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tv   Treasury Secretary Mnuchin Testifies on State of International Financial...  CSPAN  April 10, 2019 4:12am-6:58am EDT

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the moral universe continues to bend toward justice. thank you, mr. president. and thank you to my colleagues who joined me this evening for this historic event. it has been an honor and a the committee will come to order. without objection the chairs authorized to declare a recess of the committee at any time. at today's hearing we are receiving the annual testimony
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of the secretary of treasury. on the state of the international financial system and i will now record myself for four minutes to give an opening statement. to date this committee convenes for a hearing to receive the annual testimony of treasury secretary steven mnuchin on the state of the international financial system. i would like to start by talking about the international development association or ida which is the arm of the world bank that provides grants and highly loans to the world's poorest countries. i am concerned through its new private sector that is today is transferring to $.5 million to the world banks private sector investment arm. the international finance corporation that is subsidizing private firms selective without competition on the basis of
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unsolicited proposals it is likely to prioritize financial returns over positive development impacts which will be difficult to monitor. it also stands in conflict with the world banks own principles that calls for subsidies to be justified, transparent, competitively based, focused on impact and guarded against risk seeking opportunities. my message to treasury and the world bank is that unless these transfers stop or at a minimum are competitively based and fully transparent down to the amounts of aid going to firms and projects the administration's request for congress to authorize the general capital increase will not be a committee priority. now i would like to turn to treasury implementation of u.s. sanctions. the secretary also must provide this committee with complete
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answers today regarding the treasury department's actions to the list companies associated with the russian old guard. he is a criminal and who should not be let off the hook from sanctions that were put in place to punish bad actors. i am very concerned that the agreement the treasury implemented sends exactly the wrong message. other russian oligarchs and putin himself because he was still will do a great deal of influence over his previously sanctioned companies. including at the summit last summer when trump in explicitly cited with putin over his own justice department when the fbi indicted 12 russian intelligence officer for conspiracy to interfere in the
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2016 u.s. presidential elections. very troubling it appears that this dynamic may be effecting sanctions policy with the trump administration's treasury department for enabling russian bad actors moreover congress mandated several sanctions to be placed on russia. the treasury has still not implemented these including sanctions required by the chemical and biological weapons act that the administration have a statutory deadline to impose by last november. treasury secretary steven mnuchin must explain these decisions in his public testimony today and addressed several other important issues. i expect you to be forthcoming with this committee and i also understand despite our efforts to accommodate your schedule you have now made another engagement this evening, this
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is unacceptable. if you are unwilling to state today with a full duration of this hearing the committee will compel your return for multiple additional hearings in the month of may. now the chair recognizes the ranking member of the committee the gentleman from north carolina mr. mchenry for five minutes. >> welcome back to the committee treasury secretary steven mnuchin. you come before this committee at a precarious time for global markets. i wrote you in january right after the event in the uk parliament regarding brexit. in that letter i raised questions about uncertainty of a prolonged brexit and that effect it would have on financial institutions, the market, cross-border trading and financial services and insurance contracts. after three failed attempts the prime minister of great britain continues to work towards friday's deadline on brexit .
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the long and uncertain path towards brexit is coupled with a possible slowdown in germany . i am concerned about the overexposure of german banks and what this means for u.s. financial institutions. this is a serious thing for systemic risk. for example last month forbes on the deutsche bank and commerzbank merger indicating both banks were in such deep trouble that even a merger couldn't help either one of them. that is problematic. the global issues aren't just limited to the uk or europe. in china the error of double- digit growth [ indiscernible - low volume ] thanks to the state-run allocation of capital they disregard for the rule of law and a regime that favors the theft of intellectual property over homegrown ideas we see that coming home to roost. moreover should we be
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concerned, this is actually a pretty interesting question i think were the of a discussion, should we be concerned that china has joined the bloomberg -- aggregate index opening their $13 trillion debt market to investors? the move is expected to bring in more than $180 billion in investor capital to china. what does this move mean for global markets? what effect does it have? notwithstanding these risks, traditional threats of global stability remain, whether they emerge from international terrorism, weapons, proliferation or illicit financed woes. treasury plays a critical role by administering sanctions and protecting u.s. financial systems. areas of bipartisan on capitol hill and we view the treasury as important to this that is why we've given you this authority.
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we think it should be used responsibly but forcefully with clear objectives of national interest. finally i want to make a special note of the committee on foreign investment in the united states. is quickly becoming a model for other countries looking to stream investments for national security risks treasury responsibility under this law has a significant impact on the global investment environment. through bipartisan work here on capitol hill we made significant changes to cfius in a way that targeted legitimate national security threats while preserving and even championing the united states open investment climate. in fact just last week cfius unwound two deals involving chinese investors. i look forward to working with the chairwoman to ensure that piece of legislation is faithfully implemented and regulations can form with
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congressional intent. i will yield the balance of my time. >> i would like to thank the gentleman for yielding and thank you for being here. i want to take this opportunity to highlight the need to reauthorize the export import bank that expires in october. that bank supports american exports and american jobs and competition for international markets is fierce and the united states companies are already operating with a disadvantage. china's support for export credit finance agency dwarfs!. i look forward to working with you to make sure we reauthorize this very important agency and institute reforms that will strengthen it its ability to help american workers compete on the global playing field i am also looking forward to your testimony with regard to global
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uncertainty sanctions international development and the bank secrecy act. thank you for being here. i yield back the balance of my time. >> thank you. the chair recognizes the subcommittee chair for one minute. >> thank you madam chair and thank you esther secretary for appearing and thank you for the service to our country. when you took this job you like members of congress swore on an oath to faithfully defend the constitution against all enemies foreign and domestic. under these unusual times the oath is being tested and it is my opinion that many of our important institutions are being threatened. i think this hearing is the opportunity for you to tell us about how you are holding on to these institutions. hopefully you will provide candid answers to questions on
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your role and decisions impacting our citizens and frankly the entire world. that included dangerous and wrong headed care of policy that reduces america's income at a rate point one $4 billion each month according to the federal reserve. the same policies the u.s. chamber of commerce says threatened 2 million american jobs. we will also have hopefully a better understanding of how this administration decides to remove sanctions against russia and or north korea. these two countries that have been identified in our unclassified worldwide thread investment as primary threats to our national security. i look forward to reading questions with you later. thank you. >> thank you very much. at this time i want to welcome to the committee our witness treasury secretary steven mnuchin . he has served in his current position since 2017, he has testified before the committee on previous occasions and i believe he does not need
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anti-any introduction. or witnessed a will will be made part of the record. you are now recognized for five minutes to present your oral testimony. >> thank you very much and it is a pleasure to be with you. chairwoman watters ranking member mchenry and members of the committee. it is good to be here with you today to discuss the state of international financial system the national advisory council on international monetary and financial policies report to congress, and the key priorities of the treasury department. i am proud to report president trumps program of tax cuts, regulatory relief and improved trade deals is a resulting in the strongest economic growth the american economy since 2005 and the best jobs market in generations. i would also like to comment on opportunity zones which are important key components of the tax cuts and jobs act.
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they will help more americans benefit from our strong economy. opportunity zones offer capital gain relief for investments in distances and distressed communities. we are seeing a great deal of enthusiasm for this policy all across the country and it is leading to revitalization and restoring the promise of prosperity to more workers and families. the administration is making trade with our international partners a top priority. i urge all members of congress to support the passage of the us-mexico candidate agreement it will create the highest standards ever negotiated to protect intellectual property rights of entrepreneurs, provide strong support for the small and medium-size businesses, encourage manufacturing and opening markets for american agricultural products. we are also making progress negotiating with china to rebalance our economic
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relationship, into unfair trade practices, open their economy to american companies and protect our critical technology. we remain focused on several economic issues related to national security. we are implementing the foreign investment risk review modernization act. this legislation which passed with overwhelming bipartisan support modernizes the committee on foreign investment in the united states known as cfius review process and enhances it in its ability to analyze transactions for national security risks preserving our commitment to open investment environments. the treasury is combating the abuse of our financial system by rogue regimes, terrorist organizations, hypercritical's and other illicit actors. the united states government with international partners are putting unprecedented pressure on the illegitimate regime in venezuela. we will continue to target this regime and support the interim
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president as he seeks to restore security and prosperity in his country. me treasury is using its authority to combat human rights abuses and corruption. we are pleased with many members of this committee has supported our sanctions and other actions and i assure you the administration will continue to aggressively target malign actors around the world. turning to policy developments impacting international financial since institutions. we are advancing reforms to more efficiently alleviate poverty and foster stability and growth in emerging markets. we are working constructively at the g7, g 20 , world bank and other partners to foster that transparency that will reduce the risks of crisis in developing countries. as you are aware the ames to conclude the this year. we believe the overall resources are currently adequate for accomplishing its goals. we are beginning discussions with other shareholders on this
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issue. finally we are requesting authorization for the funding of the world banks capital increase. in connection with this we successfully negotiated a comprehensive reform act package including lending measure limits and future need to limit future capital increase and focus resources on poor countries. we are also requesting authorization for the planned shared purchase in the north american development bank with the goal of working more closely with mexico to improve economic conditions. i look forward to your questions and discussing ways to create more jobs and more opportunities for hard-working american families. thank you very much. >> thank you very much. secretary chairman neil requested the presidents tax returns last week section 6 103 of the internal revenue code state that. when the committee makes such a request the secretary shall
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furnish in return or return information specified as such request. you have been asked to comply with the law today and i can imagine you may feel your job is on the line as secretary. yesterday president donald trump forcibly altered secretary nielsen and added to a long list of cabinet level officials that he forced out including chief of staff john kelly, secretary of state rex tillerson and attorney general jeff sessions. treasury secretary steven mnuchin will you comply with the law by the deadline tomorrow and furnish the tax returns even if you means you may be fired by this president for doing so? >> first of all thank you very much for that question. i had the opportunity to answer similar questions this morning when i testified earlier today. as i previously said i want to acknowledge we have received the request and as i said
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before we will follow the law and we are reviewing it with our internal legal department and i would leave it at that. >> thank you but i guess you're basically saying you followed the law and you are not afraid you will be fired if in fact you released the returns? >> i am not afraid of being fired at all. >> very good. >> having said that again i want to be clear, i've said we will follow the law. >> okay i am please you're not afraid of being fired. treasury secretary steven mnuchin since president donald trump took office numerous press reports have alleged top associates and campaign officials attempted to negotiate the listing of u.s. lifting the u.s. sanctions against russia. now i understand when you lifted sanctions against a major a limo company largely owned by russian oligarch you also directly benefited one of
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your former business associates and close friends with whom you owned it also seems he was a close relationship with. i have in my possession a series of letters that transfers change with congresswoman jackie spear that contained it to this issue. treasuries response denies reports that you sold your ownership in our pde to mr. stating you sold your share to a third-party unconnected to mr. the matter does not comment on his company, purchasing an interest in a related company rat pack entertainment at the exact same time. who is the third-party you sold your shares to? >> first of all let me just say
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the relationship with he is not a close associate here someone i met. >> did you sell it to him as a third party? >> rat pack entertainment? >> i have no connection with rat pack entertainment whatsoever nor can i comment on nor am i aware of the specifics of the ownership of rat pack entertainment, is a completely separate entity. >> so rat pack was and is in no way related to rat pack entertainment is that correct? >> rat pack entertainment was a passive investor and rat pack dune. >> so there is a connection between rat pack june and rat pack entertainment? >> rat pack was an investor in rat pack dune. i was not an investor or associated with rat pack. >> so when we ask about whether
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or not the third-party was involved with rat pack entertainment at the same time one had nothing to do with the other is that right? >> that's right. the third-party had nothing to do with rat pack. >> who is the third-party you sold your shares to? >> that was a confidential transaction sold to a third party. >> was in a russian oligarch? >> i assure you there is not any russian oligarch. >> why is it you cannot share that information with this committee? >> i don't think it is relevant. >> i think it is relevant because of your involvement with russian oligarchs even before you became treasury secretary and you are in the position now where you are dealing with sanctions that replaced all of these oligarchs and it appears you are delisting on lifting sanctions and it may be a conflict of inches. don't you think you need to straighten that out? >> i don't believe i've ever met a russian oligarch nor did i ever do business with a
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russian oligarch. i would just comment that i believe he was from a different country not a russian oligarch. >> so you never met or spoke with or had any conversations mr. or anybody about sanctions is that correct? >> that is correct. i never met either of them. >> not met but had a conversation? >> i'm not had any conversation with either of them. >> you've never been involved with any oligarch in terms of your previous business is that right? >> that's right. >> i am going to have the record record that the third- party you sold your shares to you refuse to reveal to this committee is that right? >> that is correct. >> let us continue.
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>> the gentleman from north carolina mr. mchenry is recognized for five minutes. >> treasury secretary steven mnuchin i don't have any questions about your executive producer credentials but i think you did well with american sniper, the lego movie and most recently wonder woman. congratulations to you at your box office success. actually i thought it was much funnier but the crowd apparently didn't. thank you for your testimony. as i alluded to in my opening i wrote you this past angry about
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brexit and in that letter i reference the financial oversight board's annual report and a number of outcomes related to brexit that could trigger distress. would you describe what work you and other regulars have been doing with u.s. financial institutions as well as regulators abroad to prepare appropriately for disorderly brexit? >> let me just comment first of all i think it is surprise many of is that we are sitting here today still waiting to see how this plays out. over the last year and specifically the past two months i've been working very closely with the appropriate regulators to make sure that our financial institutions are prepared for a hard brexit. several weeks ago i was in the uk and i met with both the prime minister as well as the
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chancellor philip hammond and discussed it as well as the head of the bank of england. we are very carefully monitoring these developments. i think u.s. financial institutions are prepared but i think there could be some significant disruptions in the markets and in trade as a result of a hard exit. >> is our government prepared? >> i believe we are prepared although i would just say i think there will be many aspects of a hard brexit and we've encouraged both parties to see if they can have a resolution that works. >> how does this week's actions yesterday and today's actions with the uk government and their conversations with the eu, how does that relate to your activities? have you heightened activities this week as a result? >> i have not been privileged to that conversation going on
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yesterday and the day before but as i said i've been actively involved in this over the past six months and i think at this point we need to be prepared for a hard brexit is a very realistic outcome. >> okay. with that in mind you are prepared friday if there is a hard brexit as far as your footprint in treasury, he worked to see that we've done all we can do in preparation? >> that is correct and we coordinated with the federal reserve, the fdic and other appropriate -- >> tomorrow the committee is holding a hearing with the seven largest financial institutions in the united date and from your perspective states and from your perspective how would you describe the u.s. financial system currently? >> i think the financial system broadly is very well- capitalized and it is in very good shape. >> so the knowns are well
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provided for? >> they are but the unknown unknowns are what we worry about. >> that is the nature of financial institutions. some have described the banking environment as size equals survival and as it relates to dodd frank that has clearly been the case where we have fewer small financial institutions because of regulatory burden, can you describe the cause of that regulatory burden? >> i think it is quite significant and i think you know we worked with this committee and with the senate last year on reforms to dodd frank to make sure community banks and regional banks can compete fairly. i think it is important we have a robust regional bank and community banks system and that we don't end up with just a small number of banks in the country. it is a greater competition. >> absolutely. >> what role do financial institutions play in enforcing
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sanctions? >> u.s. financial institutions are critical in enforcing our sanctions. >> so it is an enormous benefit for us having financial institutions to international trade? >> absolutely. the u.s. reserve currency is very important and there are many benefits we have from that and that is one of the reasons why our sanctions are such powerful national security tools. >> so if u.s. financial institutions do not play that role in sanctions how would sanctions enforcement ocher? >> it can't occur without but u.s. financial institutions and other institutions connected to the u.s. system, that is critical you described embarrassing situations that is iris technology footprints, we look forward to working with you to ensure there is proper funding so that the irs can of it technology footprint and
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thank you for making that publicly known. i yield back. >> thank you. the gentleman was also the entrepreneurship and capital markets is recognized five minutes. >> thank you. treasury secretary steven mnuchin when you testified to this committee two years ago i asked about beneficial ownership. you said you look forward to working with us on a solution to this issue and then when you testified last year you said and i quote, we have to figure out beneficial ownership in the next six months, i don't want to be coming back here next year and we don't have this so we need to work with congress on a bipartisan basis on this". mr. secretary we have been working on a bipartisan basis on this issue and i think we
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are close to an agreement. the treasury did provide us technical feedback and we have incorporated all of your recommendations and i want to thank you for that. you have seen the most recent draft of the bill and i know you are still going through it but i just want to ask you, do you think we are headed in the right direction? >> i do believe generally you are headed in the right direction and i appreciate your work on this. i hope this is something on a bipartisan basis we can get accomplished both here and the senate. as i said in the past there is many of things i am proud of our accomplishments to date, this is not one of them and i think we need to solve this. i hope not to be back again next time without this solved. >> i hope that you are correct. switching topics you said in testimony this morning your team have indicated with the white house counsel's office about congress's request for the presidents tax returns, but
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there isn't supposed to be any communication with the white house about this. the process was designed to avoid interference with the white house. i know that you said this morning you personally weren't involved in those discussions with the white house but obviously your team told you about those communications. what did your team tell you about these communications with the white house? >> first let me just say as i commented on this morning and i will repeat i have had no direct conversations with the president or anyone else in the white house about this. as i volunteered this morning i did make clear our legal department has consulted with the white house as they would and does i believe would be normal. that has not taken direction from the white house and i don't view it as interference. i think as you know it was
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widely publicized we were going to receive the request and the consultant with them before. it was not specific to the president or anything related to the presidents tax return other than the expectation of getting this request. >> did your team ask for the white house's permission to release the presidents tax returns? did the white house ask your team not to release the tax returns? >> we would not ever ask for the white house's permission on this nor did they give us permission. as i said we consulted which i believe was appropriate of our legal department. >> i think the fact that there was any communication with the white house about this is deeply troubling and certainly violate the spirit of the law and if not the letter of the law. i think we need to get to the bottom of this and i yield
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back. >> members have both been called on the floor and the committee will recess for votes and resume immediately following. the committee stands
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the gentleman from michigan is recognized five minutes. >> i appreciate the recognition and good to see you again mr. secretary. i want to touch base real quickly on a couple of international issues. one being venezuela and the other export import bank and we will see if you can get to usmca as well. the united states as you well know and european countries have recognized one wide os the interim president of venezuela but the imf has yet to follow into the same and i am curious about your thoughts on how could congress support additional resources for the imf let alone rescue venezuela potentially if the fund disagrees with the largest shareholders on who the legitimate leader of venezuela
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currently is. >> i don't think the i am of disagrees and i was with christine yesterday and we discussed this issue. there are the real issue is that we are focused on is what would it take to unlock imf resources to the interim government? that is something we are constructively working with the imf on and i would say more importantly we are very focused at the appropriate time of the transition of both using imf resources and world bank resources to rebuild the country . the people of venezuela are in desperate need of an economic recovery. >> i might add the people of venezuela deserve better. >> correct. >> pages are better than the current regime and certainly i'm hoping mr. juan guaido is able to be recognized
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permanently. any additional help you can give to make that happen would be deeply appreciated. export import bank, the bank dates back to 1945 and we've had a couple of iterations of re-authorizations, discussions, reforms of some degree, in fact in the past go around one of the provisions that was put in there was a requirement for the president to pursue negotiations with foreign countries to quote, substantially reduce possible goal of eliminating, those countries export subsidies and i know that was specifically talking about airbus and what could be happening there. could you please give us an update on treasuries role in conducting these negotiations and what specific progress if
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any are you making in this issue? >> thank you. first let me comment president trump is very interested in the export import bank and making sure we have a quorum and that it can lend properly. as it relates to export subsidies that is something the treasury is very involved in, specifically in the conversation that ambassador light hauser and myself are having with china, that is a topic high on the list. >> could you give us more specifics? >> not all of us are big fans of the export import bank, the original intent was to get those smaller industries that would not be able to be banks into a foreign transaction to have the resources to do that here we have seen it go and some very different directions and specifically i'm looking for what are the status of those conversations? >> the conversations with
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foreign countries on subsidies or the conversations on the use of the export import bank? >> specifically dealing with the foreign companies i'm sorry foreign countries having similar structures. the directive was that treasury negotiates with these countries to reduce if not remove the need for those. >> at the g7 and g 20 we have been having very significant conversations and he is leaving to become head of the world bank oversaw those and i think we are making progress also. >> you mentioned very quickly in your opening about the u.s. mca -- usmca coming from michigan and it refers to the largest readership partnership being michigan in canada. give us an update on what is happening there and your take on how we are going to be dealing with usmca.
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>> i think the trade between the u.s. canada and mexico is very important to our economy. i think as i mentioned in my opening statement that this is an agreement that brings forward trade very importantly and i hope it is brought up within congress quickly so that it will be passed. >> the gentleman from new york is recognized five minutes. >> thank you. >> i was here earlier listening to your exchange with chairwoman waters and i heard you say you will comply with the law and furnish president trumps tax returns. what i did not hear you say to the chairwoman was whether you were going to comply with the chairman's deadline of tomorrow. my question to you is yes or no, will you comply with the deadline of tomorrow?
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>> i want to clarify my previous comments so there is no misunderstanding. i said i would comply with the law. >> and the law says the recent request from the chairman of the committee of ways and means the chairman of the committee of finance of the senate or the chairman of the joints committee on taxation -- that is the law. >> again i want to be very clear so there is no misunderstanding. i have said i will comply with the law. i have not many comment one way or another whether we would supply the tax returns. we have said we will comply with the law. >> what law? what law are you referring to? this is a law. this is u.s. code can you tell me what other law talks about
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tax returns? >> that is the law and as i said we are consulting with our lawyers. >> you said you would comply with the law. >> that is correct. >> we will see about tomorrow. treasury secretary steven mnuchin in early march the u.s. shifted the national debt ceiling topping out at over $2 trillion. according to the reports that came out in february the treasury department will exhaust its use of extraordinary measures sometime in late september or early october. do you agree with those projections of the treasury department that they will exhaust its use of extraordinary measures sometime in the fall? >> i am not going to give an exact date. there are a lot of assumptions, i think the more important issue is i've written to congress and i would urge congress on a bipartisan basis to pass the debt ceiling. this is something very
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important to our national debt and national credit and i would hope this is not something we would be -- >> i hear you. thank you. >> the ust faulting on some of its debt? >> i can't possibly imagine anyone in congress would ever want us to default on our debt. it would be quite disastrous. >> do you think the debt ceiling should be held hostage by any desire president trumps may have to build his insanity wall? >> the president has no interest in holding this hostage to any issue. the president has encouraged me and i've reached out to both the democrats and republicans in discussions. the president would like to have this past as soon as we can. >> thank you.
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in the treasury department's budget request for fy 2020 you and president trump chose to eliminate something for the city of discretionary grant and direct loan programs. can you explain how you think the communities served by this institutions these institutions will be impacted? >> i had the opportunity to talk about this issue this morning at the appropriations subcommittee so let me repeat this. i want to acknowledge i do think this program serves many communities in a significant way. this was just a difficult decision looking at funding across multiple programs and how we have prioritized it and this committee and if we have appropriations for that and that is congress's desire we shall properly administer the programs as they been done. >> you that that money will be [ indiscernible - low volume ].
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thank you. i yield back. >> the gentleman from missouri is recognized. >> thank you. welcome this afternoon a while ago ms. maloney talked about ownership and i just wanted to reiterate i'm working with her on the bill and i look forward to working with you to make sure we get what we need on that. i am not really happy about the rule, i wish the treasury if we could take our bill and handed to you and you make those changes it would certainly be better than is trying to codify it but to date we haven't been able to get that done so maybe this is the best way to handle it. if you have a comment i would appreciate it. >> i appreciate the bipartisan views on this and again there are specifics we need to work out and we look forward to sitting down with you and others of the committee to try
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to get this done soon. >> if we could reach a bipartisan agreement would you be willing to make those changes to the process? >> i think that is something we need to sit down and discuss with the committee. >> thank you. as the secretary of treasury you also serve as chair of fine wrists and responding to emerging threats of state financial stability. they have discussed issues and make concerns around the standard. in my opinion this affects numerous aspects of the economy and could have drastic issues like market to market. my in my discussions indicated that they did not do any prior testing or surveying, they did not do any studying as a result we are in the same situation [ indiscernible - low volume ] after the disaster. i am very concerned about the effect it could have especially on the credit unions who if you
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will look at them having to build up reserves the only way for them to find income to build up those reserves and keep them there is raising the fees on loans. we had in this committee back in december the homebuilders association set for everyone thousand dollar increase on a home loan 100,000 people no longer have access to be able to buy or build a home. that is dramatic. that will have a tremendous effect on the economy to have that level of cost. they are both doing studies to find that out and we are hopeful they will put a pause on this to study this that they didn't and they need to have this study to make sure that gets done. would you support something like that? >> this is an issue and we are closely studying it. we look forward to speaking to you and following up on this. it is something we are discussing closely. since you mentioned it i do hope
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-- my concern is they will have to come up with billions of dollars to put in their reserves. when you have a $5 trillion portfolio and a 2% reserve with $100 million we are nowhere near that. unless they raise fees and i will have a dramatic effect on the economy. with credit union my concern is i hope that regulators and a lot of folks are involved in economic policy taking into consideration what's going on, we will work to try to find a way to make sure we know what the effects of this are going to be before we implement this rule and don't have the same disastrous results that we did. i appreciate your concern and working on that with us. one of the things i saw last weekend before last was a chart on the front page that talked about value of european banks versus the value of american banks and it's interesting because european banks were 70% of their book value and
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american banks were 1.09 or roughly 10% above book value which tells me that our banks are in good shape, i think that is great, a strong economy but the european banks are in trouble. under valued at 70% of what the book value is and that's not good. i think when we talked about the exit with that in mind splashed on the front page there how do you see this, do you see this as a concern, is it going to work this thing out and eventually recover is that a result of exit or is just a reading of some of the weaknesses in the banking system?
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>> as you pointed out u.s. banks are much better capitalized than european banks there is no question that as you pointed out the u.s. economy is much stronger than what's going on in europe. and as it relates to making predictions on brexit that's a complicated thing to predict . >> the chair for housing and development recognized for five minutes.>> thank you for being here i have some concerns about the compliance history of deutsche bank and the potential national security risk posed by operations in the u.s. recently the new york apartment of financial services and the uk financial conduct authority have brought actions against deutsche bank for facilitating
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suspicious activity in the u.s., can you comment on any and all enforcement activities involving deutsche bank and provide this committee some background for the record? >> i don't think it would be appropriate for me to comment on the regulators ongoing activities as it relates to deutsche bank , the primary responsibility of this is what the primary regulators obviously from treasury standpoint, the occ, i can assure you the regulators are very focused on deutsche bank as they are on other banks but i can't comment on ongoing enforcement matters.>> does it give you pause or concern about the activities of a bank operating in this country with
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some serious questions behind it? does i give you concern? >> i want to be careful as secretary what i say but i have a lot of confidence in our regulators and them being on top of these issues and i would say the general matter not specific to deutsche bank the issues that you talk about we take very seriously and i discussed with the financial regulators regularly.>> when you testify before our committee last july you stated that at this time the united states finds the imf resources are adequate following the 2016 implementation of the 2010 governance reform package. most recently in december when treasury undersecretary david testified before our committee he is physically stated the administration will not support a imf quota increase
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essentially bringing to a halt a decade of slow progress in reforming the funds to make it more representative, legitimate and more effective. this will seem shortsighted to some as it allows japan and europe to maintain its overweight voting power and of course none of this will be lost on china or other underrepresented emerging markets. are you concerned that the administrations rejection of any possible reform or voting shares could alienate china and other emerging markets which in turn might cause them to drift away from the multilateral institutions and increasingly towards regionalism?>> let me just clarify i am the lead as
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it relates to the imf issues actually i'm looking forward to imf meetings this week people are coming in from all over the world, just to clarify a few things one we are comfortable with the resources they had today but i think as you know it's will roll off, we don't support an increase in quotas but we are in ongoing discussions with the imf and other shareholders about what we do to support the balance sheet and i think the united states leadership at the imf is very important to us. >> what about the governance structure? >> it's also very important and is part of any ongoing issue, governance and reforms are high on the priority list just as they have been with the world bank.>> and a couple of years ago the chinese un joined the u.s. dollar, the euro and special drawing rights which
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determines currencies that countries can receive as part of loans. china does not appear to be a developing nation with an american from st. louis would want to invest in china could they have full confidence in the chinese banking system? >> the question was should an american have full confidence in the chinese banking system? it's a general comment i'm sure that banks are there that are well-capitalized and banks that have significant problems. their system is highly leveraged.>> thank you my time is up. >> i have concerns about the status of the ongoing negotiations at the international association of insurance supervisors, developing an international capital standard. i would note that randy qualls
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gave a speech in january and stated that it might not be optimal for the united states insurance markets. expressing some concern about this negotiation. my question to you is looking at this tried and true u.s. system of insurance regulation in your role in the fsp are you going to lean in and protect our system, advocate fight, negotiate for our system and our capital standards? >> of course. >> are you doing that? >> yes. >> are you respected? >> yes.>> so we should get a better result than what we are hearing from the speech from mr. coles right? >> i would hope so.>> okay,
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thank you. obviously it moves over $600 billion a day and payments and last week said wire went down and was completely nonoperational for more than three hours. were you briefed by the federal reserve?>> i was.>> can you tell us what happened, three hours is concerning.>> first of all i would just say i was completely oppressive in real- time the chair and i was speaking real-time on this issue, we had backup plans that i was comfortable with, i think it would be inappropriate in a public forum like this to comment on the specifics but i'm happy to follow-up.>> backup did not work, because it was down for three hours. >> again i want to be careful i'm more than happy to come and
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talk to you in a different setting, i will say i have complete confidence in the fedwire system i was fully aware of the specifics of what were going on, we were completely on top of it.>> i would appreciate the conversation in a different setting. are you a lawyer? >> i am not but i deal with a lot of lawyers.>> sorry about that. i don't know if you have an opinion, is a presidential candidate or a president required to release her tax returns? >> i do not believe they are. >> and it's been common practice that often time they will release her tax returns but are not required is that your understanding? >> i believe that's the case. >> i agree with the practice i have said publicly that i think president donald trump would release his tax returns. but the president has chosen not to release his tax returns, i think i can get a lot more questions today about taxes.>> to lockdown a political road where we are going to use the
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chairman of ways and means and the power given to the chair for political purposes to gain the tax returns of our political opponents, we know that when one action is taken it oftentimes does not stop. i don't know if anyone in this room has to have their taxes released, i don't want i don't know if hillary and bill wonders release, we can play this game on. this is for no investigative purpose. we have heard for two years that's bob mueller has to be protected. he's the gold standard. don't cut his money, you make sure that you protect him and let him do his work and he did his work. we got a synopsis and is not over. he continues to have debate about there might be something in the reports, maybe we have to get the actual report regardless of what is
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confidential and now we go onto tax returns. i guess i want you to follow the law, that's important. i would just note that in this room we should all be concerned about what is good for the goose is good for the gander, what happens here will probably come around and bite you as well so the president is not required to release his taxes, he has not released them i think you should he hasn't and i think we should let it go at that. we do intend to follow the law, i think of kevin brady when he had been chair of the committee had requested high-profile democrat tax returns there would have been significant concerns.>> i'm shocked to hear that. of course there would have been concerned. >> the chair for consumer protection. >> you were there, barack obama
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did disclose his tax returns, in fact every president of the united states since nixon reported their tax returns and in fact should not one be there word is their bond and they should live by what their word is is that not correct? mr. secretary? if you say something to the american people you to tell them the truth is that not correct?>> i do tell the truth.>> but since duffy brought it up the president of the united states told the american people that he would release his tax returns and he has on it at least 16 times that he would release his tax returns, he made a promise to the american people. now shedden is the president of the united states the a man or a woman of their word? yes or no?>> i would like to
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answer the question. >> it's a yes or no question. >> what i have read in the press is he releases returns when he was not under audit but i'm not privy to the specifics of that.>> he has said several times before he was elected president and after he was elected president that he would release his tax returns and then we hear from his chief of staff that he never under any circumstances, so that means he has lied to the american people. i hope you are not a liar and other individuals in the administration are not a liar and when you testify you testify to the truth and not deceiving individuals. >> the gentleman is calling the presidents a liar is this an order?>> you can go to the tape
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and see what the president said and what he hasn't done. so yes i'm calling the president of the united states a liar.>> there is no point of order what is your point of order?>> so. >> avoid personality in your remarks what is your order question my >> the president is a covert personality and i believe the president he was going to present a liar.>> a few more times -->> what i am saying mr. secretary is the american people listened to when someone made a statement and a commitment to the american people whether or not they live
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up to it or not. and i am also stating that i'm hoping that the visuals of the administration the same because there have been reports already that the president yesterday was telling individuals to disobey the law in regards to this a the border and telling officers don't listen to the judges. i came here with a whole other series of questions i wanted to ask i wanted to know some other things important to the american people and now he has raised my concerns because generally what happens at the top goes all the way down and all of the individuals fired yesterday some because are trying to tell the president to follow the law and the president would not follow the law it gives me concerns and i think that's why the chairman asked you are you concerned about your job because it seems those individuals who follow
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the law and tell the truth and not try to deceive individuals, some kind of way the administration or the president seems to want to fire them and that's the nature of her initial questions and i've almost lost all of my time so i will just ask one question i want to talk about leverage, lending and things of that nature which is important but i don't have that kind of time so let me ask you this, slapping tariffs on our allies has made for tough negotiations. do you believe those tariffs have been overly disruptive and how do they serve our purpose when it comes to negotiating with mexico and canada because it seems to me that they don't. >> i'm very pleased with the agreement we have with mexico and canada and as it relates to china the tariffs have been effective in getting china to the negotiating table and i know you ran out of time but let me just comment on leverage
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lending since you brought that up, would you like me to comment on that? >> the gentleman from ohio is recognized for five minutes.>> thank you for being here today, investor testify before the committee and said it's important to -- we look forward to working with you on a bipartisan basis to reauthorize the export import bank and make important reforms to make sure it has all the safeguards that need to be in place for the taxpayers and to make sure that it's running effectively but i really appreciate your thoughts and opinions on that.
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i wanted to talk to you about suspicious activity reports and you are in charge of the financial crimes enforcement network recollects suspicious activity reports and almost 1 million of those were filed last year by financial institutions many times without a feedback loop to the financial institution to help them be better at preparing and knowing what was good information and what was that information. it seems to me there might be a better way to conduct it even if we don't change the reporting threshold is getting the information and making it more useful, a central database. are you working on anything to make those more effective?>> yes we are first let me just comment there are very important for all of our law enforcement and our activities
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around sanctions. when i was a banker i was concerned these things went into a black hole we do use them but we are actively looking at the policy around sars and looking at whether we should make certain changes so thank you for bringing that up. >> and i understand you can't report back on everything but there may be a way to create a feedback loop to make the production more effective some of these folks are again and again doing the same thing making the same mistakes on these vicious activity reports or making them less effective than they could or should be so some type of feedback would be very helpful for a lot of folks that want to help as you are trying to help catch the bad guys. finally i wanted to touch something i know that other people have talked about, tomorrow there's going to be a hearing with seven of the large financial banks in america and
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we talked a little bit about what would happen with sanctions if we didn't have large american banks. and instead if we had to rely on european entities and chinese entities and other foreign entities to make our sanctions effective, would they be able to be implemented and would they be as effective on shutting down rogue regimes?>> know they wouldn't. the u.s. financial system and the strength of it and the importance of the dollar and large financial institutions are critical to our sanctions enforcement. >> treasury secretary are you under oath to tell us the truth
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today?>> i don't know technically if i am or not but i'm here to tell you the truth, yes.>> your here to tell us the truth. have you ever had any business dealings with russians? >> have i had any business dealings with russians?>> yes. >> not that i'm aware of but i just want to be clear my great grandparents immigrated here from russia so i might be a minuscule part russian myself.>> have you ever had any business dealings with russian all the arts? >> i don't even believe i know any russian oligarchs.>> do you have any knowledge of anyone in
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the trump administration that has done business with russians? >> the trump administration is very large, i cannot comment on the entire trumpet ministration.>> do you know if we get specific then, of any business dealings that president donald trump has had with russians as a businessman?>> i have no access to the presidents financial -- >> i'm not asking access. you see mr. mnuchin you are the treasury secretary. you are our chief steward of all economic matters as far as we are concerned in the world.
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trade matters, financial matters. it is within your purview and covers the waterfront just as our very first january secretary alexander hamilton did. my whole point is this the reason these questions are coming up to you is there is such a great owner among the american people to try to find out what is it about russia and the relationship with this administration that causes this unease? nowhere was that more paramount than in sitting on the world stage. president donald trump took
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the word, the advice of putin over his own treasury secretary, his own intelligence. so it sets many of the americans i would say the large majority that's why we are trying to get to these questions but before i go i want to get back to the trade issue, something that you are dealing with. i represents the great state of georgia and we are number one in peanuts, pecans, poultry and cotton and right now all of these industries are suffering and i want to just get your opinion here, nearly 100 % of cotton produced in the united states is exported.
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u.s. cotton subject to an additional 25% tariff in china. due to the trade dispute. georgia makes one third on the pecans produce in the nation, half of those go to china, 25%. where is this coming to? and you just made a statement that china is resolved. how so? when my people in georgia, my farmers and producers are just hanging on by their fingernails. because of this trade situation. what can you tell me to tell my farmers in georgia?>> i just want to make two quick statements first of all i don't believe the president listens to prudent over me or his intelligence, on the farmers i can assure you i'm working very hard on the china deal and
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agriculture is a very important part of that so i appreciate that. >> mr. secretary thank you for being here today there's currently a debate in our country about the economic system of capitalism versus socialism, as you know i'm a small business owner i'm a car dealer who is a strong believer in markets the concept of risk and reward and individual freedoms. the u.s. economy is growing at the fastest pace in over a decade while most of the developed world experiences an economic slowdown and yet some people are unwilling to accept the reality that our success for the past two years is a result of reducing the governments for print in a free market. so are you a capitalist or a socialist? >> i'm a capitalist.>> that's great. and what effect would it have on gdp and the u.s. economy if
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we began to turn away from free- market principles and taking a more socialist approach? >> i think it would be disastrous for the economy and every single country pursuing those economic goals has deteriorated significantly.>> venezuela and cuba, just to name a few. >> and many more.>> the economy is booming because of the tax cuts are simply working, unleashing the power to private sectors has led to increased capital investments, more job opportunities and higher wages for workers. these are very positive outcomes in the short term and these capital investments will continue to pay dividends into the future. with that being said we should not get in place it. what do you see as the biggest obstacle holding back the cover economy?>> i think the good news is the economy is in very good shape i think clearly the economy has slowed down as having some impact i think getting trade agreements were negotiated is probably the single most important issue for
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the economy and that's why it's such a big priority of this administration at the moment.>> last week the texas bankers visited my office and talked about the bank secrecy act. we discussed thresholds for currency transactions, suspicious activity reports being so low that it creates a heavy compliance burden for small banks. when the ctr threshold of $10,000 was initially implemented in 1970 that was enough to buy two brand-new automobiles. this is no longer the case because of inflation. so how would you recommend adjusting the current ctr and sar to make compliance easier for smaller institutions? >> we're looking at this carefully and i am sympathetic to the issue for community banks and small regional banks, having said that with the advance of technology and people can break transactions up into many many smaller transactions, we are not yet convinced that raising the
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limit as the appropriate issue but we continue to study it.>> our country moving in the direction economically i and a lot of people and yourself are worried that were not paying attention to the national debt. which recently surpassed $22 trillion as we know. i'm concerned that the national debt will hinder economic growth in the country and that interest payment on the debt in 2018 was $371 billion. that affects a lot of things, and it affects the military they are concerned about it. so how concerned should we be about our sore national debt?>> i'm glad you brought it up i think the debt is something that has doubled in the previous administration, i think it is something that we have to be careful and watch government spending, that's why the president is trying to look at decreasing government spending. the most important issue is growth, i'm comfortable that we
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can support the national debt as a percentage of gdp but we need to be on a pathway to make sure that the deficits don't continue to balloon and the government spending is not out- of-control.>> we remember 20% interest in our lifetime and six or seven was a good rate but right now it could be harmful. i think that we are doing the right thing being worried about it and on the side note you and i have had conversations on interest rates and we have agreed on a lot of where the interest rates are to go so i want to thank you for hearing me out when i talk about it>> the gentleman from missouri. the chair of the subcommittee on national security, international development and monetary policy is recognized for five minutes.>> mr.
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secretary the president speaks publicly in support for the export import bank and people on both sides of the aisle are also interested, the treasury resubmitted the observation request? >> i'm glad to hear there is bipartisan support because this is importance to the president and my understanding is that we are working on that.>> we have only until september and so it would be good if we had a reauthorization request submitted now. that's one step before were going to be able to get something done that can be done
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easily. >> my understanding is that this is going through the interagency process we are not the lead but we are actively supporting this and i appreciate your focus on this. we want to reauthorize the export import bank.>> so it will be done shortly? >> i'm going to go back and find out the exact status from the people working on it, yes.>> if i were the committee could receive a follow-up. >> we will follow-up with your staff.>> let me go back and visit some places where you have been earlier, my first concern is the american public as it is i'm sure yours but the american public is losing on the tariffs and it's not just
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coming from me or democrats it's coming from all over, the u.s. chamber of commerce has already said that we are going to lose $1.6 billion in export trade, in my district we are being decimated. i can understand why senator grassley came out and said we need to focus on creating opportunities instead of erecting barriers, my next-door neighbor nebraska, my farmers are being bludgeoned. i drove by some fields two weeks ago to look at flood damage and people are leaving the soybeans in the field. from $10 down to eight dollars now and dropping. people are hurting and if you had a chance to look at the state of missouri $432 million we export to canada, 72 million
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to mexico, 80 million to china, 239 million to europe. i spoke to a farmer on friday he said our patience is running out. when i go back home on friday and i'm going out into the rural parts of my district what do i say? they voted for the president. is it too much for them to expect not to continue to be hurt?>> i have been accused with all i want to do is sell soybeans but i can tell you i want structural reforms. the vice premier when he was here last time committed a very big order of soybeans and i can assure you that agriculture is very important to the president and it's on top of the list of issues to be resolved.
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i understand your concerns.>> my farmers don't know anything about that. we're talking about tariffs costing american consumers about $6.9 billion again this year. so i appreciate your concern for my appreciation but i need to go home on friday and talk to folks and i would like to say i spoke to the secretary of treasury and he said next thursday at three a clock the pain will begin to be diminished. or should i say friday? what day?>> i can tell you the chinese have committed a very large order while we were negotiating, they have committed significant orders. already and they are in the markets executing those orders.>> the gentleman from
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ohio mr. davidson.>> thank you so much for your testimony and the great work you and your department are doing on behalf of the american people. i think you would agree that america is broadly seen as the roseland of opportunity, people from all over the world, capital from all over the world comes here and it is still attracted to the united states of america. our gdp grows, our wage grows, favorable markets are the envy of the world. one of the areas that i get concerned that is in the midst of all that why are some things not quite working? america is still the most innovative country in the world, when i see american
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innovators taking their innovation and raising the capital outside of the united states, something seems to be broken. what's wrong with our markets that this would happen? so they look at blockchain now for example i see this reality where the innovation is happening in the united states and elsewhere but it's rapidly helping happening elsewhere because they don't have the regulatory certainty they need for capital formation and without the capital formation we see so often the development just doesn't take place. that's why today a bipartisan group from his committee and outside the committee introduce revelatory certainty for the crypto market to define what is a security and what is not a security. are you following the developments in blockchain and just the dynamic impact that could have not just for capital formation but for security, for the framers that we have for
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data security. are you tracking blockchain significantly in the department of treasury?>> i am there are not many things i would say but i don't think octane will be 10 times more significant than the internet. we are working with all the regulators on blockchain more importantly on crypto assets we want to make sure these can't be used for illicit purposes and i'm not familiar with your bill but i'm happy to follow up with your staff and understand your ideas.>> your staff has been very helpful as have people across industry and there is good support for us to where the should be regularly but more broadly when you look at this you see when there is a
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gap between our regulatory frameworks and the demands, get an imbalance there is a black market, the united states or the market simply moves, and if you look in the past 12 months, 50% market share for crypto assets. part of the regulatory framework as you highlighted earlier that our banks have is because so much moves through the financial system, so much move through the protocol to united states helped establish that would include trade and financial trade. i think it would be advantageous for the united states to stay at the forefront of this. we are rapidly losing ground, we need to quit studying the issue and get regulatory certainty for our market in this space. i would say that towards that end one of the encouraging things to me as you highlighted is trade and in particular i wonder if you can highlight
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some of the financial services because we hear so much more about manufacturing or agriculture, we see the expansion of financial services coverage in u.s. mca and including the framework were working on with china. >> we think the financial services improvements are quite significant and quite frankly are a model to use and other trade agreements and financial services are very high on the list and we've made a lot of progress.>> when you look at the framework and the protocols whether you're talking sanctions what are the underpinnings of that bank secrecy act? >> my colleague highlighted the work she's done on beneficial ownership but just caution as we look at this framework you mentioned earlier you connected a private transaction that you would like to remain private, there are legitimate purposes
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why that should still be the case and subject only to discovery and not criminal penalties for people that don't file forms they don't even know exist.>> i'm actually going to agree with you on a couple things i believe we should react will authorize the bank as the gentleman from ohio pointed out we say it's meaningless unless you fill the seats on the board, can you tell us now that the president will fill the seats on the board and push senate to confirm so that we can get a functioning exit bank? if you authorize it but don't put board members on it they can't do anything.>> i'm going to agree with you as well that not only do we have to reauthorize it but we need the
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board and i can assure you the president is very interested in having the board filled. >> i hope you will get them more interested in appointing rather than speaking of appointing. no economist wants tariffs. but tariffs are often the only way to push other countries to drop their tariffs and other barriers to entry. the chinese have calculated that we are in a stronger position to impose pain on them in order to get them to change but their political system is better able than ours to endure pain and therefore they will beat us in these negotiations, make only token changes and we will continue to have the largest trade deficit in the
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history of bilateral trade and history of the world. my hope is and i know that tariffs can be painful on both sides that you will do what's necessary to get us a trade relationship with china that is not the most pernicious cancerous malignant and lopsided trade relationship in history. as to marijuana i don't know if anyone has spoken it or not i know we have to have some pride in the fact that those hundred dollar bills. your signature but carrying around big sacks of hundred dollar bills through our neighborhoods in california is not good public safety, will the administration come out in favor of allowing those institutions that are legal under state law to be able to have access to the banking
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system?>> i think this is a significant issue particularly in my many roles including the irs where we have had to build cash rooms to take in the cash, i'm not going to make a comment on what the policy should be, there is a problem that there is a conflict between the federal law and state law and until that is resolved we cannot deal with it without legislation. >> will you endorse it within the jurisdiction of the committee and relevant to your functions will you endorse legislation passed on a bipartisan basis?>> i need to review it i'm not familiar. >> and you get back to us in two weeks on this? >> i will be happy to review it on my staff will follow up. >> the pressure has to be nuts to appoint but to get mcconnell to confirm i believe you finally set up enough people to
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make a. korea on an uninterrupted basis date create material if you want a better deal you have to have stronger sanctions. the ranking member reverse roles in prior years, we have sent you two letters urging you to sanction those major chinese banks that violated the u.s. sanctions, so far we only sanctioned minor chinese companies but in particular on may 21 there was the announcement by the department of sanctioning to relatively small shipping firms from china, then the president tweeted the next day that he is withdrawing, then it was announced that he was not
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withdrawing what you had done but stopping you from doing something else, is there something more important than what you did on may 21 that you are considering that the president has told you not to do?>> first of all i would say the sanctions are very important it's the only reason why they are negotiating. >> pretending to negotiate is what they do and we have adequate sanctions, making concessions is what to do when we have real sanctions. >> i think we have the strongest sanctions that ever existed i know there were some confusions as i have clarified the president never told me to take off those sanctions, i cannot comment on future future sanctions but>> are you looking at major banks? >> i think it would be inappropriate to make any specific comment on people that are going to sanction in the
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future whether it's there or anywhere else. >> mr. secretary thank you for being here i want to follow up on my colleague from wisconsin, what you mentioned on the topic of international insurance regulations. if the iai is refuses to do what my colleague from wisconsin asked and provided the u.s. is of formal recognition of this upcoming meeting would you be willing to enforce them to delay the adoption of the international capital standards to a later date so they will recognize our approach is being developed by both the states insurance commissioners and the federal reserve? here's why am asking this question is critical that the
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u.s. insurance companies are provided the same certainty and they don't have to spend the next five years which by the way is the time of the monitoring and testing. they wants to know if the system will be sufficient so either make the isis -- iais publicly recognized or delay the adoption to another date? >> i want to be careful making a public commitment on this but i'm happy to speak to your office and we will follow up. i can assure you that we were focused on and in favor of the u.s. system which is critical to our insurance companies. >> i understand the sensitivity here but when you were talking with my colleague you would like to make that sort of commitment and how certain are you that we can give some certainty to our state-based
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insurance companies, how certain are you that you can give them some future certainty? >> we always want regulatory certainty that is critical and an issue were focused on so i look forward to following up with your office as we make progress quickly.>> another concern i have with these international negotiations involve the federal insurance office. we have seen the office stay within its bounds and is not acted like an insurance regulator which is good. i have serious concerns about the office being involved in overseas negotiations and more concern about what the office could look like under a future administration. under a previous administration the office performing activities like involving or issuing arbitrary inaccurate reports, commenting negatively on the domestic insurance industry, initiating unnecessary data calls and acting like a regulator through
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the use of his powerful subpoena authority. so how does the current administration view the role and would you agree with me that it's important to put regulatory bounds on going forward to prevent what happened in the previous a ministration or worse?>> i can comment on what we are doing, i'm not an expert on what's under the previous administration. it is not a regulator it's not meant to be a regulator nor will we ever supportive being a primary regulator. >> can you put some constraints on its that would protect it against abuses in future administrations? >> we will take suggestions from you. >> a very sophisticated network of terror operations using a lot of funding 4n u.s. treasury
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department plays a vital role in stopping funds to the terror group so what steps is the treasury currently taping to stop the flow of resources and hezbollah and in particular what are we doing to stop iranian resources going to hezbollah? >> i think we have the toughest sanctions on iran and we are very focused on issues at hezbollah and also focused on issues with working with people in the region. one of the reasons i need to leave this evening is an important meeting focused on financing antiterrorism. >> last year congress passed the hezbollah international financing prevention act to increase our ability to target the global financing and reach.
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what steps has the treasury taken to implement this new legislation?>> first of all we very much appreciate the additional funding we have had to build up these resources and again since were running out of time we will follow up with you on those specific steps.>> mr. secretary you recently had an encounter that had to do with an entity that you sold to your then fianci, now wife and in no way intended to demean her and anyway yours is intended to demean you, you stole -- sold fundraiser productions to her and after having reviewed it concluded that even that you gave an indication let's call it a promise to recuse yourself if there are any future dealings with the government and storm chaser there would be
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no penalties imposed. is this true? >> i appreciate your raising this.>> i need to know if it's true because i don't want to dwell on it. >> is a true that i have committed to recuse? i've signed a new ethics agreement to clarify had there been conflicts before i would have recuse myself so i have been in touch with ethics officials for the last two years. treasury ethics officials.>> like i said i don't intend to dwell on that issue but i do plan to go to another issue that involved an entity known as is it true that you have sold your interest in rat pack? >> yes i sold it a long time ago. >> is it true that you have indicated that you need not
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expose the third-party that you sold it to?>> i'm sorry could you repeat that? >> is it true that you indicated that you need not and will not expose the third-party you sold it to? >> it was a confidential transaction.>> which means that we have no idea as to what the terms of the conditions were, not that i'm overly interested in your personal business but we don't know what the provisions are and we don't know what the entity is that purchased, is that a fair statement? >> the transaction was fully approved by the ethnics people at treasury so i don't anticipate there are any issues.>> but it's true that we are charged with the responsibility of oversight correct? >> i'm not an expert on your
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oversight responsibilities.>> we are charged with oversight so the question becomes how do we perform oversight of that which we cannot see? it is very difficult at best, probably impossible to accomplish. i'm mentioning it to you because we live in a world where we must not only be right but also look right this may look right to some but the truth be told the american public is concerned in the case that you had with your wife, you signed an agreement to recuse and if there is a conflict we would be aware of the conflict and understand that you must recuse. with rat pack we will not have the ability to monitor the relationship because we have no idea as to what it is.
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therefore we cannot ascertain evidence whether you should recuse. my point is this if it would seem to me that the interest of public having the belief that our system functions fairly and properly with transparency that you would reveal to whom you sold the interest. you don't have to tell us how much, there are numbers floating around 25 million but it would seem that you would reveal this. you said you won't and i won't ask you to do it but it seems to me that would be an appropriate thing for a person who has the lofty position of being the treasure of the united states of america, thinks that that would be
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appropriate. i won't ask you to respond.>> i just want to make one thing clear the entity of rat pack had a transaction with warner bros., warner bros. bought it out and that entity is fully liquidated so not only do i not have any interest in that entity at this point but nobody has any interest in that, that entity has been fully, there could not possibly be any ongoing conflict whatsoever.>> and i will take your word for it.>> unfortunately i have to.>> the gentleman from ohio mr. ben gonzales.>> i think there's a lot of reasons for us to be very excited about the united states economy when you compare it to what's going on in europe and the entire world.
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start of reasons to be excited and a lot of it has to do with the deregulation of the tax cuts. i think it's fairly obvious. when i think about the next stage of growth and how we can keep this moving i go directly to trade. specifically u.s. and china. i want to thank you and the administration for finally stepping up and pushing back against china, the curtain has been pulled back and the country has a good sense of how disruptive they have been.
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. >> we talk about these at the china g 7. we have been unsuccessful for a long time doing this on a multilateral basis. i think we are making a lot of progress. ambassador light hideser is doing a great job. i have a call with him tonight with device premier and as said, we are making progress. if able to conclude this, this will be the most significant structural changes that ever occurred. if we are able to conclude this, there will be an enforcement a department built. and we still have significant issues, but this may be one of the biggest accomplishments for u.s. trade, u.s. companies u.s. workers if we are able to open up their markets on a
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fairplaying field and get structural changes. >> i applaud the effort. don't take my comments on anything otherwise. you touched on the piece and china said they would shut down their fentanyl factories. i'm from southeast ohio. fentanyl has been a challenge for our community. that is an incredible promise on the enforcement. specific to that on the fentanyl, what levels of enforcement do we have? >> i can tell you the only reason they did the fentanyl is it was a request from president trump to president shea. they put through the laws and i'm very confident they are going to follow through on this, independence of any of other current trade negotiations and it's a very important issue. it's killing tens of thousands
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of people. >> so to clarify if we can't get the broaderish shoo ugh the fentanyl ban will be in place. >> i was aware that was not a conditional agreement. and not to shift the issue a little bit, just saw china expanded into it will i with this. hard to figure out what they are doing. the details stay out of the public light. but last congress we passed, i was not here. i'm a freshman, but passed the better utilization to development act. to counter china's emergence into markets. what we do to push back on china's growing presence in the international sphere. >> we know how david melpas, head of the world bank.
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the world debt transparency are important issues and i think the world bank combined with our build act and other things can be a serious competitor to their belt. >> thank you. with that, i give back the balance of my time. >> i yield myself 5 minutes. thank you mr. chairman, for being here. as i was reviewing your statement, in paragraph 4 of your statement you note that opportunity zones are a key component of the tax cut and jobs abilitying. you also say opportunity zones will offer capital gains tax relief for investments in businesses in distressed communities. so i would like to know when is that going to happen? how much -- how many dollars will be put into distressed communities? and how will you deal with to
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protect and assure us that we won't have genderfication in these communities. >> so when is it going to happen? it has already started. we put out some regulations. we are putting out more regulations. we hope to get those out in the next few weeks. critical to uncertainty. >> where are the dollars what communities, what states? do you have any in columbus, ohio? >> the funds have started. the capital formation has started. many of the investments are waiting for the regulations which i said we hope to have out in the next few weeks. in regards to how much, from commitments that i have heard people make, i could extrapolate this is going to be over 100
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billion and the gentry general terfication -- >> we don't take the communities and take dollars and change them where these individuals no longer have a place to live. >> absolutely, we look forward to working with you. we are putting more jobs in those communities, not to change them. >> this is another area of interest to me. also you used language to eliminate poverty and to talk about growth. i make that direction connection, as you will recall when you were here last year, i asked you about amwey office of american women and inclusion and you didn't do so well, if i was grading you with a test score you didn't know who the director
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was. you didn't have information to offer me about amwai? >> i want to thank you for this. i meet with her on a monthly basis. i go through the reports. i appreciate the importance of this. and thank you for bringing this to my attention last year. >> let me also say -- and i would like to enter into the record that we requested the ig to take a look into your department's compliance with section 342 of the dodd-frank act. it didn't come up so well. when i read the report, the ig, inspector general found that the amwi at your department will not likely be able to fulfill its responsibility at the same level as the other amwi's in the other regulatory office because of i want sufficient staffing.
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i ask the same question of the new director last week and it was a yes or no question, will you put enough money in there to maintain dr. cole and to give her the appropriate staff in section 342 states? it's a yes or no because right now we know it's saying you only have two people. we know that's not enough. so are you going to put it up to a standard i'm going to let you determine, but a standard that won't be embarrassing to you or cause an issue when you come before my dni committee or back here? >> i will commit to you that she thinks she has enough staff. >> okay. so the last question that i have are you aware of what the inspector general's report stated? and do you have any idea of the diversity, if we are going to talk about growth and eliminating poverty and going into distressed communities do you have any idea of what your
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department looks like with women and minorities? and if not you can send it to me in writing. i only have a few seconds. i'm going to reclaim my time because i would like to take my last few seconds to are recognize the hon rational jesse jackson being in our hearing and quite appropriate with the issues. thank you reverend jackson and my friend for being here. my time is up. i now recognize the gentleman from indiana mr. hollingsworth for 5 minutes. >> good afternoon. good to see you. i appreciate the time you have invested with us thus far. really, i know one of the things we worked on last congress and continue to work on this congress on both sides of the aisle, but especially this side of as well. and i wonder if you would talk about the importance of even foreign owned banks that operate and invest here in the united states and how they have a role
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to play in that financial services ecosystem as well. we want to make sure they are properly regulated and capitalized, but like other type of investors we encourage foreign companies or foreign individuals to invest in the united states. >> as you say properly regulated and capitalized. i know one of the concerns we have had a few times come up here is to make sure there is a parity between the two. we don't want the foreign institutions to be advantaged some way or disadvantaged. we want them to be thoughtfully capitalized so they can compete on the level player field with u.s. firms and hopefully the american companies that seek to use them will face a competitive environment where they can get the best possible deal; right? >> that is correct, level playing field. >> i'm glad to hear that. and coming back to -- i want to touch on one other topic.
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it is important right as a part of treasury's work, the restrictions the treasury does, an important aspect and much of the strength of that comes from being a reserve currency and the u.s. financial system being such a large part of the global financial system and i wonder if you would talk about what threats there might be to that system and architecture of that system coming from our large counter part countries. >> well, it is a tremendous benefit for us to be the reserve currency of the world and it's a tremendous responsibility and that's why when we look at sanctions we have to take into considerations, but sanctions are effective because we are the reserve currency for the world and the u.s. financial system. it is an utmost importance maintaining that status. >> and those policy threat that is might imperil us being the
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u.s. currency and imperil the system and restrict the system to reach and compete globally, those might adversely impact in the long run the efficacy of these sanctions and the united states being a leader and being able to conduct those operations around the world. right? >> it would and our ability to raise capital all over the world. >> right. certainly mini challenges, but it's important and i think it's frequently lost the efficacy of these sanctions problems depends on us being a capital market, continue to be a financial service fs industry that competes around the world in its ever large presence in the world. >> they are linked and thank you for bringing that up. >> the gentleman from washington mr. heck is recognized for 5 minutes. >> thank you madam chairman. i would like to quickly follow up on some of the line of questioning of my friends mr. singer regarding the export
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bank. the bank was not established in 1945. it was established in 1934 and celebrating its 85th year. i quibble. the one thing i would like to talk about is the assisting only small businesses, the history of the fact is they assist with export credit in three areas where the market is imperfect. the market is imperfect in helping small businesses stand up sales to porn the countries. it is also imperfect in its sales to countries developing because it doesn't have the ability to collect within certain countries and thirdly engage for long lived large dollar items. so think massive earth moving equipment by caterpillar sold to some nation that is building high-rise and it's in disregard
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that i think it's important to clarify that even though caterpillar as an example is a large business, the supply chain is made up of thousands and thousands of small businesses that are hurt by the fact the bank doesn't have a quorum and cannot approve deals above 10 million. so would you agree small businesses are being hurt by the absence of a quorum on an export bank. >> that is an awfully low threshold. we would agree there are lots of small businesses medium size businesses and as you said big businesses do employ people with small businesses and the purpose was not to displace private capital, but as you pointed out to assist where there is not private lending to facilitate trade. >> mr. secretary do you have any idea how much china's fair
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export companies have guaranteed loans in the last 2 years. >> it's enormous and multiples of what we would do with the import-export. >> would it be surprising they havish slewed more credit than our import-export banks have in the its history. >> that would not surprise me. >> so china is clearly a highly competitive long-term competitor that utilizes whole government means to achieve their purposes that we would be well served by having a fully functioning export-import bank as one of the arrows in our quiver in which to compete with them. >> i can tell you the president and i and others in the administration think this is very important and i would hope that whatever issues there are we can figure this out on a bipartisan basis in whatever
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reforms. it is important from an economic standpoint to get the banks back open and that means loans over 10 million. >> any idea why it would be called the import-export bank when it doesn't do any import business? >> what's that? >> any idea why it's called the import-export bank when it doesn't do any impart business. >> i don't have any information to that. >> the president has obviously directed you and secretary carson to come forth with a plan to reform fannie mae and freddie mack and lay down benchmarks which that would be measured. i would like to respectfully allow the benchmark it's predicated on the fact we have a shortage of homes. in 1970s we built 12,000 units
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for america and now we are building 4,000 for every million. clearly we have a shortage that has been documented to be at least 1.5 million. and part of the solution to that because we assess that construction financing sometimes gets benched not necessarily but sometimes consumer access to credit, but construction financing gets pinched would you support at least the current level of support by the gfcs of construction financing and secondly if we stand up a new gsc, would you limit means to lay off mortgages so they can compete effectively be their own banks would you support those benchmarks the second i would support that. but on the first i'm not
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completely sure. but we will take into account your ideas. >> thank you mr. secretary. >> gentleman's time is up. the gentleman from wisconsin mr. stout is recognized for 5 minutes. >> thank you secretary for being here. first question kind of the role of large banks in our economy. the u.s. has large and die ma'am nappic economy producing many globally successful companies businesses are world leaders in manufacturing, technology, consumer goods create opportunities for workers families and downstream supplies. in southwest wisconsin generating jobs, sustaining communities and investing in innovation. the u.s. is home to several large financial institutions that among other things provide the critical services to
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american companies engaged in global commerce that fulfill an important role in our financial system. as i looked a it. as the world's top 10 banks four are chinese and several others european, by my count only a couple are u.s. based. does this matter around what would happen to our community if large globally competitive banks are placed at a competitive disadvantage to our foreign banks? >> i think it would be a very significant problem for the u.s. economy. >> in particular as it relates to exports in the united states. >> as it relates to everything being competitive having strong well capitalized leading banks are very important to the structure of our overall economy and us being competitive throughout the world. >> thank you. i'm going to shift tactics to illicit finance and human trafficking, which is something important to me. according to the latest estimates more than 40 million
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around the world are subject to trafficking, research estimates 25% of these people are children 75% are women and girls. it's a terrible crime. and regardless of party geography, we got to be committed to stopping this. but unfortunately it's also big business. and that means we need to target the financial crimes associated with this and the ill gotten profits from human trafficking which is why i introduced a bill earlier today that require our government to hold countries accountable to turn a blind eye to illicit activity to human trafficking. what can the treasurer department do to the abusing the system with these crimes. >> we have many sanctions authorities we can utilize and we go after for these issues.
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i'm not familiar with your bill, but look forward to learning about it. >> i appreciate you taking the time today. i yield back. >> gentleman yield back, the gentleman from guam, mr. san nicholas is recognized for 5 minutes. >> thank you, madam chair and thank you for being here. earned income credit and how it creates a unique liability for the treasury, the earned income tax credit for the taxpayer, the difference between their income tax refund and withholdings is a treasury liability; is that correct? >> i believe that is the case. but now we are into an accounting issue. >> right. basically they earn x amount, x amount is withheld. if the exceeds is withheld, that's a liability the treasury has to pay out; is that correct? >> i want to make sure i'm following your technical issue.
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there are withholding taxes. there is the eitc, okay. i think what you are saying is definitionally -- i'm not sure i can check. i don't believe we record that as a liability on our books and records, but i will check that and get back to you. >> what i mean by liability is the treasurer is responsible for paying out the earned income tax credits if there is no withholding to fund it. >> the treasury is responsible for paying out the eitc, that is correct. >> does the treasurer divert funds from education health, or public safety? >> the treasury funds everything okay, on a general basis. there is no specific allocations from one program to another program. >> and just again to reiterate, the treasury is responsible for funding the earned income tax credit. >> the treasury is responsible for dispursing the earned income tax credit. the government is responsible for funding it. >> i'm glad we have this on the
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record mr. secretary. i'm a delegate from guam and since 2008, guam has been 100% of the payouts that have been filed from our taxpayers territory. and this sum has actually ballooned to account for over 50% of the annual set aside that we have for tax refunds altogether. and so what i'm really hoping, especially with tax season in full gear is that we can have the treasury work with the guam department of revenue and taxation to figure out what the earned income tax credit amount the treasury should be paying for the taxpayers for guam paying this. i also want to put it on the record, mr. secretary this is not something new. the treasury for years has been paying out the additional child tax credit on guam and so in order for us to be consistent with the treasury funding the
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actc , i humbly ask the treasury to do its part to fund the eitc on guam. this is very critical, mr. secretary for a variety of reasons. one of them is the fact that with poverty rates so high on guam, the diversion of general fund coffers in the territory of guam to fund the eitc payouts impacts education and it impacts health and it impacts public safety and those diversions also result in deficits to the territory because we are having to pull other tax resources that would be otherwise to meet our protections. so the time is for us to have the conversation not only have the treasury fund the eitc on guam going forward but deeply appreciate if the treasury would work with government of guam for
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all paid out since 2008 so we can recover those funds because it has resulted in deficits. it has resulted in debt. it has resulted in deferred maintenance. we don't even have textbooks in our public schools that are within the reasonable seven-year age of textbooks. there is so many diversions going on and this eitc of 76 million a year accounts for a significant chunk of that. i appreciate your forthrightness in answering my question with respect to who is responsible for paying that and i look forward to the treasury working with the territory of guam to make the territory whole. >> i am aware they have some highly technical tax issues. i met with the governor the last time he was here with the office of tax policy, we would be happy for you to come in. so please follow up with my office on these issues. i know there is this and a bunch
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of other technical issues we have been needing to follow up on. >> i appreciate that. >> the gentleman from kentucky, mr. bar is recognized for 5 minutes. >> thank you madam chairwoman. >> the last process i was pleased to chair the sub development of the risk modernization act or firma i later served on the conference committee that negotiated the firma provisions the president signed into law and this community's leadership has been united from a rule making and i would like unanimous consent to enter into the record a letter that i cosigned with chairman waters former chairman and the former subcommittee ranking gwen moore behind some of fir ma's projections. >> without objection. >> and also on the status of
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the rule making process. firma narrow its scope to particular countries. while some discretion on which country it targets apparently the president wanted china taken. how do you know it is china and not other allies like canada and europe. >> first we are for the legislation and party of ours executing it. i can assure you we are not just focused on china. we are focused on other countries as well and look forward to working with you the regulations will be clear as we roll this out in full time. we don't want to encourage investment, but this is about protecting national security interests. >> great and thank you for your balancing those interests including maintaining an open investment climate. i was pleased to see the
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president's budget has significant more resource for sithius, does the president's expanded request to congress mean you currently don't see the requirement to impose filing fees? >> no, we anticipate there will be filing fees as well. >> but nothing more than what is contemplated in the firma. >> nothing that -- i believe it's in our budget. it takes into account the new filing fees, but we will follow up with your office on it. >> thank you. >> i think you will find the filing fees will be reasonable. >> mr. secretary i was encouraged to the islamic dog corps as a terrorist organization. the cuds force have been responsible for numerous deaths of americans abroad and the
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planning of a bombing attempt here in the nations' capital and how will this restrict the previous executived orrers and add verb sars sanction act and what role will the treasury have in these restrictions. >> the treasury has been very involved in the state department and something we think is important. from a financial statement we have had sanctions in place. this puts other restrictions to restrict people both in entering the country and doing business and other things. this is even stronger sanctions that will be -- >> i applaud the administration's designation and i want know treasury is going to have an important role to play in implementation. finally, you had mentioned your interest in commenting on the leverage loan issue. obviously leverage lending is increasing, 75% through nonbank firms, but as i understand it nearly 77% of u.s. companies are
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noninvestment grailed and aren't lerj loans to nonknown like dell, burger king, sprint, hotel that permit these companies to thrive and hire american workers and if these were shut off would it be be bad for the companies and broader investment economy. >> that is true. we are working at f soc and studying the lending issue, just to make sure there is no problems but it is something we are on top of. >> and i know you recognized if the economy does have adown turn prices will drop and debt will be difficult to refinance. but in november, 2018, speech, losses, chairman powell said such loss is unlikely to pose a threat to the soundness of the institutions at the core of the system and likely to fall on investment vehicles like clo's and little threat of damaging
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fire sales. given that clo's are noncapital and not retail and solutional credit products, do you believe with the current wete today that will provide liquidity to the below investment grade communities. >> a lot of the capital has went out of the regular banking to clo's which are regular capital providing vehicles. >> and including the financial crisis. >> gentleman your light is up. gentleman from illinois, mr. tack son is recognized. >> madam chair i don't mean to be respectful, but we had an agreement i was going to leave at 5:00. it would be embarrassing, though i will tell you in the last 6 years there has never been a secretary of treasury that sat for more than 3 hours 15 minutes. as a courtesy, i will stay
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until -- but it would billion embarrassment for us not to show up for that meeting. >> but we still have members and both sides who too had been here for these questions would you be willing to come back in may? >> i always would be happy to come to a committee. i would be happy to coordinate with chairman waters. >> but you would commit to come back? >> of course. if i am going to come back, though i would propose we could break so i'm not late for this meeting. >> and if we continue and stop at your deadline, would -- if we need more than one wearing would you commit to coming back at least twice? >> i would do what previous secretaries have done. i can't see why it's not
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sufficient to come back. but again as opposed to trying to negotiate this in this format i would like to have a good working relationship with the committee and i look forward to answering all your questions. >> thank you. the gentleman from illinois mr. katz ton has 5 minutes. >> madam chair, at this point there are equal numbers of questions asked by republicans and democrats, so if we are going to adjourn in 5 minutes we divide this remaining time between republican and democrat, just to be fair under committee rules. >> i have no problem. we have been doing that the entire time, going from democrat -- >> it's 5:10, so 5 more minutes taken and the secretary has to leave in 5 minutes. >> the question will be for the
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secretary to stay for one democrat and one republican. five minutes. >> thank you. i will try to be quick to respect your time. would you support returning to the gold standard. >> i would not. >> good. do you agree with the president's recent call for renewal of quantitative easing. >> i'm sorry. i didn't hear the question. >> do you agree with the president's recent suggestion to return to quantitative easing. >> it would be inappropriate for me to make specific comments on what the federal reserve should or shouldn't do. >> okay. from significantly expanded deficits spanning to significantly expanded borrowing, we have an expansion their policy since the tax cuts in spite of rising gdp and
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falling unemployment. do you support the pro cyclical policy to the larger economy. >> i don't think you can put all proposal cig the same. i support the tax cuts and stand by i think this will create growths we pay for. so we had significant government spending on top of that. we got to be careful because we can't spend the money twice. >> the reason for my question, i think this morning the imf cut the global outlook to the lowest level since the crisis. domestically we are seeing an inversion from 3-month treasury bonds, an inverted yield curve. how concerned should we be we are approaching the next downturn? >> first of all there is no question that growth outside of the united states, whether it be in europe or china has slowed significantly as it relates to the inverted yield curve i am not particularly concerned about the inverted yield curve at all and from everything we see, we see for the next two years
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strong robust u.s. growth. >> i certainly hope you are right. i think i have yet seen a downturn people predicted. if not we would all be wealthy right now. if it comes here is my concern and in the last downturn, we have tremendous good fortune to have exceptionally policy driven tech any cats at the helm. these people did pretty well in the circumstances. president trump has to put it mildly not proven himself to retain people of that cal burr and i want to be clear we do not put you in that category. you are an extremely smart guy your resume qualifies you for this. but i have concerns guinn his recent no, ma'amnys to reserve
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posts who might have answered these questions differently than you have, that when the next downturn comes we are not going to have the people with the skills necessary to handle it and certainly without the trust of the markets the prior generation had. now, i'm not going to ask you whether you agree with that. it would be an awkward question for you. i expect given your background you might share some of those same concerns. my question for you as the congress given that potential and given your experience and wisdom how would you advise we hedge against that risk. >> i don't agree with you at all. i have a lot of confidence in the economic team that we have, whether it's with the regulators or whether it's in the commerce department larry cud low in the white house, we have as robust team as we have had in the previous areas. i'm glad you like these previous
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people. i worked with secretary paulsen for a long time and understand that. >> i guess my concern is as much -- the president keeps family members around him. there is a lot of turnover in the rest. i am concerned about the trusted financial markets for those people putting policy fist as their basic skills and that's the concern we have to hedge against. >> is there a question i'm supposed to answer on that? >> i think with respect to your time i will yield back the balance of my time. . >> who is next, please. the gentleman from georgia mr. labormath is recognized for 5 minutes. >> thank you madam chair and i will be conscious of your time.
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i'm a member of congress, but also an american citizen and it's important we put the best light of our nation with the rest of the world especially foreign nations. i have a whole suite of questions, i will narrow it to one. four years ago we passed the brokers signed into law. what's holding it back is that we haven't nominated a board of directors yet to be confirmed by the senate. they haven't been appointed. i'm leaving a bipartisan bicamera letter to the president. several have signed onto it expressing the urgency to go ahead and move forward. i know that you submitted some names. my question, can you please pass along to the president the urgency of getting this moving forward? >> will do. >> thank you mr. secretary.
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i yield back the balance of my time. >> mr. secretary if i may, you had indicated that you would like to have a press conference in this room following. >> i'm going to cancel that. i don't have time for that. >> well, that's what i was going to ask you if you would instead of having a press conference, continue with those members who have been waiting here for so long. and i think what i thought i originally heard was 5:30, rather than 5:15. so is it possible you could give us another 15 minutes. >> i have a foreign leader waiting in my office at 5:30. i agreed to stay longer. it will be embarrassing if i keep this person waiting for a long time. i wasn't going to have a press conference. i was going to have a press gaggle. i assured you i am happy to come back here and answer more of your questions. i respect the committee and want
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to have a good working relationship with you. i hope you understand i am already going to be late for my 5:30 meeting. >> i do understand. we are late all the time. we are all pressed for time. i do get it. however, i think i indicated early on that we would request or require that you come back at least two more times in the month of may. is that something you are agreeing to. >> no. madam chair, i find this to be -- i have here every single time jack lou and other people came here. there has never been anybody been here more than 3 hours and 15 minutes. i sat here over 3 hours and 15 minutes. i told you i would come back. i can't believe i'm sitting here negotiating when i will come back. i will follow up with your office. i told you i will accommodate you. >> i appreciate that and appreciate your reminding us of the length of time other secretaries have been here. this is a new way a new day and
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a new chair and i have the gavel at this point. if you wish to leave you may. . >> can you clarify that for me? >> yes. clarify if you wish to leave, you may. >> so we are dismissed; is that correct? >> if you wish to leave, you may leave. >> i don't understand what you are saying. >> you are wasting your time. remember you have a foreign dignitary in your office. >> i would just say that the previoused a min -- when the republicans, they did not treat the secretary of the treasury this way. so if this is the way you want to treat me, i will rethink whether i voluntarily come back here to testify which i have offered to do. >> mr. secretary i want you to know that no other secretary has ever told us the day before that they were going to limit their time in the way that you are doing. so if you want to use them as
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examples, you have acted differently than they have acted and as i have said, if you wish to leave you may. >> if you would wish to keep me here so that i don't have any important meeting and continue to grill me, then we can do that. i will cancel my meeting and i will not be back here. i will be clear, if that's the way you would like to have this relationship. >> thank you. the gentleman the secretary has agreed to stay to hear all of the rest when you members. please respect our time. who is next on the list. >> you are instructing me to stay here and i should cancel my foreign -- >> no, you made me an offer. you made me an offer that i accepted. >> i did not make you an offer. let's be clear. you are instructing me, you are ordering me to stay here. >> no, i am not ordering you. i am responding. i said you can leave any time you want. and you said okay. if that's what you want me to
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do, i will cancel my appointment and stay here. i'm responding to your request if that's what you want to do. >> that's not what i like to do. >> what would you like to do. >> i told you it's respectful to let me leave at 5:15. >> you are free to leave any time you want. >> please dismiss everybody. i believe you are supposed to take the gavel and bang it. >> please do not instruct me as to how i am to conduct this committee. please gentle lady, the time belongs to the chair. who is next? the gentle woman from washington ms. dean is recognized for 5 minutes. thank you, madam chairman. and thank you, mr. secretary. i'm not sure, the secretary has the attention right now. mr. secretary. >> so my understanding i have
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just been advised i am under no obligation to stay. i will leave at 5:30, which is going to make me already 20 minutes late. so i am happy to listen for another 10 minutes and then i -- >> thank you. >> and i have withdrawn my offer to voluntarily come back. we can follow up if that's appropriate or not. >> you may choose to do whatever you want. ms. dean, it is your time now. please proceed. >> thank you for restoring the clock. mr. secretary, how are you. and i am disappointed you were not going to come back. thank you for staying on. who was the foreign dignitary. >> i am here with a senior person from barain that is going to talk about security issues. >> thank you. maybe you heard this, but last
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year secretary was before a joint session of congress and he gave a beautiful stirring speech. his concerns regarding russia were the following. in 2014 russia illegally annexed crimea first time they took force since world war ii, a pattern of russian blooifr including massive military buildup from the arctic to the mediterranean to the black sea to the baltic nerve grade consistent cyber attacks on nato allies and partners. targeting anything from power grids. campaigns and attempts to interfere in democracy itself. did you have a chance to hear his speech? >> i didn't. but at your recommendation, i will get a copy of it and read it. >> it's beautiful. and he prefaced it and ended it with it's good to have friendsed
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and he was recalling the history of nato and 70 years among nation there is and he ended it with it's good to have friends and in the middle i inferred, but it's also good to know who your friends are not in this world and with that history of what has been going on with russia, aggression -- i'm puzzled how it was that you decided to delist three sanctioned russian companies with i guess majority ownership with deraposka. who was your decision for delisting. >> thank you for raising that because it's a very important issue. first of all the important issue is we dig sided to sanction the companies and i think in particular rusol and the related entities, a group of entities. and we did that under the various different authorities that we had. >> why did you delist them? i don't want to learn the whole history. why did you delist them.
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>> we delisted them because the company approached us, not the olagart, but the company approached us, negotiated an agreement. >> majority control by the olagart. >> not majority control anymore. he and the entities have 45% enoer ship and 35% vote. >> and he shared ownership to whom. >> various entities. >> who? any family members any related members? >> again if you were referring to shares to his children pursuant to a divorce decree that he was legally bound to do. >> so he retained 40%. his children got other shares, so likely among the family they have more than a majority of the ownership. >> no, they don't have more than a majority in the family. >> but we don't know that for sure. are you able to provide us that full detailing. >> i believe on a confidential basis we would be more than
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happy to give you the details. >> speaking of conflicts of interest when did you take the position of secretary? >> i believe it was february 13th. >> of 2017. >> that is correct. >> and you sold a company that you owned to your then fiance now wife; is that correct? >> that's correct and that was fully approved by the ethics department at treasury. >> and that took place when. >> i don't have the exact date but i can -- >> after you assumed the secretary ship. >> but i was in my ethics, i was given a certain amount of time to sell assets which i did. >> but you thought it appropriate to sell to your fianci, now wife, that would clear you of any conflict of interest. >> again just to be clear that transtransaction was fully vetted and fully approved and consistent with the ethics -- >> what questions did you ask of ethics counsel surrounding
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that transaction. >> i asked extensive questions both internally to our designated ethics advisor as well as outside counsel i had. i wanted to make sure i was fully in compliance. >> because you were concerned about a conflict of ainterest or appearance of conflict of interest. >> i was never concerned about a conflict of interest. quite frankly i never thought i should sell it, but i agreed to comply with the decision of the og. >> why did they tell you you needed to sell it. >> i don't know. again -- >> you took on that transaction, invested yourself of the -- your wife owns it and you don't know why they recommended that to do. >> again i divested virtually every single asset that i owned. and again, as part of the agreement i entered into, i agreed to sell the asset.
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i was fully compliant when i sold it to my fianci. >> i can see a strange parallel. >> the gentleman from tennessee, mr. rose is recognized for the rest of the time until 5:30 when the secretary will be leaving. >> thank you mr. secretary for being so generous for your time. i would like to yield 30 seconds to mr. keen. >> thank you. mr. secretary in respect to your time, i will take 5 second to say i will submit my questions with regard to sifius and china. back to you. >> thank you. as the report stated counsel reaffirms its view that legislation is needed to create a more sustainable system. the white house recently issued a memo, as you know on its reform on march 29 with a
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member -- outlining a number of initiatives. mr. secretary i understand you cannot go into the weeds too much and tell me about treasuries views at a high level of what housing reform looks like but cowell you give me some guidance as to what you believe and treasury believes housing reform should look like. >> absolutely and this is an area i have been involved with for 30 years. it's something i have talked about and i believe that it should be twofold. so one as it relates to the cse's, we should have a system where taxpayers are not at risk, so we want a robust system where people can access mortgage capital, 30-year mortgages but not put taxpayers at risk and the reason we are focused on housing reform and not gsc reform is we done want to take the risk out of fannie mae and freddie mack and put it in another bucket.
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this is something i hope we can work on a bipartisan basis. my first choice is to do legislation with congress and i hope we can do something quickly this year. >> thank you. i appreciate your interest in making housing finance reform a priority. while the last administration did express an interest in the issue, they did not provide the leadership necessary to get reform over the finish line and your leadership makes me optimistic that this will get done. in the interest of time, madam chair, i ask unanimous consent to submit to the record a list of previous appearances by treasury secretaries along with the time they gave. >> without objection such is the order. mr. secretary thank you for staying until 5:30. without objection all members will have 5 legislative days within which to submit additional written questions to the chair, which will be forwarded to the secretary for his response. and i ask the secretary to please respond as promptly as
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you are able. and i expect the secretary to honor our invitation to return so that the rest of these members will have an opportunity to pursue their questions. so without objection all members will have 5 legislative days within which to submit extraneous material to the chair for inclusion in this record. this committee is adjourned. >> thank you. and i will look forward to being back in may. we will work on a date. thank you very much. appreciate it.
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