TOUGH FULL HEARING: Scott Bessent Clashes With Democrat After Democrat In Brutal House Hearing

[0:02] The Committee on Financial Services will come to order. Without objection, the Chair has [0:05] recognized to declare a recess of the Committee at any time. Today's hearing is titled, The Annual [0:10] Report of the Financial Stability Oversight Council. Without objection, all members will [0:14] have five legislative days within which to submit extraneous materials to the Chair for inclusion [0:18] in the record. I now recognize myself for a four-minute opening statement. Good morning. [0:24] Treasury Secretary Besant, welcome. It's an honor to have you with us today to provide testimony as [0:28] the Chair of the Financial Stability Oversight Council. Today we will examine recent actions [0:33] taken by the FSOC and provide members the opportunity to address any questions or concerns regarding [0:40] FSOC's 2025 Annual Report. As the 2025 Annual Report makes clear, economic growth is essential for [0:48] financial stability. In a growing economy with rising incomes, debt burdens fall, American standards of [0:55] living rise and the financial system remains stable. It's encouraging to have financial regulators [1:02] and policy makers who understand this fundamental reality and aim to foster a regulatory environment [1:08] that considers how both new and existing regulations alter and impact economic growth. Committee Republicans [1:16] share the commitment to promoting economic growth through the elimination of unnecessary regulatory [1:22] burdens, a hallmark of the Trump Administration. Since assuming the presidency just over a year ago, [1:29] President Trump has built on this critical work that he achieved in his first administration to make [1:34] further progress in rolling back overly burdensome regulations that stifle innovation in our economic growth. [1:42] These efforts go beyond reducing just regulatory red tape. They're about fostering an environment where [1:48] financial institutions can thrive and contribute to the stability and growth of our economy. I'd be remiss [1:54] if I didn't remind everyone in the room today of the doom and gloom economic predictions that we heard [2:00] across the aisle as the Trump Administration was sworn in. In late 2024, Moody's analytics anticipated that a [2:07] Republican-controlled government would bring 3.5 percent inflation, 5 percent unemployment, a recession, [2:14] and a budget deficit of 6 percent of GDP. Since then, Democrats have repeatedly and wrongfully accused [2:21] Republicans of, quote, tanking the economy, close quote. With most of the official data in the books, [2:27] these warnings missed the mark by a mile. Inflation came in at nearly one percentage point lower than that forecast. [2:34] The unemployment rate never increased increased beyond 4.5 percent, no recession materialized, [2:41] and GDP is on track to have three consecutive quarters above 3 percent growth. Meanwhile, [2:47] the budget deficit is on track to fall to some 5.4 percent of the GDP. These numbers speak for themselves. [2:55] Under President Trump's leadership and Treasury Secretary Besant's steady hand, the economy is back on track, [3:02] reversing the damage of the previous administration. Throughout the 119th Congress, Congress and [3:08] committee Republicans remain steadfast in our goal of reinvigorating the commercial banking system [3:14] and make life more affordable for our American families. That commitment is why I introduced the [3:19] Main Street Capital Access Act with Subcommittee of Financial Institutions Chair Andy Barr last month. [3:26] Our community banking package is designed to revitalize local bank formation, right-size regulations that [3:33] are intended for far larger and more complex institutions, ensure that community lenders can [3:39] focus on serving our families, small businesses, and our local economies. This bill also aligns with the [3:45] administration's efforts to right-size regulation and reflects the committee Republicans' dedication to [3:51] ensuring that financial operations focus on safety and soundness with a tailored approach to supervisory [3:58] complexity. Similarly, our bipartisan Housing for the 21st Century Act addresses housing affordability [4:04] head-on by reducing the burdens that have made homes and apartment construction untenable. Improving [4:10] affordability requires directly expanding the housing supply. Paired with Main Street Capital Access, [4:17] Americans will benefit from more homes and more affordable ways to finance them. We're grateful for [4:23] your time today, Mr. Secretary. We look forward to the discussion and I yield back the balance of my time. [4:28] I now recognize the ranking member of the committee, Mrs. Waters of California, for a four-minute opening statement. [4:34] Thank you very much, Mr. Chairman. Last week, Donald Trump marked his first year in office with consumer [4:41] confidence plummeting to a 12-year low. That is not a coincidence. Trump promised [4:48] a so-called golden age. But apparently, he only meant one for his family and billionaire friends. [4:55] Instead of helping families, Trump's trade wars are driving up the price of goods, like groceries, [5:02] clothing, and furniture. Small businesses and farmers fill it too. And we all know exactly who is to blame. [5:11] Instead of lowering costs, Donald Trump has doubled down on chaos and cruelty while handing more power [5:20] and more freedom to Wall Street. For example, instead of directing the Financial Stability Oversight Council [5:27] to address threats to our economy, Mr. Secretary, it appears that using it to do the exact opposite [5:34] and deregulate Wall Street. While Trump claims he wants to cap credit card interest rates, his administration [5:42] has repealed rules that curbed excessive credit card late fees and shuttered the Consumer Financial [5:50] Protection Bureau, the very agency that returned $21 billion to Americans after they were ripped off. In fact, [6:00] Trump's team has dismissed enforcement actions against predatory firms even after they admitted to [6:08] defrauding consumers. Why? Could it be because they gave to Trump's campaign or brought his crypto coins? [6:15] Or could it be this president is not on the side of the American consumer and never has been? It does not stop there. [6:24] Right now, Trump's Justice Department is conducting a baseless criminal investigation [6:31] into Jerome Powell to bully the Federal Reserve. So they serve Trump's agenda instead of the American [6:39] people. Since Trump returned to office, Republicans have looked the other way while consumer protections [6:45] were gutted. Instead of offering solutions to help families, they have protected corporate profits. [6:53] Under this administration, billionaires are winning and hardworking Americans are losing. We've seen [6:59] this movie before. The same blind loyalty and deregulation led directly to the 2008 financial crisis [7:09] when millions of Americans lost their jobs, their homes, and their savings, all while Wall Street walked [7:17] away with bonuses. Despite repeated demands from Democrats for accountability, Republicans have refused to [7:26] bring other key administration officials before Congress. That includes CFPB acting director Russell Vaught, [7:35] who must be held accountable for dismantling the CFPB. This includes FHA director and Bill Pulte, [7:43] who has unlawfully installed himself and his staff on the board of Fannie and Freddie, weaponized mortgage data [7:53] to try to attack Trump's political enemies, and who is incompetently pushing just plain dumb housing policies [8:03] to try to attack Trump's political issues. Like a 50-year mortgage. Every turn, committee, Democrats, and I are standing up for America's consumers, [8:14] defending strong safeguards, fighting corporate abuse, and the corruption of the Trump family. It's just common sense. [8:22] Our economy should work for everyone, not just for Trump, that billionaire circles that he's involved with. [8:30] Republicans need to stand up to Trump, defend our regulators, protect consumers, and put families ahead of Wall Street. [8:39] Anything less is complicity. The gentlewoman's time has expired. I yield back. [8:43] I recognize the chair of our subcommittee on financial institutions, Mr. Barr of Kentucky, for a one-minute opening statement. [8:49] Thank you, Mr. Chairman. Secretary Besant, welcome back to the committee. Under your leadership, FSOC has done a terrific job [8:55] eliminating unnecessary regulatory burdens and promote economic growth. Common sense legislation like the Main Street Capital Access Act [9:02] is exactly the type of pro-growth proposal to promote financial stability that FSOC highlighted in its annual report. [9:09] I'm proud to sponsor the Tier Act and the Community Bank Regulatory Tailoring Act that will modernize outdated statutory thresholds [9:17] that impose disproportionate regulatory burdens on our financial system. This committee, along with FSOC, [9:22] can successfully support our community lenders and allow them to thrive under right-size regulation with this legislation in place. [9:29] Regulatory tailoring helps to protect the diversity of our financial system, which is itself key to promoting financial stability. [9:36] I look forward to working with the Treasury Department as you implement my outbound investment legislation that the President signed into law in December. [9:44] With you at the reins, FSOC has returned to its core values and away from the weaponization and disarray we experienced under the Biden administration. [9:52] I yield back. [9:53] The gentleman yields back. I recognize the ranking member of our subcommittee of financial institutions, Dr. Bill Foster of Illinois, for a one-minute opening statement. [10:00] Thank you, Chair Hill. Mark Twain is credited with observing that history does not repeat but often rhymes. [10:06] And those of us who served on this committee during the financial crisis recognize this poem and its tragic ending. [10:12] We have once again a historically unpopular president, fixated on the glory of his overseas misadventures and foreign bailouts. [10:19] We have once again a multi-trillion dollar asset bubble underpinned by opaque and conflicted financial mechanisms that nobody understands by design, [10:28] being willfully ignored by partisan financial deregulators. [10:32] And we have families all over America who, despite all the happy talk from the President, are having a hard time paying their mortgages and their monthly bills. [10:40] You can hardly open any financial news source without seeing a discussion of the pending collapse of the AI circular investment bubble. [10:48] And that is why we created the FSOC. And that is why, last November, Democrats on this committee sent you a letter as chair of FSOC to figure out what we'll have to do when the music stops. [10:58] Your response was insufficient, dismissive, and dangerous to our economy. I look forward to hearing more from our questions and yield back. [11:04] The gentleman yields back. [11:05] Today we welcome the testimony of the Honorable Scott Bessent, Secretary of the Department of Treasury and Chair of the Financial Stability Oversight Council. [11:13] Secretary Bessent, we thank you for taking time to join us today. We'll be recognized for five minutes to give an oral presentation of your written testimony. [11:19] And without objection, your written statement will be made part of the record. [11:23] Mr. Secretary, you're recognized for five minutes. [11:26] Chairman Hill, Ranking Member Waters, and members of the committee, thank you for inviting me to discuss the Financial Stability Oversight Council's 2025 Annual Report. [11:37] This report is a culmination of extensive collaboration amongst FSOC members. [11:44] I'd like to thank them for their hard work and dedication in advancing the President's old vision for a better America. [11:51] Since day one, President Trump has focused on building parallel prosperity, an era of economic expansion where Wall Street and Main Street can grow together. [12:00] To that end, Treasury has tirelessly pursued pro-growth policies to unlock the potential available to all Americans when they are free to save, [12:09] invest, build businesses, and drive their own economic destinies. [12:13] The Financial Stability Oversight Council plays an important role in delivering on this agenda. [12:18] Too often in the past, we've seen regulation by reflex. [12:22] Rather than preempting crises, regulators have frequently reacted to them after the fact. [12:28] They've played the role of a hazmat cleanup team instead of preventing dangerous spillovers in the first place. [12:34] Regulation by reflex has led to a regulatory myopia that has undermined safety and soundness. [12:41] Under President Biden, the bank regulators preoccupied themselves with reputation risk, climate-related financial risk, and other risks with no clear nexus to safety and soundness. [12:52] At the same time, they centered supervision on management and other governance matters that distracted examiners and banks' risk managers from the real risk to safety and soundness. [13:02] The result, predictably, was the second, third, and fourth largest bank failures in U.S. history in 2023. [13:10] Besides undermining safety and soundness, regulation by reflex has driven excessive regulation. [13:16] That can lead to economic stagnation, and economic stagnation is itself a grave threat to financial stability. [13:24] In calibrating regulations, federal agencies must avoid the temptation to create a zero-risk financial system, which would result in what others have called the stability of the graveyard. [13:35] FSOC should aim to identify vulnerabilities that could lead to systemic crises and encourage the private sector to mitigate those risks before recommending additional regulation. [13:47] FSOC should also work with its members to support efforts to avoid or pare back existing regulation that stifles pro-growth lending, capital formation, and innovation. [13:58] And the best way to achieve these goals is by centering economic growth and economic security at the heart of FSOC's agenda. [14:06] Promoting economic growth and economic security is essential to ensuring financial stability. [14:12] Economic growth strengthens household, business, and financial institution balance sheets, creating capital buffers that reduce the risk of defaults and financial stress. [14:24] And economic security reinforces domestic production capacity, raising living standards while reducing vulnerability to external shocks and supply chain disruptions. [14:35] FSOC's annual report prioritizes economic growth and economic security accordingly, with a specific focus on four policy areas. [14:44] Treasury markets, cybersecurity, regulatory modernization, and AI. [14:49] First, the Council is ensuring that the U.S. Treasury market remains the deepest and most liquid in the world. [14:55] The Council is supporting efforts by member agencies to strengthen this market against future shocks, [15:00] including through the Interagency Working Group on Treasury Market Surveillance and the Market Resilience Working Group. [15:06] Ongoing monitoring and targeted reforms by individual agencies remain essential to financial stability. [15:14] Second, the Council is taking action to protect our financial system from increasingly sophisticated cyber attacks. [15:21] Nation-state actors and criminal groups continue to target our financial institution and infrastructure. [15:29] To address this risk, the Council is supporting expanded information sharing, joint monitoring, and scenario-based exercises, [15:36] and it is emphasizing the need for regulated firms to manage cyber risk tied to third-party service providers. [15:43] Third, the Council is committed to supporting efforts to modernize supervisory and regulatory frameworks for banks and credit unions. [15:52] Going forward, regulation and supervision should address material risk, enhance transparency, and reduce unnecessary burdens, particularly for small and community banks. [16:04] Fourth, the Council is prioritizing the responsible use of artificial intelligence to strengthen financial stability. [16:11] The Council is working with public and private partners, including international counterparts, to enhance system resilience while closely monitoring emerging risk. [16:22] I will close by highlighting our progress, enhancing the utility of our annual report. [16:26] In this year's report, FSOC shifted away from its past approach, where nearly every major market and financial sector was described as a financial stability vulnerability. [16:37] By introducing a new structure centered on fostering economic growth and security, [16:42] we are tuning out the noise to concentrate on the issues that matter most for U.S. financial stability. [16:49] With this overview, I look forward to taking your questions. [16:52] Well, now, thank the Secretary, and we will turn to member questions, and I recognize myself for five minutes for questions. [17:01] You made a persuasive case that since President Trump was sworn in that economic growth is a cornerstone of his presidency, [17:10] and you highlighted today, as you have in speeches over the year, the importance of that Wall Street's doing well, [17:17] but it's Main Street's turn, and you'd like to see economic growth expanded into what I always quote from Steve Case, [17:25] the rise of the rest, where we see that economic performance expand across the country. [17:33] We share that commitment here on this committee about reversing elements of the regulatory framework that have sought, [17:39] possibly, certainly well-intentioned, the concept of too big to fail, but ended up in creating an environment over the past 15 years [17:47] where community banks are too small to succeed, or maybe avoiding your term today, you chose to use the stability of the graveyard. [17:56] The committee has worked together on a bipartisan basis to highlight some of the principal actions that we've considered over the past year, [18:04] our Main Street Capital Access Act, which we intend to bring to the House floor. [18:10] We're grateful for your Under Secretary, Mr. McKernan, who last month joined us as we rolled out that package to talk about how we can collaborate. [18:18] Would you take a minute, and from your perspective, how do strong, well-capitalized community banks [18:24] and the benefits of tailoring that are in this legislative proposal help accomplish faster economic growth and the rise of the rest? [18:34] Well, Chairman Hill, as I've said, it's Main Street's turn, and essential for Main Street's having its turn are the small and community banks. [18:43] And I would note that thanks to onerous regulation, and as you and I both say, community and small banks became too small to succeed. [18:54] Tragically, more than 50, 50 percent of our community banks have disappeared since the great financial crisis, not during, since. [19:04] There have been virtually no de novo banks created, whereas before the GFC, there were more than 50 per year. [19:12] And small and community banks not only are the anchor for community-based lending, but they provide the bulk of the lending for agriculture, [19:23] for small real estate loans, and for small business loans. [19:28] So a thriving community bank infrastructure and ecosystem is essential. [19:35] I've met with more individually and in roundtables with more than 200 community bankers. [19:41] I've spoken at conferences with more than 1,000, and tailoring is essential. [19:47] I had one banker from my home state in South Carolina with assets of about $200 million tell me that under the previous regulatory regime, [19:56] she was told that she should be more like Bank America, the second largest bank in the country. [20:02] And so it is essential that we have the right tailoring, right risk levels, and right monitoring of these important institutions. [20:14] We thank you for your perspective on that. [20:17] And to illustrate it in our work we've done on housing in the committee, also on a bipartisan basis, [20:23] it was noted that banks under $10 billion in size, really the heart of our community banking system, several thousand banks across the country, [20:31] they make 60% of our one to four family construction loans. [20:36] And while banks of all sizes deliver amazing capital access in our economy, [20:41] at the heart of our main streets, if we want more housing supply, [20:46] we find that it's really that local grassroots public or privately held community bank that helps lead that. [20:52] You mentioned de novos, and under Chairman Barr's leadership in our subcommittee, [20:58] and again with bipartisan support, we've enhanced in the Main Street Capital Access Act, [21:05] ways we think that will speed up and make easier to get both deposit insurance, raise capital, [21:11] and tell the story about having more dynamic de novo bank formations that, as you say, have been so slowed by the last 15 years. [21:21] Turning to digital assets, something that we've talked about quite a bit in the time remaining, [21:27] can you tell me your assessment of how the regulatory process is coming for the implementation of the Genius Act? [21:36] The Genius Act was an important piece of legislation for bringing back into the U.S. [21:46] the regulation creation of digital assets and making the United States a national champion. [21:52] The Genius Act and the stable coins that will be created with that could, in fact, be an important feature of financing the U.S. government. [22:02] And we are moving with deliberate speed to round out the House and the Senate's intention on that important piece of legislation. [22:16] I appreciate your work and leadership there. I now recognize the ranking member of our committee, Mrs. Waters of California, for five minutes for questions. [22:23] Thank you very much. Secretary Besson, in the EFSA annual report, you stressed the importance of economic growth to promote financial stability. [22:33] While you noted many ways you plan to deregulate Wall Street and plant the seeds for another crisis, [22:40] you said little about the harms of inflation. [22:43] I find this odd as the president and you have finally began discussing in the media how the price of goods are way too high. [22:51] Notably, you mentioned that tariffs may need to come down to lower costs for Americans. [22:57] So I have a few questions about this. As a former hedge fund manager in 2004, and I don't want you to go into any long details about this, [23:07] but did you write a letter to investors raising concerns about the impact of tariffs writing that, quote, tariffs are inflationary? [23:17] Did you say that at that time, yes or no? [23:20] No. [23:22] Okay, thank you. [23:23] Okay, we have a New York Times article that agrees that you said that. [23:28] A great New York Times. [23:29] Then last summer, when you testified before a Senate committee, you said in our quote, [23:33] there is no inflation. Tariffs are not being passed on to consumers. [23:38] You were quite definitive and even claimed that critics had, quote, tariff derangement syndrome. [23:46] Well, those comments are at odds with the statement you made to investors that tariffs are inflationary. [23:53] Again, I want to be clear. So just let me ask you, are tariffs inflationary? Yes or no? [24:01] According to the San Francisco Federal Reserve, with 150 years of data, tariffs do not cause inflation. [24:07] Well, last November, as the Trump administration finally began to realize that affordability issues in America are not a hoax, [24:16] you told Fox News that the government was going to reduce tariffs on goods like coffee and bananas, [24:23] and that doing so would, quote, bring the prices down very quickly. [24:27] Mr. Secretary, why was that announcement even necessary? [24:31] If tariffs aren't inflationary, and as you and the president like to say are paid for by the foreign country, [24:41] a tariff on coffee or bananas shouldn't raise the price of either for American consumers. [24:47] Well, that's the Trump logic, but that isn't reality. [24:51] It did raise prices across the board. [24:54] And you know it. I think you knew back in July also. [24:57] The real question is, why would you even impose a tariff on a good that a country doesn't grow or make, [25:04] as that would only serve to punish the American consumer? [25:07] Now, as you know, this committee has taken a bipartisan approach to addressing another real affordability crisis. [25:15] Housing. Rents are too high. There aren't enough houses. [25:20] However, one clear reason that the housing crisis has grown worse is that you and the rest of the Trump administration [25:28] levied tariffs on housing production goods like lumber and steel, as well as appliances. [25:36] These tariffs will result in half. [25:39] Congressman, lumber is at a five-year role, Congressman. [25:42] Lumber is at a five-year role, Congressman. [25:44] Reclaiming my time. [25:46] Reclaiming my time. [25:51] Reclaiming my time. Thank you. [25:52] However, one clear reason that the housing crisis has gone worse is that you and the rest of the Trump administration [25:58] levied tariffs on housing production goods like lumber and steel, as I said, as well as appliances. [26:05] These tariffs will result in half a million fewer homes built at a time when we need more homes built, not less. [26:12] Trump single-handedly made housing more expensive. [26:16] And once again, you know it. [26:17] As Exios has reported that you were planning to lift tariffs on housing production goods. [26:25] In addition, the unlawful campaign the Trump administration has waged with ICE and Border Patrol terrorizing American communities has also harmed home construction across America. [26:39] So I ask you, Secretary Benson, will you be the voice of reason in the administration? [26:45] And urge Trump to stop waging a war on American consumers and on housing affordability and putting the economy at risk. [26:54] Yes or no? [26:55] Do I have to explain? [26:56] Will you be the voice? [26:58] Will you be the voice? [26:59] Will you be the voice? [27:00] Will you be the voice? [27:01] Will you be the voice of reason? [27:02] Will you be the voice of a reason? [27:03] Will you be the voice of reason? [27:04] Will you be the voice of reason? [27:05] A study from Morgan University �AT Reclaming My Time has shown [27:17] housing 10 and 20 million immigrants can you shut the housing housing stock well [27:24] of working Americans and can you maintain some level of data labor's time [27:28] has expired no my time has not expired your time has expired and the gentleman [27:33] gentleman took up my time mister I think you should recognize that mr. chair the [27:38] gentlewoman's time has expired the gentlewoman's time is it your [27:42] parliamentary chair recognizes the vice chairman is to [27:47] chair parliamentary inquiry go right ahead but I would not expect you to do [27:52] that thank you mr. chairman and I will grant very briefly any time that you [27:59] feel like you need to address anything again I think the ranking member does [28:04] not understand mr. secretary I'm sorry the gentleman will suspend there's a [28:08] parliamentary inquiry mr. chairman mr. chair will you enforce the rules of this [28:13] committee so that the time belongs to the questioner and prevent filibusters from [28:18] taking time away and if those filibusters by the witness do take time away will you [28:23] allocate additional time I will enforce the five-minute rule the gentleman I want [28:28] my time back the gentleman from Michigan is recognized I grant briefly anything [28:35] that you need to feel you need to address I believe the ranking member does not [28:38] understand the definition of generalized inflation versus one-time price increases [28:43] I would also note that housing especially for working Americans a Wharton study has shown that [28:51] the mass unfettered immigration adding 10 to 20 million new people demanding housing congresswoman is [28:59] what caused a great deal of housing inflation for working Americans so you would and the [29:04] Biden administration should be ashamed which is also which is also why we are seeing rents there was [29:10] just a recent media story on this rents are going down partially because of that enforcement so I mr. [29:16] secretary is supply and demand continues to work I've got a number of issues I got to hit very [29:21] briefly here on FSOC I need to talk then Burma and three percent you talked about with the chairman [29:29] about regulators using tailored market approach tools how are you ensuring that FSOC's current work [29:36] continues to prioritize activity-based transparent analytically rigorous approach grounded in cost [29:41] benefit analysis in coordination with functional regulators when evaluating potential risks in [29:46] non-bank financial markets that is done fine primarily for small banks through the office the [29:53] controller the currency and the FDIC the and those chairs are intent on tailoring the rules for small [30:02] banks so that we do not have another 50% decrease in Main Street lending all right thank you you you [30:10] outlined as part of the four goals protecting number two was protecting from cyber attacks we have seen a [30:18] rise in those cyber attacks and scam centers in Burma and I applaud you and Treasury for for some of [30:27] your work in that including sanctioning North Korean individuals selling weapons to the Burmese military [30:34] regime as well as the Democratic Korean benevolent army Burmese army group that has organized these scam [30:42] centers however last week it was reported that Iran was secretly shipping vast amounts of jet fuel in Burma [30:49] and I need to move through this quickly here but that's why last year I introduced a bipartisan legislation that [30:56] would specifically require the president to determine whether to impose stronger blocking sanctions [31:01] on Myanmar oil and gas Myanmar economic bank and foreign persons operating in the jet fuel sector of the [31:08] Burmese economy I read recently that Treasury responded to Reuters report by noting that Orion's quest for [31:15] quote new markets is a sign that President Trump's policies are working which I would agree I'm also aware [31:21] that Burma's military leader leaders have attempted to gain favor with the president especially when [31:26] it comes to lowering tariffs levied on his country is this is something that simply cannot happen I [31:32] represent a significant Rohingya population and know that the active bombing that is going on is [31:40] unacceptable and I believe we must continue to impose strict sanctions on the Burmese military rulers [31:46] what tools can Treasury use to punish both Iran and Burma for violating both US and other Western country sanctions [31:54] well with respect to Iran President Trump upon entering office instructed US Treasury to implement a maximum [32:02] pressure campaign and we saw the fruits of that campaign in December as the Iranian economy has collapsed and we had a large bank collapse [32:12] there the central bank was forced forced to bail it out created inflation and the Iranian the brave Iranian [32:19] people have taken to the streets we continuously monitor trade between two countries like that [32:25] the good news would be Iran has a significant shortage of dollars to buy whether it is weapons or [32:33] goods or goods or the people or to pad the Swiss bank accounts of the Iranian regime [32:42] but we've got to keep the pressure up on Iran but also that pressure on the Burmese junta please [32:48] lastly I'd be remiss if I did not thank you in public for your discussion of a desire to lower deficits to 3% of the GDP [32:58] I've introduced along with 14 of my colleagues from the bipartisan fiscal forum that I chair with Congressman Scott Peters out of California [33:07] that urges the house to achieve this 3% goal by 2030 a tangible achievable goal that is desperately needed and we're building consensus here in the house [33:17] I know you and the administration take the ticking debt bomb seriously and I hope that to continue this conversation with you I don't know if [33:25] you can in 10 seconds I look forward to working with you on that and I would note that the deficit to GDP calendar year 2024 7% highest not at war not in [33:34] recession calendar 2025 down to 5.4% thank you chair recognize the gentleman from California our ranking member of our capital market [33:44] subcommittee Mr. Sherman you're recognized for five minutes I want to agree with the gentleman from Michigan that we need to impose those sanctions on the [33:50] Myanmar regime and protect of course the Rohingya minority to the extent we can [33:59] FSOC has to define what is systemic [34:04] I for one think that we shouldn't be focusing on the assets but rather the liabilities we didn't have a [34:11] problem in 2008 because the banks had too many assets we had a problem because they had too many liabilities [34:18] so I don't see how [34:19] Congressman that's incorrect Ben Bernanke then Fed chair said could you please tell me what [34:24] I'm going to reclaim my time regardless of that I'm going to ask you whether [34:31] they're going to ask you to agree with me I'm going to ask you to agree with your predecessor [34:36] secretary Mnuchin during the first Trump administration that secretary Mnuchin promulgated [34:42] promulgated interpretive guidance that pri that prioritized an activities-based approach to systemic risk [34:48] regulation over an entity approach secretary Benson you have indicated that you want to kick off a review of [34:54] FSOC's activities and processes the FSOC improvement act led by my colleague Dr. [35:02] Foster which I've co-sponsored as you know would codify an activities-based approach [35:08] to systemic risk regulation do does the FSOC plan to revert to the 2019 guidance of [35:18] the first Trump administration regarding a definition of a SIFI yes we prefer an activities-based [35:26] approach rather than an institutional based approach thank you I want to pick up on the [35:31] ranking members comments about whether tariffs cause inflation you know economists can say when [35:39] the price of something goes up by 20 percent that isn't inflation it's a one-time price increase but [35:49] out in my district when the price of something goes up by 20 percent we call that unaffordability and [35:56] to say it's not inflation is sophistry I'll point out that every time Democrats had environment and [36:05] regulations that increased a company's cost people in this room said that's going to cause inflation [36:12] well tariffs clearly have to be paid by companies and if environmental costs are passed through you can be [36:18] sure tariffs are passed through the ranking member asked the question why a tariff on coffee and [36:25] bananas I think the answer is obvious to make our tax system more regressive to pay for the big bad [36:34] beautiful bills cuts and taxes for billionaires and to fund ICE I used to head this largest sales tax [36:43] agency in this country and we knew the sales tax was regressive but we knew it would be even more [36:49] regressive if we impose taxes on sales taxes on food and that is what you do with a tariff on bananas [36:57] and coffee Mr. Secretary we lived through the bailouts of 2008 when powerful men lose money they now want a [37:08] government bailout does the Treasury Department or the various components of the FMOC have the authority to [37:16] bail out bitcoin could you please elaborate what exactly does bail out bitcoin okay could you [37:25] instruct the banks of this country to buy more bit to buy bitcoin or change banking regulations uh so [37:32] that uh uh they are encouraged to do so in terms of uh the reserves that they're otherwise required to have [37:39] uh again that within the context of asset diversification within banks they could hold many assets [37:47] they can and they're different uh but uh uh do you have the authority to order banks to buy bitcoin [37:53] or to invest U.S. tax dollars in bitcoin or trump coin uh I am secretary of the Treasury I do not have [38:00] the authority to do that and as chair of FSOC I do not have that authority so we're not going to see our tax dollars [38:07] invested in crypto assets well why would a private bank be your tax dollars congressman excuse me I'm [38:14] now asking about the money of our taxpayers which you manage as secretary of the Treasury is it going [38:19] to be deployed into crypto assets we are retaining seized bitcoin that's not exactly taxpayer money you [38:29] collect a lot of taxes this month no that that is an asset of the U.S. it's an asset of the U.S. it was [38:34] government and are you going to invest and I will point out Mr. Secretary reclaiming my time are you [38:40] going to invest the asset seizure that 1 billion of bitcoin was seized 500 million was retained and [38:47] that 500 million has become over 15 billion gentleman's time has expired the gentleman from [38:54] Oklahoma the chair of our monetary policy task force Mr. Lucas you're recognized for five minutes [39:00] thank you Mr. Chairman and thank you secretary for being here today you've said that the current [39:05] deposit insurance framework is a vulnerability for the banking system that there is a competitive [39:11] imbalance that favors large banks and that this increases the risk of bank runs and erodes [39:17] depositor confidence can you talk more about a targeted expansion of deposit insurance for non-interest [39:23] bearing transaction accounts and would that strengthen financial stability within the system [39:31] Congressman thank you for that very important question because it is my belief [39:37] because there is the belief that big banks the depositors will not lose money during a financial [39:45] crisis as we saw in 2023 assets leave small banks and much of that is what is known as the payroll account [39:53] so I think it is very important for small banks to have one non-interest bearing account that can [40:00] have a much higher level of insurance so that they are able to retain deposits during a stress period this is [40:08] one of the reasons that we have seen assets leave small banks is one of the reasons that we have seen [40:14] 50 percent of small banks disappear continue along this line of inquiry Mr. Secretary a robust banking system with [40:22] healthy banks of all sizes reduces systematic risk across the entire system why is it important that congress act now [40:30] on targeted deposit insurance reform not only for main street but also our financial stability [40:37] again deposit volatility which is what you're referring to is deposits moving during a stress [40:43] time does not benefit anyone in the long run and one more question on this perspective congress [40:52] should look at giving fdic authority to raise the coverage level for non-interest bearing transaction [40:56] accounts to an appropriate amount that is data driven and put smaller institutions on a level [41:02] playing field larger banks how would our banking system be safer with a narrow targeted expansion such [41:10] as the one i've suggested again it would permit the small and community banks to continue competing [41:17] it would get credit to our main street and it would stem deposit flight during a period of stress which is [41:25] one of the most or one of the biggest threats to financial stability focusing on a slightly different subject sometimes [41:35] something i've focused on as chairman of the task force on treasury monetary resilience has been strengthening marketing [41:41] market stability and liquidity we saw occasional bouts of treasury market volatility last year [41:47] how would reforms to banking regulations like the liquidity coverage ratio and stress tests [41:53] incentivize market intermediation for banks and improve market stability again congressman wonderful [42:00] question that it brings more of our treasury market onshore and as you said there were periods of stress [42:08] last year the market successfully navigated those at the end of january we had the third highest volume [42:15] in the treasury market and the bid-ask spreads very important for the financial well-being of the american [42:21] people who were invested in money market funds in bond funds and their retirement funds they have stayed right [42:27] in the center line and we are at a five-year low in bond market volatility thank you mr secretary i yield back [42:34] mr chairman thank you gentleman yields back chair recognizes the gentleman from new york [42:41] ranking member of our foreign affairs committee mr meeks you're recognized for five minutes thank you mr chairman [42:46] secretary bessett uh if i'm not mistaken you were working in the financial service industry during the late [42:53] 1980s correct i was thank you and well i'm wondering do you recall uh are you knowledgeable of the keating [43:06] five scandal back then uh yes sir and i will point out that i was i don't want to i don't know i will point [43:12] out that i i i i identify gentlemen mr secretary is the gentleman from new york's time so i just want [43:20] to make sure everyone knows who doesn't know that the keating five scandal involved five u.s senators [43:26] accused of pressuring the federal home loan bank board to expedite and give more consideration to the [43:33] case of charles keating jr who ran the california-based lincoln savings and loans it led to a 14-month [43:40] investigation unveiling how five u.s senators and staff ended up with more than one million dollars [43:47] in contributions for trips to the bahamas and all expenses paid stays at resort hotels following the [43:53] scandal the industry saw sweeping regulatory changes that was launched by then president george hw bush [44:01] now mr secretary i'm sure you can agree conflicts of interest and improper influence by u.s elected [44:10] officials over bank regulators weakened supervisory independence and and ultimately impose they [44:17] ultimately impose massive losses on consumers and taxpayers i think that we can all agree upon that [44:24] and as we know the basic lessons from the post keating reforms still applies today when the office [44:31] of the controller of currency the occ deciding to get a bank charter i think we can stimulate that now mr [44:39] bessett as our nation's treasurer i'm sure you also know that a foreign linked investment firm tied to [44:48] the u at the united arab emirates government quietly bought about half of the trump family's crypto company [44:58] world liberty financial and at the very same time the president of the united states was dealing with [45:05] that country on foreign policy now eric trump the president's son and co-founder of world liberty [45:13] financial said and i quote i'm not going to get into who the investors are but i've got some pretty [45:22] meaningful investors end of quote lack of transparency and it didn't end there when trump fans brought the [45:32] tokens they thought they were getting the deal of a century but what they didn't know was that only [45:39] trump and his sons had the sole power to decide who can sell the token and win today the price of the [45:48] token has fallen over 50 percent and the trump fans who broke who bought the token are now begging to get [45:56] out now i'm not i'm not making this up i'm not making this up you can see it for yourself on the world [46:04] liberty financial discussion uh forum yeah yourself mr secretary so there's no longer this is no longer [46:15] just about a shady crypto deal or a possible gift when a foreign linked investor is putting hundreds of [46:25] millions of millions of dollars into a company controlled by the president's family and at the [46:32] same time this president is conducting foreign policy with that country you know what that cause or [46:40] creates it creates a national security concern so i'm not going to ask much of you mr secretary i just [46:49] want to know whether you will commit today to pause and heighten and the scrutiny of any bank charter or [47:01] licensing application at the occ connected to the world liberty financial until all of these conflicts [47:09] of interest and foreign influence reviews are completed and shared with the united states congress [47:18] all you know is will you halt it and do a complete investigation and scrutiny of this licensing [47:27] uh application uh oh yeah that's yes or no uh no congressman the all you have to ask the occ is an [47:36] independent entity and i would know congressman that i tell you that in 2010 as a note you traveled to [47:41] venezuela i i i take i take that as a note on behalf i take that as a note you do not want to answer [47:48] that question i take that as a no for a 7 billion i'm asking you to do your responsibility as secretary [47:56] of the treasury into a venezuela you do not you make will you i'm just you cannot erase what you did [48:04] and he's the one that went past your time mr chairman no and he did not answer my question [48:09] or he wouldn't pass the time he had six seconds left to try to answer your question and it was a yes [48:15] or no it was a yes or no answer i asked him will he no gentleman yes or no the president yeah well [48:24] stop being his flunky all right okay and gentlemen gentlemen you're just talking to me i'm responding [48:31] i don't know 2006 trip to venezuela why don't you stop covering for the president don't be a [48:37] work for the american secretary mr meeks trip to venezuela work for the american people and maybe [48:44] don't be a cover-up for a mob maybe you're going to see your friend as long as he talked to me [48:49] i will not recognize mr besant please i recognize the gentleman from texas mr sessions you're recognized for [48:58] five minutes mr chairman thank you very much uh secretary welcome to the financial services [49:03] committee i'm delighted that you're here mr secretary we've talked with you about a broad range of [49:12] things not necessarily related to fsoc and your chairmanship there but i would like to if i can [49:20] talk with you something about the word public confidence and the word public confidence does have [49:25] a lot to do with the financial stability of the country uh there are reports in social media that [49:33] have shown and i don't want to put you in a position where you cannot answer this because of anything that [49:40] you've learned in minnesota with the nine billion dollars worth of fraud but there are social media [49:48] accounts that show people who are at a minneapolis airport with baggage full of up to a million dollars [49:59] cash attempting to exit the country and i have engaged several people who have been who have worked at [50:08] treasury to ask their opinion about that that not the relationship between how they got the money but [50:18] just that it's going out of the country and following the law can you tell us or give this committee your [50:24] viewpoints about people not using some other system but taking cash up to a million dollars through our [50:36] airports to leave the country yes so that that is a dhs tsa function we having learned of this we are [50:46] attempting to integrate our fence in better with those forms what we are trying to do the at treasury [50:54] via fence in is to keep money from being wired out of the country through what are called money service [51:01] businesses so we have issued a geographic targeting order bringing down the amount of reporting to 300 [51:09] and also asking on the form if someone is wiring money out of the country are you [51:16] receiving public benefits these are all very important issues and as you did talk about department [51:23] of homeland security uh does have a role in this i would suggest to you that treasury probably has a [51:31] philosophy about the role of the american dollar in world economy the stability that we have the use of [51:40] wanting to make sure that the dollar remains that dominant use but i would would tell you that i will be [51:47] very interested if you uh have a working group on this of us making ourself aware because it is an issue [51:56] to people who simply see social media we look forward to working with you on that congressman thank you [52:02] secretary mr secretary as you have alluded to and as the discussion here has been about banks community [52:11] banks the ability that they have you recognized because you spoke directly to it about the stress [52:18] that they are placed under as opposed to bigger banks could you please talk to us about what you believe [52:25] the role is of home ownership which is increasingly a part of the political discussion and debate and [52:34] discussions for members of congress back home of solving our home ownership problem and we've got [52:42] you've got almost a minute boy i'm giving you a lot of time and interest rates uh as they correspond to [52:49] people being able to buy their own homes good well thank you and i would note that i was also a [52:54] financial banks and financial institutions analyst for 35 years and was instrumental in working with the [53:01] government to bring down american continental and sun state savings and loans which benefit that which [53:07] were the direct the uh beneficiaries of the keating five uh that bringing getting small banks lending again [53:19] we need to get them back into the mortgage market no one knows their communities like small banks and [53:27] that having moved into the the larger system uh the strength and breadth of the u.s mortgage market is [53:36] choice and we have lost the choice in the small banks and i think we need to get them back into the [53:43] housing lending business and we are seeing it's a tragedy that the average first-time home buyer is now 40 [53:50] years old 40 years old well i had a discussion last night with the realtors uh about their [53:58] importance in this process too so i'd like to once again make sure we see community banks [54:04] and realtors and home builders all have an interest in the almost time i want to thank the gentleman i [54:08] thank gentleman for texas before we move on i want to remind everyone participating today to uphold the [54:13] house's rule of decorum and i'd like to remind everybody to respect the five minute rule and uh having [54:21] been a witness before congress before in my executive branch days uh it is important to note that our [54:27] members can spend their five minutes and and never ask a question or not it's their five minutes so [54:33] let's try to be mutually respectful of each other and i now recognize the gentleman from massachusetts [54:39] the ranking member of our digital assets financial technology and artificial intelligence subcommittee [54:43] mr lynch massachusetts five minutes uh thank you mr chairman the secretary based on uh early reports [54:51] and this is an analysis done by public citizen and subsequent news reports when the trump [54:59] administration came in to office they immediately took steps to either halt dismiss or roll back over [55:08] 100 enforcement actions and investigations against corporations in its first two months [55:13] in office with a very heavy concentration on financial services consumer protection and cryptocurrency [55:21] totaling over 3.1 billion dollars in potential penalties avoided now as a member of the financial [55:30] services oversight council is that a concern that you have raised within within the council all these [55:40] immediate dismissals of of cases against financial services firms well i think you're the biden [55:47] administration had an extra please be responsive to my question i i am i'm not i'm trying sir and this [55:54] back and forth is just eating your time that the the biden administration had an extinction policy for [56:01] crypto this is when trump came into office i'm going to go to the next question because you're not you're [56:05] not you know your answers on mr chairman the answers have to be responsive if we're going to have a [56:10] if we're going to have a serious hearing here well the questions have to be serious well those are 100 [56:17] dismissals of of cases that the trump administration came in and executed in their first weeks in office [56:26] like that all of a sudden all these crypto cases went away the sec was dropping cases the consumer [56:33] financial protection bureau dropping cases and and look you're on you're on fsoc with all all the heads [56:39] of these agencies this should be a serious question to you trust should be a serious question and a [56:45] serious issue for the financial services industry especially as a secretary of the treasury well that's [56:51] an important no this is my time i haven't asked any more questions i haven't asked you any more questions [56:57] it's the gentleman from massachusetts i'm trying to get to my next question could you speak a little louder i can't [57:01] hear you yeah okay i i might i might mr secretary let let mr lynch proceed with his time put put four [57:12] seconds back on the clock please thank you mr chairman yes mr lynch i just want to do a comparison of the [57:19] fsoc reports let's go back to 2024 and then we'll talk about the current report in the previous report [57:27] uh the members of fsoc expressed serious concerns about related to potential risk to financial stability [57:41] regarding the lack of explainability and high complexity of ai and uh the approaches that have [57:48] a potential to heighten financial instability especially in the areas of bias and discrimination [57:53] in credit decisions that was in 2024 your report in 2025 focuses on [58:03] removing regulatory impediments so so in 2024 we were concerned about consumer protections [58:12] and now under your leadership we're concerned with eliminating regulatory impediments the the dangers [58:24] and and that was a that was a report during a time where the chairman and i were were co-chairs of [58:30] an ai uh task force those dangers haven't gone away in reality those dangers are still as severe for the american [58:41] consumer but they are absent from fsoc's report so it's obviously you've you've eliminated or or dropped that [58:50] priority uh as an issue for fsoc so can you explain the the change from protecting this to consumer and now [59:00] eliminating regulations we are charged with financial stability and we are focused on leveraging ai [59:08] strengthen the financial system resilience but with economic growth and a security lens on the issue of [59:17] explainability any any concern about that in the use of ai in the financial services industry i'm sorry [59:26] what was the question the issue of explainability how when people apply for credit and are denied we don't [59:35] have the ability for ai to explain why they were denied is that is that a concern i mean we are [59:40] talking about the trust within the financial services industry it could be a concern but we don't view [59:45] it as a priority for financial stability that that's the truth that's that's the truth okay mr chairman [59:52] i'll yield back thank you gentlemen from massachusetts yields back recognize the gentlewoman from missouri [59:57] ms wagner who chairs our capital markets subcommittee recognized for five minutes i uh thank you mr [1:00:03] chairman and secretary besant i find your answers to be quite clear substantive and as always well [1:00:11] informed thank you for being here early sir in your tenure as treasury secretary you said and you [1:00:18] touched on it here today and i quote for the last four decades wall street has grown wealthier than [1:00:23] ever before and it can continue to grow and do well but for the next four years it's main street's turn [1:00:34] it's main street's turn to hire workers it's main street's term to drive investment and it's main street's [1:00:41] turn to restore the american dream and as chair of the capital markets committee i could not agree more [1:00:51] sir for too long outdated securities laws have limited everyday americans ability to invest in innovative [1:01:00] startups at the same time the number of companies listed on public markets continues to shrink and [1:01:08] as a result everyday americans in missouri's second congressional district that i have the honor to [1:01:16] represent have fewer opportunities to invest toward major life goals including owning a home paying for [1:01:24] their children's education or or securing a dignified retirement main street businesses across the midwest [1:01:32] and other regions of our country are overlooked as venture funding and capital raising opportunities [1:01:38] remain largely concentrated on the coast that is why i have made it a priority to facilitate capital [1:01:45] formation and empower entrepreneurs and business small businesses across america just weeks ago mr [1:01:52] secretary december 11th to be exact the house passed my invest act a bipartisan package of 22 bills [1:02:00] focused on three goals expanding access to capital for small businesses increasing opportunities for [1:02:07] everyday investors and strengthening our public markets capital formation is the lifeblood of american [1:02:14] economic growth and prosperity our capital markets are indeed the deepest and most liquid [1:02:21] in the world and the invest act will ensure that they remain among the greatest strengths for decades to [1:02:27] come i look forward to continuing to work with you and the administration to advance these priorities [1:02:33] and unleash the power of our capital markets secretary besant in your view what are the largest barriers [1:02:41] to capital formation for a small business congresswoman i look forward to working with you and i i think i [1:02:52] would bifurcate that most small businesses are individuals and for many individuals we we have learned [1:03:01] that most of them 38 percent of americans do not own equities so with the trump accounts which will give [1:03:08] every child a thousand dollar seed finance every american the will will be invested in a low-cost index fund [1:03:17] every american will have a share of our great innovative economy for small businesses it is often i would say [1:03:25] it is a duality of regulatory and access to finance americans are entrepreneurial we want to get out and form [1:03:34] businesses and i believe that with the confidence of being able to do that and what president trump's agenda [1:03:42] has done businesses now have tax certainty with the one big beautiful bill that 100 deductibility of [1:03:50] equipment of factories and of ag structures we have energy certainty with our energy dominance and we have [1:03:58] regulatory certainty as we are pulling back the regulatory morass that was highly highly [1:04:05] the uh harmful to both small and large business absolutely and as global competition for capital [1:04:12] intensifies the united states risks falling behind if our public markets also i must say uh remain [1:04:19] costly or inaccessible for growing companies how important is capital formation reform like the reforms included [1:04:28] in the invest act again 22 bipartisan bills that we brought to the floor with the support of 87 democrats [1:04:37] how important are these reforms to maintaining u.s economic leadership and long-term growth quickly sir [1:04:43] congressman they're they're vital and what we have seen as you correctly outlined is since the early 2000s [1:04:50] the number of public companies available for americans and indeed international investors to [1:04:56] invest in has greatly diminished and it has developed into a network of private assets thank you my time [1:05:03] has expired i have others that i will i will put forward for the record and i yield back general woman yields [1:05:09] back chair recognizes the gentleman from texas mr green who's the ranking member of our oversight [1:05:14] investigation subcommittee screen you're recognized for five minutes thank you mr chairman mr secretary i ask that [1:05:21] you recall liberation day the day that president trump announced tariffs i ask that you recall that when [1:05:31] he made this announcement there was a sharp decline in the stock market in fact when he made the announcement [1:05:40] the nasdaq nasdaq experience a six percent decline the s p 500 a decline of 11 percent i ask that you also [1:05:50] remember that some days later the president announced that he was going to pause those tariffs and when [1:05:59] he indicated that he would pause the tariffs the market then moved up do you recall these things mr mr [1:06:07] secretary i recall them very well congressman thank you and i ask that you also recall please mr secretary [1:06:16] that hours before the president announced the pause he indicated by way of truth social he has a [1:06:27] more than 50 percent ownership in truth social it's a great time to buy djt that was his [1:06:37] announcement on truth social and in so doing truth social had a value that moved up in fact truth [1:06:52] social which the president has a majority ownership went up by 415 million dollars now here's what's [1:07:02] interesting in this scenario when he made that announcement and said it's a great time to buy djt [1:07:10] that happens to be the symbol for his stock djt i ask you kindly and as one professional to another [1:07:20] mr treasury secretary you think that this should be investigated the president's stock being [1:07:28] linked to his truth social message and that stock having gone up by some 415 million dollars in a [1:07:39] single day in a single day and this is a stock that was doing very poorly uh prior to that hadn't done [1:07:45] a hadn't had a lot of success uh you think that this should be investigated no sir kindly explain to me [1:07:55] why we would not investigate the president making such an announcement as it relates to his stock [1:08:02] and then reaping some 415 million dollars million dollars as a potential capital well all americans [1:08:11] benefited from the rebound in the markets that day and in fact the rebound in the market after that was [1:08:16] the fastest in market history yes it was but here's what's interesting about your statement you did not [1:08:23] note mr secretary that djt had probably the sharpest increase on that day 415 million and that the [1:08:35] president said buy djt and that's what happened i'm unfamiliar with the exact text did he say buy djt yes [1:08:44] yes he said now now exactly now is a good time to buy and and and have a salutation djt yes sir djt [1:08:54] immediately following now is a good time to buy well those are his initials as you said they are his [1:08:59] initials but it's also do you agree that those are the symbol that's the symbol for his stock i believe [1:09:05] it is okay and and do you believe that such a thing done openly and notoriously should not be [1:09:13] investigated is that what you're telling the american people sir i i believe that anything that is widely [1:09:20] disseminated is widely disseminated and available to everyone well it was available to everyone [1:09:26] but what he said related to his stock could relate to something else but to his stock and here's the [1:09:33] point mr president mr excuse me secretary here's the point i believe that any other president making [1:09:43] this kind of move is almost a hustle i don't want to say that about the president but making this kind [1:09:51] of move would at least be investigated if you're going to allow the president to do this openly and [1:09:59] notoriously 415 million dollars what you're doing is giving him a license to move markets at will [1:10:09] make announcements and reap benefits he is literally hustling the united states stock market i yield [1:10:19] back gentlemen's times yield back the gentleman from kentucky mr bar chairman of our financial [1:10:28] decision subcommittee you're recognized for five thank you mr chairman uh mr secretary you came here [1:10:34] to testify about financial stability and threats to financial stability i think what we're learning from [1:10:40] this hearing mr secretary is how much trump derangement syndrome is a threat to emotional stability um [1:10:50] there's been a lot of lectures uh directed at you today would you like to clarify anything or respond in [1:10:55] any way to any of these lectures i i would just like to say that financial stability analysis centered on [1:11:03] identifying vulnerabilities in financial institutions or markets that might disrupt the provision of credit or [1:11:09] liquidity disrupt other sectors and leads to significant losses across the financial stability this is [1:11:17] what fsoc is chartered to do thank you uh secretary besant uh i'd like to applaud president trump and [1:11:24] the treasury department for announcing trump accounts uh i i do believe these will this will kick start the [1:11:30] american dream for children born between 2025 and 2028 with a 1 000 investment from the u.s treasury [1:11:36] uh and i'm personally uh grateful because uh my daughter virginia was born in october and will be a [1:11:44] beneficiary of these trump accounts uh not only will this ensure that american children born in this [1:11:49] time frame will participate in the deepest most liquid capital markets in the world but it it importantly [1:11:54] will also teach this new generation about the power of compound interest and will help them develop [1:12:00] financial literacy literacy skills which will make them owners and investors um and will improve their [1:12:06] financial outcomes throughout their lives can you touch on the impact of these trump accounts and how [1:12:12] it will help this new generation achieve financial independence and as you talk about that you know we [1:12:18] have a mayor of new york that espouses socialism members of congress who espouse socialism how how will these [1:12:25] trump accounts uh impact uh impact this new generation of americans view of financial independence versus [1:12:31] socialism again it history would show that people who own a piece of the action uh do not want to bring [1:12:39] down the system when you are part of the system as i said 38 percent of americans american households [1:12:45] they do not participate in the equity market uh many do many directly many through 401ks but over time the goal [1:12:54] here should be to have everyone own a piece of the american economic engine we have treasury working [1:13:02] with many people uh are going to work on financial literacy this will be one of the greatest real-time [1:13:08] experiments in history you are bringing wall street to main street and wall street will work for main [1:13:13] street instead of the other way around well on behalf of my three-month-old uh daughter virginia and [1:13:18] millions of american uh children thank you uh to you and president trump for for bringing financial [1:13:24] independence to the american people i agree with you that economic stagnation is itself a threat to [1:13:29] financial stability that's why we're pushing this main street access to capital bill which will provide [1:13:36] for more de novo charters of community banks the tier act the community bank regulatory tailoring act [1:13:42] which would modernize these statutory thresholds to remove the static nature of the thresholds [1:13:47] and allow for more diversity and growth in financial institutions can you discuss how [1:13:53] indexing these static regulatory thresholds will allow banks of all sizes to grow to grow and how that [1:13:59] will in turn um help financial stability yep so congressman i i've said very often that under the [1:14:09] regulatory straitjacket that emerged that pushed lending outside the traditional banking system [1:14:15] uh small banks became uh too small to succeed and i think we have to uh fix that and tailor it to the [1:14:24] risk for people who know their communities who are concentrated geographically and if you were in iowa you [1:14:30] are concentrated in farming if you were in florida you are likely concentrated in real estate and tourism and [1:14:35] we need to make adjustments and that that will promote diversity in the financial system which [1:14:40] in turn will help with financial stability final question secretary bess and at the end of last year [1:14:45] uh president trump signed into law the ndaa which included my legislation which will be overseen by [1:14:50] the treasury department the comprehensive outbound investment national security act uh also known as the [1:14:55] fight china act the coins act will ensure that americans are not unknowingly funding the military [1:15:01] industrial complex of our adversaries by codifying enhancing the trump administration's existing [1:15:06] outbound investment security program can you discuss the treasury uh department's new obligations under [1:15:11] this bill and how do you intend to implement it to prevent capital flows into chinese military [1:15:15] industrial complex companies well i want to thank you for this important piece of legislation it is [1:15:21] another arrow in our quiver and i can tell you as i am the lead negotiator the with china on the [1:15:28] economic front it is very useful for me to be able to say well i'm happy to refer things to the hill [1:15:33] gentleman's time has expired great to work with you on that i yield back gentleman's time has expired [1:15:38] i recognize the ranking member of our housing and insurance subcommittee mr cleaver of missouri [1:15:42] you're recognized for five minutes thank you mr chairman um unfortunately this is an embarrassing kind [1:15:55] of a hearing i've been on this committee 20 21 years we've had all kinds of conflict in fact [1:16:02] i was in here when the federal reserve chair along with the treasury secretary and many others came [1:16:10] in to tell us what what was going to happen if asian markets when the asian markets opened uh after the [1:16:18] collapse of uh the uh economics of our of our nation and i've learned that you you can't make honey and [1:16:28] sting at the same time the question is whether we came here today to sting uh or whether we came here to [1:16:36] talk about issues that are of importance to the nation i got a little grandson i hope well he was in [1:16:46] school today i would hate for him to have seen this uh so far um what i would like to talk about is your [1:16:59] opinion of dual mandate uh stable prices maximum uh employment uh i just i would like to get your [1:17:15] philosophy on that issue is is that the the creators of the federal reserve um and then the mandate was [1:17:26] that a mistake the the federal reserve act of 1913 which which created the fed and then we have morphed [1:17:36] into the dual mandate and the dual mandate is a very delicate balance between maximizing economic growth [1:17:43] while maintaining the low levels of inflation well um so then you believe in i'm assuming the [1:17:54] independence of the federal reserve i believe in the independence of the federal reserve but i also [1:17:58] believe in accountability i mean can you explain how you put those two together uh sure i i would welcome [1:18:08] we've seen these cost overruns at the fed the fed the fed has a the independence of the fed is based on its [1:18:14] trust with the american people and the federal reserve lost the trust of american people when it [1:18:21] created when it allowed the greatest inflation of 49 years to ravage ravage working people in this [1:18:28] country mr secretary so the people in the country there was a poll or something i mean you're i mean you're [1:18:39] i mean you're speaking of the american people as if uh there's some human being that um had an opinion [1:18:49] i mean i i either the fed is either either the federal reserve is independent or it's not isn't that [1:18:58] right is the logic right but the federal the federal reserve should be independent for monetary policy and [1:19:05] every other program it undertakes impinges on the monetary policy independence whether it is cost overruns [1:19:12] on a building whether it is intruding the uh in climate whether it is offering political opinions [1:19:19] mr secretary uh so you would being a member of the cabinet you would advise the president of the [1:19:27] united states um uh to verbally and politically interfere with the decision making of the federal reserve [1:19:39] well it's his right just as senator warren's right in september of 24 to say that they should shouldn't [1:19:46] cut 50 basis points they should cut 75 basis points it's the right of everyone in in in here because [1:19:52] again there is no there is no appropriation for the fed the fed has magic money and prints all its own [1:19:59] money yeah i understand how the system is financed uh the federal reserve but uh elizabeth warren [1:20:06] uh is not the president united states uh and i'm sure i mean her comment was in newspapers on the news [1:20:14] i'm asking about the uh arguably uh the the most influential human being on planet earth well i will [1:20:22] refer you to president biden's last state of the union where he said i believe the fed is going to be [1:20:27] cutting interest rates mr secretary can you tell me please would you advise the president uh to [1:20:40] force the uh independent federal reserve to cut interest rates fired and i invite the secretary [1:20:49] to respond to the gentleman's question in writing gentleman from texas mr williams you're recognized [1:20:55] mr williams is chair of the house small business committee you're recognized for five minutes [1:21:00] thank you mr chairman mr speaker mr secretary thank you for being here i want to discuss the mainstream [1:21:05] capital access act which strengthens uh local bank formation allows community financial institutions to [1:21:11] refocus on serving their customers supporting small businesses and improving affordability for [1:21:16] americans the one-size-fits-all regulatory requirements are particularly harmful to community [1:21:20] banks which often lack the lot the large compliance staffs and resources needed to absorb broad mandates [1:21:28] so to preserve competition avoid consolidation the banking sector regulatory requirements must be [1:21:33] tailored to the size and risk profile of each institution you touched a little bit at today so [1:21:38] a question would be can you speak to the importance of tailoring and right sizing regulations for [1:21:43] community banks and the communities they serve and and how does a one-size-fits-all regulatory approach [1:21:48] undermine the community-based lending model again congressman as i said a banker from my home state [1:21:55] of south carolina of about 200 million assets that would be a very small bank was told by a regulator [1:22:00] she should run her business like bank america she has three compliance officers out of 17 employees [1:22:06] she knows everyone in her small community in south carolina so it is very important that we set the [1:22:13] correct standards for the lending risk and for the business success because our main streets will only [1:22:19] succeed when these banks succeed 99 of the businesses are small they need these banks yes and i've cut [1:22:27] and just to be clear i've come under fire from the wall street journal or they called me a populist [1:22:32] because i said that it's main street's turn and i will note that it's called the wall street journal [1:22:37] not the main street journal thank you two of my bills are included in our committee's main street act [1:22:43] the first the merger process review act directs the inspector general of the ncua and federal banking [1:22:49] agencies to examine the agencies merger review process to evaluate delay reduction efficiency and [1:22:55] transparency the second the merchant banking modernization act would permit banks to hold merchant banking [1:23:01] investments for up to 15 years providing regulatory certainty and aligning federal investment rules [1:23:06] with real world timelines of small and medium-sized business projects that often take more than a decade to [1:23:12] plan so a question would be mr secretary can you tell us what the benefits would be brought by greater [1:23:19] clarity in merger review process and next how would allowing banks to hold merchant banking investments for [1:23:26] longer periods contribute to growth for small and medium and businesses in the wider economy again [1:23:32] regulatory certainty for any business as you know as an advocate for a small business is important [1:23:40] and for small businesses who don't have legions of consultants legions of lawyers the regulatory [1:23:46] certainty that is important and the ability to grow through acquisition is also important and we we just [1:23:53] want the regulators to put down the framework and stick to the framework not to regulate through [1:24:00] supervision uh thank you for that answer and uh finally in the 2025 ssoc annual report you noted that [1:24:08] financial stability and economic growth are closely linked you also observed that many financial and [1:24:12] regulatory supervisory policies fail to consider their cumulative pack impact on economic growth [1:24:19] with new regulatory costs often evaluated in isolation i hear this concern frequently from small [1:24:25] businesses and financial institutions in my district in texas where layer after layer of regulatory burden [1:24:31] from prior administrations led to millions of dollars in countless hours spent on compliance instead of [1:24:37] serving customers and supporting their local communities and they're hiring compliance officers [1:24:42] before they hire loan officers again it affects main street so how do layers of regulations after small [1:24:48] business growth with ultimately uh ultimately affect economic growth again it is a great [1:24:54] retardant for economic growth and i believe that if we were to go back and look at what's happened [1:25:02] the karen petiru a progressive uh believes that this is this regulation of small banks has been a real [1:25:09] problem and that she calls the fed the engine of inequality and a lot of the regulation the burdens and [1:25:15] regulation and has come out of the federal reserve but also also the fdic and the occ and i think [1:25:22] removing that can again get main street lending going again thank you i've got 34 seconds left would you [1:25:29] like to have any of that i i would like to add that under under this administration we are pushing for the [1:25:38] financial system to the regulated financial system to get back on an even safe sound and smart [1:25:46] level through deregulation but not deregulation at any cost but deregulation that will help the american [1:25:55] small business the american consumer and those who would like to become homeowners thank you for [1:26:01] watching main street i yield my time back gentleman yields back chair recognizes the ranking member of [1:26:06] our financial institution subcommittee dr foster from chicago you recognize four or five minutes [1:26:10] thank you mr chair and to our witness um i mentioned in my opening uh remarks uh our recent letter to fsoc [1:26:18] uh asking them to look seriously at the risk of the uh deflation of the the ai circular investment [1:26:24] bubble which is something you obviously read about every time you open up any any financial journal [1:26:29] anywhere these days um i understand there was a letter uh sent a similar letter sent uh recently by the [1:26:36] senate uh democrats uh that received a similarly dismissive uh response basically recognizing that [1:26:42] yeah this is part of what we're supposed to be doing but provided zero specifics on what you're [1:26:46] actually doing so how many people do you have that are actually assigned to looking at the risk of this [1:26:51] circular financing these off balance sheet entities the securitization all of the parade of of [1:26:56] terribles that that you know wrecked our economy last time and are looking to um threaten again so how many [1:27:03] people are actually working on this and and when can we expect to hear from what they've concluded [1:27:08] again we are constantly evaluating how many people how many people could you answer my [1:27:14] complaint how many people are actually working on that problem that there there it is it is an all [1:27:20] agencies the uh it is an all agencies no answer okay i understand you're not willing to give me a [1:27:27] number on who's actually working on it and when i could say 2000 but that wouldn't be correct [1:27:31] that i i i because some people may devote an hour a day some people may devote 80 hours a week right [1:27:38] when can we hear something specific when can we expect to hear something in the interest of getting [1:27:42] back to you and a change in tone i am happy to send you a reply okay i would appreciate something with [1:27:50] a lot more detail than something we got from the under assistant acting whatever it was um all right [1:27:56] also the last time we spoke um you i asked you a simple question that i didn't get an answer to which [1:28:01] is does this administration support a strong dollar policy or a weak dollar policy and frankly as [1:28:06] far as i've been able to tell you just all over the map on this so what could you answer the question [1:28:11] just simply do you support a strong dollar policy or weak dollar policy and how would you you know [1:28:15] score your you know whichever way you're trying to go how are you doing we always support a strong [1:28:21] dollar policy okay that that's interesting because you know as um last time we spoke i presented a [1:28:29] couple of graphs which presented the historic fact that interesting fact that every time you put a [1:28:34] republican in charge of you know in the presidency that two things have happened that the dollar has [1:28:40] gotten weaker and that manufacturing employment has dropped you know and this has happened just you [1:28:45] know during every every republican president in our lifetime and the reverse has happened every [1:28:50] democratic president the dollar has strengthened actually achieved your objective instead of just [1:28:55] talking about it um and since the time of that actually i think this this plot here was the the [1:29:00] the one we had then when the dollar was only eight percent i think it's down about ten and a [1:29:03] half percent now so you're continuing down the traditional i'm sorry which index are you using [1:29:08] for the dollar i think it's dxy year on year yeah and i think it's the last time i looked at it [1:29:13] was roughly ten down ten and a half percent and and you have the president on there but under [1:29:18] president clinton it would be i'm not talking it would be it would be my my belief that it was speaker [1:29:22] gingrich and what he i'm just talking about the president who has working with the clinton [1:29:29] administration i understand is dr falster's tom yeah so um so but you agree it is a historic fact [1:29:37] that during those presidencies manufacturing employment dropped and the dollar got weaker during [1:29:42] republicans without exception yeah i haven't seen the data so i can't i presented it to you on a graph [1:29:47] it's my understanding actually that later on in that hearing after i'd left to attend a different [1:29:52] hearing that you uh said some rather negative things about the data and that as a finance professor [1:29:58] that um that you would have i think given it an f was i believe your word and and so that all right [1:30:03] so now i'm not a finance professor i'm a manufacturer okay and but i understand that the first thing the [1:30:09] first rule as of a manufacturer is you don't piss off your customers which seems to be something that [1:30:14] your administration just rebels in doing uh internationally especially and so i think that this is it's easy [1:30:20] for me to understand why manufacturing employment has continued to drop that ever since liberation day [1:30:26] we have seen a continuous decline in manufacturing employment which was one of your number one one [1:30:32] promises congressman as a manufacturer you would know that i i can't snap my fingers and create factories [1:30:39] so there is a building process that is well underway i could send you the chart on right yes factory [1:30:45] groundbreaking i understand and and the fact that we have been historically a low tariff nation is i [1:30:51] believe responsible for the really extraordinary economic growth over the last decade of the united [1:30:56] states compared to say the eu which was a high tariff regime and now we are joining i i believe that [1:31:01] we've exported jobs to china so you you you were touching on a lot of ccp talking points i think i i as [1:31:09] a manufacturer who's kept jobs in the midwest i think i have a little more credibility [1:31:13] the gentleman gentleman's time has expired does the gentleman want something inserted in the record [1:31:18] would you like that document inserted in the record without objection be included in the record [1:31:24] gentleman recognize is from georgia uh mr laudermilk you're recognized for five minutes vice chairman [1:31:29] of our financial institution subcommittee no thank you mr chairman uh good to see you again mr secretary [1:31:34] thank you for being here but before i get to my questions i want to build on something that [1:31:37] mr lucas had talked about uh this committee held a hearing in november about deposit insurance and we [1:31:43] had an honest conversation about the need to maintain depositor confidence the potential costs [1:31:49] and unintended consequences and how we need more data before making reforms this issue is just too [1:31:55] important to mess up and i hope we can continue to talk about it in a thoughtful and data-driven way [1:32:00] and now uh onto my own questions here uh secretary besant the bank secrecy act uh or bsa reporting [1:32:08] modernization is very long overdue and is required by the anti-money laundering act of 2020 otherwise known [1:32:17] as amla increasing these outdated bsa reporting thresholds is in my opinion a critical impo component [1:32:24] of this modernization effort the currency transaction report requires banks to report cash transactions [1:32:31] that exceed ten thousand dollars that threshold has remained the same since 1972 this low value threshold has [1:32:38] in recent years led financial institutions to file over 20 million reports on their customers annually and [1:32:44] as i brought up during our recent hearing uh ten thousand dollars in 1972 was enough to buy two [1:32:50] brand new corvettes um just to give an illustration of how inflation has affected uh these ctr filings the [1:32:58] vast majority of these reports are filed on law-abiding citizens conducting innocent transaction and i agree with [1:33:03] something that you've stated that banks need to be focused on their bsa reporting or they need to [1:33:09] focus their bsa programs on real illicit finance risk and that focus on higher value activities would [1:33:16] also better serve our law enforcement and national security objectives a few weeks ago we had a markup [1:33:22] in this committee and passed my bill the financial reporting threshold modernization act that would [1:33:27] responsibly raise the ctr and sar thresholds while ensuring these reports are still useful for law [1:33:33] enforcement um as part of your community or your commitment to implement amla um will you use your [1:33:42] authority to modernize and streamline the outdated reporting rules and and increase the thresholds [1:33:48] yes congressman we we are studying this carefully we look forward to working with you on it the other [1:33:53] thing that we are trying to do is to use common sense for geographical targeting that we can lower [1:33:59] thresholds with a g what's called a geographical targeting order for areas where we see disturbing [1:34:06] trends like the southern border or in uh hennepin and barley counties st paul minneapolis right and uh i [1:34:16] believe under the program there there those exceptions exist that to give flexibility um you've talked about [1:34:23] the importance of creating an effective bsa program that allow financial institutions to focus [1:34:29] on high risk activities other than just uh focused examinations on paperwork um how can you ensure [1:34:36] that our financial institutions can focus on real illicit finance risks and do you plan to consult them in [1:34:42] law enforcement throughout your process yes we we have done a very iterative process especially with the [1:34:49] small banks and we we've had numerous visits at treasury our fence-in group has been out on the road [1:34:58] regionally asking for best practices and we are working to incorporate that to get the right [1:35:07] mix of enforcement and common sense well that's that's good to hear because uh after spending almost 30 [1:35:17] years in the i.t sector especially with data security um i've equated to the way the system is right now is [1:35:24] looking for a needle in the haystack where the government's default is always well uh let's just [1:35:30] make the haystack bigger when i believe we should make the haystack smaller so it's easier to detect [1:35:36] the the fraudulent uh players um do you believe that a modernized effective bsa regime would hinder or [1:35:44] undermine law enforcement if we were to modernize it again if it were done in in a very smart way that [1:35:51] optimizes looking for criminal activity not at all and and that's that's really the direction i think [1:35:57] we should be going eliminate the noise so we can focus on where the bad players actually are um mr [1:36:03] secretary um when can congress expect to see the treasury's proposed changes to the bsa program um [1:36:11] congressman i will get back to you on the okay on that but we we are working on it with all deliberate [1:36:16] speed okay and uh stand ready to help in any way that we can and we appreciate your your efforts and your [1:36:21] service and mr chairman i yield back gentleman from georgia yields back chair recognizes the [1:36:28] ranking member of the house permanent select committee on intelligence mr himes in connecticut [1:36:33] you're recognized for five minutes uh thank you mr chairman and welcome mr secretary uh over here [1:36:38] um uh good to have you with us today um secretary in february of last year during your tenure as acting [1:36:44] director of the cfpb you instructed the staff to suspend all rulemaking litigation communications and [1:36:50] enforcement actions um one of the rules that was uh in process at cfpb was a rule that would have [1:36:58] capped credit card late fees at eight dollars for large issuers i understand there's an agency process [1:37:05] do you have a personal view as to the wisdom of an eight dollar cap on late fees i do not you have no [1:37:14] view okay the president recently proposed a 10 percent cap on uh credit card interest rates uh that's [1:37:24] caused a certain amount of interest in this institution um because presumably it would require legal action [1:37:29] so as treasury secretary what what are the plus and minuses of that uh proposal uh do you have a [1:37:35] personal view on the wisdom of that proposal the the president is interested in affordability for the [1:37:41] american people and i think his view is that uh banks have done very well and that by by capping the [1:37:50] rate for one year uh it would give the american people the chance to recover from the horrible [1:37:55] biden inflation of 22 percent um we were both in the finance business for a long time is there any [1:38:05] possibility any risk that such a cap would actually have a pretty constrictive effect on the availability of [1:38:12] credit especially to subprime borrowers again i think that would be very important to examine as [1:38:19] it's being the as it's being put in and but congressman what we've seen over time is credit cards used to [1:38:28] compete on what was known as apr the financing rate and now they compete on rewards and what we have seen [1:38:34] is that the apr as you said that the subprime borrowers are paying higher apr and the upper end borrowers are [1:38:41] getting more rewards so maybe there is a calculus here on how to diminish the rewards and they cut [1:38:48] the apr when you were asked a similar series of questions um you gave a similarly careful answer [1:38:55] but you said that there were bad actors in the uh i think you said you were referring to credit card [1:39:00] companies who are those bad actors i'm not going to name to name them so you'll tell us that they exist but [1:39:08] you won't tell the congress who they are so that we might undertake some oversight i i think you have [1:39:13] very large investigative committees okay um let me shift gears here so many many years ago working with [1:39:19] the then colleagues john carney and john delaney we put together a proposal for the removal from [1:39:24] conservator conservatorship of the gse's um last fall as you'll undoubtedly recall there was a round [1:39:30] table held at treasury around an issue that is really critical which is housing and its affordability [1:39:34] and the fact that we need to build a whole lot more housing the conclusion from that uh round table [1:39:39] as i understood it was um really one theme which is do no harm um over the past year uh the president [1:39:48] and director pulte however have tweeted a host of utterly chaotic proposals for the uh the gse's including [1:39:55] an immediate ipo uh uh 50-year mortgages um ending special purpose credit programs rapidly exiting the [1:40:03] conservatorship stripping away the gse's housing goals i could go on and on and on mr pulte seems [1:40:08] to have appointed himself the uh indictor inquisitor of people like letitia james and adam schiff and [1:40:15] apart from making a political point here i'm trying to point out that we have a crisis in this country [1:40:19] around housing affordability the hud secretary was in here the other day using terms like i'm going to [1:40:24] encourage the building of additional housing so my question for you in my final minute um what should we [1:40:31] be doing right now with respect to the gse so the gse's can create a lot less risk for the american [1:40:38] people than they represent in the conservatorship but so that they are a vibrant part of an expanding [1:40:43] housing growth sector good so congressman i would point out that the market is the ultimate arbiter [1:40:50] and the spread between mortgages and treasuries despite your statements is the lowest that it's been [1:40:57] in many many years yeah but that's that's because the mortgages are effectively guaranteed by the [1:41:02] federal government that's not surprising that's trivial but my question is what should we be doing [1:41:06] right but the spread is lower than it was this time last year and it was guaranteed last year [1:41:10] let me repeat my question mr secretary you're an expert in the field what should we be doing [1:41:15] right now to assist in the production of additional housing that it is a very complicated question but [1:41:24] the the most important thing that has happened is we now see mortgages touched a three-year low in [1:41:30] january so i think getting down the payments and again uh moving toward fannie and freddie eventually [1:41:38] leaving conservatorship and our north star gentleman's time has expired that the spreads cannot widen [1:41:47] gentleman's time has expired it's okay i think i yield back thank the gentleman from connecticut [1:41:54] gentleman from ohio mr davidson who chairs our national security subcommittee you're recognized [1:41:59] for five minutes thank you mr chairman mr secretary thank you so much for your leadership at treasury [1:42:05] like the markets i'm comforted and reassured by your leadership there so thank you and i hope you keep [1:42:11] continuing the excellence that you've delivered for this first year in the job um you know the export [1:42:16] import bank has played an increasingly important role in strengthening u.s supply chains and certainly doing [1:42:22] that has been a big focus of this administration uh with a whole host of policies uh given china's [1:42:28] dominant position in many critical mineral supply chains and the bank's expanding use of financing [1:42:34] tools to address these vulnerabilities does the export import bank need additional capital [1:42:38] or authorities to scale its support for supply chain resilience yeah i believe that the uh john [1:42:48] nikonovich would come to you uh he's doing a fantastic job the uh as the uh exim bank uh is overall and it is [1:42:57] the linchpin toward our move toward regaining our sovereignty uh with not only critical minerals but [1:43:06] will be semiconductors medicines steel so uh anytime exim bank comes forward and asks for more money [1:43:15] for national security i cannot stress that enough at fsoc we are talking about economic security and [1:43:22] national security are the same yeah thank you for that and uh we'll be meeting this week frankly to [1:43:27] talk about just that so we need to reauthorize it and i think that's things that we want to take into [1:43:32] consideration what what additional capital what additional authorities do they need and that leads [1:43:36] into the defense production act in the most recent uh ndaa uh certain defense production act [1:43:42] authorities were shifted to the department of defense given that dpa authorities have historically been [1:43:49] housed at treasury to address supply chain vulnerabilities across the entire economy [1:43:54] and not just defense needs should the primary dpa authorities remain within treasury [1:44:00] to make sure we get a whole of economy approach well we are working well with with dow and i can tell you [1:44:09] that the defense priorities are the same across the economy and it's really with the it starts with [1:44:18] critical minerals and i believe dow is leading that along with exome bank thank you so much and as [1:44:27] as we work to reauthorize that and modernize it this will be the first modernization since um you know since [1:44:34] covid and we've seen the expanding use and how the administration's made such a focus on our trade [1:44:40] policy and reshoring so i think the debate and reauthorization modernization of defense production [1:44:46] act i think brings coherence to what has been a major focal point for the administration so thanks for [1:44:52] your leadership there you know lastly as uh as mr foster was uh trying to tout the benefits of communist money [1:44:59] i appreciate you calling him out on that and uh rejecting it and frankly during the bite [1:45:03] administration the federal reserve posted positions they were literally recruiting developers to [1:45:09] develop a central bank digital currency including you know a quote senior crypto architect role dedicated [1:45:15] to cbdc development are you aware of any ongoing uh government uh or federal reserve efforts to [1:45:22] develop a u.s central bank digital currency with within the administration absolutely not [1:45:29] president trump has made it clear that a central bank digital currency is athema to the creation [1:45:35] of the u.s as a digital powerhouse i can't speak for what goes on at the fed but i would assume that [1:45:42] they would not be part of that either yeah i hope so because uh you know not only has the president [1:45:47] been clear on that he issued an executive order on it and said that we will not develop a central bank [1:45:53] digital currency um and of course that applies to the whole executive branch does that mean it applies [1:45:59] to the federal reserve again i i would say that the federal reserve has been very cooperative in [1:46:06] terms of the regulation and they're a bit of forward thinking with the genius act what's happening with [1:46:13] stable coins how that fits within the financial and the payment system yeah i think that that approach [1:46:20] clearly contrasts with what really china has been working on is essentially managed uh basically programmable [1:46:27] money by the federal government and frankly they're working on it with the bank of international [1:46:31] settlement with the european central bank the bank of england mark carney seems to be a fan of it and [1:46:36] they're all collaborating to basically develop communist money uh and impose it on their populations [1:46:42] and it seems like you have a a different hope for the future uh so as as you lay that out would [1:46:49] love to work with you on the future of money i really think it's going to shape the future of western [1:46:53] civilization i i couldn't agree more with with you congressman and it's moving fast and the u.s has [1:46:58] to keep the lead all right thank you and i yield back gentleman yields back chair recognizes the [1:47:04] gentlewoman from ohio miss baity who is the ranking member of our national security subcommittee thank you [1:47:12] thank you mr chairman ranking member and to the witness uh first let me start by saying that i am [1:47:17] certainly concerned about the direction of this country this treasury this administration and this [1:47:23] president i believe that our democracy is under attack as well as cfpb the federal reserve cdfis [1:47:32] hud and the list goes on and on so i'd like to start with a question on committee community [1:47:39] development financial institutions or cdfis as we refer to them which you've played a key role in [1:47:47] economic uh development as a matter of fact in your uh one page um testimony you mentioned economic [1:47:56] development or growth or security almost a dozen times you also have stated promoting economic growth [1:48:03] and economic security is essential to ensuring financial stability economic growth strengthens strengthens [1:48:11] housing business financial institutions so forth and so forth nationwide cdfis finance more than 45 000 [1:48:22] affordable homes however applications for cdfis fund programs have been pending for almost 12 months [1:48:32] or more and except for some cdfis funds for administrative costs none of the fy25 program funds have been allocated [1:48:42] last fall cdf funds issued a supplemental application to cdfis to ensure that they were in compliance with the [1:48:51] executive orders issued by the administration's administration but funds still have not been disbursed now [1:48:59] my question to you are there plans to place in place to release monies to cdfis so they can [1:49:06] continue to finance affordable housing project that's a yes or no if yes when if no why not [1:49:16] treasury been working to implement the cdfi funds programs as required by law upon apportionment of [1:49:21] appropriated funds treasury will be is this going to be a yes or no program award mr secretary [1:49:26] no no no no i i'm going to buy it by the chairman's rules but i have some rules you can say yes or no [1:49:35] and then if you say yes you may continue to give that support if it's a no then you tell me why not [1:49:42] and now we need to be clear yes let's start with the yes or no i'm trying to be respectful but you're not [1:49:48] going you're not going to do what you want to do on my time yes or no or you can say i'm not going to [1:49:53] answer now move on uh number three okay so let the record show that he refuses to answer a question [1:50:01] no no no no no no no we're not going to do that with me we are not going to do that with me ask [1:50:08] it's the general woman's time from ohio what now you opted for number three so you get to hear my [1:50:14] wrath that you refuse to answer a question under your authority and what this administration and yet [1:50:22] you've talked about the value of housing and you're not releasing the funds and i want the record to [1:50:28] be clear on that so let me move on mr secretary i've asked you as your predecessors democrats or [1:50:34] republican jack lou mnuchin janet yellen and you a year ago uh about putting harriet tubman on the 20 [1:50:44] dollar bill we started this process in 2020 at that time jack lou said it would take four years [1:50:52] i sent you a letter do you know what your response was to me i haven't seen the letter ma'am well you [1:50:59] answered the letter so now i was given a chance to help you you you responded to my letter just recently [1:51:08] because you know i drilled you on this but now you responded to tell me in a few words it's a complex [1:51:16] process so that's not really an answer we know it's a complex process your republican predecessor said [1:51:24] the same thing but he went on to support it so it was supported by three people before you it was [1:51:30] scheduled for 2020 then it got backlogged because it's a complex process to 2028 the last republican said [1:51:40] we would be on target to do this so now my question to you is why is it not on target and why are you [1:51:51] not engaged in this process part one part two do you know who is over the department or the bureau [1:51:59] of engraving and printing do you know who that person is sorry do you know who is over the bureau [1:52:06] of engraving and printing i am you run it you run it the treasury secretary be careful now [1:52:14] do you run general ladies time has expired then let me ask him to put it right because he doesn't [1:52:20] it's appointed by him and it's patricia collins so let the record show that he was incompetent in [1:52:27] general ladies time is expired and i invite the secretary to respond to your detailed question about [1:52:34] that you proposed on the bill in writing and i now call on the gentleman from tennessee [1:52:42] mr rose you're recognized for five minutes thank you chairman hill and thank you ranking member [1:52:47] waters for holding this important hearing and thank you secretary bassett for taking time [1:52:51] from your schedule to be with us here today if you would like if you'd like to take a moment to [1:52:56] address any of the issues that were just on the table there are numerous the incidents with [1:53:02] counterfeited bills and we are revamping the 50 which is the most counterfeited bill first [1:53:08] congresswoman does not seem to have an interest in safety and security of american money thank you [1:53:15] mr secretary secretary besson i really enjoyed reading your recent wall street journal op-ed with my friend [1:53:21] senator bill hagerty about strengthening main street banks you make a compelling case that the current fdic [1:53:29] insurance limits contribute to an uneven playing field where deposits flow toward the largest [1:53:35] institutions in times of stress could you elaborate on how raising deposit insurance coverage would help [1:53:42] restore confidence in community and mid-sized banks particularly in places like my home state of [1:53:48] tennessee and ensure small businesses can keep their payroll and operations anchored in their local banks [1:53:55] again congressman what happens during a stress period uh the owners of the capital rightly move it to [1:54:04] where they believe their deposits are insured there is the belief that large institutions that have a special [1:54:11] exemption called moral hazard and i think by increasing the deposit accounts especially for payroll accounts that [1:54:20] those deposits will not be forced to flee when a local businessman calls up and says i have two five [1:54:27] seven million dollars in your bank i've known you we've banked here for 50 or 100 years but we're gonna [1:54:32] have to move they usually many times they don't come back thank you i share that view secretary besson do you [1:54:40] believe that raising deposit insurance limits would directly translate into more lending capacity for small [1:54:47] businesses and farms that rely on community banks particularly in rural communities like those that i [1:54:54] represent across middle and east tennessee uh congressman rose in a fractional banking system deposits [1:54:59] finance lending when deposits flow out the the ability to have capital to lend is greatly diminished thank you [1:55:08] again share that view mr secretary the fsock annual report highlights the terrorism risk insurance [1:55:14] program and underscores that small insurers are significant participants in the terrorism risk [1:55:19] market with their market share stable since 2017 in light of that and given that the terrorism risk [1:55:26] insurance act backstop has never been triggered in more than 20 years do you see any clear evidence [1:55:33] today of market failure or a pressing need for federal intervention that would justify continuing [1:55:40] a permanent federal backstop at current levels in this market rather than beginning a responsible [1:55:45] transition to a more private terrorism risk insurance system congressman i have no data so i have no [1:55:53] opinion but i will get back to you on that thank you i'd appreciate um and and how is how does treasury [1:56:00] assess if you could add to this or you can address it now taxpayer risk under trea today and do you believe [1:56:07] that risk that that risk profile is consistent with what congress originally envisioned as a temporary [1:56:12] federal program i i used to be an insurance analyst but i haven't seen the actual aerial table so i'm not [1:56:17] going to comment thank you i was proud to vote with president for president trump's one big beautiful bill [1:56:23] and help create trump accounts which give kids a real foundation to build savings and wealth from day one [1:56:30] these accounts are a great way to help families in tennessee and across the country start planning for [1:56:34] their children's futures can you update us on how implementation of the trump accounts is going so [1:56:40] far whether treasury has the resources it needs to stand this program up effectively and whether credit [1:56:46] unions and small community financial institutions will be allowed to participate in offering these accounts [1:56:52] so uh i'll work backwards uh initially there will be one one master uh one master custodian for the accounts [1:57:05] so initially these small banks will not be able to participate uh eventually the holders of the accounts will [1:57:13] be able to migrate out to designated institutions the uptake is going quite well we had a big event this week [1:57:20] to roll out the accounts uh more than a million households representing more than a million children [1:57:27] have signed up i would tell everyone to look for the commercial right after the national anthem at the [1:57:33] super bowl this weekend i i think we are prepared for a flood of signups and then they will go live [1:57:42] on july 5th and the goal is the lowest possible of fees on these index funds thank you mr thank you [1:57:50] chancellor secretary hopefully no singing as a part of this time has expired gentlemen from california [1:57:55] mr vargas who is the ranking member of our monetary policy task force you're recognized for five [1:57:59] minutes thank you very much mr chairman and ranking member and the witness i have to confess that i'm [1:58:08] very disappointed in today i think a lot of our allies are losing faith in us we hear it in our european [1:58:16] allies certainly we see it in the diminishment of our dollar but we always seem to have faith in [1:58:27] sort of the fed chairman and also the treasury secretary they're always very serious people [1:58:34] they're always seen around the world as very serious people i've been here for a long time now [1:58:39] i used to watch when a friend of mine sean duffy used to sit over there and scream at the top of his [1:58:45] lungs at jack lou when he was treasury secretary and the treasury always answered in the most logical way [1:58:53] never flippant never libelous would never say something like sure my colleague here wants to see [1:59:01] harriet tubman on the 20 bill she didn't say anything about not wanting confidence and not [1:59:07] wanting to have secure money that was a very libelous comment that you made very flippant comment [1:59:12] it was very disappointing to hear and then to hear the libelous comment that you made about the fed [1:59:19] that we lost we lost faith in the fed you said in your testimony here today because of inflation and [1:59:27] the cost overrunning the buildings you know mimicking basically the same thing that the president said is [1:59:32] about the chairman you didn't say it in the same words you said it in a way that's a little more [1:59:38] elegant it means the same thing today you've been very performative in everything that you've done [1:59:44] that's very disappointing i wanted to ask you about the independence of the fed i think it is important [1:59:51] you did comment about that a little bit but today i think has been a pretty much a waste of time but [1:59:57] sadly i think i think it really does erode the faith in our country when a person as important as you [2:00:07] give the answers that you gave today so i'm not going to ask you any questions because i think [2:00:12] it would be useless but i'm just going to say mr chairman we've had some very good hearings recently [2:00:18] this was not one of them this is not your finest day and it's too bad because i think you're a very [2:00:22] competent person i disagree with some of your policies but you're a very competent person president [2:00:28] has put in some people in very important places that are sort of caricatures of incompetence [2:00:34] that's not you today was not your finest day and with that i yield back gentleman from california [2:00:41] yields back chair recognizes the gentleman from wisconsin mr style who chairs our house [2:00:46] administration committee and also chairs the subcommittee here on digital assets financial [2:00:51] technology and artificial intelligence thank you very much mr chairman mr secretary thank you for being [2:00:57] here thank you for your service and your leadership uh at treasury there's been a lot of energy [2:01:02] in the room today a handful of times you've made some great points you've been cut off [2:01:07] so i want to go back and give you an opportunity uh to elaborate on a couple of these points at the [2:01:12] beginning of the hearing today uh ranking member waters um you were in the process of mentioning the [2:01:19] 10 to 20 million uh illegal immigrants came into the united states during the biden administration [2:01:25] uh functionally with the blessing of democrats uh in congress uh as you mentioned that and you were [2:01:31] building into a comment about the impact that that would have on the price of housing in the united [2:01:35] states the ranking member said can you shut up end quote i think you're about to make actually a [2:01:40] really good point about the impact that biden's and the democrats open border policies had on uh the cost of [2:01:48] housing uh the time is now mine uh and i'd actually love you uh to provide a little additional [2:01:55] detail as to where you're headed there good well congressman thank you and to answer congressman [2:02:02] vargas who isn't able to stay for the whole uh or to hear my reply that as you would have seen [2:02:10] that when when approached the i i am happy to have a conversation representative green who is known for [2:02:17] some fiery moments and i had a very respectful back and forth and i enjoyed my conversation with him [2:02:24] and it is a shame that all conversations cannot be like that yes or no answers to me mean that the [2:02:32] representative has talking points from his or her staff and is unable to discuss things in a logical [2:02:38] and in-depth manner uh in in terms of the uh your question uh look the we have had 4.1 economic growth [2:02:49] uh for the past three quarters we're on track for three percent growth and the the economy is doing [2:02:56] very well uh the financial stability that we are seeing uh whether it is through growth the or through [2:03:05] uh economic security we've been brought back from the edge we we president trump and your leadership [2:03:12] at treasury uh we have absolutely been brought back from the edge uh in particular as we think about [2:03:17] the impact of housing his was biden's open border policies directly related to some of the inflation [2:03:23] that we've seen in housing that's where you're previously cut off yes to to come back to that uh i [2:03:28] would point to a study from the wharton school that said that supply and demand works especially in [2:03:37] low-end housing that letting in 10 20 we don't know how many illegal aliens that flooded into the housing [2:03:44] market they all need some place to live so what we have seen is that the wharton study says that for [2:03:52] every one percent increase due to the illegal immigration rents went up one percent so if you [2:03:58] get a 20 increase in population then rents went up 20 percent and economics 101 supply and demand [2:04:05] and democrats drove up demand by having a massive number of illegal immigrants coming in the united states [2:04:10] the democrats didn't care what they did to working americans we're seeing a substantial substantial [2:04:15] drop in rent let let me let me build another point you were making uh when you were cut off you said [2:04:20] that lumber's at a five-year low uh ranking members waters then said quote you don't get to talk end [2:04:26] quote again the time is mine you get to talk lumber's at a five-year low supplying demands in effect uh [2:04:32] what's the impact of that on the cost of housing again uh that fact facts can be uh facts can be [2:04:42] annoying for people who just want to make talking points and the fact is we have not seen an increase [2:04:49] in housing costs the increase in housing costs came during the great inflation that up 21.5 percent [2:04:56] for consumer prices for the cpi up much more up in the 30s for working americans so let me that's [2:05:04] where that's the cost of housing and regulation we're still recovering from the democrats terrible [2:05:09] policies let me let me get one final point in i chair the the digital assets subcommittee uh we [2:05:14] passed and was signed into law the stable act setting forward legislation as relates to stable coin [2:05:20] treasury is required to complete implementing regulations uh by july 18 of this year um are you [2:05:27] going to hit the deadline and are there any impediments preventing you from hitting that july 18 deadline i [2:05:32] i don't see any impediments at present and if we're going to hit them we will notify you in the committee [2:05:38] i appreciate that appreciate your service at treasury mr chairman i yield back i thank the [2:05:43] gentleman gentleman yields back i recognize the gentleman from illinois mr gaston you're now [2:05:47] recognized for five minutes uh thank you for being here today uh mr president i appreciate your [2:05:52] patience with us um since the u.s captured president maduro the trump administration has been selling [2:05:58] venezuelan oil secretary wright has said that's going to continue indefinitely the president's [2:06:04] january 9th executive order said that those funds are the sovereign property of venezuela [2:06:09] but has directed you the treasury secretary to hold those assets in custody to facilitate disbursements [2:06:13] transfers as directed by the secretary of state as i've gone through the 91 specific trust that you [2:06:20] have the statutory authority to oversee none of those have any relationship to venezuelan oil so [2:06:26] can you help us understand under what statutory authority or what statutory authority is treasury [2:06:31] relying on to exercise the discretionary control over natural resources and sovereign assets of [2:06:37] another country uh treasury has no control over the i'm just asking about what statutory authority you [2:06:44] rely again we we are operating under an agreement between state and energy that we we are not involved [2:06:51] but the we are not the executive order said that the treasury secretary is holding those assets in [2:06:57] custody that's a specific language there and is facilitating disbursements under what authority are [2:07:03] you acting i will get back to you with the exact authority but it is under agreement with state [2:07:09] let me let me just clarify because my concern is that the executive order cites cites iepa iepa [2:07:16] specifically says that you have to be engaged in hostilities with a country for iepa to trigger [2:07:21] that that claim secretary rubio said that we are not at war with venezuela i would agree i'm glad we're not [2:07:28] a war so unless you disagree with secretary rubio i'm under unclear under what legal authority the [2:07:34] united states has to control or disperse those assets well i i would believe that the iepa authority [2:07:40] would act for a period of time for a not unless not unless we're not we're not that's not that's [2:07:46] a transition well look that's not true but please provide in writing what you're doing there because [2:07:49] i and i want to get to why i think that's material last week secretary rubio also said that the 200 [2:07:54] million in proceeds was sitting in a qatari bank that was owned by venezuela he went on to say the [2:08:00] treasury has a written agreement with venezuela's interim government to review the monthly budget [2:08:05] request for payments from that account i come back to where the authority comes what statutory authority [2:08:10] are you using to exercise custody indirectly through a third country and direct the release of funds from [2:08:16] those offshore accounts yeah iep that's not in iepa you're managing okay so if you're managing a third [2:08:23] country not in iepa and please do provide us with the legal guidance because this this matters [2:08:29] what controls are you putting to audit those flows because as you know the venezuelan government [2:08:33] still has a lot of shady people how are you how are you controlling the dispersion of those flows so [2:08:37] that they don't go back to some of the shady characters that the president is concerned about [2:08:40] in venezuela what is the audit process again the we will be bringing in outside auditors they have for [2:08:47] this and the venezuelan government will be do you do you have an agreement in place right now for those [2:08:51] orders sorry do you have an agreement for that audit in place right now not at present um okay [2:08:56] because secretary rubio um when he was asked that question before the senate he said that the the [2:09:02] treasury had handled the agreement that he would be providing to the senate committee are you saying [2:09:07] that that secretary rubio was incorrect or that you're not aware of the agreement the treasury directed [2:09:12] according to i'm saying i'm not aware of the agreement okay so secretary rubio said he would provide [2:09:18] that to the senate committee can you please coordinate with secretary rubio and give us your word to [2:09:21] provide us what secretary rubio was providing because he is alleging that that was done under [2:09:24] your with pleasure congressman and just so you know the the goal here it's it's been 30 days i want to [2:09:31] just i just move reclaim my time just reclaim my house because i the concern i have is that in this [2:09:36] would be considered a fraudulent conveyance i have a specific concern that we've entered into contracts [2:09:40] with companies like vtol who have pled guilty to bribery and all sorts of nefarious actors if i was a company [2:09:46] buying stolen goods and we didn't have statutory authority i'm going to have a lot of creditors coming [2:09:51] after me one last thing sir i want to read you a quote uh trump will pursue a weak dollar policy [2:09:57] rather than implementing tariffs tariffs are inflationary and would strengthen the dollar [2:10:01] do you recognize that quote i i believe you're referring to a letter that i wrote and yes tariffs [2:10:07] could be inflationary no no it says tariffs are inflationary yep you know what you you had said to [2:10:13] the chairwoman i'd like to introduce in the record a january 31 2024 letter from quote scott [2:10:18] percent and the key square team to your partners where that quote comes from without objection do [2:10:23] you want to correct what you said to the ranking member when you specifically said that you did [2:10:27] not say tariffs are inflationary well i think she referenced a letter in the summer of something not [2:10:33] no no i think you disparaged the new york times sorry you said tariffs are inflationary sorry you said [2:10:40] tariffs are inflationary do you want to correct what you said to the ranking member or did you lie i [2:10:46] the if i was mistaken i want to correct it and i was also mistaken when i said the tariffs could be [2:10:53] inflationary because gentlemen's time has expired seen inflation drop to 2.1 gentlemen's time has [2:10:58] expired chair now recognizes the gentleman from south carolina mr timmons you're recognized for five [2:11:04] minutes thank you mr chairman uh mr secretary it is great to see you again and thank you for being here [2:11:09] your experience and leadership at treasury are widely respected and appreciated as we work to make the [2:11:14] u.s economy more competitive in the global economy and i know you were hearing some questions about [2:11:18] tariffs is that the purpose of the last year to to renegotiate our trade agreements to make the u.s [2:11:24] economy more competitive in the global economy uh a hundred percent that the the there are numerous [2:11:30] goals but it is to make the u.s economy more resilient we are now seeing 4.1 growth for the past three [2:11:39] quarters so the we are seeing inflation drop so uh tariff inflation was the dog that didn't bark [2:11:47] well i appreciate it i i think that the businesses that are trying to compete in the global economy are [2:11:52] far better off because of the last year there was some strain to the uncertainty but most of that is [2:11:56] behind us and i just really appreciate your hard work additionally after several years of regulatory [2:12:02] uncertainty and pervasive government overreach it is encouraging to see serious leadership at treasury [2:12:07] focused on restoring balance to our financial system that work matters not only to markets but [2:12:12] to families small businesses and communities across the country you've called for a fundamental reset of [2:12:18] financial regulation and emphasized treasury's role in promoting appropriately tailored regulation [2:12:23] to support economic growth i agree with that approach while there has been progress on tailoring [2:12:28] supervision far less has been done to modernize regulatory tailoring itself particularly the [2:12:34] interagency thresholds that trigger enhanced prediction prudential standards for category 2 [2:12:38] through 4 banks those thresholds were set years ago and have not been updated to reflect inflation [2:12:43] economic growth or changes in the financial system as a result banks that were never intended to be [2:12:48] treated like g-subs are increasingly subject to requirements that do not match their risk profiles [2:12:54] republicans on this committee raised this concern letter to the federal banking agencies last november [2:13:00] mr secretary my question is this how are treasury and the financial stability oversight council working [2:13:04] to coordinate across the agencies to modernize and update these thresholds and to ensure that [2:13:10] regulatory tailoring keeps pace with economic reality rather than falling further behind it uh congressman [2:13:16] the i i believe there's a chance that the community banker who i reference with 200 million assets may have [2:13:22] actually been from your district so we we are all all hands on deck and we've seen 50 percent of these [2:13:30] institutions disappear and we are working as quickly as we can again uh one size fits all for regulation is a [2:13:39] disaster and as the potentially the woman the the bank president and owner from your district uh said bank america's [2:13:48] regulatory regime is not good for something in the the piedmont and upcountry in south carolina for a [2:13:55] bank with 200 million assets i couldn't agree more tailoring should apply not only to prudential [2:14:00] standards but also to supervision itself for example my bipartisan legislation the smart act would allow [2:14:07] smaller well-managed and well-capitalized institutions to combine certain consumer compliance and [2:14:12] i.t exams reducing unnecessary burden while preserving strong oversight uh mr secretary how can legislation [2:14:20] like the smart act and other bipartisan efforts this committee has advanced help build on the principle [2:14:25] of tailoring and restore a regulatory framework that truly works for main street without compromising [2:14:31] safety and soundness uh congressman i think it may be very important to get this into a regulatory [2:14:38] framework because what we've seen for too long just as the bank examiner said to the 200 million dollar [2:14:45] banker you should be more like bank america we cannot have a supervision or we cannot have regulation done [2:14:54] through supervision we need to have clear guidelines for tailoring for many banks as i said earlier are [2:15:03] industry concentrated geographic concentrated and we have got to push this through or we're going to [2:15:11] they will be too small to succeed i couldn't agree with you more thank you for that i want to close [2:15:16] by discussing the trillions of dollars in foreign direct investment that you and president trump have [2:15:20] shepherded into the united states over the past year in our home state of south carolina alone hundreds [2:15:25] of billions of dollars in new investment have been announced that will create high-paying highly skilled [2:15:29] jobs for our communities nearly every week i'm in washington i meet with a foreign manufacturer that is [2:15:34] expanding its footprint in the upstate and i also want to thank you for your work to remove tariffs from coffee [2:15:40] which has been directly welcomed by manufacturers like keurig in south carolina that have benefited [2:15:45] from this administration's commitment to fair and sensible trade policy it's hard to believe that [2:15:50] the largest coffee manufacturer in the world is in spartanburg south carolina but it is and we [2:15:55] greatly appreciate your work to help make sure that they're competitive in the u.s economy and in [2:15:59] the global economy and uh with that mr chairman i yield back thank you and congressman just point out [2:16:04] gentlemen there's a lot of discussion on coffee prices gentlemen time has experienced a global [2:16:09] the gentleman's time has expired thank you please uh mr secretary if you'd respond in writing if you [2:16:14] have more on that topic now chair recognizes the gentlewoman from uh massachusetts miss presley [2:16:20] you're recognized for five minutes mr secretary it took a year to get secretary turner before this [2:16:28] committee so i'm grateful for your return and i want to pick up where we left off nine months ago [2:16:34] the average american spends over twenty thousand dollars on baby costs in the first year of having [2:16:39] a baby essential products like car seats are more expensive because of trump tariffs you told me last [2:16:48] time that they were under consideration but nothing has changed since may of last year much to the [2:16:56] distress of families there is still no exemption for tariffs on baby products for the record mr secretary how [2:17:04] many tariff exemptions are there there are actually very few now you're right actually um i think [2:17:14] there's some 30 pages of exemptions uh totaling over a thousand including for asbestos can you explain to [2:17:23] families across america working families struggling to make ends meet why baby products that are required [2:17:30] by law are not exempt from trump's tariffs again congressman or congresswoman uh the it is a matrix [2:17:42] and many of these products unfortunately are made in china and the every secretary it's just it's an [2:17:51] unacceptable answer you've had nine months you told me it was under consideration you've had nine months to [2:17:56] think about it and why you've been thinking about it working families have been struggling when it is [2:18:00] required by law that they have many of these uh essential baby costs your report from the department [2:18:08] of treasury refers to them uh car seats as essential safety tools so if you can acknowledge that this is [2:18:15] i i will acknowledge the gas to run the car well listen is that a five-year you've included asbestos [2:18:20] in your exemptions so you're telling me you can do asbestos and not baby products i i think it's my [2:18:26] time i think you would want children to be safe in their homes mr secretary parents with newborns [2:18:30] don't want to hear your excuses they need to keep their babies safe they want to comply with the law [2:18:36] and they need action to lower costs period so will you exempt baby products from tariffs yes or no [2:18:41] again we will yes or no we will look at we will look at mr secretary respectfully congresswoman yes [2:18:49] i do not i'm the treasury secretary i'm not the ustr claiming my time i'm not the president [2:18:54] of the united states reclaiming my time so it you're asking the wrong well i'll take i'll take commitment [2:18:58] mr secretary you're taking the general ladies down claiming my time this is financial stability [2:19:03] oversight council mr secretary then i i ask for your advocacy then because a no or a non-answer is [2:19:12] unacceptable to the working family which you claim to care so much about moving on moving on moving [2:19:17] on moving on i'm agreeing with you you you will have my advocacy okay thank you can you say that [2:19:24] again for the record sorry can you say that again i am i will have your advocacy i am one voice for an [2:19:30] exemption i i am one voice okay um have you been paying attention to the higher rate of unemployment for [2:19:38] black workers are you aware of that the high unemployment rate for black workers it is [2:19:44] traditionally higher than for all workers well listen you know it's through the roof right now [2:19:50] there's hundreds of thousands of black workers that have been pushed out of the workforce [2:19:53] and the unemployment rates for black workers and all workers are among the highest they've been since [2:19:57] the copa 19 pandemic black workers contribute over a trillion dollars to the u.s economy but the push out [2:20:03] of these workers from the workforce has led to a a loss of 37 billion dollars in the gdp with black [2:20:11] women being among just so you all know the most educated and most active in seeking work their [2:20:17] push out is a glaring warning sign for where our economy is headed because black workers black women [2:20:22] in particular have always been the canaries in the coal mine so this is a problem for everyone black [2:20:26] women are bearing the brunt but everyone will feel this hurt i have led letters to fed chair powell [2:20:30] calling for action to be taken he is also a member of fsoc so i want to ask you mr secretary will you [2:20:36] commit to analyzing black unemployment rates specifically and its impacts on financial [2:20:41] stability yes or no i will analyze black unemployment rates wonderful and when will you get us a report [2:20:48] and a plan of action i was thinking march 6. i i can't commit to a date okay all right well i think march [2:20:58] 6 makes sense i'd give you over a month which is more than enough time to convene that [2:21:02] a working group and to report out your findings i know you already have the infrastructure to do [2:21:06] that so at the end of the day black families black futures and the lives and livelihoods of [2:21:12] all who call this country home are depending on you to act and with that happy black history month [2:21:18] i yield back thank you and i was sorry to see you not run for senate general gentleman yields back [2:21:23] chair recognizes the chair of the subcommittee on oversight and investigations mr muser from pennsylvania [2:21:31] secretary percent thank you very much for being with us and thank you when you state that main [2:21:36] it's now main street's turn i can assure you the people of pennsylvania's ninth congressional district [2:21:41] greatly appreciate that and your remarks are quite refreshing um the previous treasury secretary once [2:21:47] when i asked what their growth economic growth initiatives were they implied that spending federal [2:21:53] spending was their primary if not only growth initiative so clearly under your leadership and [2:22:00] president trump's and the republicans in congress passing the family's tax cut uh delivered meaningful [2:22:05] tax relief billions to workers and small business owners no tax on tips regulatory reform no tax on [2:22:13] overtime 100 depreciation all this is driving our savings all this is driving our economy for a booming [2:22:20] gdp q3 q3 and q4 uh in the over four percent range so things are going very well we expect 2026 to be [2:22:29] uh pretty exciting as well um secretary if there is anything that was asked that is still in your [2:22:35] mind that you would like to respond to i want you to go ahead and do so again this is supposed to be a [2:22:43] financial stability oversight mission and that we have taken this very seriously and we believe that a [2:22:50] lack of growth one of the reasons i am sitting here and came out from behind my very quiet and nice private [2:22:57] life is because i was worried that the u.s was going to become like a european style social democracy [2:23:04] and indeed what we are seeing in europe in many countries is the death spiral of higher debt raise [2:23:11] taxes lower growth the u.s will have reported likely despite the government shutdown despite the longest [2:23:18] government shutdown in history 4.1 growth for the past three quarters and so we we have been successful [2:23:27] at that europe last week celebrated 0.3 percent growth so they uh it's no comparison and i think [2:23:37] we are beginning to accelerate and importantly everything we are doing is to fix this terrible [2:23:44] biden inflation from the the past four years 21.5 percent much more for working families and we are [2:23:52] bringing that down your remarks and the president's remarks in davos uh suggested that how you spiral [2:24:00] down in your economy which europe has been doing uh a not having closed borders or secure borders [2:24:06] anyway over reliance upon imports and driving the public sector rather than the private sector [2:24:12] is a recipe for disaster and so we appreciate you correcting the ship and moving pennsylvania or pennsylvania [2:24:18] the united states in the right direction uh just to uh get to some questions secretary you've [2:24:24] emphasized putting main street ahead of wall street uh when evaluating bank capital standards [2:24:29] how will modernizing the capital framework improve credit access and affordability for small [2:24:35] businesses homeowners farmers who ultimately in the end bear the costs for such excessive capital [2:24:42] requirements again congressman the groups you just listed they are the three most dependent on [2:24:49] community and small banks and we are determined to increase their lending capacity to increase their [2:24:58] proclivity to lend and we want to do it on a safe sound and smart basis in the previous administration [2:25:06] we had regulators that imposed capital requirements well beyond the international peers including the [2:25:12] g-sib surcharge the c-car tier one leverage ratios are these frameworks being reviewed holistically to [2:25:19] better support lending and economic growth again we are not going to let outside regulators determine what [2:25:25] is best for the u.s financial system thank you the the strength of the u.s financial system is the depth and [2:25:31] breadth and we do not want to end up like canada with five banks switzerland with one france with [2:25:36] three absolutely great um your decisive action to confront what should concern all of us certainly [2:25:43] concerns us is the rampant government benefits fraud uncovered in minnesota can you walk us through how [2:25:49] treasury is using it to your authorities to identify disrupt and recover fraud proceeds and how [2:25:53] minnesota is serving as a start for a broader national enforcement model uh uh indeed there is a [2:26:01] substantial amount of waste fraud abuse and americans and legislators on both sides of the aisle should [2:26:07] be outraged when you are there and you see uh empty daycare centers senior centers and i i personally met with [2:26:18] two centers for autistic children and they are not getting their benefits so we are using our regulations [2:26:28] under fincen to follow the money which is what we've done whether it's mexican drug cartels whether [2:26:33] it's the mafia or whether the time has expired thank you mr chairman i yield back thank you very very [2:26:39] much for your great work chair recognizes the gentleman from new jersey scott harmer you're recognized for [2:26:45] five minutes uh thank you mr chairman mr secretary welcome um the the 10-year treasury is running around [2:26:51] mid four percent range mortgage rates are still above six percent that's keeping monthly payments high and [2:26:57] pricing would be buyers out of the market the affordability crisis is increasing the home [2:27:01] ownership gap in north jersey which i represent and across the country how can we get the 10-year [2:27:06] down uh and help make home ownership more affordable you know and that's what i'm really focused on [2:27:12] well the the 10-year bond had its best year since 2020 last year and we actually had a fiscal [2:27:19] contraction in the budget the rest of the g7 bond market went up in yield so if we if we continue to [2:27:27] so you see a path where this you hope you think we'll continue to see a tick down especially the [2:27:32] the long well i think we can do that and that i believe that we have all of our wyman's numbers [2:27:38] not treasuries uh they they say that the what we what has been done with financial deregulation [2:27:45] unleashes 2.5 trillion of lending capacity into the u.s economy so by creating more capacity there is [2:27:54] less of a competition they have four scarce funds so we are decreasing scarcity thank you um i have [2:28:02] a strong belief that ai will revolutionize financial services and delivering meaningful gains for for [2:28:08] customers and regulators and institutions if we do it right f stock's report strikes an encouraging [2:28:14] balance highlighting ai's potential to improve resilience and efficiency in financial markets [2:28:18] while also noting that vendor concentration create challenges how is f stock threading the needle to [2:28:23] enable broad ai adoption while encouraging competition and where can congress help get this right so ai can [2:28:30] flourish as a helpful tool for for americans uh in the financial markets good i think it's important to [2:28:36] work together because what we see many times in these very quick technology cycles is the technology gets ahead [2:28:44] of the regulation so working together to keep the regulation in sync with the technology whether it's for the [2:28:51] financial system or for any anywhere else any uh there there's good news as you said it will change the [2:28:58] interaction uh the the bad news is that it gives whether it's state actors or independent actors more [2:29:05] tools ready you can what are you doing internally treasury obviously you spent a lot of time on the [2:29:10] security side of of of on the treasury piece of it what what are we doing about that yes so we we we have both [2:29:16] uh at treasury and then bringing in our private sector partners regularly we've done we do tabletop exercises [2:29:24] in terms of what would happen if a malign actor got into the system uh how can we reinforce that [2:29:33] as you may have read before i arrived treasury itself was hacked yes by we believe a state actor so again [2:29:43] increasing resilience being being aware and working with our private sector partners for best practices [2:29:49] thank you we're obviously seeing a combination of factors that historically make markets nervous [2:29:53] after dollar with higher gold prices even if there are multiple drivers these those moves are often [2:29:59] interpreted as investors seeking protection against policy uncertainty or concerns about u.s fiscal and [2:30:04] monetary credibility they can be also be early signals that global capital is demanding a higher [2:30:08] confidence premium to hold u.s assets our market's starting to price in a sustained shift away from [2:30:14] u.s assets you believe and what are the specific indicators you watch to see if we're seeing that [2:30:18] pullback from foreign investors yep so what we see at treasury is we saw record amount of foreign inflows [2:30:27] despite the popular narrative we saw a record amount of foreign inflows into treasury auctions last year [2:30:33] uh this year many of the auctions have traded through through the prevailing price before the auction so [2:30:41] we we are still seeing very good flow and we are still seeing massive flows into u.s equities and as [2:30:51] several of the congressmen said we are seeing very substantial foreign direct investment you know one [2:30:57] of the things i'm concerned about this week writers reported disney saw fewer international visitors at [2:31:01] its u.s parks u.s overall saw six percent fewer visitors despite global tourism revenue rising six [2:31:07] and a half percent canadian trips are down significantly 22 percent year over year even at the great jersey [2:31:12] shore 2025 beach tag revenue was down what is the administration's plan to calm volatility and [2:31:17] obviously tariff policy has been part of this so tours can continue to choose the u.s uh look on some [2:31:23] things there's nothing we can do if the premier of british columbia or ontario wants to be especially [2:31:29] hostile and tell people not to come to the u.s that that's a decision i i would say it's their loss [2:31:35] and as you said uh do you think we'll see less volatility with the tariff policy kind of firming [2:31:41] up or the well uh less less volatility in tourism well yeah because it affects everything people don't [2:31:48] want to come time has expired thank you sir thank you chair recognizes the gentleman from indiana mr [2:31:53] stutzman you're recognized for five minutes thank you mr chairman and uh thank you mr secretary for for [2:31:58] being here today i'm going to yield to the chairman just briefly uh for a couple of questions uh mr secretary [2:32:04] i i appreciate members on the republican side allowing you to clarify points on some key discussions back [2:32:10] and forth and we have had some good ones today uh there was an exchange you had with my friend from [2:32:16] massachusetts mr lynch about artificial intelligence and in your capacity as chair of fsoc our view here is [2:32:25] that artificial intelligence offers great promise for better consumer service uh fighting fraud uh more [2:32:34] accuracy in providing customer service but also in providing a more robust compliance process with the [2:32:43] rules and banking and the brokerage and securities industry i wonder if you could talk from an fsoc point [2:32:48] of view about a philosophy of overseeing artificial intelligence both in the financial services industry [2:32:54] and among the supervisors of the financial services industry yes so uh again we are working uh with with our [2:33:04] private sector partners uh to best best practices and uh chairman as you said there there are two pieces to [2:33:13] this there is service improvement which we are for instance working on at the irs you we hope to be able to [2:33:21] use artificial intelligence there uh to get customer weight downs and service down the on the other side [2:33:29] both financial security alerting everyone to the risk of what is going on but this is a transformative [2:33:38] change and as i mentioned uh to the congressman uh we would look forward to working with you on [2:33:44] legislation to make sure that the technology does not move uh too far ahead of the legislation very [2:33:51] helpful and i yield back to my friend from indiana all right thank you and first of all i just want to [2:33:55] say thank you for being a just a steady voice um our economy is seeing tremendous growth is there [2:34:03] volatility in places absolutely we're still recovering you know we've heard a lot today from my colleagues [2:34:08] across the aisle about tariffs and the effect on inflation in the u.s economy uh i just want to [2:34:13] remind everybody during the biden administration grocery prices increased by over 23 percent i'm in [2:34:19] the food industry we've seen it uh that growth has accounted for nearly 91 of grocery price increases [2:34:25] since january of 2021 in biden's first year alone grocery prices increased by six and a half percent [2:34:32] as compared to 1.9 during president trump's first year in office and that's nearly three and a half [2:34:38] times faster but yet my colleagues want to blame trump's tariffs for the prior administration's [2:34:45] uncontrolled and excessive spending and i know that you know uh what the administration with the [2:34:51] trump administration you are doing is really i mean the america first policies are spot on we've [2:34:56] needed somebody in the white house to be fighting for america first and so i just want to say thank you [2:35:02] from um from folks in northeast indiana uh for for your hard work to reset the table globally and uh [2:35:09] you know we're a manufacturing agricultural sector we grow the food for the country we manufacture [2:35:16] you know medical devices and all these other things um and so i just want to say thanks for that [2:35:21] well good and congressman just to tell you i was with the president out in iowa and to combine two of [2:35:28] your themes manufacturing and the farm economy we were with the ceo of john deere and he is building [2:35:37] a new factory in indiana and the president he's building one in indiana one in north carolina and [2:35:43] the president said what made you do that and he said the tariffs the tariffs yeah no it's i mean this [2:35:49] really is putting manufacturing a in a position to compete with china whether it's a cnc shop whether it's [2:35:58] the um you know the medical device industry there's obviously some pieces there with regulatory [2:36:03] environment things like that but it's really giving manufacturing a spot one thing i would ask and [2:36:07] if i could maybe share with your office i had a foundry owner in the office yesterday and there are [2:36:12] some definitions around foundries and so i'd be happy to send that information over to your office to [2:36:17] take a look at it's a it's a industry that's of course very important for america and i know [2:36:21] you all care very much about manufacturing and the steel industry so i'll send that over with pleasure yeah [2:36:28] but uh anyway my time is about to expire but i i do want to just say thanks because it's uh you know [2:36:33] what people back home are really dealing with is is this cost over the last five years and for you to [2:36:39] really reset the table they're believing and they believe in america we just need to show them that we [2:36:43] believe in america as well and that america can be great good congressman there's a level and there's [2:36:49] a rate of change the level is very difficult to get down we're trying as hard as we can but we've slowed [2:36:53] the rate of change greatly yeah thank you i'll yield back thank you the gentleman from michigan [2:36:59] miss talib is now recognized for five minutes thank you mr secretary uh a bank's leverage ratio is [2:37:04] important right well there are numerous leverage ratios congressman which one are you referring to [2:37:10] so uh for the record if i may mr chair i'm going to submit the bank capitals analysis semi-annual update [2:37:17] for the record may i without objection so ordered um i want to talk about the way that we look at global [2:37:25] systematic important banks what they call what do you guys call g sibs is that right that's correct [2:37:29] that's what i'm talking about um they're banking organizations that could trigger a financial [2:37:34] crisis if they failed correct and they could trigger a financial crisis by not lending yeah so the [2:37:39] leverage ratio is important when we look at it right again i'm not sure which leverage okay so i'm [2:37:44] looking at here this this chart okay it says tier one capital does that help uh tier one that's helpful [2:37:52] okay so i know you it's kind of hard to see but the green line is the community banks you see how [2:37:58] high that cushion is that it's about what almost 11 percent i know you can't see it's fine i was [2:38:04] going to enlarge it for you i'll take your word yeah so the largest bank capital analysis for the [2:38:10] federal reserve bank of kansas city um it shows that last june the tier one leverage ratio of community [2:38:16] banks was at 10.83 percent for the banks that pose the largest threat to global system [2:38:21] what they call g sibs this is the big banks the ones who take all the risks you know this right [2:38:25] their supplementary leverage ratio was about 5.8 percent that's a huge difference right [2:38:33] correct okay i'm getting there i promise um do you think the largest most complex banks [2:38:41] are roughly are roughly half as risky in the threat that they pose to the financial system [2:38:47] as a community bank in my district well i think congress one that what what you're neglecting to think [2:38:52] about is the composition of the of the assets and the capital so the capital at the g sibs can be [2:38:59] much more liquid where the uh the banks in your community are much much more you know as we're used [2:39:08] to seeing in the movies well let me explain to the public why community yeah i understand community [2:39:12] banks though lend out equivalent about 75 percent of their deposits to real economy some people refer to [2:39:20] as main street but we call it the real economy people families communities the larger largest [2:39:26] banks only lend about 40 percent of their deposits into our real economy instead they they rapidly expand [2:39:33] their loans to hedge funds and private equity that you're calling liquidity they can liquidate right [2:39:37] is that what you're saying is that what you're saying no i'm also i'm just i'm saying they hold a much [2:39:44] higher the yeah but the big banks are the ones who keep failing right what's that the big banks are the [2:39:49] ones who keep failing no many small banks well that's because they're getting pushed out we're [2:39:55] not actually supporting community banks well as i said i think i think more than 100 times today [2:40:01] yeah i support community banks and what i don't want to see you can say it but you got to do something [2:40:05] about it but listen i've met with more than 200 i know mr secretary but this is this is pretty bad [2:40:11] because the fact that community banks in my business have almost twice as much capital [2:40:15] percentage-wise compared to banks that pose the largest threat to our financial system [2:40:20] you know that shows that that just how much playing fields titled tilted towards wall street [2:40:26] you understand that right that's where the risk is the big banks do far less for our real economy [2:40:31] for everyday people and that's what i'm trying to say because trump's regulators recently you know [2:40:36] finalized a rule to modify the supplementary leverage ratio that applied to the largest banks many former [2:40:44] regulators and experts have warned that such step will actually undermine the safety and soundness of [2:40:50] our largest banks the final rule result in a reduction of about 219 billion about 28 percent [2:40:56] in capital at the bank subsidiaries uh of global systematic uh important banks g-sips my residents [2:41:03] don't know this but the thing is they end up with having to pay the cost when they fail and so i'm just [2:41:08] trying to stress to my colleagues how important it is because secretary last november didn't [2:41:14] regulators reduce it again the capital requirement right yes or no again congresswoman that i i want [2:41:20] to be polite not say it's naive what the roads are going down but much of the excess capital has been [2:41:27] invested in the u.s treasury market and keeping those yields low helps the borrowers who want a [2:41:33] mortgage or a small business or an ag loan but are you paying attention how much they are lending versus [2:41:38] community banks uh yes we we pay very close really low i've been a financial analyst for over 40 years [2:41:44] do you agree it's low sorry no very low it's not relative to the historical level mr secretary if [2:41:50] you came to my district you can go to detroit or the suburbs they will tell you the big banks do not [2:41:56] loan to them and if they do it's predatory it's not supportive it's the local community banks that [2:42:03] support them in owning home ownership and small business generally it's time to expire congresswoman you [2:42:07] and i are in complete agreement the general age time's expired except on the capital ratio is [2:42:11] now recognized for five minutes thank you very much secretary besson it's really great to see you [2:42:19] before our committee again uh i want to thank you so much for working very closely with me on [2:42:25] delivering the historic salt uh relief to the tune of forty thousand dollars because with that my [2:42:33] constituents in orange riverside and san bernardino counties will finally be able to see the relief [2:42:39] as they file their tax returns the four times increase in the salt deduction coupled with other [2:42:46] provisions of the working families tax cuts act will result in supercharged tax returns helping more [2:42:53] american families get back on their feet after the years of failed biodynamics last year you noted that [2:43:02] treasury would revisit the 2023 guidance and analytic framework and you also highlighted that [2:43:09] fsoc has other tools such as issuing recommendations to member agencies that are more tailored and [2:43:17] precise than designation power so secretary besson can we expect a new proposal for non-bank guidance [2:43:26] that will be released sometime 2026 we should expect that thank you you know i look forward to [2:43:34] seeing that proposal when it's finally released and hope there will be a public comment period [2:43:41] to ensure stakeholders can weigh in and help shape that guidance good and the congresswoman the other [2:43:48] thing that i would point out is we had a lot of talk about affordability today and you were a great [2:43:55] advocate for the one big beautiful bill and what we're seeing unfortunately in states like yours [2:44:00] that the state revenue authorities are not going to mirror the no tax and tips no tax on overtime [2:44:08] no tax on social security deductibility of auto loans so which is very unfortunate so to the extent [2:44:16] that anyone in the california delegation whether democrat republican the new york delegation should push [2:44:25] their states to follow through for working america you can count on me on that you know um let me shift gears [2:44:33] now i want to focus on the community development financial institution fund um i was really happy and [2:44:41] relieved to see the staff at the fund were restored after the conclusion of the schumer shut down late last year [2:44:49] um i know that you share my view that the fund's work is critical to serving communities that typically [2:44:57] do not receive the traditional banking services so can i ask you how you are planning to make the fund more [2:45:04] effective and efficient as we move forward what we want to do is focus on community revitalization not [2:45:13] unrelated and ill-advised social policies and we want to drive reforms new restrictions on the use of [2:45:19] funds and we want to focus on the program's statutory intent i know making the lives better for people [2:45:27] in their communities sure you know cdf fund as you know has bipartisan support and i think it would also [2:45:35] has a bicameral support so i look forward to continuing to work with you on the future of this [2:45:40] critical critical program but i also want to talk to you and thank you for being willing to come to [2:45:47] california and investigate all the fraud waste and abuse unfortunately gavin newsom uh has tied you know [2:45:56] he tried to hide all those uh you know fraud and waste under the carpet allowing more than 32 million dollars [2:46:03] of unemployment fraud that went unchecked the state has also watched 13 million dollars stolen from [2:46:10] california students because of the ai generated ghost students enrolled in community colleges [2:46:17] so you know i suspect this is just the tip of the iceberg in california's fraud waste and abuse [2:46:24] and i've been talking a lot about this unfortunately sadly the state that i love and i live [2:46:30] and i represent a district from california has become a fraud capital of the world so sad [2:46:36] that but that's why we need your team in california and is there anything that you can share to that [2:46:44] end uh how your investigation into california fraud is proceeding there's nothing i can share right now [2:46:51] but i have spoken to dr memet oz at hhs and he is later laser focused on the health care fraud that's [2:46:59] going on in california which seems to be substantial yes i also sent a letter to gavin newsom to that end [2:47:05] and i was glad to see dr oz sending a letter demanding so now state of california is now in [2:47:10] the process of returning 1.6 billion dollars to the federal government so thank you for that and [2:47:16] i look forward to continuing to work with you thank you for joining us thank you the gentleman from new [2:47:20] york mr torres is now recognized for five minutes thank you mr chair uh mr secretary does the president [2:47:26] have the constitutional authority to remove the chair of the federal reserve or a member of the board of [2:47:32] governors solely because of a policy disagreement i'm not a lawyer and i don't have an opinion you [2:47:40] have no opinion on whether the president can remove a board member at will uh well i believe that the [2:47:46] board member has committed no just in general i'm not asking about a particular case i'm asking or mal [2:47:51] malfeasance i'm asking about the president's general authority let me ask it differently do you [2:47:55] believe that the unitary executive theory applies to the federal reserve again um i think we'll have to [2:48:02] wait and see what the supreme court says what is your opinion i i'm not a lawyer what is the [2:48:08] administration's opinion there are varying opinions in the administration what's the prevailing opinion [2:48:13] the official opinion again we'll have to see do you consider the federal reserve an executive agency [2:48:18] or a legislative agency uh i consider an independent agency so neither executive nor legislative so we'll [2:48:24] see therefore independent of presidential control so it sounds like you do have it again we'll we will [2:48:29] see we will see congressman okay thank you for establishing the independence of the federal [2:48:32] reserve i i i do believe that the federal reserve has to maintain credibility and be like caesar's wife [2:48:40] beyond reproach and and undermining the independence of the federal reserve is a threat to that credibility [2:48:44] so i know you're no fan of the new york times but let me let me let me let me let me reclaim my time [2:48:50] the the wall street journal which is hardly a leftist publication published an article with the [2:48:55] following headline quote trump claims factory construction is up contradicting u.s data the [2:49:02] article then goes on to note quote president trump claimed that the u.s factory construction is up by 41 [2:49:08] a number that doesn't appear to be supported by the government's own data one of the stated [2:49:13] policy objectives of the trump tariffs is to bring back manufacturing jobs yet since the so-called [2:49:19] liberation day tariffs of april 2025 we've seen the net loss of manufacturing jobs do you know how many [2:49:26] net manufacturing jobs have been lost since april 2025 and under your watch uh well a couple of [2:49:34] things manufacturing operates with very long leaves what's the number is there a number i believe it's [2:49:40] about 67 000 70 000 70 000 jobs lost so but again despite the stated objective let me let me proceed [2:49:47] i'm going to reclaim my time flip the switch i'm going to reclaim my time let me let me reclaim my time [2:49:52] the purchasing managers index measures whether manufacturing is expanding or contracting [2:49:58] a pmi above 50 means expansion below 50 means contraction since the so-called liberation day [2:50:05] tariffs of april 2025 has the pmi been mostly above 50 or below 50. we just had the biggest increase [2:50:14] in over a decade and we are well above 50 now has it been mostly above 50 since april 2025. again long and [2:50:22] variable lead times in manufacturing that you may represent let me let me ask a different financial [2:50:27] center since since april 2025 for how many months has the pmi been below 50. where are we now where [2:50:35] are we now i'll give you january went up but what about april to december it was below 50 for nine [2:50:42] consecutive months where are we now so the score is nine to one nine months of uh manufacturing contraction [2:50:48] versus one month of expansion i look forward to seeing you next year so one of the stated policy [2:50:52] objectives and we'll keep score yeah one of the stated policy objectives of the trump tariffs is [2:50:57] to bring back domestic production does the trump administration regret imposing tariffs on goods that [2:51:05] cannot be produced domestically at scale in the united states do you realize in hindsight that that was [2:51:10] foolish uh do you realize that we use the leverage to bring down tariffs from other countries to take down [2:51:18] non-tariff tariffs on bananas give you leverage so uh yes with colombia with brazil i i think congressman [2:51:25] you're being very naive with negotiating i mean we were promised re-industrialization a tariff on bananas [2:51:30] did not lead to domestic banana production it simply made bananas more expensive for american businesses and [2:51:36] consumers the said the same has led to other countries negotiating in a more fulsome manner are you [2:51:41] willing to commit to no longer imposing tariffs on any product that has neither a domestic substitute [2:51:48] nor a national security rationale that would be the definition of foolish in a negotiation so you're [2:51:54] not willing you're willing to impose you're willing to impose tariffs that make more expensive goods that [2:51:58] we cannot domestically produce here in the united states again that have no national like what is the [2:52:03] national security nexus of bananas and coffee again why why would you do that that there there are [2:52:10] numerous things when you negotiate with indonesia there are things that are only made in indonesia [2:52:14] but the indonesians brought down their tariff barriers or non-tariff barriers i get it we have [2:52:19] to make bananas great again i get it thank you mr secretary the gentleman from new york mr garbarino [2:52:25] is now recognized for five minutes thank you um mr chairman thank you secretary for for being here today [2:52:31] first off let me lead off um i was one of the people you were in negotiations with over salt last year and i [2:52:36] really appreciate uh the hard work and the commitment and uh getting helping us get it across the finish [2:52:41] line and a lot of my uh constituents are going to see a big benefit i can tell you as also the irs [2:52:46] chairman that the second largest their refunds are going to come from your constituents or go to your [2:52:54] constituents because of the salt deduction it's going to be great and hopefully and uh like myself [2:52:59] the rest of my constituents i think are going to plow that money back into the economy with well with [2:53:03] some purchases uh when they get their refund this year so thank you for all the hard work you did [2:53:07] there with us um last year you oversaw treasury's efforts to implement president trump's executive [2:53:13] order to phase out paper checks eliminating a costly inefficient and more fraud-prone process [2:53:19] part of the eo directed the treasury department to work with financial institutions consumer groups [2:53:24] and other stakeholders to address financial access for unbanked and underbanked populations [2:53:30] secretary can you share more on what on the work stream and the particularly how treasury treasury [2:53:36] plans to incorporate digital technologies or payment solutions to increase financial access for [2:53:41] unbanked americans again we are trying to bring them into the financial system and we are trying to [2:53:48] one of the ways is over these individuals phones and what we see especially for the cohort you [2:53:56] described is they are especially susceptible to theft of the paper checks they may not have fixed [2:54:04] addresses the fixed addresses or the mailboxes may not be secure someone from the new york delegation [2:54:11] in staten island brought this to my attention for her district and i appreciate that i really do [2:54:16] think the administration has made serious strides uh to modernize our financial system through these [2:54:21] initiatives uh are there other ways treasury is looking to safeguard against fraud and improper [2:54:26] transactions that you're working on well again as we've done the in minnesota we found a substantial [2:54:34] amount of waste fraud and abuse and we we want to know with our geographic targeting order we have [2:54:43] pushed down the threshold for reporting for money service businesses which these are non-banks to 300 [2:54:50] and we want to know if you are wiring money out of the country that are you on public [2:54:56] benefits because one of two things must be true you're receiving more public benefits than you need [2:55:04] so you can wire it back home or you have stolen the money is there anything that treasury's working on to [2:55:13] any other payment modernizations that you're all working on um right now we're we're constantly working [2:55:20] on payment modernizations we're working uh with the fed to modernize the their their fed now we are [2:55:27] looking at ways on digital assets also great um i'm going to switch gears a little bit here uh myself [2:55:35] just as anybody other any other member has constituents that will face emergencies you know you can't plan for [2:55:42] those um you know whether it's a natural disaster medical emergency unexpected you know refrigerator stops [2:55:48] working at home um so that they have to and a lot of people don't have savings accounts so they often [2:55:53] have to rely on short-term credit uh to cover basic expenses uh that arise from these emergencies uh [2:55:59] would you agree secretary that access to credit credit can be a critical lifeline for millions of [2:56:05] americans particularly middle and lower income house households yes what actions is the administration [2:56:12] taking to promote affordable and responsible access to credit for uh for american households again uh we we [2:56:18] believe by uh some of the financial deregulation that we have done especially for community banks this [2:56:26] this will lead to more credit for communities rather than the money um coming from a distant credit card [2:56:36] agency i appreciate that answer mr secretary and last as chairman of the homeland security committee [2:56:43] cyber security is one of my top priorities um secretary can you describe what the administration [2:56:49] is doing to strengthen cyber security across the federal financial regulatory agencies particularly [2:56:55] in light of last year's breaches at occ and cfpb uh that had that information leak so the the treasury [2:57:04] we're committed to making risk-informed resources we constantly work on emerging threats and we are in [2:57:11] close collaboration with our financial sector partners both as a push and a pull we recently had a group of [2:57:18] them into treasury for a very large conference on best practices sharing with each other sharing with [2:57:24] us and we've used that as a convener and then our convening ability and then also uh the gentleman's time [2:57:33] has expired we've identified it as a financial stability concern i appreciate your time has expired [2:57:39] thank you chair recognizes the gentleman from texas miss garcia you're recognized for five minutes thank you mr [2:57:45] chairman and um mr secretary earlier and in response to someone else's question you talked a little [2:57:51] bit there toward the end but but i'm not sure that uh there was a time for follow-up about i think you [2:57:58] said 10 to 20 million immigrants that have that are responsible for the driving up the housing costs is [2:58:05] that what you said i'm referring to a wharton report yes award do you do you know what they based it on [2:58:12] what data what information they looked at uh yes the survey by survey community by community you could [2:58:18] go if you'd like i will have my people posted on the treasury x account as we speak well thanks for the [2:58:24] cooperation because i just completely baffled the average new home sale is about five hundred thousand [2:58:30] dollars and you're saying and it's driving up uh uh um their housing crisis uh when dhs is over there [2:58:38] trying to to pick up uh and deport people because quote unquote they're a drain on society uh they're [2:58:46] dependent on public benefits so if you're on public benefits how do you afford a five hundred thousand [2:58:51] dollar house well let me clarify your confusion because i'm not confused sir don't don't don't be [2:58:58] demeaning to me all right because i'm going to object and ask the chairman to make you answer [2:59:03] questions anyway i i'm trying to explain to you that it is rental income and rental properties [2:59:08] the value do you really think that people have you been to the rental income rental places of [2:59:13] immigrants i have people in my district that are in rental houses that i wouldn't rent to anybody [2:59:20] they're not expensive they're probably five or six hundred dollars a month you think people that [2:59:27] that you can barely afford housing like that that that's the housing that we're talking about when [2:59:32] we talk about the housing crisis d properties push up the price of c properties inflation and c properties [2:59:38] pushes up the price of a properties inflation and price of a property b properties pushes up a [2:59:43] properties so it moves up the stack and if you think that somehow the laws of supply and demand [2:59:48] do not apply to housing i would say you're incorrect no well i'm i'm not incorrect because [2:59:53] as would you know the only thing that we might say about immigrants that we don't have new housing [2:59:58] because they can't there there's a shortage of labor supply because they build the houses [3:00:02] and you all are more focused on deporting them than having them stay here and build uh mr chairman [3:00:08] i'd like to introduce three items to the record construction workforce shortages are leading cause [3:00:14] a project delays immigrant enforcement affects nearly one-third of firms second how the ice crackdown [3:00:20] has impacted minnesota's economy and third their price of cruelty how trump's mass deportation agenda [3:00:27] and endangers all without objection the record thank you uh do you have any idea how much we're [3:00:33] spending on ice every single day again the representative this is the financial stability [3:00:40] oversight commission but you're the treasurer you're the treasurer you're supposed to follow [3:00:43] the money in response to questions on this side you're always talking about well we follow the money [3:00:48] will they have you follow the money how much are they spending every single day in minnesota [3:00:53] in other states where they occupy cities terrorize communities and try to break up our country [3:01:00] again president trump has secured the border he was elected well then let him stay at the border on a [3:01:05] mandate well i disagree with you and i think you disagree that he was elected i think you're confused [3:01:13] but let me ask you about something else okay maybe you'll answer this one you also recently announced [3:01:18] the formation of you uh fsoc household resilience working group that will focus on [3:01:23] american households financial condition american households across the country especially in my [3:01:28] district which is a working class district texas 29 have experienced firsthand the destabilizing [3:01:34] effects of climate disasters property insurance or insurance companies are leaving texas california [3:01:40] florida and many other states because of growing climate risks i myself have felt the impact my [3:01:47] concerns feel uh uh uh mr secretary uh what if anything is are you all doing to address the risk to [3:01:56] households of mortgages and other forms of credit becoming unavailable in certain regions of the [3:02:01] country due to climate change again congresswoman are you familiar with klw24 no it was the base for [3:02:13] for everything that was done with climate and with all the client proposed climate legislation and it [3:02:19] has been discredited so everything that fsoc previously did based on climate who discredited [3:02:25] has been discredited who discredited nature magazine nature magazine has retracted the economic [3:02:32] commitment of climate change more than 18 months after first learning that the paper was fatally [3:02:36] flawed with authors acknowledging that its errors are too substantial for a correction i'm sorry i'm not [3:02:41] familiar with nature magazine we're relying on the nature magazine to determine public policy [3:02:46] unfortunately that's what general woman's time is inspired and i invite the secretary to respond [3:02:52] more mr chairman i'd like a response in writing thank you yes uh general woman we'll have those [3:02:57] answers to you in writing the gentleman from wisconsin mr fitzgerald you're recognized for five minutes [3:03:04] mr secretary thanks for being here today i appreciate all the work that you've done and uh certainly look [3:03:10] forward to working with you in the future um i did have just a couple questions though in many ways the um [3:03:17] the cses are far less risky than they were before the financial crisis and one of the reasons uh has [3:03:25] been that the cses that credit risk transfer the crt piece uh those programs however some industry [3:03:33] experts are concerned that the crt program have been significantly diminished [3:03:38] and uh focus on capital arbitrage instead of the real risk reduction can you just kind of in [3:03:44] general discuss the importance of the crt with regard to this the cse and ensuring that uh they're [3:03:51] transferring a significant amount of credit risk to the private market and really are then avoiding the [3:03:57] risk that the taxpayers take on good so the the crt or the the credit risk transfer uh is very important [3:04:05] at fsoc and the attendant agencies the members we closely monitor to make sure that there is no daisy [3:04:15] chain effect that the quality of the risk transfer is at least as high as it as the under as the entity [3:04:26] from which it was bought what we saw in the gfc was a complexity can create a daisy chain so what we want [3:04:33] is transparency but i think crt's are very important but they cannot be opaque very good um [3:04:41] you called for uh you originally called for kind of a fundamental reset of financial regulation [3:04:46] and then you emphasize kind of treasury's active role in promoting just more efficient effective [3:04:53] and appropriately tailored regulation um while we've seen progress in tailoring the supervision [3:05:00] can you just tell us kind of overall how you've uh tried to move uh the entire department kind of in [3:05:08] that direction again uh as fsoc i have convening power and so that would be what you were describing [3:05:17] would be done by the federal reserve regulation the regulatory body uh vice chair mickey bowman has done [3:05:24] an excellent job the controller the currency and the fdic we have tried to get them aligned in what they [3:05:31] are doing and in for tailoring and to understand that the reason 50 of small and community banks have [3:05:38] disappeared that over the the past 15 years has been because of a one-size-fits-all regulatory strategy [3:05:46] which clearly it does not very good uh keep up to good work and thank you for being here today and i yield back [3:05:53] chairman thank you gentleman from wisconsin yields back chair now recognizes the gentlewoman from [3:05:57] georgia miss williams you're recognized for five minutes thank you chairman hill and ranking member [3:06:02] waters for having this conversation today and thank you mr secretary for joining us mr secretary you [3:06:07] noted in your introductory letter to the 2025 fsoc report that the council has formed a new household [3:06:15] resilience working group that will focus on american households financial condition well mr secretary [3:06:21] as the congresswoman for atlanta i'm here to make sure that that includes all families as you know [3:06:26] that financially resilient households can better withstand shocks maintain essential consumption and [3:06:32] avoid costly debt cycles discrimination in lending or an investment impacts growth opportunities for black [3:06:39] owned small businesses which means discrimination is in fact a threat to american financial stability [3:06:46] atlanta has the largest racial wealth gap in the country supporting entrepreneurship and access to [3:06:52] capital within the black community can help close that gap mr secretary but i need your help [3:06:57] small businesses like those in the fighting fifth are critical to building and maintaining household [3:07:03] wealth per brookings from 2017 to 2022 the number of black owned businesses surge representing over half of [3:07:10] all new employer businesses in 2022 black owned firms with at least one employee added 212 billion dollars [3:07:17] with a b in revenue to the economy and paid over 61 billion dollars in salaries more broadly over the last [3:07:24] 10 years minority business entities comprised approximately 50 percent of new businesses started in the united [3:07:31] states and created 4.7 million jobs according to the u.s census there are over 9.2 million minority-owned [3:07:39] companies in the u.s employing 8.7 million workers and generating more than 1.8 trillion dollars in annual [3:07:47] revenue however mr secretary there are significant barriers blocking student sustainability and growth of [3:07:54] black entrepreneurship that's why i launched a small business advisory council in my district to hear [3:08:00] directly from small business owners in my district because access to capital as we heard in all of the [3:08:06] conversations continues to be one of the biggest challenges that these small business owners face [3:08:12] the first major hurdle for black entrepreneurs in starting their business is a lack of startup funds [3:08:17] equity and collateral a result of the racial wealth gap during the baton administration the minority [3:08:23] business development agency delivered 7.1 million dollars in funding to georgians through his business [3:08:28] centers and capital readiness programs but president trump signed an executive order continuing the reduction [3:08:36] of the federal bureaucracy directing the destruction of the minority business development agency mr [3:08:43] secretary what steps has fsoc taken to assess the impact of discriminatory lending and investment [3:08:49] practices on black small business owners and the stability and growth of the economy overall [3:08:54] and how does fsoc factor discriminatory investment practices into its assessment of threats to our economy [3:09:00] again we do not view that as a financial stability concern but i do view it as a concern [3:09:08] and as i've repeatedly said that we would be worth willing to work with you on tailoring for [3:09:15] banks in your community to give them more lending power because what we have seen is that with 50 percent of the small banks that have disappeared i don't have empirical data but i can tell you that [3:09:26] that my strong hunch would be that many of those would have been minority banks so we would like [3:09:33] to see more de novo banks whether they are in black communities in atlanta whether they are in [3:09:40] latino communities whether they are in asian communities so mr secretary you don't think [3:09:44] dismantling the minority business development agency had any impact on the u.s economy at all [3:09:51] again very difficult to tell in a complicated multi-variable economy what impacts whether [3:09:59] it's good or bad or the aggregate versus the individual mr secretary i'm here to be the voice [3:10:06] of the people that sent me here and i welcome you to join me in atlanta and i would love to introduce [3:10:11] you to some of these small business owners that have been greatly impacted by this dismantling [3:10:16] also in the 2025 fsoc report placed a premium on deregulation and demonstrates the administration's [3:10:22] optimism about the use of ai to make financial institutions more efficient as you noted ai used [3:10:28] properly could provide numerous benefits to financial institutions by enabling them to provide innovative [3:10:34] services cheaper faster to a broader set of customers and under very economic conditions for example [3:10:40] currently some lending institutions are using ai to evaluate a customer's credit worthiness [3:10:45] through alternative data such as cash flow history and i see my time is about to expire but my [3:10:51] question is mr secretary what proactive steps does fsoc recommend regulators take to combat that lending [3:10:58] discrimination which may be compounded through the use of ai as banking in the woman's time has [3:11:04] expired to make lending decisions and we love that answer we invite the secretary to respond to your [3:11:09] question in writing thank you we thank you both now recognize the gentleman from new york [3:11:16] mr lawlor you're recognized for five minutes thank you chairman and uh first mr secretary thank you for [3:11:22] being here and thank you for your leadership uh in helping get the working families tax cut bill across [3:11:28] the finish line and in particular thank you for negotiating over the issue of salt the state and local tax [3:11:34] deduction that was a big win uh for the american people um a core goal of u.s stablecoin policy is to keep [3:11:43] dollar uh denominated stable coins issued regulated and supervised here in the united states rather than [3:11:49] offshore today a substantial and growing share of the dollar stable coin market operates outside the us [3:11:57] as foreign jurisdictions move quickly to establish legal regimes that encourage dollar stable coin [3:12:02] issuance in their markets foreign issued stable coins already compete globally by offering [3:12:08] consumers economic value and incentives to use and hold them and countries like china are actively using [3:12:15] economic incentives to drive adoption of their digital currencies as treasury implements stable coin [3:12:21] legislation do you agree that u.s rules should preserve enough flexibility for american issuers to [3:12:28] remain competitive so dollar activity stays onshore transparent and under u.s oversight congressman and [3:12:36] again i think as you know i used to have a house in your district as given the tax regime in new york [3:12:42] i'm not sorry that i'm no longer there i hope it will come back it's a beautiful part of the world [3:12:48] with stable coins i i would say what we want is u.s best practices the stable coins can go around the [3:12:56] world and indeed we are seeing the i believe we will see the adoption especially in emergent economies or maybe [3:13:04] any other individuals who want to hold the u.s dollar but i think it is paramount as was done with [3:13:10] the genius act to put in u.s best practices agree uh different topic fraud scams by bad actors are [3:13:18] estimated to affect 15 percent of american homes representing about 20 million american households in [3:13:25] total and given that losses to these scams often amount to 575 dollars consumers face meaningful [3:13:32] financial harm even from a single incident at the same time 37 percent of all u.s households cannot [3:13:39] cover an emergency expense of over 400 dollars with cash or savings and a fraud loss can be [3:13:46] devastating to the average american these losses can lead to missed debt payments and damage to credit [3:13:51] scores which in some cases prevent home ownership we've seen a renewed focus on fraud by this [3:13:58] administration with the announcement of things like the scam center strike force and i'd like to [3:14:02] strongly encourage the administration to adopt in all of government approach to combating fraud and [3:14:08] scams secretary besant what role do you think treasury should play in fighting scams and fraud [3:14:14] and does fsoc uh does the fsoc committee have any initiatives planned for the coming year [3:14:20] yes so treasury through fincen was part of the group who took down the big scam centers [3:14:27] the uh in asia we are very focused on places like laos like burma like north korea look and [3:14:35] even iran and the other side of that congressman is that it's used to use for nefarious once the [3:14:42] money's stolen not only has a u.s citizen been hurt but it's used for nefarious purposes so we are [3:14:49] constantly monitoring that and we are working with our partners because as you said ai can be both [3:14:57] a benefit they can be both a blessing and a curse so we think properly managed and rolling it out [3:15:05] using private sector partners we can cut down on that shocking number uh i was not aware 15 percent [3:15:12] of americans are subject to it but we've also got to be very careful because it will make malign actors [3:15:19] we have more um more able to pull off bigger scans yeah well and and kind of continuing on that front [3:15:28] there's been a growing concentration of cloud and ai model providers and the risk that results of a [3:15:36] small number of firms control critical financial sector infrastructure uh how is fsoc assessing the [3:15:43] financial stability implications of this concentration particularly in scenarios of an outage cyber [3:15:51] incident or foreign-based remote access vulnerability and i had introduced legislation that we passed [3:16:00] recently through committee the remote access security act ended up passing the house with strong [3:16:06] bipartisan support what steps is fsoc taking to ensure that financial institution reliance on third [3:16:13] party ai and cloud providers does not expose the system to remote access risks you'll need [3:16:19] to answer that question in writing mr secretary mr the gentleman's time has expired pursuant to [3:16:25] the agreement with the committee and the treasury secretary we'll have one more questioner [3:16:30] because the secretary has a hard stop at 1 30 pm and so the chair recognizes the gentleman from [3:16:36] san jose california mr lucardo you're recognized for five minutes thank you mr chair and thank you mr [3:16:41] secretary for testifying before us today i know in addition to your many responsibilities uh fincen comes [3:16:48] under uh your duties as well in uh in managing and fincen has been very outspoken in this administration [3:16:55] and other administrations and expressing concerns about alternative remittance systems also known as i [3:17:02] think informal value transfer systems is that fair uh yes sir and uh there are many concerns i know with [3:17:10] these alternative systems including lack of documentation anonymity uh their informality make [3:17:17] them very attractive to money laundering is that true yes sir and in fact uh in particular chinese [3:17:24] money laundering organizations have been very effective at utilizing these systems uh to acquire [3:17:29] access u.s currency uh in various ways for nefarious means we were very focused on chinese money [3:17:35] laundering organizations which originally began as a way for chinese citizens to get money out of the country [3:17:42] as china clamped down on the leakage they morphed into partners with the mexican drug cartels so we are very [3:17:50] focused on all of that i appreciate that and i support that uh i understand there has been some research [3:17:58] including published by the general uh the government accountability office um i'm sorry a gao report [3:18:06] in 2016 and other studies as well that have found that fines and obstacles to remittances um are not [3:18:14] very effective at stopping the flow of remittances through the in in in the aggregate but in fact [3:18:20] tend to push these remittances away from legitimate uh companies and remittance systems into these [3:18:28] alternative systems are you familiar with some of that literature i'm familiar with that thinking [3:18:35] this administration last year through hr one imposed a tax on remittances uh in section 4475 uh you're [3:18:45] familiar with that is that right i am and as you know many residents in the united states depend [3:18:53] enormously on these remittances in many cases to keep their families alive in foreign countries because [3:19:00] it's pretty darn difficult to immigrate to the united states these days um you're familiar with the [3:19:07] importance to so many residents in the united states to be able to have access to remittances i'm [3:19:11] familiar with the difficulty of coming into us illegally since january 20th of last year yes [3:19:16] sir and quite simply legally as well i have residents in my district who have been waiting 20 years to [3:19:22] get a green card and they've been going through all the legal channels so it's there are many obstacles [3:19:26] it's fair to say is that fair to say secretary i i don't know the specific instances that you're [3:19:33] considering i invite you to my district and you can meet uh the nearly 40 percent of my residents were [3:19:37] born in a foreign country that makes silicon valley the extraordinary place that it is and they'll tell [3:19:42] you their tales of woe and trying to get through this system in january you indicated quote we will [3:19:49] strongly push to prevent anyone receiving federal government support funds from sending money overseas is that [3:19:55] right a hundred percent in reaction a policy analyst at cato institute um said quote uh that these kinds [3:20:05] of actions are building quote building a legacy of financial surveillance and control you recall that [3:20:14] i don't read the cato institute but i do believe in financial surveillance for the remittances that [3:20:21] should not be remitted and we should also know where the money is going and if you agree that imposing [3:20:28] taxes and obstacles to using legitimate systems may compel people to use some of these informal [3:20:35] mechanisms don't you agree that undercuts are objectives in addressing money laundering illicit [3:20:44] activity in these alternative systems i i disagree with taxes but your administration and you supported [3:20:53] that tax last year i disagree with your assessment that taxes can be a hindrance uh don't you agree that [3:21:01] taxes can alter behavior in various ways when people understand something costs more they may choose [3:21:07] a different path uh i i would say that they would choose the safest path well they may they may choose [3:21:13] a less safe path if it just costs more to use the safe path don't you agree i i believe that anyone who [3:21:20] has a has legitimate income is in the u.s legally and is sending money home through gains where they have paid [3:21:29] taxes they would choose the safest path mr secretary unfortunately the data doesn't show what you [3:21:36] suggest it shows the opposite and we're encouraging money laundering through these kinds of actions [3:21:41] these obstacles and these taxes are not helping the gentleman's time is inspired appreciate the [3:21:47] gentleman from california i want to thank treasury secretary besant today for his testimony without [3:21:51] objection all members will have five legislative days to submit additional written questions [3:21:56] for the witness to the chair questions will be forwarded to the witness for his response [3:22:00] mr secretary please respond no later than march 11th to our questions this hearing is adjourned