it as an intervention in political markets. [1:15:59] And by the way, I have no doubt that if I walked down there right now and said, [1:16:02] I will pay you $5,000 if you focus your buying on the three-year treasury, [1:16:06] that conversation would end with me in handcuffs. [1:16:10] But the question I have for you, Mr. Secretary, relates to your intervention in the markets. [1:16:15] And I'm not going to ask you to agree with me here, but I can think of no administration in the last 50 years [1:16:21] that is quite as communist as the Trump administration. [1:16:24] Constant interventions in the operations of the free market. [1:16:27] But let's spend one minute on your intervention. [1:16:30] About a week and a half ago, you spent some $10 billion, plus or minus, to try to lower the yield on the 10-year bond. [1:16:38] This prices American mortgages. [1:16:40] When you started, the 10-year bond was at 4.8%. [1:16:43] Today, it's at a 20-year high of 5.04%. [1:16:46] 20 basis point rise. [1:16:48] Was your intervention successful? [1:16:52] And will there be more? [1:16:53] Yes, it was, sir. [1:16:55] Wait, wait, wait. [1:16:56] The 10-year went up by 20 basis points. [1:16:58] How can you say it was successful? [1:17:00] Well, there is the counterfactual of what it would have done. [1:17:04] And we then proceeded to have the two most successful treasury auctions that we've had in 20 years. [1:17:10] And the U.S. bond market, it continues during the past month, since President Trump has come in. [1:17:16] It has been the best performing bond market in the developed world. [1:17:20] I have one last question. [1:17:21] You didn't use our cash for that. [1:17:24] You let short-term bonds pay, essentially, for the purchase of long-term bonds. [1:17:28] But you've talked about maybe using the Treasury General Fund. [1:17:31] That's the American people's money. [1:17:32] Do you have the intention of using the Treasury General Fund to continue this operation? [1:17:37] I don't think you understand what the Treasury General Fund is. [1:17:41] The TGA is the checking account for the federal government. [1:17:46] And if we can buy bonds cheaply, which is what we do, that we approximately $10 billion of— [1:17:54] I just asked a yes or no question about whether you intend to use that for the operation. [1:17:58] You can ask him a question. [1:17:59] You can't tell me how to answer it. [1:18:00] Mr. Himes, your time has expired. [1:18:02] Thank you, Mr. Chairman. [1:18:03] I'll let it go on because I wanted you to get that clarification. [1:18:06] And I'd invite the Secretary to put that in writing. [1:18:09] The committee's interested there. [1:18:10] Thank you. [1:18:11] The gentleman, true gentleman, from Montana. [1:18:16] Mr. Downing, you're recognized for five minutes. [1:18:18] Well, thank you, Mr. Chairman. [1:18:20] And, Secretary—Mr. Secretary, thank you for being here. [1:18:24] I want to first start by applauding your efforts and the Trump Administration's efforts to reduce red tape and ensure that regulations are appropriately tailored. [1:18:33] I also want to quickly acknowledge the Treasury's efforts to stand up Trump accounts, which really do have the potential to give kids a financial leg up. [1:18:43] But straight into my questions. [1:18:45] As a former state insurance commissioner, one of my biggest priorities is maintaining strong and competitive state-based insurance markets, which, in my experience, is the best way to serve the needs of Americans. [1:18:57] And during the Biden administration, I saw firsthand how the Federal Insurance Office, or FIO, was empowered and politicized to encroach on that system, despite a key function of FIO being to represent the U.S. insurance industry on the international stage on prudential matters. [1:19:17] And I saw all kinds of deviations from that, including trying to get the U.S. to adopt European capital standards rather than adopting the other way on the strongest, most effective insurance market on the planet, acting as a regulator when they clearly weren't a regulator. [1:19:34] And probably one of the biggest transgressions I saw there was in the previous administration's Green New Deal aspirations, basically making data calls on our domestic insurers, usurping the authority of our domestic regulators. [1:19:47] So, Mr. Secretary, can you discuss the efforts Treasury has made under your leadership to rein in those abuses we saw at FIO during the previous administration? [1:19:56] And what further reforms might you support? [1:20:01] So, Congressman, that's a very important distinction. [1:20:04] FIO was created under Dodd-Frank, but it is not a regulator. [1:20:08] It is a convener. [1:20:10] It is an observer. [1:20:12] We facilitate communication. [1:20:15] And we do not exercise authorities. [1:20:20] I believe that the 50-state insurance mechanism that we have in the U.S. is extremely robust. [1:20:30] And I had the regulators, the insurance commissioners, come to Treasury in the spring for some very detailed discussions on what's happening in private credit. [1:20:42] I was very impressed with the depth and breadth of their work. [1:20:46] And importantly, they regulate each other because to do business in Montana, New York, Montana has to certify a New York company selling there. [1:21:01] So, it is a very robust system. [1:21:03] Right. [1:21:04] And look, I think what we can do is, which is what we do, identify the potential areas that we are concerned about. [1:21:15] We have for financial stability. [1:21:17] And then make sure that the insurance regulators are aware of them. [1:21:24] Because, as I've often said, in risk management, the biggest risk you're taking is one you don't know you have. [1:21:29] Right. [1:21:30] Well, thank you for that. [1:21:31] And obviously, you know, we understand what the intent was behind FIO, but we have seen usurpations of what their authority was under the previous administration. [1:21:40] And I've championed efforts to reform and abolish FIO. [1:21:44] You know, the McCarran Ferguson Act of 1945 made clear that states have sole regulatory authority over the insurance industry, which was upended by Dodd-Frank when it created FIO. [1:21:53] So, Mr. Secretary, do you believe that Treasury should minimize its insurance activities to clearly define federal responsibilities and leave insurance regulation to the states? [1:22:03] A hundred percent. [1:22:05] Thank you. [1:22:06] So, my legislation, the McCarran Ferguson Restoration Act, really strikes a balance on abolishing FIO while maintaining some key responsibilities. [1:22:14] So, I hope you'll take a look at that. [1:22:17] Moving on, in the interest of time, I was very pleased to see the final rule issued by FinCEN to permanently remove the invasive beneficial ownership information requirements for U.S. small businesses. [1:22:28] I've heard from countless companies as to how costly and unworkable this requirement would have been. [1:22:34] Can you briefly discuss why exempting U.S. businesses from this requirement was so critical to the administration's commitment to cut red tape? [1:22:42] Well, Congressman, I think, first of all, it's important to know who we did exempt and its foreign entities. [1:22:48] Right. [1:22:49] But by exempting 33 million small businesses from these onerous and expensive reporting requirements, you know, I believe it is a victory for common sense. [1:23:00] Right. [1:23:01] Another burden I hear from our community banks in my district is how costly it is to comply with the Bank Secrecy Act and anti-money laundering laws. [1:23:10] The $10,000 domestic currency transaction report threshold has never been raised to account for inflation since the Secrecy Act became law in 1970. [1:23:19] You discussed this issue with Chairman Hill earlier, but can you describe why it's important to keep these thresholds updated? [1:23:25] I invite you to describe them in writing to the gentleman from Montana. [1:23:29] Thanks for the question. [1:23:31] The Chair recognizes the Ranking Member of our Task Force on Monetary Policy, Mr. Vargas of California. [1:23:36] You're right now for five minutes. [1:23:37] Thank you very much, Mr. Chair and Ranking Member for the hearing. [1:23:40] I appreciate it. [1:23:41] Mr. Secretary, thank you for being here, joining us. [1:23:43] I know you have a very tough job, and I appreciate you taking it. [1:23:46] I do. [1:23:47] I've been here since the beginning of the hearing, so I have heard most of your testimony and some of the things I was going to ask you have already been asked. [1:23:56] But one of the things that I did hear that you did attend the midterm Republican Convention in Dallas, and you did hear, of course, [1:24:06] and you commented about the $5,000. [1:24:09] In fact, the actual quote from the President was this. [1:24:12] If Republicans win, you win with us, and you get $5,000. [1:24:19] So is that a good idea? [1:24:24] Pardon me? [1:24:25] Is that a good idea? [1:24:26] Yes. [1:24:27] Why? [1:24:28] I think it's a good idea for the American people to keep more of their money. [1:24:33] So they get $5,000. [1:24:35] Does that hurt the deficit or the debt? [1:24:37] Does that increase the deficit or does it increase the debt? [1:24:40] I believe that there are ways to do it without increasing the debt or deficit. [1:24:44] Why don't you go ahead and tell us then? [1:24:46] Because it doesn't seem like that's been the case so far. [1:24:49] That is in process right now. [1:24:51] So it's somehow mysteriously or magically going to occur? [1:24:55] You can't tell us? [1:24:57] You can't give us a hint? [1:24:58] I'm not ready to discuss it at present, but at Treasury we've been working on it for quite a while. [1:25:02] The reason I say this is because we hear this all the time, that in fact this is going to reduce the debt, reduce the debt. [1:25:08] I remember when President Trump used to talk about how outrageous the $24 trillion debt is. [1:25:13] Now, of course, it's at $40 trillion. [1:25:15] So again, we hear these miraculous things that are going to happen and they don't seem to appear. [1:25:21] But since we are talking about miraculous, I studied to be a Catholic priest for a long time. [1:25:26] And I had to study metaphysics, Thomistic philosophy in particular, because you have to pass an exam as a Jesuit called the De Universa. [1:25:34] And we talk about ontology, learn about ontology, epistemology, the notion of what is existence, what is being, how do you know these things. [1:25:44] I never thought I was going to have to research them once again. [1:25:47] But because of AI, I do find myself once again going back to this information, trying to figure out, you know, what exists, what doesn't exist. [1:25:56] This is a dangerous thing. And I'm not a techie, but I do know philosophy as as the systems learn more and more about us. [1:26:05] They do become very dangerous. And you're in a position to do something important. [1:26:10] The people who are technically savvy more and more are saying these are very dangerous things. [1:26:15] And yet you were talking a little bit about how we have to do this for really efficiency purposes. [1:26:23] What are you doing for safety? [1:26:26] We've been working on safety nonstop since the release of Mythos. [1:26:33] And I can tell you what we shouldn't do on safety is to give these labs a liability exemption, which is what they are asking for. [1:26:43] The best way to guarantee safety is that the creators are liable for what they build and generate and put out into the economy and to the American people and to the world populace. [1:26:58] Would you like to expand a little bit more on that? Because if it's just a liability, I'm a lawyer too, I understand liability. [1:27:04] So if the safety issue is just a liability for you, as you know, oftentimes companies go ahead and take the risk because of the potential profit. [1:27:16] Are you building in any other type of safety other than the risk, the liability? [1:27:21] Again, the one thing we should not do is give them a blank check on liability because I believe that the best liability or the best safety guard is that they will be held responsible. [1:27:37] And they are saying that we would like to all slow down, but please give us a waiver on liability, which should not be done. [1:27:45] And I would encourage everyone in this committee and in both houses not to consider that. [1:27:51] Well, I think that's a very good idea and I agree with you, but what about the safety of being able to turn the system off? [1:27:57] We are working, we've been working in this administration on that. [1:28:02] You know, you might recall that we forced Anthropic to withdraw a model because we did not believe that it passed the safety criteria. [1:28:11] And they received a lot, you know, we were held up as doing something that was terrible. [1:28:20] I have 17 seconds less. [1:28:22] I would just urge you to focus more on the safety. [1:28:26] I think you're a very capable person. [1:28:27] I don't agree with you on everything, but I think you're a very capable person. [1:28:31] I hope you focus on the safety because I do think there's a lot of danger here. [1:28:34] Again, thank you for being here. [1:28:35] Yes, sir. [1:28:36] The chair now recognizes gentleman from Florida, Mr. Herodopoulos, for five minutes. [1:28:41] Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being here. [1:28:44] We appreciate your candor as you go through these questions. [1:28:47] And I've never studied to be a priest, but I am a former history professor and I've learned that socialism doesn't work. [1:28:54] And I think we all recognize and seeing what's happening in Central Europe right now with their declining economies. [1:28:59] And the last thing I want to do is go in that direction. [1:29:01] I also see the opportunities now happening in Latin America where they're opening up their markets as we've seen success in places like Argentina. [1:29:08] Mr. Secretary, I'm going to get a couple of questions with you, if I could, about Argentina and Japan. [1:29:13] And I'm greatly concerned in some of the reaction to some of your good policy directions. [1:29:18] First of all, it is correct that Japan is our largest holder of U.S. Treasuries. Is that correct? [1:29:23] It is. [1:29:24] And second, I think we've seen almost a 90 percent reduction in Argentina in their inflation rates since they've moved to the free market, is my understanding at this point as well. [1:29:33] And the reason I'm bringing this question up, I know there's a little bit of a public conversation between [1:29:37] the Senator from Massachusetts and yourself. [1:29:40] And maybe for not only the dedication of this committee but the public to understand what we did in Argentina to help a fellow ally [1:29:49] and what we did there which actually helped the world economy as opposed to hinder it. [1:29:55] In Argentina, we had a fully collateralized swap line on which they just drew a small amount. [1:30:03] The goal was to protect the capital of the American people. [1:30:07] We actually made tens of millions of dollars and we successfully bridged an American ally. [1:30:12] As everyone said, a Trump ally. [1:30:14] No, this is an American ally. [1:30:16] And Javier Molay has taken Argentina out of this far-left anti-American governments and has been a beacon for Latin America. [1:30:30] So when the congressman from Connecticut talked about being in Bolivia, that we are seeing with Argentina, with Bolivia, with Chile, with Colombia, with Ecuador, [1:30:42] all of these countries, having realized that these far-left policies have never worked anywhere and did not work for them, [1:30:51] now want leadership in a market-based economy. [1:30:54] And to build on that idea, when you had a situation recently with Japan, again, our number one bond holder at this point in America, [1:31:02] it has to be frustrating as a person who is actually an expert on the economy to hear the chattering class talking about some of the decisions they made [1:31:09] and not understanding a fundamental understanding whether it be credit swaps or otherwise. [1:31:14] Well, and some in the Senate. [1:31:17] And that said, what is the benefit of helping out an ally like Japan when they run into a situation like they did recently? [1:31:24] Again, we had been engaged with the Japanese on their currency interventions in constant dialogue. [1:31:33] The Ministry of Finance there is very transparent with us. [1:31:37] And for a nominal amount, again, not the goal, but a nominal amount where the U.S. Treasury has made tens of millions of dollars, [1:31:47] we were able to signal our support for the Japanese policy of a stronger yen. [1:31:54] And a stronger yen is better for American exports. [1:31:58] A stronger yen means that the Japanese government will not have to sell U.S. assets to finance foreign currency intervention. [1:32:06] And in our last minute and a half, if I could, I know there's been a lot of unique statements made from the other side of the aisle. [1:32:12] We've got a little bit of time left. [1:32:14] Do you want to address a couple of the comments? [1:32:16] I know that you have cut off in a few different circumstances. [1:32:18] Well, Congressman, what I would like to do is this was just released during the hearing. [1:32:24] It's several inconvenient facts. [1:32:26] The Census Bureau covering 2025, they had just published the poverty rate declined 50 basis points to 10.2%. [1:32:35] Real median household income increased by $2,250, 2.6% to $87,460, the highest on record. [1:32:45] Pre-tax income for black Americans is up 4.8%, white Americans 2.9%. [1:32:51] Well, thank you, Mr. Secretary. [1:32:53] And one last thing, if I could, Mr. Chairman. [1:32:55] I talk about opportunity zones in Florida. [1:32:58] I'd like to just make a request to the Treasury Department to take a look at some of those ideas for the future. [1:33:03] We're booming right now because of the space industry in Florida. [1:33:06] And we're looking for new ways to find that investment so we stay number one in space. [1:33:10] But with that, Mr. Secretary, thanks so much for your time. [1:33:12] And Mr. Chairman, I yield back. [1:33:14] The gentleman yields back. [1:33:15] The chair recognizes the gentleman from Illinois, Mr. Caston, for five minutes. [1:33:18] Hello, Secretary Besant. [1:33:21] What is the total amount of money associated with the sale of Venezuelan assets that's flowed through Treasury accounts or accounts managed by Treasury since January? [1:33:28] Just a minute. [1:33:32] We are not giving out the total amount of disbursements. [1:33:49] I'm asking for the total amount of money. [1:33:51] President Trump said in July that it was more than $13 billion. [1:33:54] Would you agree that it was more than $13 billion in July? [1:33:56] Again, I'm not going to give out that amount. [1:34:00] Okay. [1:34:01] Has Treasury hired an independent auditor to review those flows? [1:34:04] The KPMG. [1:34:05] Okay. [1:34:06] Thank you. [1:34:07] All disbursements are subject to KPMG. [1:34:09] Yes. [1:34:10] And will their audit review the flows through the Qatari managed account that was initially set up? [1:34:15] Will their audit review the Qatari flows? [1:34:17] KPMG is reviewing everything since they have been hired. [1:34:21] Will that include the Qatari flows? [1:34:25] Secretary Rubio said it would. [1:34:27] I'm just asking you to confirm what Secretary Rubio said. [1:34:29] I agree with Secretary Rubio because state is leading this. [1:34:32] Okay. [1:34:33] Have you personally reviewed any of their audits? [1:34:35] There have been no audits published yet. [1:34:37] So have you reviewed their work products? [1:34:38] What's that? [1:34:39] Have you reviewed any of their work products? [1:34:40] My staff reviews them every day. [1:34:43] Okay. [1:34:44] Do you know, are any of the cash flows that are flowing, flowing to the U.S. government, U.S. persons, or U.S. corporations? [1:34:49] I have no knowledge of that. [1:34:51] Okay. [1:34:52] Because President Trump said on July 27th, we've paid for that war many times over. [1:34:56] We're taking in a lot of money, billions and billions of dollars from Venezuela. [1:34:59] Who is the we that he is referring to? [1:35:01] Well, I think President Trump may have been referring to the oil deal that the Department of War has done with Venezuela. [1:35:08] But he seemed to imply that we, the United States people, are taking in money to offset those costs. [1:35:14] That would suggest flows to U.S. persons. [1:35:17] Again, that this is one of the largest assets that may be ever to go on the U.S. balance sheet, Congress. [1:35:26] Okay. [1:35:27] Okay. [1:35:28] Are the accounts that the Treasury is managing tied only to the sale of oils, or are you also taking control of other Venezuelan assets? [1:35:35] It is many Venezuelan assets. [1:35:39] So you've asserted control over Venezuelan assets. [1:35:42] I know Interior recently said they're taking control of Venezuelan gold sales. [1:35:46] So we're also taking control of those assets and the dispersions. [1:35:49] Yes. [1:35:50] And you can't testify as we sit here whether or not those are flowing to U.S. persons? [1:35:53] No. [1:35:54] Can you identify where or what U.S. bank those funds are being held? [1:36:01] No. [1:36:02] Secretary Rubio had indicated that they were being held by Citibank. [1:36:06] Do you dispute what Secretary Rubio said, or do you not know? [1:36:09] I agree with him. [1:36:11] Is Citibank earning any fees or other charges on those deposits? [1:36:15] I believe that they are likely earning their traditional fees. [1:36:20] Okay. [1:36:21] So that would be a U.S. person who money is flowing to. [1:36:25] What is that? [1:36:26] That would be a U.S. entity. [1:36:27] Citibank is a U.S. entity. [1:36:28] That would be a U.S. entity that Venezuelan funds are flowing to. [1:36:30] Yes. [1:36:31] In February, you promised to provide this committee with a copy of Treasury's agreement with the Venezuelan government regarding the control of the payments associated with the Qatari account. [1:36:39] When can we expect to receive that document? [1:36:41] I'll check with my staff. [1:36:43] Do you know, is that document the same as the current agreement? [1:36:47] Was that modified after the flows moved from Qatar into a U.S. account, which apparently is managed by Citibank? [1:36:53] Again, that account is audited. [1:36:56] No, I'm asking whether the agreement that you have promised to provide between Treasury and the government of Venezuela has been modified since the flows moved from the Qatari account into a Treasury. [1:37:07] Well, if there's an auditor, it's obviously been substantial. [1:37:10] This is not an audit question. [1:37:11] This is a… [1:37:12] No, if they are taking direction… [1:37:15] I'm asking about the agreement. [1:37:17] I'm not sure you know what you're asking. [1:37:19] Please don't judge me, and I'll try not to judge you. [1:37:22] You are asserting that you have control over assets that were not coercive and they're standing in front of creditors. [1:37:29] That's predicated on the existence of an agreement between the U.S. government and the Venezuelan government that you promised to provide with us. [1:37:35] Do you understand what I'm asking you? [1:37:37] I'm not sure you understand what you're asking. [1:37:39] Secretary Rubio testified to the Senate that the Qatari account was necessary because if the Venezuelan money was in a U.S. account, it would be subject to claim by foreign creditors. [1:37:53] Are you of the opinion that those funds which are now in U.S. accounts are protected from foreign creditors? [1:37:59] Yes. [1:38:00] Under whose legal opinion are you relying? [1:38:02] They are funds of the Venezuelan Central Bank, which is protected from foreign creditors. [1:38:10] But why would they not have been protected when they were? [1:38:12] Well, look, let me get one last thing. [1:38:14] The GAO is conducting an audit of this whole process right now. [1:38:16] Will Treasury commit to working fulsomely and openly with the GAO to make sure that we get answers to the questions you can't provide? [1:38:22] The gentleman's time has expired. [1:38:24] Is that a yes? [1:38:25] The gentleman's time has expired. [1:38:26] That is a hard yes. [1:38:27] Yield back. [1:38:28] The gentleman recognizes the chair of our Task Force on Monetary Policy, Mr. Lucas of Oklahoma, for five minutes. [1:38:33] Thank you, Mr. Chairman. [1:38:34] Mr. Secretary, thank you for the bold leadership and action you've taken to cool the fever building in the Treasury market. [1:38:42] Can you describe market functioning during this time and how the Department is safeguarding the world's most important asset class while ensuring the market remains anchored in facts? [1:38:53] Well, we have the proof because the U.S. Treasury market continues to be the best performing market, whether it is over one month in the developed world, whether it is over one month or whether it is over the period since President Trump came to office. [1:39:13] And as I said, the proof of our credibility and that this operation was successful, we traditionally, when we are bidding for $3 billion of assets, get $20 billion of offers. [1:39:27] When we are bidding for $6 billion, we only receive $10 billion, and we have a very strict pricing guideline. [1:39:34] So we are buying these assets at a discount, creating liquidity and creating value for the American people. [1:39:41] That money then gets recycled back into the Treasury market as dealers' balance sheets become freed up. [1:39:47] As we see demand from foreign investors shift more towards the equity markets here in the United States, how is the Department thinking about the potential for volatility risk in our Treasury market while recognizing the depth and liquidity benefits that more price-sensitive buyers provide? [1:40:07] Well, Congressman, I believe it is not either or for American assets. [1:40:12] I believe that the money that is flowing into American assets reflects a preference away from other global assets. [1:40:22] So it is not either or, and as I said, we are seeing, we saw the two of the best Treasury auctions for a long dated paper for 10 and 30 years that we've seen in 20 years. [1:40:36] Do you feel confident that the Treasury Department has the tools necessary to address any concerns over yield levels, or are there additional authorities that might be helpful? [1:40:47] Now, again, as I said, that yield levels that we do not set the equilibrium price. [1:40:55] Things rarely exist in equilibrium. [1:40:57] They are either moving away from it or moving toward it. [1:41:00] My job is to make sure that when I believe that they have moved too far away, to move it back toward equilibrium. [1:41:06] And I believe we have the necessary tools. [1:41:08] Continuing on a similar topic, can you describe your work with the Prudential regulators on their much improved Basel re-proposal to ensure access to clearing efficiencies in the cash and repo Treasury markets as the clearing rule goes into effect at the end of the year? [1:41:25] Yes, we have substantially engaged with them to make sure that the U.S. clearinghouses and financial institutions are not disadvantaged and that the U.S. remains the premier market in the world and the destination for capital. [1:41:43] Over in the Ag Committee this week, we're discussing how to continue supporting the work of our colleagues at USDA to support our farmers and ranchers, the people who feed and fuel the country. [1:41:53] Our producers are working diligently to rebuild our herds while the Fed continues to consistently report high demand for American beef. [1:42:01] Talk to us about the importance of our cattle ranchers to the overall health of the American economy. [1:42:06] And what do you expect in the farm economy after we emerge from the contraction in the beef cycle? [1:42:12] The beef cycle, as you know, is a long and idiosyncratic cycle. [1:42:18] And we got hit in the cycle at the same time with this, you know, it's an invocative name, the screw worm, that forced us to cut back on Mexican and to the extent there wasn't any Central American beef. [1:42:35] So it was one, two. I believe that in my conversations with Secretary Rollins that we will move beyond the screw worm epidemic perhaps in the next six or twelve months. [1:42:47] That should help stabilize the market. And then the financial health of our farmers is essential for coming out on the other side of this beef cycle. [1:42:57] Thank you for your awareness of these important issues, Mr. Secretary. And with that, I yield back, Mr. Chairman. [1:43:03] The gentleman yields back. The chair recognizes the gentleman from New Jersey, Mr. Gottheimer, for five minutes. [1:43:08] Hi, Mr. Secretary. The 10-year Treasury hit 5% as of September 14th, as you know, the highest since 2007, [1:43:15] and has dragged the 30-year mortgage to a one-year high near 7%, pricing families in my district and in many places around the country out of their first homes. [1:43:24] And the 10-year keeps climbing. Do you believe it's important that we make credible progress on the deficit? [1:43:31] And you think that's a serious part of actually tackling this affordability crisis? [1:43:36] Yes. And I believe the 10-year yield reflects many things, but the need to address the deficit is one of those. [1:43:43] Thank you. Mr. Secretary, deposit insurance has been stuck at $250,000 for years. [1:43:50] And when SVB and Signature Bank failed, business deposits fled our community banks overnight. [1:43:56] Coverage has been frozen at $250,000 for many years, and it hasn't kept pace with inflation. [1:44:01] And today, about half of all bank deposits, some $7 trillion, sit uninsured. [1:44:05] Do you believe deposit insurance reform would help strengthen confidence across the banking system [1:44:09] and could help our community banks retain customers and stay competitive? [1:44:13] Yes, sir. [1:44:14] Since a diverse, resilient banking sector is part of what underpins the strength of the global financial system, [1:44:21] would you commit to working with many of us toward deposit insurance reform in the future? [1:44:26] Yes. And we have been working with members of this committee. [1:44:30] I think I welcome the opportunity to work across the aisle because what we see when there is deposit volatility during a period like the SVB and the two other banks [1:44:42] is that banks move from community banks to large banks, and then they never migrate back. [1:44:47] Right. Many of our community banks are really struggling because of it, right? [1:44:51] Well, they are struggling for a variety of reasons. [1:44:54] Right. For many reasons. [1:44:55] That's one of the reasons they're struggling. [1:44:56] Yes. But we've seen 45% of small and community banks disappear since 2009. [1:45:01] Yes. I'm very worried about that. Thank you for bringing that up. [1:45:04] Mr. Secretary, we have been warned just last week that unchecked advanced AI could pose an existential risk to humanity, [1:45:11] and the international rules of the road now being debated all depend on enforcing who can access advanced chips and capital. [1:45:18] We can't rely on self-policing, in my opinion, in third-party audits alone, which is why clear rules of the road need to be adopted and put in place. [1:45:25] What role is Treasury playing to ensure any guardrails on frontier AI can actually be enforced, [1:45:30] and how are you coordinating that internationally so that a race without rules doesn't endanger the whole system? [1:45:36] Well, Congressman, to go back to the first point you made, that AI runs on the advanced chips that the U.S. has a substantial lead in. [1:45:46] So making sure that other countries do not have access to those advanced chips is very important. [1:45:55] And at Treasury, as I said, we convened very early after what I would call the mythos, a step function gain of intelligence, and have continued working. [1:46:08] Our mandate is with the financial sector, and then we have attempted to migrate that knowledge and the learning from the financial sector into other sectors through the Gold Eagle Forum. [1:46:21] You're coordinating across government, working with your partners across the government on this? [1:46:25] Yes, sir. [1:46:26] Thank you. [1:46:28] I appreciate that. [1:46:29] On September 8th, Treasury sanctioned three dozen more entities tied to Iran's aviation sector. [1:46:34] Airlines and cargo operators Tehran uses to move weapons, personnel, and illicit cargo as part of Operation Economic Outcast. [1:46:40] However, some of the enablers you named aren't in Iran. [1:46:43] They're firms in Turkey, the UAE, Kazakhstan, and Malaysia. [1:46:46] Third countries, several of them are partners, supplying the parts and logistics that keep planes like Mahan Air in the air. [1:46:54] A sanction is only as strong as our willingness to enforce it against the facilitators as well. [1:46:58] What is Treasury doing to hit those third-country facilitators with secondary sanctions and force their governments to cut the network off so that cutoff from the global financial system is a consequence and not just a warning? [1:47:10] So that warning will take effect, and we'll start biting on September 23rd, and we will fulsomely enforce those just as we have with the three banks that we have over the past three weeks. [1:47:23] Got it. [1:47:24] So you're going to look across the board at all those who are tied, not just to the main actors? [1:47:27] No, we've made it known. [1:47:29] We know for those of you who are enabling the regime, you know who you are, we know who you are, and the Aviation Authority is a new authority, a new sanctioned authority, and we are going to exercise that very vigorously. [1:47:42] Excellent. [1:47:43] I think we need to be aggressive. [1:47:44] So thank you. [1:47:45] Thank you so much. [1:47:46] We are, sir. [1:47:47] Thank you. [1:47:48] I yield back. [1:47:49] The gentleman from Tennessee, Mr. Rose, for five minutes. [1:47:51] Thank you. [1:47:53] Thank you, Chairman. [1:47:54] And thank Chairman Hill and Ranking Member Waters for holding this important hearing. [1:47:58] And thank you, Secretary Bessett, for being here with us today. [1:48:01] Secretary Bessett, as you may be aware, I introduced H.R. 7993, the Somaliland Economic Access and Opportunity Act. [1:48:09] My bill would require the Department of the Treasury to submit a report to Congress examining the principal legal, regulatory, and policy barriers limiting Somaliland's access to the U.S. financial system. [1:48:22] The report would examine issues including Somaliland's international status, sanctions exposure, compliance with know-your-customer and anti-money laundering and counter-terrorism financing standards, remittance flows, access to international financial institutions, and the steps necessary to incorporate Somaliland into the SWIFT financial messaging and payment system. [1:48:44] It would also provide recommendations to strengthen financial transparency, expand lawful financial access, and reduce the risks of money laundering, terrorism, financing, and other illicit activity. [1:48:57] Somaliland is a valuable partner for the United States and has the potential to become an even greater partner. [1:49:04] Its strategic position along the Gulf of Aden, near some of the world's most important shipping routes, makes it particularly important to U.S. security and economic interests. [1:49:14] At a time when China is expanding its influence throughout the Horn of Africa, Somaliland can serve as a reliable and constructive regional partner. [1:49:23] I just had the opportunity a few moments ago to meet with the President of Somaliland, who is visiting here in Washington this week. [1:49:31] Secretary Passat, do you believe that stronger financial ties between the United States and Somaliland could advance U.S. security and economic interest and help counter China's growing influence in the Horn of Africa? [1:49:47] Representative, I'm going to defer to the State Department on the recognition of Somaliland. [1:49:52] But historically, that stronger economic engagement with the United States by any country creates sustainable development and creates more resources. [1:50:03] Well, thank you for that. [1:50:04] And I guess being more pointed, I would say, do you support, and perhaps you haven't had a chance to familiarize yourself with the bill, is not really talking about explicit recognition, [1:50:20] but about clearing the way for Somaliland to continue to build economic access to the world market. [1:50:27] So I would ask for your support of, and your taking a look at the Somaliland Economic Access and Opportunity Act, [1:50:36] and its requirement that the Department of Treasury provide Congress with a comprehensive assessment of the barriers limiting Somaliland's access to the United States financial system. [1:50:47] Would you support that? [1:50:48] I will support looking at your bill. [1:50:52] I will have my International Affairs Department give me a briefing next week, and then we will engage with your staff. [1:50:59] Thank you. [1:51:00] And does the Department of Treasury, based on your current knowledge, have the technical expertise, personnel, and capacity to conduct a comprehensive assessment of the legal, regulatory, and policy barriers limiting Somaliland's access to the U.S. financial system within a 180-day period? [1:51:16] Yes, sir. [1:51:17] Okay. [1:51:18] And if not, how much additional time would be required? [1:51:24] That would be helpful to know. [1:51:25] Secretary Bessett, in June of 2024, I was proud to join a letter led by my friend and colleague from Florida, Congressman and member of this committee, Congressman Byron Donalds, urging the World Bank to reconsider its longstanding position on nuclear energy financing. [1:51:39] I was encouraged to see the World Bank reverse that position in June 2025 and begin reentering the nuclear energy space. [1:51:46] This is an important step toward giving developing countries access to reliable, affordable, and secure energy options. [1:51:53] Can you describe how the administration is using America's voice and vote at the IMF to support responsible nuclear energy projects and expand financing opportunities? [1:52:03] Yes. [1:52:04] So, Mr. Bongo, who heads the World Bank, we have made it clear to him that this is a priority, and indeed, he has adopted this as a priority. [1:52:16] And this is the first time in decades that the World Bank has moved forward on nuclear energy, and I think it is an important part for the poorest countries in engaging in increasing their welfare levels and increasing their prosperity and developing truly sustainable energy. [1:52:37] Thank you, Secretary. [1:52:38] Thank you, Secretary. [1:52:39] I appreciate your leadership on that issue. [1:52:40] I see my time is winding down, so I will yield back the remainder of my time. [1:52:43] Thank you again for being here. [1:52:44] The gentleman yields back. [1:52:45] The chair recognizes the gentlewoman from Massachusetts, Ms. Presley, for five minutes. [1:52:50] Thank you. [1:52:52] Mr. Secretary, I want to continue where we left off the last time you testified before this committee. [1:52:57] As you know, hundreds of thousands of black workers have been pushed out of the workforce and unemployment rates over the last year, haven't been this high since the COVID-19 pandemic. [1:53:06] To put it simply, more people are out of work now than they were before Trump took office in 2025. [1:53:12] Secretary Besson, in February, you testified under oath that you would analyze black unemployment data and report back on its impacts to the financial stability of the U.S. economy. [1:53:25] Have you begun working on this report yet? [1:53:27] I would check with my staff. [1:53:29] I have not seen it. [1:53:30] Can you make a commitment to honor what you said on the record under oath? [1:53:36] Of course. [1:53:37] Okay. [1:53:38] And when can I expect that report? [1:53:40] I will check with my staff, and they will communicate to you a date certain. [1:53:45] Secretary Besson, let me be frank here. [1:53:47] Something that is having this sort of impact. [1:53:52] At one point, there were 300,000 black women who had been pushed out of the workforce, most of them from the federal government, devastating many black families. [1:54:03] And that 80% of those families, black women, are the primary breadwinner. [1:54:09] So this is something of great consequence. [1:54:11] I have to also say, again being frank, that you're on thin ice with me, because you sat here in the midst of the tariffs conversation, and I asked for you to be a partner in pushing for an exemption of baby products. [1:54:24] And you told me that I had a partner in you in that advocacy. [1:54:28] And nothing came of that. [1:54:30] So twice you've come before this committee, made a commitment under oath, and you've not followed up. [1:54:36] I would say watch this space after President Xi's visit. [1:54:42] Okay, I don't know what that means, but people are struggling. [1:54:47] You've made commitments. [1:54:48] You haven't kept any of them. [1:54:50] And it's outrageous. [1:54:51] Moving on. [1:54:52] I have a lot of ground to cover, and I have too much of my time. [1:54:55] Secretary Besson, when Donald Trump — this is reclaiming my time. [1:54:58] When Donald Trump launched the unnecessary and unconstitutional war with Iran, how long did he say that would last? [1:55:04] I don't recall. [1:55:05] I'll jog your memory. [1:55:06] Four to five weeks. [1:55:07] It's been six months. [1:55:08] So he lied. [1:55:09] And we're all paying the cost. [1:55:11] Since the war started, gas prices are up 52 percent. [1:55:14] Yes or no? [1:55:15] Are you aware of that? [1:55:16] Gas prices are up 52 percent. [1:55:18] Gas prices are up 52 percent since the war started. [1:55:21] Are you aware of this issue? [1:55:22] Yes or no? [1:55:23] From what to what? [1:55:24] I think that's not a good number. [1:55:26] Okay, I'm going to take that as a yes. [1:55:29] You're playing like you don't know, but you know. [1:55:31] Okay? [1:55:32] Secretary Besson. [1:55:33] Working people, reclaiming my time. [1:55:35] Secretary Besson, working people are paying more for utilities now than they were five [1:55:40] years ago. [1:55:41] More than 40, 20 percent more. [1:55:43] Are you aware of that? [1:55:44] I am aware of that. [1:55:46] Okay, moving on. [1:55:47] Secretary Besson, people are also paying over three times more on health insurance. [1:55:51] Have you heard about this issue, yes or no? [1:55:53] I am aware that Obama is a failure. [1:55:55] Okay, no. [1:55:56] Yes or no? [1:55:57] Are you aware? [1:55:58] You can ask me a question. [1:55:59] Stop filibustering and stop acting like you don't know what the facts are. [1:56:02] You can ask this question and not tell me how to answer it. [1:56:04] And not tell me how to answer it. [1:56:05] Secretary Besson, the Joint Economic Committee found that tariffs cost families on average [1:56:08] $1,700. [1:56:09] Have you heard about this issue? [1:56:10] I have not. [1:56:11] You heard about this issue. [1:56:12] Your boss, Donald Trump, said that he was going to give people, he would reimburse them. [1:56:21] He would send them a check for the cost of these tariffs. [1:56:24] And he hasn't done that because he lies on everything. [1:56:26] Moving on. [1:56:27] You know about these issues and I'm questioning your integrity. [1:56:31] You know about these issues. [1:56:32] Ms. Presley is recognized. [1:56:33] Ms. Presley is recognized. [1:56:34] Thank you, Mr. Secretary. [1:56:35] You know about these issues. [1:56:37] The American people are suffering. [1:56:39] You know better. [1:56:40] You go on television and you say that Trump's economic agenda is a great comeback. [1:56:44] And that makes me question not only your integrity but if you're operating in the same [1:56:48] reality as the people whom you are accountable to. [1:56:51] And you are enabling him. [1:56:52] And it's shameful. [1:56:53] Secretary Besson, the families in my district and across this country are struggling to afford [1:56:58] a home, buy food, raise their kids, pay these high utility bills. [1:57:01] And they deserve a government that's going to make their life easier, not harder. [1:57:05] But that's exactly what is happening on your watch. [1:57:08] As the Secretary of Treasury, you're responsible for overseeing all of our economy. [1:57:12] You don't have anyone else to blame but yourself and Donald Trump. [1:57:15] And it is shameful that you're being an accessory to this and being complicit to this. [1:57:19] You are a smart man and you know better. [1:57:21] I yield back. [1:57:23] The chair recognizes the chair of the House Small Business Committee, Mr. Williams of Texas, [1:57:28] for five minutes. [1:57:29] Mr. Chairman, thank you for being here. [1:57:31] It's going to be a little calmer on this side. [1:57:33] First of all, I'm from Texas. [1:57:34] I'm a car dealer and I employ hundreds of people. [1:57:37] And business is great. [1:57:38] And I appreciate that. [1:57:40] And with that, I'd like to give you some time to respond to what you just had to take. [1:57:44] Well, I mean, one thing is that black pre-tax income is leading the country. [1:57:49] It's up 4.8 percent in 2025. [1:57:52] And I think it's not very wise to be lectured. [1:57:57] This is the equivalent of Lizzie Borden lecturing someone on family values. [1:58:02] The Democrats torched the American people. [1:58:05] 21.5 percent. [1:58:08] The stated inflation and for working families up in the 30s due to groceries, due to rent, [1:58:15] due to insurance, due to cars. [1:58:17] So they created a price level, a gigantic step, the worst inflation in a generation or two. [1:58:27] And the American people are recovering from that. [1:58:30] We have seen real wage growth. [1:58:32] What is an inconvenient fact is that real wages are up under President Trump, [1:58:37] and they went down between 4 and 8 percent for working Americans under the last administration. [1:58:43] So I tell people I feel like an emergency room doctor. [1:58:47] For people who have been backed over by a truck, you had to stabilize the patient, [1:58:52] and now the patient is up and able to walk and is going to get back on his or her feet. [1:58:58] Well, you've been a good doctor for Main Street. [1:59:00] I can tell you that. [1:59:01] So I appreciate that. [1:59:02] With that being said, in August of this year, FinCEN issued a new rule excluding American businesses [1:59:08] and owners from their beneficial ownership reporting requirements. [1:59:12] And this was a great news for Main Street, I can tell you. [1:59:15] And however, many small business owners in many districts and across the country [1:59:19] have spent significant time and money in preparation for the original BOI rule before the exclusion. [1:59:24] So the question would be, can you walk us through the steps Treasury plans to take [1:59:29] to effectively communicate this change to small businesses like mine, [1:59:33] and whether there are plans to address costs already incurred under the prior requirement? [1:59:37] Congressman, what we can do is alleviate future costs from being incurred [1:59:44] and tell the businesses that this data will be deleted, [1:59:50] that we are doing everything we can to move this process with the NRA to conclusion and delete the data, [1:59:57] and that the 33 million small businesses that were on the hook for this, [2:00:03] what I would say is virtually useless information, [2:00:06] they will not have to endure this again. [2:00:09] Well, thank you for that answer. [2:00:10] And in 2025, Americans lost $16 billion to fraud and scams, the highest figure ever reported. [2:00:16] Small businesses regularly find themselves as targets for the scammers [2:00:20] through attacks like payment fraud and impersonation scams. [2:00:23] And Main Street America often lacks the resources of larger firms to recover from these scams, [2:00:29] and many scam networks operate overseas so they can move stolen funds to the international financial system [2:00:35] before victims even realize they have been defrauded. [2:00:38] So a question, Mr. Secretary, is how is the Treasury planning to fight the scam networks targeting small businesses, [2:00:45] and what role do sanctions and other Treasury tools play in cutting off these networks across the U.S. financial system? [2:00:52] Yes. [2:00:53] So we've used our available tools and resources to address what is a growing problem. [2:00:58] We look forward to continuing with Congress and agencies to ensure that the full force of the government is against these scammers, [2:01:05] and it is unacceptable for them to take money out of the pockets of American citizens, especially our seniors. [2:01:11] My last question, in July, Director Gacky of FinCent testified in front of this committee [2:01:17] about raising the reporting thresholds for suspicious activity reports and currency transaction reports [2:01:22] was a priority for Treasury leadership, and I'd like to follow up on that quickly. [2:01:26] And I know that Chairman Hill touched on this earlier today, and community banks and credit unions, [2:01:31] which we all do business with, face an unequal compliance burden. [2:01:34] Lenders are being forced to divert resources away from underwriting and customer service, [2:01:39] which has restricted credit availability for small borrowers who depend on this. [2:01:43] And these thresholds have not been adjusted to some time, [2:01:46] and inflation alone has pulled a growing volume of routine transactions and mandatory reporting. [2:01:52] So quickly, can you provide us with a concrete timeline for finalizing the AML program's rule [2:01:57] and SAR and CTR threshold changes? [2:02:00] And can you commit that the final rule would meaningfully reduce compliance burden [2:02:05] for community banks and credit unions as opposed to a marginal adjustment? [2:02:08] Congressman, I can't give you an exact time. [2:02:12] I can commit to your last point that this is very important rulemaking, [2:02:17] and we need to get it right because of the burden on small and community banks. [2:02:23] And we are looking at their special place in the financial system in terms of their reporting requirements [2:02:29] and their enhanced knowledge of their customers. [2:02:32] My time is up. I yield back. Thanks for your leadership. [2:02:34] Thank you. [2:02:35] The gentleman yields back. The chair recognizes the gentleman from New York, Mr. Torres, for five minutes. [2:02:39] Thank you, Mr. Chair. Mr. Secretary, are you familiar with the facts of the hugging face hack? [2:02:43] I am. [2:02:44] So I want to run through the facts as I understand them. [2:02:47] A swarm of OpenAI agents secretly communicated and coordinated for about two months without OpenAI fully realizing what was happening. [2:02:56] Specifically from July 8th to July 13th, roughly 1,200 AI agents exchanged more than 70,000 messages and files through an unauthorized message board. [2:03:06] Again, without OpenAI recognizing the scale of what was happening, the AI swarm managed to escape its sandboxes, gain access to the public internet, [2:03:15] and ultimately hack into the private infrastructure of hugging face. [2:03:19] Of the 1,200 AI agents involved in the hugging face hack or in the lead up to it, do you know how many of them blew the whistle and alerted human researchers that an AI swarm had escaped their sandboxes and hacked into a private company? [2:03:34] My understanding is zero. [2:03:37] The answer is zero. [2:03:38] So of the 1,200 agents in the AI swarm, not a single one blew the whistle. [2:03:43] Does that concern you? [2:03:44] Well, I think we would have to understand what each agent was doing. [2:03:50] But does it concern out of 1,200, not a single one blew the whistle? [2:03:54] Does that concern you? [2:03:55] Well, again, the representative, exactly what is an agent? [2:03:59] It is not a human. [2:04:01] It could be a very limited program that could have been tasked with something. [2:04:09] But a program that escaped its sandbox and hacked into a private company. [2:04:13] Is it fair to say that the hugging face incident illustrates how a misaligned or misused AI might find and exploit vulnerabilities in the very computer systems that operate our critical infrastructure, including our financial system? [2:04:28] I agree. [2:04:30] And I think we have to, again, we haven't seen where was the liability for that incident. [2:04:37] Well, given that agreement, does the administration support any new AI safety regulation in light of the lessons learned from the hugging face hack? [2:04:48] Well, we have been working with the labs, with our financial partners on that. [2:04:54] And you wouldn't notice. [2:04:55] Is there any specific law regulation that you would support in light of the hugging face hack? [2:05:00] I haven't seen anything yet. [2:05:02] Okay. [2:05:04] The leaders of the frontier AI labs, particularly OpenAI and Anthropic, have been effectively disclosing to the public that their increasingly powerful AI models could pose an existential risk to humanity. [2:05:15] If a company is publicly disclosing that its own product could pose an existential risk to humanity, should that company be permitted to access the public capital markets through an IPO? [2:05:26] I think the liabilities have to be very well outlined in the S-1 and in the prospectus. [2:05:35] And as a former investor, now in the public sector, I'm not sure how one would quantify that. [2:05:41] I want to move on to the economy. [2:05:44] On August 4th, during an interview on CNBC's Squawk Box, you said the following, quote, I got sick of hearing about this K-shaped economy. [2:05:52] I can say here definitively the K-shaped economy is over. [2:05:56] Then on August 6th, you wrote on X, quote, earnings growth for mainstream workers at the 25th earnings percentile was 5.5% year over year in the latest data this quarter. [2:06:07] You cite wage growth of 5.5%. Is that inflation adjusted? [2:06:13] That's nominal. [2:06:14] It's nominal. Okay. [2:06:15] So the average CPI inflation rate in the second quarter of 2026 was 3.9%. [2:06:20] So once you adjust the 5.5% nominal wage growth for 3.9% inflation, you're left with a real wage growth of only about 1.5%, a fact that you neglected to mention in your post. [2:06:35] Also left unmentioned is the fact that lower income households depend disproportionately on wages, while higher income households own a disproportionate share of financial assets. [2:06:45] From mid-January 2025 to mid-September 2026, real wages rose cumulatively by 0.5%. [2:06:53] Over the same period of time, the S&P 500 rose cumulatively by over 20% in real terms. [2:07:00] So, Mr. Secretary, how can you possibly declare that the K-shaped economy is over, when during President Trump's second term, the assets of Wall Street are booming, while the real wages of Main Street have barely grown? [2:07:14] Well, it's the opposite of President Biden's term. [2:07:16] It wasn't Biden's term. [2:07:17] Because there was... [2:07:18] Look, I... [2:07:19] There was... [2:07:20] No, no, let me finish. [2:07:21] When does... [2:07:22] Can I ask, what's the statute of limitations on the Joe Biden blame game? [2:07:25] The... [2:07:26] What's the statute of... [2:07:27] Is it? [2:07:28] Because we're approaching the two-year mark of the Trump administration. [2:07:29] I was in a car accident as a teenager. [2:07:31] My back still hurts. [2:07:32] Did Joe Biden wage the war in Iran? [2:07:34] Did he disrupt the Strait of Hormuz? [2:07:35] Did he shut down one-fifth of the world's oil supply and LNG exports? [2:07:39] The... [2:07:40] Like, when in doubt, blame Joe Biden? [2:07:41] Is that the modus operandi of this administration? [2:07:43] I yield back. [2:07:44] The gentleman's time has expired. [2:07:45] The gentleman yields back. [2:07:46] The chair recognizes the chair of the House Republican Conference, Mrs. McClain of Michigan, for five minutes. [2:07:51] Thank you, Mr. Chair. [2:07:52] I wish we weren't digging ourselves out of the Biden economy, but here we are. [2:07:56] So I want to start by saying, first of all, thank you for trying to right the ship, right? [2:08:03] Because we all remember what a disastrous economy it was. [2:08:06] Inflation, over 9%, right? [2:08:10] I think we remember that. [2:08:11] Shutting American oil and gas production down so we were dependent. [2:08:16] But, hey, let's not talk about that. [2:08:19] Let's talk about what we're trying to actually do to improve. [2:08:23] Yeah, Representative, I think George Orwell called it memory holing. [2:08:26] I think so. [2:08:27] Don't let the facts get in the way of a good story, right? [2:08:30] But thank you for being here, Mr. Secretary. [2:08:32] I really appreciate it. [2:08:33] You and your team actually did a tremendous job on the working families tax cuts. [2:08:38] A year later, the receipts are in. [2:08:42] I know the media doesn't want to cover this. [2:08:44] I know the other side of the aisle doesn't want to talk about it. [2:08:46] But Michigan families are taking home almost $10,000 more a year. [2:08:53] We put money back in people's pockets. [2:08:57] And now I want to talk a little bit about, if we could switch gears a little bit, [2:09:01] who's stealing money out of their pockets? [2:09:04] Last year, if my memory serves me correctly, scammers robbed Michigan families and seniors of nearly $204 million. [2:09:15] That's nearly $600,000 walking out of my state every single day, which is a lot of money and real money to people. [2:09:25] When most Americans think of a scammer, they think of some guy with a baseball hat on in their parents' basement. [2:09:32] But that's not really what we're dealing with today. [2:09:35] I think it's much more sinister. [2:09:37] Mr. Secretary, can you talk about really who is at the other end of that call, who's really scamming the American people? [2:09:45] It's a variety of organized crime, both state and non-state actors across the globe. [2:09:52] Could be North Korea, could be in Southeast Asia, these camps that are set up, and it can be the bans in the U.S. [2:10:04] So at Treasury, we are examining this with our agency partners, including the FBI, Homeland Security. [2:10:13] We are shutting them down, and in many cases, recovering those assets for the hardworking people of Michigan. [2:10:20] And I thank you for doing that. [2:10:24] So often, these are massive, organized Chinese crime syndicates. [2:10:30] Is that a fair statement, or am I overstating that? [2:10:33] Many of them are. They are run outside of mainland China in other Southeast Asian countries. [2:10:42] Kind of seems like a common sense question, but sometimes my colleagues on the other side of the aisle don't operate in the arena of common sense. [2:10:53] When we find these fraudsters and we shut them down, do you think that's a good thing? [2:11:00] I think it is one of the best things that we can do for hardworking Americans, especially our seniors. [2:11:09] Yeah, so we work hard as taxpayers. [2:11:14] We give that money to the government, who should be good stewards of our hardworking taxpayer dollars. [2:11:21] When we actually find these scammers, we should shut them down. [2:11:25] I think that makes common sense. I think that makes sense. [2:11:28] I'm not really sure when votes come up that colleagues on the other side of the aisle don't want to vote that way. [2:11:34] But I think it's a good thing to shut scammers down. [2:11:37] Can you talk at all about when you went after them? [2:11:42] You seized 15 billion dollars in Bitcoin from the from the Prince Group, the largest forfeiture in American history. [2:11:50] I'm sure we all saw that covered on the news, perhaps not. [2:11:53] But I think you need to take a victory lap on that. [2:11:56] Think about that. You went after them and you seized 15 billion dollars in Bitcoin from the Prince Group, the largest forfeiture in American history. [2:12:06] How would you pull that off? [2:12:09] Well, again, it was a combination. Our VINCEN, they are some of the most dedicated people that I've ever seen since we implemented Operation Economic Outcast. [2:12:21] We have people working from 6 in the morning till 10 at night. [2:12:24] And it is for the love of their job that we commemorated 9-11 on Monday with this group. [2:12:35] And they were enabled then to make sure that nothing like that ever happens again. [2:12:42] And I can tell you that they never stop working on this. [2:12:46] Well, if you do do me a favor, tell them thank you, because we appreciate it. [2:12:51] And we appreciate every dollar that you keep in our pocket. [2:12:54] Well, that's very important. [2:12:55] Gentlewoman's time is expired. [2:12:56] They don't get the thanks they deserve. [2:12:57] The chair now recognizes the gentlewoman from Texas, Ms. Garcia, for five minutes. [2:13:01] Thank you, Mr. Chairman, and welcome, Mr. Treasury Secretary. [2:13:06] Less than two years after the Trump administration took office, we are looking at higher prices and more uncertainty in our economy than we have faced in decades. [2:13:16] Our country has been forced into a new war in the Middle East, started by Donald Trump, that is now hurting mine and everyone else's district. [2:13:25] In the past six months, gas prices have been up nearly 50 percent nationwide, and there is no end in sight. [2:13:33] Same for diesel. [2:13:34] This administration has shown no ability to get us out of this reckless war that had started, and it is everyday Americans who are paying the price. [2:13:43] Mr. Secretary, the administration has no real plan, it seems, to end this war. [2:13:49] Your economic D-Day has done little to affect any change in this conflict. [2:13:54] Instead of truly isolating Iran economically by cutting it off from its top trading partner, China, you have used sanctions to target its heritage and nationality. [2:14:04] The Office of Foreign Assets Control recently suspended Iran General License G, which allows Iranian citizens to take interest exams like the LSAT, the law school entrance exam, the GRE, which is for graduate students, GMAT, and TOEFL, and a number of others. [2:14:24] Do you truly think this is going to affect the war, Mr. Secretary, or is this just another xenophobic policy from this administration aimed at disenfranchising religious minorities and immigrants in this country? [2:14:37] Congressman Wendt, do you actually believe that taking the SAT will empower people who are being starved by their regime, as that regime gives billions to their proxies rather than funding its people? [2:14:50] Congressman Wendt, Sir, my question to you, do you think that this is a policy aimed at the war and things that are going on, or just another attack at religious minorities and immigrants? [2:15:04] Congressman Wendt, I would say that that is a completely specious charge. [2:15:09] Congressman Wendt, Oh, it is. [2:15:10] Congressman Wendt, Well, you know, we got a call from someone who is just not allowed to take the LSAT, and they would totally disagree with you, sir. [2:15:18] Congressman Wendt, Instead, it only hurts and discriminates anyone with Iranian heritage, including Iran-Americans. [2:15:25] Congressman Wendt, It will also hurt our communities, because there are so many people that are Iranian descent that are heavily represented in medicine, engineering, higher education, technology, and business. [2:15:36] With no planned strategy in regard for how this affects Americans, Donald Trump and you have thrust us into a messy war in Iran. [2:15:45] You have lost the trust of the American people and have made a mockery of our country's reputation on the global stage. [2:15:52] You have personally said that one of this administration's primary foreign policy priorities is maintaining strong relationships within the Western Hemisphere. [2:16:00] Instead, we're at odds with the second largest economy in North America and our second largest trading partner because of how this administration has treated them. [2:16:10] In just the greater Houston community area, Canada represents a vital $12 billion trade relationship. [2:16:16] So how does a trade war with Canada, one of our closest allies, help the American people? [2:16:23] Well, first of all, it was Prime Minister Carney who said we are at war. [2:16:27] Sir, the question is, how does a trade war with Canada, one of our closest allies, help the American people? [2:16:33] Sure. The terms of trade that the Canadians have received for years have been unbalanced and imbalanced and trying to bring them back. [2:16:43] So how does that help the American people? [2:16:45] That will help the American people as we have better terms of trade, that there will be more jobs. [2:16:52] As we just saw Sapporo Brewery, Japanese brewer, announced that they were relocating into the U.S. [2:16:59] That helps the American people. [2:17:01] So that's one example. Hopefully you'll be able to be more. [2:17:04] There are many examples. [2:17:05] Well, sir, would you send me a list then? [2:17:08] With pleasure. And as you are from Texas, I will remind you that the Texas economy is bigger than the Canadian economy. [2:17:14] Well, I know that, sir. I'm from Texas. I'm a native Texas, unlike one of our senators. [2:17:20] Do you have an end goal for this new trade war? [2:17:22] Can you lay out a better long-term scenario for the American people than free trade with our neighbors? [2:17:28] The free trade has not always been fair trade. [2:17:33] Whether Canada imports the steel from overseas and it gets backdoored into the U.S. markets, [2:17:39] whether they try to do that with Chinese EVs, that, again, we want fair trade, the representative. [2:17:47] So you think that the free trade agreement that even Donald Trump approved the last time was not fair? [2:17:53] Again, we have seen many things. Why don't you check with our Wisconsin dairy farmers who are unable to sell? [2:18:00] Sir, I'm also concerned about beef farmers in Texas whose trade policies have impacted them. [2:18:06] My question was— [2:18:07] It hasn't impacted them. [2:18:08] Gentlemen, ladies. Time has expired. [2:18:09] Thank you. [2:18:10] I now recognize myself for five minutes. [2:18:13] Thank you for being here today, Mr. Secretary. [2:18:16] This committee has long had concerns that an outbound investment screening regime would prove overly broad, vague, maybe even unworkable. [2:18:25] So I know you can't really get into details, but as Treasury writes the updated rule, [2:18:30] can you assure us that it will be narrowly tailored and sufficiently clear so that investors have bright-line standards [2:18:38] and can easily understand their obligations under these rules? [2:18:42] Yes, sir, that we have about 18 months of dealing with the outbound, and now, as we perfect the COINS Act, [2:18:51] that we will make sure that the all outbound and potential outbound investors know their duties, their obligations, and adhere to them. [2:19:03] Thank you, Mr. Secretary. [2:19:04] As Chairman Hill noted earlier, it was outrageous when the Biden administration increased the weight of China's RMB [2:19:11] in the International Monetary Fund's SDR basket. [2:19:16] I have legislation that would oppose any such increase until China starts playing by the rules. [2:19:21] Can you commit to opposing any increase for the RMB in the next SDR basket review? [2:19:27] I will commit to working closely with you and your staff on that. [2:19:31] Thank you, Mr. Secretary. [2:19:33] You know, a lot of the policies of this administration, I wish you great success in bringing China into the things they've frankly already agreed to do. [2:19:42] I mean, the trade policies that people complain about, I was in manufacturing before I came to Congress, and we weren't competing against other companies. [2:19:50] We were competing against a foreign government that had decided they would own and dominate other industries. [2:19:56] It was disadvantaging in American companies. [2:19:59] So, frankly, the Trump administration is taking aim at, you know, why would we confront people like China? [2:20:07] Well, because they're taking America for granted. [2:20:10] They're assuming Xi Jinping is going to be in charge in China longer than President Trump is going to maintain the resolve, [2:20:16] not just in his administration, but going forward, to counter China. [2:20:21] China committed to be a market economy in the World Trade Organization as part of their acceptance into the World Trade Organization. [2:20:28] Is China a market economy, Mr. Secretary? [2:20:31] No, sir. [2:20:32] And at the G20 in Asheville, we had a communique drafted that criticized non-market economies, and China would not sign on to that. [2:20:44] And so I issued a cherished statement. [2:20:47] So 19 to 1. [2:20:48] And if you could imagine getting all these countries from around the world to agree to that, China was a lone holdout. [2:20:54] So I think they've answered the question for you. [2:20:56] Thank you, Mr. Secretary. [2:20:57] That was well played, as are so many other things that you've had initiatives on. [2:21:02] I want to highlight the scam operations. [2:21:04] And when you look at, you know, the illicit finance, we certainly have tools in place to gather financial intelligence. [2:21:12] It's always supposed to be with deference to our constitutional safeguards for privacy, speech. [2:21:20] We've seen debanking and weaponized government under previous administrations. [2:21:24] And you've restored under this administration, sanity and common sense in many ways there. [2:21:32] So I guess, how do you view balancing constitutional safeguards with the need to be effective at shutting down these transnational organizations? [2:21:42] Well, I think the scammers could be divided really into three categories. [2:21:51] Domestic. [2:21:52] And so we work at those every day. [2:21:54] But many of them are U.S. citizens. [2:21:56] And we adhere to their rights. [2:21:58] But law enforcement is very vigorous in going after them. [2:22:03] State actors, as in North Korea. [2:22:06] And then private sector actors, many, many of them in Southeast Asia. [2:22:11] And we have committed substantial resources. [2:22:13] And again, I want to compliment our interagency partners, whether it's the FBI or Homeland, on that. [2:22:21] Yeah, thank you. [2:22:22] And some great wins there. [2:22:23] I think, in particular, shutting down the Prince Group. [2:22:26] These kinds of operations are substantial portions of Southeast Asian state actor economies. [2:22:33] So there's certainly an intersection there. [2:22:35] And it was just over in Foreign Affairs talking about your work with the State Department on those initiatives. [2:22:41] And so applaud that. [2:22:43] Another area that we're seeing, you know, these things come to a head is with Defense Production Act. [2:22:51] Treasury working with other departments. [2:22:53] Coins touches on that. [2:22:55] And as we use the Defense Production Act, we're working to reauthorize and modernize that. [2:23:00] Can you commit to work with us to get that reauthorized? [2:23:02] Yes, sir. [2:23:03] And my staff would like to engage with you on that, especially in the CFIUS area. [2:23:10] Thank you, Mr. Secretary. [2:23:11] My time has expired. [2:23:12] And I now recognize the gentlewoman from Georgia, Ms. Williams, for five minutes. [2:23:17] Thank you, Mr. Chairman. [2:23:18] And thank you, Ranking Member Waters, for convening this hearing today. [2:23:21] And thank you, Mr. Secretary, for being here. [2:23:23] Mr. Secretary, last year before this committee, you told us that the core components of the Trump economic agenda are trade, tax cuts, and deregulation. [2:23:32] And that this combination would raise real incomes for families and reassure jobs. [2:23:36] This summer, you went even further on CNBC declaring the K-shaped economy is over. [2:23:42] I'm not here for talking points, spin, or clever framing of numbers that don't really hold up under a microscope or in the pockets of the American people. [2:23:51] I'm here to ask questions for the families that are still struggling in my district to keep up with the basic cost of living despite your proclamations in front of G20 finance ministers and on CNBC. [2:24:02] They deserve honest answers, and that's what my questions aim to get to. [2:24:07] They don't need a Trump-bescent rebrand on their budget. [2:24:10] They need an honest accounting from you, Mr. Secretary. [2:24:13] So according to the Bureau of Labor Statistics, real hourly wages fell 0.3% over the past 12 months. [2:24:20] Mr. Secretary, do you dispute that number? Yes or no? [2:24:23] Yes or no? [2:24:25] I dispute it. Yes. [2:24:26] Okay. [2:24:27] According to the Bureau of Labor Statistics, wage growth has slowed to 3.1% over the year, the slowest pace in more than five years, and down from 3.7% in February. [2:24:38] Do you dispute that number? Yes or no? [2:24:40] I believe medium wage growth. [2:24:42] I'm not sure where you're getting the number. [2:24:43] Do you dispute that number? Yes or no? [2:24:44] The number I've seen for medium wage growth is 3.5%. [2:24:46] Well, Mr. Secretary, I'm going to reclaim my time. [2:24:48] I'm going to reclaim my time because these numbers are from our agency, the U.S. Bureau of Labor Statistics. [2:24:53] So it's not my numbers. [2:24:55] It's the numbers from the U.S. government. [2:24:57] And wages are slowing at the exact moment the prices are rising. [2:25:02] And that is not a policy that is working. [2:25:04] That is a policy failing the people that is supposed to help. [2:25:08] Families in this country are not asking for talking points. [2:25:11] They're asking why things are harder to buy. [2:25:14] They're asking why they continue to have more month than money. [2:25:18] So for my folks at home who may not be familiar with the term a K-shaped economy, [2:25:24] it's two arms and a graph that look like a K. [2:25:27] One line goes up representing wealthy Americans and the high earners who are gaining ground. [2:25:32] And the other line, unfortunately, is going down, representing slow growth for lower and middle income workers. [2:25:38] According to the Federal Reserve Bank of Atlanta's wage growth tracker, the top quarter of earners has seen wage growth of 3.9% over the past year compared to 3.6% for the bottom quarter. [2:25:50] Again, not my numbers. [2:25:52] That is from the Federal Reserve Bank of Atlanta's wage growth tracker. [2:25:56] Not my numbers, Mr. Secretary, no matter how much you want to share. [2:25:59] It was 4.7% for the lowest. [2:26:01] Mr. Secretary, the time is mine. [2:26:02] Mr. Secretary, the time is mine. [2:26:04] That gap has not closed a single month of 2026, not one single month. [2:26:10] Again, not my numbers, Mr. Secretary. [2:26:13] So, Mr. Secretary, given that data, do you think your claim that the K-shaped economy is over was premature? [2:26:19] I'm not sure what the data I have from the same agencies, not the Federal Reserve of Atlanta, is 4.7% for the bottom 25%. [2:26:36] So, you're saying the Federal Reserve Bank of Atlanta is incorrect. [2:26:39] I know you noticed earlier in your opening statement, you quoted them. [2:26:42] So, I'm not sure when you want me to believe them and when you don't want me to believe them. [2:26:47] Do you want to agree with them that we're having a booming third quarter over 4%? [2:26:50] Well, Mr. Secretary, you don't seem to agree with all of their data. [2:26:53] Well, do you? [2:26:54] Do you agree with all their data? [2:26:56] Mr. Secretary, I'm asking the questions here and the time is mine. [2:27:00] If you're watching this at home and you're wondering why your paycheck doesn't stretch [2:27:04] as students, y'all, and not to you either, Mr. Secretary. [2:27:07] This administration was told on the record that its data shows wages falling behind inflation, [2:27:13] wage growth at a five-year low, and no closing of the gap between the top and bottom. [2:27:17] And instead of a plan to fix it, we got a Trump rebrand. [2:27:22] At the end of your written testimony last year, Mr. Secretary, you said, [2:27:25] together we can build a stronger, safer, and more prosperous America. [2:27:29] And I'm all for that. [2:27:31] I hope you can pivot back to that commitment, to this committee, and to the millions of Americans [2:27:36] who have entrusted this administration with their economic future. [2:27:39] Thank you, Mr. Chairman, and I yield back. [2:27:41] Thank you. [2:27:42] Thank you. [2:27:44] I now recognize the Chairman of our Subcommittee on Digital Assets, Mr. Stile of Wisconsin, [2:27:49] for five minutes. [2:27:50] Thank you very much, Mr. Chairman. [2:27:51] Secretary, thank you for being here with us today. [2:27:54] In particular, I appreciate all your work in making the United States the gold standard [2:27:59] in the digital asset era. [2:28:01] A huge vote coming up in the Senate in the near future on clarity, a bill that we worked hard [2:28:06] on in this committee and appreciate all your support of that. [2:28:08] We're all optimistic the Senate is in a position to move forward. [2:28:11] I want to also look at Genius, which was signed into law now over a year ago. [2:28:16] We're approaching the effective date, January 18th. [2:28:19] You and your team at Treasury have been doing a great job getting the rules and regulations [2:28:24] in order and in place. [2:28:26] Can you give us an update on where we're at in the rulemaking process and our ability [2:28:31] to be able to hit the ground running come January? [2:28:34] Yes, sir. [2:28:35] I am confident that we will have that done. [2:28:37] During the rulemaking process, we have heard from the tens of thousands of interested parties, [2:28:45] both from the public, from stakeholders, from community banks, from the digital asset companies, [2:28:54] and we are working on the rulemaking to codify the congressional intent. [2:28:59] I appreciate that. [2:29:01] Let me shift gears. [2:29:03] You gave a speech in July looking at flows of, in particular, foreign funds that were impacting the broader U.S. political ecosystem. [2:29:14] You referenced how some of those funds may be flowing through nonprofits as it relates, [2:29:19] and I think your term, political terrorism. [2:29:21] This is something that we've been looking at since going back 25 years ago to the original 9-11, [2:29:27] and the actions that were taken as we looked at how foreign funds were flowing. [2:29:31] In particular, in my work as chair on the administration committee, we've been looking at how nonprofits may be misusing their protected status to move funds from foreign actors and have an impact in our political discourse. [2:29:48] You've engaged the power of Treasury to explore and examine that. [2:29:53] I've been very concerned that funds have flowed in from foreign actors into some 501c tax-exempt entities in the United States, [2:30:02] would then flow those funds through additional 501c's to shelter and shield the original donor of those funds. [2:30:10] Can you comment on the work that you've been engaged at at Treasury to address this concern? [2:30:17] Yes, I can't direct the particular audits or examinations, but what we have done is the work with the President's Executive Order 13224. [2:30:36] As you said, that goes back to the original violent acts of 2001, and we are actively looking to see whether there is foreign influence here, whether we saw it today. [2:30:54] I have no opinion. I think people can decide for themselves. [2:30:58] Being a nonprofit is a privilege, and anyone who violates that privilege will lose that status. [2:31:11] I think your comments in your speech about making sure that nonprofits and board of directors not only know the identity of the donors, [2:31:19] but also know the identity of their grantees is really important. [2:31:24] In a period of time where we know foreign actors are interested in altering our political discourse here in the United States in the legal loophole that allows a 501c to receive foreign funds, [2:31:38] often our nonprofits are for the altruistic purpose for which they were created. [2:31:43] The concern, of course, is that they're being exploited by foreign actors. [2:31:47] The funds come into a 501c. They're being transferred to others, and they're attempting to use those funds to the original donors, international actors' intent. [2:31:57] So I appreciate your work on this. I appreciate the speech you gave on this topic in July. [2:32:02] I appreciate all the work that's going on in Treasury. [2:32:04] And in particular, going back to my first topic, optimistic that we see a positive vote in the United States Senate to move forward on clarity. [2:32:11] It's so important that we see us, the United States, be the leader in the digital asset space. [2:32:17] Thank you for being here. [2:32:19] Thank you, Congressman. [2:32:20] Mr. Chairman, I yield back. [2:32:21] Thank you, Mr. Stile. [2:32:22] I now recognize the ranking member of our Subcommittee on Financial Institutions, Dr. Foster of Illinois, for five minutes. [2:32:28] Hi there. Are you having fun yet? [2:32:30] It started off great. It's gotten better. [2:32:34] Okay. I'd like to use, I guess, a few moments on, I guess, round three of the manufacturer and the finance professor. [2:32:39] The first time you showed up in front of our committee, I presented a graphic with the well-known information that whenever, for longer than you and I have been alive. [2:32:48] Every time you put a Republican in the White House, manufacturing employment declines. [2:32:52] Every time you put a Democrat in the White House, it goes up without exception. [2:32:55] And you, I guess, volunteered during that hearing that as a finance professor, you'd give that an F. [2:33:02] Now, President Trump came into office promising millions of new manufacturing jobs would be rushing in as a response to his tariff policies and other things. [2:33:12] So, we're now just nearly two years in. [2:33:15] And so far, we have not seen millions of new manufacturing jobs. [2:33:19] In fact, manufacturing employment is down. [2:33:21] Last time I looked, about 35,000 jobs. [2:33:23] So, as a professor, what grade would you give your administration on restoring millions of manufacturing jobs? [2:33:31] Congressman, I think you know better than this. [2:33:34] So, the last two years of the Biden administration, we lost 200,000 manufacturing jobs. [2:33:38] I'm not talking – please, could you just – [2:33:41] No, no, no. [2:33:42] This is not finance. [2:33:43] This is real world. [2:33:44] And in the real world, one has to build factories. [2:33:47] And what we're seeing is a manufacturing – [2:33:49] Well, look, I have built factories. [2:33:51] Okay. [2:33:52] There are 1,600 people in a manufacturing business in the Midwest. [2:33:55] And our company has kept those in the Midwest. [2:33:58] In fact, just last year – [2:33:59] Then you would understand – [2:34:00] Reclaiming my time. [2:34:01] Then you would understand that we have added 300,000 manufacturing jobs this year. [2:34:06] What? [2:34:07] The net number of manufacturing jobs down 35 – 35,000. [2:34:13] Okay. [2:34:14] All right. [2:34:15] I'm also Congress's pet PhD physicist and chip designer and AI programmer. [2:34:20] We keep one around for chuckles, I guess. [2:34:22] And I'm very gratified that AI is now finally being recognized as a significant threat to [2:34:28] our economy by seemingly everyone but the president. [2:34:31] Do you agree with the president that the whole thing is some Chinese hoax? [2:34:35] Or do you regard AI as a real threat to our economy and our government and stability? [2:34:42] I believe that as the president does that the AI is the most important technology of this century [2:34:51] and that we must maintain U.S. leadership. [2:34:54] And I think if you're a chip designer, who's the greatest chip company in the world? [2:34:59] NVIDIA. [2:35:00] The president is aligned with Jensen Wong on this. [2:35:01] Well, yeah. [2:35:02] They both want to make money because of the position they're in. [2:35:05] Okay. [2:35:06] Let's talk about the mythos rollout. [2:35:07] Okay. [2:35:08] It was completely chaotic, frankly. [2:35:10] You know, this was not something new. [2:35:12] If you actually had people in contact with the technical people in AI firms, you'd know [2:35:17] that the next generation AI, their coding and their hacking capabilities were off the charts, [2:35:22] and you've known it months ahead of time. [2:35:25] Instead, you had, when it became public, you had early access to mythos, granted to one of [2:35:32] the giant banks in the country. [2:35:34] And then, as you said earlier in your testimony, you went down the capitalization chain, first [2:35:39] to the giant banks and then the mid-sized banks, and at the very, very end, the banks [2:35:44] you were protecting were the small local community banks. [2:35:47] Is that your plan going forward? [2:35:48] Is that what's going to happen next time and the time after that, that the small banks [2:35:52] are going to be left defenseless for cyber? [2:35:54] Well, again, that's an unfair characterization, that we used the strength and the cybersecurity [2:36:01] of the large banks, and we migrated their know-how, because the small banks and the community [2:36:08] banks, who no one has championed more than I have. [2:36:11] Oh, come on. [2:36:12] The number one thing the community banks have been asking for was no interest on stable coins. [2:36:17] That was their number one ask for the last years, and we're in the process of getting [2:36:21] to work around. [2:36:22] So don't tell me about how much you love small banks. [2:36:25] Well, I've met with 500 community bankers this year. [2:36:27] How many have you met with? [2:36:28] You go to big rooms full of bankers. [2:36:30] They come to me individually, and I talk to them in my district. [2:36:34] So I think I have a plan on how we're actually going to help small community banks on cybersecurity, [2:36:43] and how we're actually going to have a fair distribution of cyber defense the next time mythos [2:36:49] or a similar threat comes up. [2:36:51] And one of the things that really concerns me is the seeming inability of your administration [2:36:56] to attract and retain people with any technical competence. [2:36:59] You know, leading your AI report was your national director of cybersecurity, a guy called [2:37:04] Shane Carencross, who has a BA in international studies, and his main credential is that he was [2:37:09] a lawyer for the Republican National Committee. [2:37:12] Your science advisor has a degree in Hellenic studies and poli-sci, all right? [2:37:17] And his main thing is that he was Peter Thiel's chief of staff. [2:37:21] And when I go down your org chart, how do you even decide when you're deciding about letting [2:37:27] countries have access to AI chips, which AI chips are really even significant for AI development? [2:37:33] Well, we have a very good handle on the AI chip allocation. [2:37:41] And, you know, I owe a dispute. [2:37:42] I think you don't know. [2:37:43] Robert Oppenheimer was not a physicist. [2:37:45] Maybe you were hung up on degrees. [2:37:47] The gentleman's time has expired. [2:37:50] I now recognize the gentleman from California, Ms. Kim, for five minutes. [2:37:54] Thank you, Chairman. [2:37:56] And Secretary Bassin, good to see you again. [2:37:58] Thank you for joining us. [2:37:59] I want to start by thanking you for your great work in launching the Trump accounts earlier [2:38:05] this year. [2:38:06] And your hard work has actually created lifetime of opportunity that combined with your financial [2:38:12] literacy efforts that will uplift the American working families. [2:38:17] As we consider extending this successful program, I've been traveling up and down my districts, [2:38:26] and people are really, really excited about this. [2:38:29] So I have introduced some legislation, SEEDS Act, to codify this. [2:38:35] So what would be early feedback that you have received on Trump accounts and also your thoughts [2:38:42] on SEEDS Act? [2:38:44] I would greatly appreciate that. [2:38:46] So I think the Trump accounts, as I've said many times, are the most important government [2:38:51] benefit for young people since the GI Bill. [2:38:54] As someone who has spent decades advocating for financial literacy, I think that this will [2:39:00] be a real-time financial literacy experiment. [2:39:03] And I think that we are going to create a generation of shareholders, unlike many people, [2:39:11] some in this room, who had advocated for baby bonds. [2:39:14] This is giving every American a piece of our great capital markets, of our innovation, and [2:39:23] making them realize the power of compounding. [2:39:28] And what we've done at Treasury, we have between seven and eight million families who signed up, [2:39:33] that we anticipate that within a month we will have 70 million, because we will go to auto-enroll. [2:39:41] And the enthusiasm, and keep in mind that huge numbers of these families are making less than 200,000, less than 100,000, and had no exposure to the equity market. [2:39:53] And I truly believe that we have to couple these financial literacy courses with Trump accounts. [2:39:59] So hopefully, either incorporating it or mandating this financial literacy program and constantly talking about Trump accounts at schools will be great. [2:40:08] Would you agree? [2:40:09] Yes, I couldn't agree more. [2:40:11] In the school system, at Treasury, we've created 15 learning modules, both for children, the beneficiaries of the account. [2:40:20] There's a four-year-old, there's a six-year-old. [2:40:23] But importantly, many of these are families who have never, maybe the term Wall Street, maybe they clicked through. [2:40:32] And now I think they're going to have a real interest here. [2:40:35] It will be something that families do around the table. [2:40:38] And I think that this is a unique opportunity to bring the 38% of households who have no equity exposure to make it 100%. [2:40:47] And I'll join you right there. [2:40:48] Keep on talking about it. [2:40:49] And have an ownership nation. [2:40:51] So I want to go to talk about the Taiwan Non-Discrimination Act, which is my bill that was passed as part of NDAA last year. [2:41:00] And this legislation directs the IMF representative to use the U.S. voice and vote to support Taiwan's membership in IMF. [2:41:09] So I just wanted to ask, as Taiwan, we've been talking to Taiwanese government officials, and as they get ready to formally submit a request to join IMF, I hope U.S. will use our voice to support their petition to join or encourage them to do so as soon as possible. [2:41:29] We're aware of your bill. [2:41:31] Great. [2:41:32] Thank you. [2:41:33] And as chairman, our former chairman McHenry often used to say economic security is national security. [2:41:43] And strong Taiwan is our best tools to counter Chinese economic coercion. [2:41:47] So another aspect of Chinese economic activity that concerns me is their use of state corporation and predatory lending to dominate critical mineral supply chain and control energy structure. [2:42:01] We have strong, innovative private companies, but they cannot go up against CCP on their own. [2:42:07] This is a matter of national security, which is why I introduced Dominance Act. [2:42:12] This will strengthen our global critical mineral supply chains and secure our energy futures. [2:42:18] But our multilateral banks also provide key avenues to counter predatory Chinese economic activity. [2:42:24] So could you talk about that and what U.S. should be doing differently through the World Bank and our own institutions to compete with China? [2:42:33] Sure. [2:42:34] So as we did with the G20 in Asheville, we are pushing for greater transparency and to make sure that these countries do not get into a debt trap with rapacious lending as we've seen from China. [2:42:47] Thank you very much, Secretary. [2:42:49] And I yield back. [2:42:51] Thank you, Ms. Kim. [2:42:53] Mr. Secretary, I want to thank you for your testimony today. [2:42:56] Without objection, all members will have five legislative days to submit additional written questions for the witness to the chairman. [2:43:04] The questions will be forwarded to the witness for his response. [2:43:07] Mr. Secretary, please respond not later than October 20th. [2:43:10] This hearing is adjourned. [2:43:11] Thank you.