a region where a lot of trade, tourism, families who live on both sides. the border is very diverse geographically and very diverse, is private land, public land, sovereign indian land, all along the border. and so really the border should be thought of like its own. it is owned that requires good management. >> watch the entire conversation with janet napolitano tonight at 8:00 p.m. eastern. also but tb, how we went, and peace on earth. angela stance on prudence world and amy siebert her plan. it all begins at eight eastern p.m. on c-span2.

thursday morning the justice department will release the redacted version of the mueller report. it will be given to congress and released publicly at the same time. once a report is released c-span will open the phone lines for your reaction. also when available you will be able to find the report online at cspan.org treasury secretary steven mnuchin went before a house committee to testify on the current state of the international financial system but he was also asked about the release of president trump's tax returns. maxine waters is the chair of the house financial services committee. >> the committee will come to order. without objection the chair authorized to declare a recess of the committee at any time. at today's hearing, we are receiving the annual testimony of the secretary of the treasury.

on the state of the international financial system. i will now recognize myself for four minutes to give an opening statement. today thisem committee convenes for hearing to receive the annual testimony of the secretary of the treasury and the state of the international financial system. i would like to start by talking about the international development association or iga which is the arm of the world bank that provides grants and highly concessional loans to the world's poorest countries. i am concerned that the new private sector window is transferring $2.5 billion to the world bank's private sector arm. the international finance corporation. it is subsidizing private firms, selected without competition on the basis of un- solicited proposals. the psw is likely to prioritize financial returns over positive,

development impacts which will be difficult to monitor. the psw also stands in conflict with the world banks own principles that call for subsidies to be justified, transparent, competitively based, focused on impact and guarded against rent seeking opportunities. so my message to treasury and the world bank, unless this transfer stop, or at a minimum or competitively based and fully transparent down to the amounts and purpose of aid going to which firms in which projects. the administration's request for congress to authorize the ifc increase will not be a committee priority.ca i would like to turn to treasury implementation of u.s. sanctions. the secretary also must provide this committee with complete answers today regarding the treasury department actions to delist companies associated with the russianre oligarch.

he is a criminal and is confidential not be let off the hook. the sanction that would put in place to punish bad actors. i'm very concerned that the delisting agreement the treasury implemented sends exactly the wrong message to him. other russian oligarchs and putting himself because he was brought a great deal of influence over his previously sanction companies. trump has shown a difference to. trump inexpensively sided with putin over his own justice department and when the fbi

indicted 12 russian intelligence officers for conspiracy to interfere in the 2016 u.s. presidential election. very troubling, it appears that this dynamic may be affecting sanctions coliseum with the trump administration treasury department. enabling russian bad actors. moreover, congress mandated several things to be placed on russia. the treasury has still not implemented including sanctions required by the chemical and biological weapons act. that the administration at a statutory deadline to impose by last november. so, secretary mnuchin must explain these decisions in a public testimony today and address several other important issues. i expect you to be forthcoming withmu this committee and i also understand that despite the tforts to accommodate your schedule we have now made another engagement this evening. this is unacceptable. if you are unwilling to say today for the full duration of

the hearing we will compel heth returned 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 for an opening statement. >> welcome sec. mnuchin. committee ate the a precarious time for gold markets. in fact there were you in january right after the vote in the uk parliaments regarding brexit and in that letter i raise questions about the uncertainty of a prolonged brexit and the effect it would have on financial institutions derivatives market. cross-border training and financial assurances and financial contract. after brief failed attempts the prime minister of great britain continues to work toward friday's deadline on brexit. europe is a long and uncertain path toward brexit is coupled with the slowdown in germany.

i'm particularly 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 on the deutsche bank indicating that both banks were in such big trouble the even the merger could not help either one of them. that is problematic. the global issues are not just limited to the uk, and china the double-digit growth is at an end. and thanks to the state run allocation of capital, the disregard of the rule of lawaw d regime of intellectual property over home grown ideas, we see that coming home to roost. moreover, should we be concerned, this is a pretty interesting question worthy of a discussion of financial

services. that china is showing the global aggregates index open up the 13 trillion-dollar debt market to investors. the move is expected to bring in more than a hundred and $80 billion in investor capital to china. what does this move mean for global markets? what effect does it have? with these risk traditional threats remain whether they emerge from international terrorism, weapons or illicit finance's flows. it plays a critical role in protecting the financial system. areas of bipartisa bipartisanshn capitol hill and we viewed the treasury important to this and that is why we give you this authority. we think it should be used responsibly but fortunately with clear objectives of national interest. finally i want to make a special note ofspt the committee on fon

investment in the united states or cvs. it is quickly becoming a model for other countries looking to screen investments for national security risks. treasury'smi response ability under this law is a significant impact on the global investmentt environment. through bipartisan work here on capitol hill we made significant changes in a way that it targeted national security threats while preserving and shepherding the united states open investment climate. in fact, last week they unwound two deals involving chinese investors. i look forward to working with the chairwoman to ensure that piece of legislation is basically implemented and regulations can form with congressional intent. with that i would like to yield the balance of my time to the subcommittee ranking member on international affairs.

>> i would like to thank the gentleman for yielding. mrs. secretary thank you for being here. i would like to take this opportunity to highlight and reauthorize the export bank that expires in>> october. the x and bank supports the experts and american jobs. competition for international markets is fierce in the united states companies already operated the disadvantage china support finance agencies. chinese equivalent was 36 million last year and i look forward to looking into working with you to make sure we reauthorize this agency and institute reforms that will strengthen it. to help american workers compete on the local plainfield. i am also looking forward to your testimony with regard to mpglobal uncertainty sanctions d

international development in the bank secrecy act. thank you for being here. i yield back the balance of my time to thehe gentleman. >> the chair now recognizes mr. cleveland for one minute. >> thank you, madam turn thank you secretary for appearing on the yo committee. and thank you for the service to our country. when you took this job you let members of congress swear on an oath on theyo constitution foren and domestic. under these unusual times the host oath is being tested. it is my opinion that many of the institutions are actually being threatened. i think this hearing is an opportunity for you to tell us about how you are holding on to these institutions. hopefully you will provide candid answers to questions on your role in decisions impacting us and frankly the entire world. this included dangerous and long tariff policy that reduced

america's income at a rate $1.4 billion each month according to the federaler reserve. the same policy and the u.s. chamber of commerce threatened 2.6 million american jobs. we will also have hopefully a better understanding of how this administration decides to remove sanctions against russia and north korea. these two countries have been identified and unclassified worldwide thread investment as primary threats to national security. i look forward to raising questions later. thank you. > thank you very much. at this time i want to welcome to the committeeyo are witness f the treasury. he has served in his current position since 2017. mr. mnuchin has testified before the committee on previous occasions and i believe he does

not need a present introduction. without objection your written statement will be made part of the record. sec. mnuchin you are now wrecking us for five minutes to present your oral ll testimony. >> thank you very much. it's a pleasure to be with you. chairwoman waters, ranking member mckendry and member of the committee. it is good to be with you today to discuss the international omfinancial system, the national advisory council on monetary and financial policies report to congress and the key priorities of the treasury department. i am proud to report the cipresident trump's program of x cuts, regulatory relief and trade deals is resulting in the strongest economic growth the american economytala since 2005n the best jobs market in generations. i would also like to comment on opportunity zones which are important key components of the

tax cut and job act. they will help more americans benefit from the strong economy. opportunity zones offer capital gains release for an investments and businesses. we are seeing a great deal of enthusiasm for this policy. it will lead to revitalization and restore the prosperity to more workers and families. the administration is making trade with their international partners a topthpr priority. i urge all members of congress to support the passage of the u.s. mexico canada agreement, u.s. mca 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 agricultural products. we are also making progress negotiating with china to rebalance our economic relationship. and unfair trade practices, open their economy to american companies and protect our critical technology.ic

we remain focused on several economic issues related to national security. we are implementing the foreign investment risk review modernization act. this legislation had an overwhelming bipartisan support modernizes the committee on foreign investment in the united states review process and enhances to analyze transactions for national security risks reserving our commitment to open investment environments. treasury is combating the abuse of our financial system by regimes and terrorist organizations, cyber critical and other illicit actors. the united states government and the internationalsu partners are putting unprecedented pressure on the illness legitimate maduro regime and venezuela. we will continue to target this regime and support juan guaido as he continues in his country.

we are pleased that with many members of this committee has supported her sanctions and other actions i assure you that the administration will continue to aggressively target actors around the world. turning to policy development, impacting international financial institutions. we are advancing reforms to more efficiently. we are working constructively to g7, g20, world bank and other partners to foster debt transparency that will reduce the risks of crisis in developing countries. as you are aware the imf has the review quoted this year. we believe the overall resources are currently adequate to composted schools and we are beginning discussions with other shareholders on this issue. finally a particular note, we are requesting authorization for the funding of the world bank capital increase.

in connection with this, we successfully negotiated a comprehensive reform package including lending major elements and future capital increase in resources on poor countries. we are also requesting authorization for thetu plan she purchase in the north american development bank with the goal 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 veryam much sec. mnuchin. chairman neil requested the president's tax returns last week. section 6103 of internal revenue. when the committee makes such a request "this they shall furnish

specified in such request". you have been asked to be complied with the law today and i imagine you feel your job as secretary is online. yesterday, president trump forcibly out stirred secretary nielsen and to a long list of cabinet, level officials say he forced out including chief of staff john kelly, secretary staff and attorney general jeff sessions. will you comply withh the law bt the deadline tomorrow in british the tax returns even if it 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 a similar question this morning when i testified earlier today. as a previous said i want to acknowledge we have received the request and as i said before we will follow the law, we are reviewing it with our internal legal department and i would

leave it at that. >> thank you i guess. what you're basically saying you follow the law and near not afraid that you will be fired if in fact he released the returns? >> i am not afraid of being fired at all. >> very good. >> having said that, i want to be clear. i have said we will follow the law. >> i'm very pleased you're not afraid of being fired. since president trump took office numerous press reports have been made to the trump associates and campaign officials have attempted to negotiate the lift of sanctions of russia. when you lifted sanctions the company largely owned by russians you also directly benefited one of your for former business associates. which whom you owned are pde.

it also seems that he was a close relationship with him. i have in my possession a series of letters the treasury exchange with congresswoman that pertain to this issue. treasurer's response to ms. spear denied leader reports that you sold your ownership stating that you sold your share to a third party unconnected to him. however, the letter is not comment on his company, producing an interest in a related company rat pack entertainment at this exact same time. who is the third party that you sold your shares to? >> first of all let me just say, and relationship with lynn

bought nick. he is not a close associate of mine. he is someone i met a couple of times. >> did you sell them to him as a third party? >> no. >> rat pack entertainment? >> i have no connection with rat pack entertainment and nor can i, or am i aware of the specifics of the ownership. it's a completely separate entity. so it was and is no way related to rat pack entertainment? >> rat pack entertainment was a passive investor and rat pack dune. >> so there is a connection between rat pack dune and rat pack entertainment? >> rat pack was in investor and ratpa pack dune. i was not an investor or associate engine associated with rat pack. >> when we ask about whether 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 is correct. the third party had nothing to do with rat pack -- >> hoosier third-party that you sold? >> that was a confidential transaction. >> was it a russian oligarch. >> no i can assure you -- >> why can you not share the information with the committee. >> i don't think is relevant. >> i think is relevant because of your involvement with russian oligarchs even before you came treasury secretary. and you're in the position now where you are dealing with sanctions that replaced on these oligarchs and it appears your delisting sanctions and it may be a conflict of interest. don't you think you need to straighten that out. >> i don't believe i have ever met a russian oligarch nor did i do business with russian oligarch. i would just, that he was from a

different country he was not and russian oligarch. >> so you never met or talk with or had any conversations with anyone from russia or mr. victor or anybody about sanctions is that correct? >> that is correct. i never met either of them. >> .net had a conversation. >> i've never had a conversation with either one oftht. them. >> you've never been involved with any oligarch in terms of your previous businesses? >> that isaner correct. >> i am going to have the record record that the third party that you sold your shares to you refuse to reveal to the committee is that right? >> that is correct. >> let us continue not on.

[inaudible] >> the gentleman from north carolina, mr. mckendry is organized for five minutes. >> sec. mnuchin i don't have any questions about your executive producer credentials, but i think you did well with the american sniper, solely, the lego movie and most recently wonder woman. congratulations to you at your box officee success. actually i thought it was much funnier but the crowd apparently didn't. thank you for your testimony. as i looted in my opening i wrote you this past january in particular about brexit. he referenced this financial oversight's annual report. in a number of outcomes related

to brexit that could trigger distress. anwould you describe what work u and other regulars arguing with u.s. financial institutions as well as regulators abroad appropriately for disorderly brexit? >> let me just comment first of all, i think it's a surprise to many of us that arey sitting he today. we are waiting to see how this plays out. but over the last year end specifically over the last two months i have been working very closely with si and with the appropriatela regulators that or financial institutions are prepared for brexit and several weeks ago i was in the uk and i met with the primes minister as well as philip hammond and as long as the head of the bank of england. and we are very carefully

monitoring these developments. u.s. financial institutions are prepared but i think there could be some significant disruption in the market and in trade as a result of a heart brexit. >> are regulars prepared and is our government prepare? >> i believe we are prepared. although i would just say, i think there will be many aspects as brexit and we have encouraged both parties to see if they can have a resolution that works. >> how does this weeks actions, yesterday and today's actions, with the uk government and the conversations with the eu relate to your activities and have you hate and activities this week as a result? >> i haven't been privy to the conversations that are beenla going on yesterday and the day before and i've beenn actively involved in this for the last six months and i think at this

point we need to be prepared for heart brexit as a realistic outcome. >> without mindset you are tcprepared on friday if there ia heart brexit as far as your footprint treasury, you've worked to see that we've done all we can do in preparation? >> that is correct. as we coordinated with the federal reserve, the fdic and the otherrk appropriate -- >> the tomorrow we are holding and untrue meeting and from your e perspective how would you describe the u.s. financial system currently? >> i think the u.s. financial system probably is very well capitalized as the risk significantly and it is in very good shape. >> so the known unknowns are well provided for? >> they are but the unknown

unknowns are what we worried about. >> that the nature of financial institution? >> some describe the banking environment as size equaltu survival. as it relates to dodd frank that is clearly been the case where we have fewer small financial institutions because of the regulatory firm and he described the cost of the system a regulatory burden. >> i think it's quite significant and i think we were to this committee and the senate last year on reforms to dodd frank to make sure community banks and regional banks can competestk fairly. i think it's important we have a robust regional bank in community banks system and we don't end up with a small number of banks in the country. >> greater competition ? >> absolutely. >> unless consolidation which it a result of regulation. >> what role do u.s. financial institutions play and enforcement of sanctions questionat were.

>> u.s. financial institutions are critical in forcing our sanctions. >> enormous benefit being the reserve currency and for us having financial institutions to do international trade customer. >> absolutely. the reserve currency is verye? important and there are many benefits that we have from that and that is one of the reasons why our sanctions are such powerful national security tools. >> u.s. financial institutions do not play that role and sanctions. how would sanctions a customer. >> it couldn't occur without both u.s. financial institutions and other institutions that are connected to the u.s. system. that is critical. >> final question, you described embarrassing situation that the irs technologyin footprint. we look forward to working with you to ensure there is proper funding. so the irs can update its technology footprint and thank you for making that publicly known. are you back. >> thank you, ms. maloney from

new york. also the chair of investor protection and capital markets is reckoned as for fives minut. >> sixty mnuchin, when you testify to this committee two years ago, i asked about beneficial mortgage. you said he look forward to working with us on a solution to this issue. and then you testified last year you said and i "we have to figure out ownership in the next six months, i don't want to be coming back here next year if we don't have a result. we need to work with congress on a bipartisan basis on this. "well mr. secretary we been working on a bipartisan basis on this issue and i think we are very close to an agreement. treasury did provide technical feedback on our bill and we've incorporated all of the recommendations and i want to thank you forid that.

you've seen the most recent draft of the bill and i know you are still going through it and i 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 that on a bipartisan basis we can get accomplished both here in the senate. as i've said in the past, there are many of things i am proud of our compliments today and this is not one of them. i think we need to solve this and i hope not to be back again next time with it unsolved. >> i hope that you're correct. switching topics. you said in testimony this morning that your team had communicated with the white house office about congress' request for the president's tax returns. but there isn't supposed to be any communication with the white house the process was designed

to avoid interference with the white house. i know that you said this morning that you personally were not involved in the discussions with the white house but obviously your team told you about those communications. what did your team tell you about the communications with the white house questioning. >> first of all let me just say as i commented on this morning and i will repeat, i have no direct conversations with the president or anybody else in the white house about this. as a volunteer this morning, i did make clear our legal department has consulted withwi the white house as they would and as they would think would be normal. it's not taking direction from the white house, i don't view that as interference. it was widely publicized that we are going to received the

request and they consulted with them before. it is not specific to the president or anything related to the president's tax returns other than the expectation of getting this request. >> did your team ask for the white house's permission to release the president's tax returns? did the white house ask your team not to release the tax returns? >> we were never asked the white house permission on this nor did they give us the permission. as i said, we consulted which i believe is appropriate of our legalic department. >> i think the fact that there is any communication with the white house about this is deeply troubling and certainly violates the spirit of the law if not the letter of the law. i think we need to get to the bottom of this. i yield back.

>> the chair advises members that the vote has been called on the floor and the committee will recess for votes and resume immediately following. the committee stands in recess. no one. [inaudible] [inaudible] [inaudible]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> the gentleman from michigan is organize for five minutes. i appreciate the chairs

recognition and good to see you again mr. secretary. i want to touch base real quickly on a couple international issues. one being venezuela and the other i want to touch on export import bank and will see if we can get to u.s. and in ca as well. the united states is you will know in a european country has recognized juan guaido as the interim president of venezuela. but the ims is yet to follow and do the same. i am curious about your thoughts on how could congress support additional resources for the ims let alone rescue venezuela potentially if the fund disagrees with the largest shareholders on who the legitimate leader of venezuela currently is. >> i don't think that the imf

disagrees. matter fact i was with christine yesterday and we discussed this issue. the real issue is that we are focused on is what would it take to unlock imf resources to the interim government and that is something we are constructively working with on. more portly, we are very focused at the appropriate time at the transition of using imf resources and world bank resources that the people of venezuela are in desperate need of an economic recovery. >> i might add that the people of venezuela deserve better. they deserve better than the current raising regime and certainly am hoping that mr. cueto is able to be recognized permanently. but any additional help you can give to make that happen would

be greatly appreciated. export importy bake. the bank dates back to 1945 and we have had a couple of re- authorizations, discussions, reforms of some degree and in fact in the last go around one of the provisions that was put in was a requirement for the president to pursue negotiations with foreign countries to "substantially reduce with a possible goal of eliminating". those countries export subsidies. that was specifically talked about with airbus and what could be happening there. could you please give us an update on treasury's role in conducting these negotiations and what specific progress if any are you making in this issue customer. >> first let me just, president

trump is very interested in the export import bank and making sure we have a quorum in the can and land properly. that is something that the treasury is very involved in and specifically the conversations of light hauser and myself in china that is a topic that is high on the list. >> so could you give us more specific and the progress. not all of us are fans and when you look at the original intent it was to get the smaller industries into a foreign transaction to have the resources to be able to do that. we have seen it go in a very different direction. specifically am looking for what are the status of thesore conversations? >> the conversations with foreign countries on subsidies or the conversations on the use of the export import bank? >> specifically dealing withid foreign companies excuse me,

foreign countries have on similar structures. the directive was that treasury negotiates with these countries to reduce if not remove the need for those. >> as the g7 and the g20, we have been having very significant conversations prior to leaving the world bank oversaw those and we are making progress at the oecd. >> you mentioned in your opening about the u.s. in ca coming from michigan which statistics would point to the largest trading being in canada. the six largest is the state of michigan in canada. give us an update on what is happening there and or take on how we are going to be dealing with u.s. mca. >> the trade between the u.s.. canada and mexico is very important to our economy. i think as i mentioned in the

opening statement that this is an agreement that brings forward trade very importantly and i hope it's brought up within congress very quickly so it will be passed. >> thank you mr. secretary. i was here earlier listening to your exchange with chairwoman waters. i heard you say that you will comply with the law and furnish president trump's tax returns. but what i did not hear you say to the chairwoman was whether you are going to comply withgo chairman niels deadline of tomorrow? so my question to you is yes or no we comply with tier niels deadline of tomorrow questioni

questioning. >> i want to clarify my previous comments so there's no misunderstanding. i said that i would comply with the law. >> in the law sends a written request from the chairman of the committee of the house of representatives and the chairman of the committee of finance of the senate of the chairman committee the secretary shall furnish. that is a law. >> again, i want to be very clear so there's no misunderstanding. i have said that i will comply with the lie. i'm not made a comment one way or another whether we would supply the tax returns. i want to be very clear on>> th. we have said we will comply wit the law. >> what law are you referring to? this is the law. u.s. code 561 zero three. so can you tell me what other law talks about tax returns? >> as i said we are consulting with our lawyers -- >> you said you would comply with the law questioning. >> that is correct will we will

see about tomorrow. >> secondary management in early march the u.s. officially debt ceiling cappingrr the debt that over $22 trillion. according to the c.b.o. reports producing and february the treasury department will exhaust its use of extraordinary measures sometime in late september or early october. do you agree with the cdo's production that the treasury department will exhaust of extreme neri majors sometimes in the fall customer experience i am not going to give an exact date. there are a lot of assumptions. the more important issue is that i have written to congress and i would urge congress on a bipartisan basis to pass the debt ceiling. this is something that is very important to our national debt international credit. i would hope that this is not

something that would be sittinge here -- >> i hear you. what would be the consequences domestically as well as internationally of the u.s. defaulting on some of its debt? >> i can't possibly imagine that anybody in congress would ever want us to default on our debt. it would be quite disastrous. >> so do you think the debt >>ceiling should be held hostage by any desire president trump might have two fund is th vanity wall? >> the president has no interest holding this hostage to any issue. he has encouraged me and i reached out to both the democrats and the republicans in discussions the president would like to have this past as soon as we can. >> thank you. in the treasury department request for fy 2020, you and president trump choose to

eliminate funding foror the city of discretionary grant and direct loan programs. can you explain this and tells how you think. the community served by this institutions are impacted. >> thank you i the opportunity to talk about this at the appropriations subcommittee. let me rip repeat this. first of all i want to acknowledge that 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 prioritize it. if this committee and if we have appropriations for that then that's congress' desire then we shall administer the programs -- >> you but that that money will beco obligated. >> the gentleman from missouri.

he is recognized for five minutes. >> thank you, madamyi chair. welcome secretary mnuchin. i know a while ago ms. maloney talked about beneficial ownership. i wanted to reiterate. i am 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 codifying as a rule. i wish the treasury if we could take her bill and handed to you and you make those changes it would certainly be better than a string to codify. but to date we have not been able to get that done and maybe this is the best way to handle it. if you can,. >> i appreciate the bipartisan views and again, there are specifics that we need to work out and we look forward to sitting down with you and otherr of the committee to get this done soon. >> what if we could reach a bipartisan agreement would you be willing to make the changes? >> i think that is something we need to sit down and discuss with the committee.

>> thinking. as secretary of treasury you also serve as a sock which is task of emerging threats to financial stability. in the past it has discussed issues of cecil and many concerns around the center. atin my opinion it affects many aspects of the economy and could have drastic issues like mortgage market and my discussions with them they indicated they did not do any protesting in any serving. they did not do any studying as a result we are in the same a situation with a rule that could have a dramatic impact that market to market had and had too pull it after the disaster of overweight. i'm very concerned about the effect it can have on the geocities and the credit unions. the only way to find income and

billow through reserves is to raising fees on loans. we had that on this committee back in december. the homebuilders association said for every thousand dollar increase a hundred thousand people no longer have access are able to buy or build a home. that is dramatic. that will have a tremendous effect on the economy if it hass that level. they're both doing studies to find that out when we are hopeful that they will put a pause on this until we can stud this and they didn't. we need to have the industry studied to make sure we can have that done. would you support something like that? >> this is an issue that we are closely studying. we look forward to speaking to you and following up on this and it is something we are discussing veryth closely. since you mentioned gsc, i hope that's an area that we can work on on a bipartisan basis for gse reforms. >> my concern is that the g of c's are going to come up with billions of dollars to put into reserves. when you have a $5 trillion

portfolio in the back of the envelope announces the two reserve. you never knew that. that will have a dramatic effect of the economy. same thing the credit union. my concern, i hope the regulators and a lot of folks involved in economic policy take into consideration what is going on and will work to try to findu a way to get them to pause on this to make sure we know what the effects are before we implement this role and don't have the same disastrous results as we did with market market. . . . going to be before we implement this rule and don't have the same disastrous results that we did. i appreciate your 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 >> it's interesting because european banks were 70% the market value was 70% their book value. american banks were 1.09 a roughly 10% above book value which tells me our banks are in good shape.

we think that's great. we have a strong economy, it also tells us european banks are in trouble. they're valued at 70% says the economy and troubled the bank is in trouble. that's not good. he mentioned a while ago and i think the ranking member talked about brexit. with that in mind, with the weakness in my mind and just splashed on the front page of the journal, how do you see this playing out? do you see this is a concern? will brexit work this out and brings will recover? is that rating the result of brexit or some other weaknesses? >> welcome as as you pointed out, there's no question that u.s. banks are much better capitalized than european banks. there's no question that is you pointed out the u.s. economy is much stronger than what is going on in europe. and as it relates to making

predictions that brexit that's a complicated thing to predict. >> thank you. >> the gentleman from missouri. also the chair of the subcommittee on housing community development. it is recognized for five minutes. >> thank you, madam chair. thank you mr. secretary for being here. i have some concerns about the compliance history of the bank and the potential national security and criminal risk posed by its operation in the u.s. recently, the new york department of financial services in the u.k. financial conduct authority have brought actions against deutsche bank for its role in facilitating suspicious activity in the u.s. can you comment on any and all

enforcement activities involve one 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 activity as a relates to deutsche bank. the primary responsibility with this is with the primary regulators obviously from a treasury standpoint that is the occ and fen/phen. i can assure you the regulators are very focused on deutsche bank and other banks but i can't comment on ongoing enforcement matters. >> and, does it give you pause or concern about the activities of a bank operating in this country was some serious questions perhaps? does that give you concern? >> i want to be careful

secretary with what i say. but, have a lot of confidence in our regulators and them being on top of these issues. i was a the general matter to deutsche bank the issues we talk about we take very seriously. i discussed with the financial regulators regularly. >> thank you for that response. when you testify before committee last july you stated that at this time, the united states find the imf resources are adequate following the 2016 implementation of the 2010 quota governance reform package. most recently in december when treasury under secretary, david testified before committee he explicitly stated that the administration not support an imf quota increase essentially bringing to a halt a decade of slow progress in reforming the

funds in governance structure to make it more representative, legitimate more effective. this will seem shortsighted to some is that allows japan and europe to maintain its overweight voting power and of course none of this will be lost on china or other under representing emerging markets. you concern the administrations rejection of any possible reform of 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 clarify. i am the lead as it relates to the imf issues. i'm looking forward to imf meetings this week. people are coming in from all over the world.

who said one we are comfortable with the resources they have today. but i think is you know, the nab will rolloff. two, we don't support an increase in quotas but we are in ongoing discussions with the imf and other shareholders about what we need to do to support the balance sheet. i think the united states leadership at the imf is very important to us. >> what about the governance structure? >> the governance is important. as part of any ongoing issue, governance and reform are high on the priority list just as they have been with the world bank. >> i see. a couple of years ago the chinese and joined the u.s. dollar, the euro, the yen and the british pound and imf special drawing rights basket which determines currencies that countries can receive as part of imf loans.

by joining this elite group in china certainly doesn't appear to be a developing nation. if an american from st. louis wanted to invest in china, could they have full confidence in the chinese banking system? >> the question was question art should american have full confidence in the chinese banking? is a general comment. i'm sure there's banks that are wrong capitalize and banks that have significant problems. their system is highly leveraged. >> thank you my time is up. >> mr. duffy is recognized for five minutes. >> thank you madam chair. welcome secretary mnuchin. i have concerns about the status of the ongoing negotiation that the international association of insurance providers, the developing an international capital standard. i would note that randy gave a speech in january and stated that the ics quote may not be optimal for the 80 united states

insurance markets. obviously expressing some concern about this negotiation. my question to you is, looking at this tried-and-true u.s. system of insurance regulation and your role in the fsb, 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. if you mr. corals lean into this, we should get a better result than what were hearing for mr. quarrels, right? >> i would hope so. >> so what i. >> let's talk fed wire. obviously it moves over $600 billion per day in

payments. last week, fed where went down and was completely nonoperational for more than three hours. review brief by the federal reserve? >> i was. >> you tell us what happened? the three hours is concerning. >> first of all, i would just say i was completely abreast of it real-time. the chair and i were speaking real-time on this issue. the fed had backup plans that i was comfortable with. i think it would be viewed appropriate in a public forum like this for me to comment on the specifics. >> did the backup not work if it was down for three hours? >> i want to be careful. a more than happy to come and talk to you in a different setting. i will say, have complete confidence in the fed wire system. i was fully aware of the specifics of what was going on. we were completely on top of it.

>> i would appreciate a follow-up conversation in a different setting. >> are you a lawyer? >> i am not, but i deal with a lot of lawyers. >> sorry about that. maybe you know this, of is a presidential candidate or president required to release her tax returns? >> i do not believe they are. >> is common practice often times that they will release their tax returns but it's not required. >> i believe that's the case. >> i agree with that practice. i said president trump should release his tax returns, it would be a good thing. but the president has chosen not to release his tax returns. i think you're going to get a lot more questions today about taxes. i would note that to walk down a political road where we are going to use the chairman of the ways and means and the power given by the chair for political purposes to gain the tax returns were political opponents, we

know that when one action is taken it it often times doesn't stop. i don't know if anyone in this room wants to have their taxes release. i don't know if hillary and bill want there's release. we can play this game out. i guess this is for no investigative purpose. we heard for two years that bob mueller has to be protected. bob mueller is the gold standard. don't cut his money, you make sure you protect him into his work. he did his work. we have our synopsis. it's not over. we continue to have debate about there might be something in the report. maybe we need the report out regardless of what is confidential, now, we go to tax returns. i want you to follow the law, that's important. but i would note in this room,

we should be awfully 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. the president is not read required to release his taxes, 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 was chair of the committee had requested high profile democratic tax returns they would have been significant concerns. >> i'm shocked to hear that mr. secretary. of course there would have been concerned. >> thank you for your time. >> the gentleman from new york was also the chair of the subcommittee on consumer protection of financial institutions. >> barack obama did release his tax returns. in fact, every president of the united states except nixon --

since nixon open their tax return and is and when someone says they give their words shouldn't one be there word is their bond they should live by what their word is. is that correct mr. secretary? if you say something to the american people, you should tell them the truth, is that not correct? >> i do tell the truth. >> but, since mr. duffy brought it up, the president of the united states told the american people he would release his tax returns and he has done it at least 16 times that he would release his tax returns. he made a promise to the american people. now shouldn't the president of the united states be a man or woman of their word? >> let me just,. >> yes or no. >> i would like to answer the question. it's a yes or no question. >> again, what i have read in

the press he will release his returns were not under audit. i'm not privy to the specifics of that. >> he has said several times, before elected president and after elected president that he would release his tax returns and then we hear from his chief of staff that never under any circumstances. that means he has liked the american people. i hope mr. secretary you are not a liar and other individuals in the administration is not a liar when you testify you testify to the truth and not deceiving individuals. i hope. >> .of order. >> of the gentleman is calling him a liar. >> i didn't call anybody a liar. i'm saying you can go to the videotape and see what the president said what he hasn't done. so yes.

>> the.of order,. >> there is no.of order. >> what is your.of order? >> my.of order. >> what is your.of order? >> that the president is a cover personality and i believe the gentleman was calling the president a liar. >> will the gentleman proceed. >> yes. >> so. what i'm saying saying mr. secretary is that the american people listened to someone when they make a statement and make a commitment to the american people of whether or not they live up to it or not. i'm also stating that i'm hoping individuals of the administration did the same. because, there have been reports already that the president

yesterday was telling individuals to disobey the law in regards to the borderline in telling officers, don't listen to the judges. now, i came here with a series of questions that i wanted to ask but mr. duffy went there. i wanted to know some of the things that are important to the american people. now, he has raised my concerns because dealing what happens at the top goes all the way down. with all the individuals that were fired yesterday, some because they're trying to tell the president to follow the law. the president would not follow the law that gives me concerns. i think that's where the chairwoman su, are you concerned about your job. it seems as though individuals within the administration who follows the law and may take tell the truth and not try to deceive individuals. in some kind of way the administration of the president wants to fire them.

that is the nature of her initial questions that she had with you. i almost have lost my time. i will ask one question. i want to ask about talk about leverage lending and things of that nature which is important. i don't have that kind of time. let me ask you this. tariffs on our allies have made for tough negotiations. do you believe those chairs have been overly disruptive? how do they serve our purpose when it comes to negotiating with mexico and canada? it seems to me they don't. >> i'm very pleased with the agreement we have with mexico and canada. i will tell you as it relates to china, the tariffs have been affected in getting china to the negotiating table. i know you are out of town the let me talk for second on leverage lending. chair would you like me to come in? >> the gentleman is recognized

for five minutes. >> thank you, investor light heiser testified in front of the ways and means committee recently and said that it is really important to reauthorize the export import bank because it supports american jobs that american exports. do you agree with investor light heiser is assessment? >> i do. >> great. we look forward to working with you on a bipartisan basis to reauthorize the export import bank and make important reforms. make sure it has all the safeguards that need to be in place for the taxpayers and to make sure it is running effectively. i really appreciate your thoughts and opinions on that. is that i to talk about suspicious activity reports.

you are in charge of the financial crimes enforcement that fen/phen collects. almost a million of those were filed last year by financial institutions. many times that happens without a feedback loop to the financial institutions to help them be better at preparing annoying woes good information, what was bad information. seems to me there might be a better way to conduct even if we don't change the reporting thresholds. just getting information and make it more useful. a central database or some type of way where you can query it by the folks that need it. are you working on anything to make those more effective? >> yes. let me just, the stars are very important for all of our law enforcement and our activities around sanctions. when i was a banker i was concerned these things just went into a black hole. we do use them, but we are actively looking at the policy

around sars and are working with infinity if i am looking at if we should make certain changes. thank you for bringing that up. >> i understand that you can't report back on everything. there may be a raid to create a feedback loop to make the production more effective. some of these folks are doing the same thing and may be making same mistakes on these activity reports are making them less effective than they could or should be. some type of feedback would be helpful for folks that want to help as you are trying to help catch the bad guys. >> thank you. >> finally, i wanted to touch on something i know other people have talked about. tomorrow there's going to be hearing with seven large financial banks in america. we talked a little bit about what would happen with sanctions if we did not have large

american banks. if u.s. didn't have a global banking institutions and had to rely on european entities and other foreign entities to help try to make her sanctions effective, would they be able to be implemented and will they be as effective on shutting down rogue regimes? >> no, they wouldn't. the u.s. financial system, the strength of it in the financial institutions are critical. >> thank you. >> are you back the balance of white-collar. >> the gentleman from georgia is recognized for five minutes. >> thank you madam chair lady. treasury secretary mnuchin, are you under oath to tell us the truth today? >> i don't know technically if i

am under oath or not but i'm here to tell you the truth, yes. >> you are here to tell us the truth. have you ever had any business dealings with russians? >> have i had any business dealings with russians? >> not that i'm aware of. i just want to be clear. my great grandparents immigrated here from russia. so, i may be a minuscule partnership myself. >> have you ever had any business dealings with russian oligarchs. >> know. as i commented earlier, don't even believe i know any russian oligarchs. >> to you have any knowledge of anyone in the trump administration that has done business with russians?

>> the trump administration is very large. i cannot comment on the entire trump administration. >> you know if we get specific of any business dealings that president donald trump has had with russians as a businessman? >> i have no access to the presidents finances. >> at. >> 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 the world, trade matters, financial matters, it is within your purview and

covers the waterfront just as our very first treasury secretary, "alexander hamilton" did, treaties, you name it. my whole.is this. now, the reason these questions are coming up to you is there such a great hunger 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 trump took the word, the advice of putin over his own

treasury secretary. his own intelligence. so, for many in america, 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 you're dealing with. i represent the great state of georgia and we are number one and peanuts, pecans, poultry and number two in cotton. right now, all of these entities are suffering. i wanted to just get your opinion here. the latest says that nearly 100% of cotton produced in the united states is exported. u.s. cotton and cart and arms are huge subject to an additional 25% tariff in china.

due to the trade dispute. georgia makes one third all the pecans produced in the nation. half of those go to china. 25%. where is this coming to an you just made a statement that china's resolve. how so when my people in georgia, my farmers and producers are just hanging on by their fingernails because of the street 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 listen to putin over me. , farmers, i can assure you i am working very hard on the china deal and agriculture is a very important part of that. so, i appreciate that.

>> the gentleman from texas, mr. >> thank you. mr. secretary, thank you for being here today. there's currently a debate going on in our country about the economic system of capitalism versus socialism. hmmm a small business owner. i'm a car dealer who has a strong believer in markets, the concepts of risk and rewards and individual freedom. the u.s. economy is growing at the fastest pace over decades. yet, some people, lord willing to accept that our success is the result of reducing the governments footprint in the free market. are you capitalist or socialist? pgh so, capitalist. >> that's great. >> what effect would it have on gdp in the u.s. economy if we began to turn away from free-market principles and take a more socialist approach? >> it would be disastrous to the

country in every country that has taken on those goals has deteriorated significantly. >> venezuela, cuba. >> and many more. >> the economy is booming because of tax cuts enacted last year working. unleashing the power the private sector has led to more job opportunities and higher wages for workers. these are all 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 complacent. what you see is the biggest obstacle holding back the economy? >> the good news is the economy is in very good shape. clearly the world economy has slowed down. that's having some impact. i think getting our trade agreements renegotiated is probably the single most important issue for the economy and that's why the 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 the current threshold of suspicious activity reports being so low that it creates a heavy compliance burden for some banks. when the threshold of $10000 was initially implemented in 1970 that was enough to buy two brand-new automobiles. this is no longer the case because of inflation. how would you recommend adjusting the current ctr regime to make compliance easier for smaller institutions? >> were looking at this carefully. i am sympathetic to the issue of 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 limit is the appropriate action. >> our country moving in the right direction economically. i and many are worried that we

are not paying enough attention to the national debt. which recently surpassed $22 trillion as we know. i'm concerned the national debt will ultimately hinder economic growth in the country. the net interest payment in 2018 was $371 billion. ford heard is in my district and it affects the military. that's a huge number. how concerned should we be about our story national debt? >> i'm glad you brought it up. i think that 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 decrease in government spending. the most important issue is growth. i'm comfortable we 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 in the government spending is not out of control. >> we are at 20% interest in art lifetime in six or seven was a good rate. right now, with the debt, six or seven could be harmful. i think we're doing the right thing and being worried about it. will like to have that conversation in the past about interest rates and we have agreed on where the interest rates out to go. the chairman said that interest rates will remain flat. i thank you for hearing me out. i yield my time back. >> thank you very much. the gentleman from missouri, mrr the subcommittee on national security, international development monetary policy. he is recognized for five minutes. >> thank you madam chair. mr. secretary, the president i believe has expressed publicly his support for reauthorization

of the export import bank. people on both sides of the aisle were also interested, has treasury submitted reauthorization request? >> i'm glad to hear that there is bipartisan support, this is important to the president. my understanding is that we are working on it. >> we have only until september. so, it would be good if we had a reauthorization request submitted now that is one step before we are going to be able to get something done that can be done relatively easily. >> my understanding is that this is going through the interagency process at the moment. were not the lead but we are actively supporting this.

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 who are working on it. >> can i ask if i can receiver the committee can receive,. >> will follow-up with with your staff. >> thank you. >> when we 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. it's not just coming from mere democrats, it's coming from all over. the u.s. chamber of commerce have said where you're going to lose $1.6 billion in export

trade in my district, were being decimated. i can understand why senator grassley came out and said we need to focus on creating opportunities instead of barriers. i like to see a resolution with canada and mexico et cetera. it's killing, my next-door neighbor in nebraska, my neighbors are being bludgeoned. i drove by some soybean fields two weeks ago to look at flood damage. the people leaving the soybeans in the field. from $10 down to $8 and dropping. i mean,, people are hurting. if you had a chance to look at the state of missouri, $432 million we export to canada. 7 million to mexico. 80 million to china. 239 million to europe.

i spoke to a farmer on friday and 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 which is significant, what do i say? they voted for the president, is it too much for them to expect not to continue to be hurt? >> they will be heard. i've been accused at all i want to do is sell soybeans, i can tell you, i want structural reforms. but 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 that is on the top of the list of issues to be resolved. i understand your concerns. >> yes. my farmers don't know anything about that. and we were talking about u.s.

tariffs costing american consumers about $6.9 billion, again it may go up this year i appreciate your concern for my appreciation, but i have to go home on friday. i have to talk to folks and i would like to say i spoke to the secretary-treasurer and he said next thursday at 3:00 o'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, very large order while we are negotiating they have committed significant orders in the soybean? >> already? >> yes come already. they are in the markets executing those markets. >> thank you. the gentleman from ohio, mr. davidson is recognized for five minutes. >> thank you manning chairwoman. >> thank so much for your

testimony and really the great work you and your department are doing on behalf of the american people. thank you. i think you would agree that america is broadly seen as the worlds land of opportunity. people from all over the world, it comes here. it is still attracted to the united states of america. in fact our gdp growth, or wage growth come are favorable markets are the envy of the world. we are an outlier in many respects to the raider performance over the past two years. one of the areas that i get concerned dad is in the midst of all that, why are some things not quite working. america still the most innovative country in the world. when i see american innovators taking their innovation and raising the capital outside the united states, something seems to be broken. what's wrong with her markets that this would happen?

as i look at block chain for example i see this reality. the innovation is happening in the united states and elsewhere but it is rapidly happening elsewhere because even american companies are raising capital outside the united states. they don't have regulatory certainty they need for capital formation. without capital formation that's why today, bipartisan group from this committee and outside this committee introduced the token taxonomy act. it would provide certainty for the crypto market to define what is security and what is not a security. but, you following the developments in block chain and the dynamic impact that can have, not just from capital formation for security? for the frameworks we have for data security premieres -- maybe with hyperbole said that he

believes the block chain will be ten times more significant than the internet. so, are you tracking that significantly in the department of treasury? >> i am. there's not many things i would say i take the other side of that but i don't think block chain will be ten times more significant. we are working with the regulators on block chain, more portly and crypto assets. we want to make sure these cannot be used for illicit purposes. i'm not familiar with your bill but i'm happy to follow-up with with your staff. >> thank you. your staff has been very helpful has had people across industry. people in the fcc and there's good nonpartisan support when there's a gap between our regulatory framework and supply and demand, there's a black market. the united states of the market

simply moves. when you look at the past 12 months it moves to 50% market share. the framework you highlighted earlier that our banks have is because so much moves to the u.s. financial system. so much moves through the protocols. that includes trader financial trade. i think it would be advantageous for the united states to stay at the forefront of this. we need to quit studying the issue and get regulatory certainty for our market space. i would say towards that and, one of the encouraging things for me as you highlighted that you highlighted his trade. in particular i wonder if you could highlight some of the financial services. we hear so much about manufacturing or agriculture we see the financial services

coverage including in the framework we are working on with china. >> thank you for pointing that out. we think the financial services improvements are quite significant and quite -- model agreements. financial services are very high on the list and we have made a lot of progress. >> thank you for that. when you look at the framework and the protocol whether you're talking all fact with her sanctions, one of the underpinnings of that is the bank secrecy act. my colleague, ms. miss maloney highlighted the work she has done on beneficial ownership. i caution as we look at this framework you mentioned you conducted financial transaction that you want to remain private. there are reasons where it should be subject to discovery and not criminal penalties for people who don't file forms that don't exist.

i yelled. >> gentleman yields back. mr. sherman is recognized for five minutes. >> thank you. i'm going to agree with you on a couple of things. we should reauthorize the bank as a gentleman from ohio pointed out. but it is meaningless as you feel fill the seats on the board. can you tell us now that the president will fill the seats on the xm board and push it to confirm so that we can get of auctioning exit bank? >> if you authorize it, if you don't put board members on it they can't do anything. >> i'm going to agree with you as well. not only do we need to authorize it we need the quorum and reassure you that the president is very interested in having the board filled.

>> but, has not appointed. i hope that it will get him more interested in appointing. second as to tariffs, no economists 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 to endure pain and therefore will beat us in these negotiations make only token changes and that we will continue to have the largest trade deficit in the history of bilateral trade in the history of the world. my hope is that i know tariffs can be painful on both sides, that you will do what is

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 -- has spoken yet or not. i know they have to have some pride in the fact that those hundred dollar bills bear a signature be carrying around big stacks of 100-dollar bills through our neighborhoods in california is not good public safety. will the administration come out in favor of allowing those marijuana institutions that are illegal under state law to be able to have access to the banking system? >> lame comments on it. 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 am 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. until that is resolved, we cannot deal without legislation. >> would you endorse within the jurisdiction of the committee and relevant would you endorse the legislation which was passed on a bipartisan basis recently? i would be happy to review the pressure has got to be not to appoint but to get mcconnell to confirm. i believe they sent off enough people to make a quorum. korea, on and on interrupted

basis they have created more material. if you want a stronger deal anymore sanctions. mr. yoho is the ranking member. we had reversed roles in prior years. we urge you to sanction those major chinese banks that have violated the u.s. sanctions. so far we have only sanctioned minor chinese companies. in particular on may 21 there was an announcement by your company of sanctioning two small shipping firms from china. then, the president tweeted the next day that he is withdrawing, then it was announced that he wasn't withdrawing what you had done but was 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 is considering you to do? >> first of all, the sanctions are very important in north korea. >> pretending to negotiating is what they pretend to do. making real concessions is what they do. >> i don't think we have inadequate sanctions. i think the strongest ever existed i know there's some confusion about the tweets, the president never told me to take off those sanctions sanctions. >> are you looking at major chinese banks without naming names? >> mr. sherman your time is up. >> i think it would be inappropriate to make any comments on those who would sanction the future. the jones time has expired.

>> thank you for being here. i want to follow up on my colleague from wisconsin, mr. duffy. what he mentioned on insurance regulations. if the iai as if you provided the u.s. system formal recognition in this abu dhabi meeting, would you be willing to force the iai as to delayed the adoption of the capital standards to a later date when they would recognize the u.s. system in our aggregate capital by the staying current commissioners and federal reserve. here's why am asking. it's critical that the u.s. and insurance companies are provided this saying certainty and that they don't have to spend the next five years which by the way

is monitoring and testing. you don't have to spend the next five years wondering if it will be sufficient for the ie i asked. would you agree to make it formally recognized or delay the adoption to a later date? >> i want to be careful making a public commitment to this. i am happy to speak to your office. we will follow up. we are focused on in favor of the u.s. system which is critical for the insurance company. >> that's helpful. a sound like you are willing to. i understand the sensitivity. when you're talking with my colleague if you'd like to make that commitment. how certain are you that we could give some certainty to our state -based insurance compani companies. >> we always want to have

regulatory certainty. that's critical. >> thank you. another concern i have is with the international negotiations is with the federal insurance office. with the trump administration we've seen the them stay within their about bounds. i've had serious concerns about the office being involved in overseas negotiation in even more of what it could look like under future administration. the office went down the road or performing activities like involving or issuing arbitrary and inaccurate reports. commenting negatively on the domestic insurance initiating duplicate to data calls and acting like a quad sire regulator and the use of this powerful subpoena authority. how does the current administration view the role of

the office and you agree that it's important to put regulatory bounds to help prevent what happened in the previous administration or even worse? >> i can comment on what were doing. i'm not an expert on what's being done in the previous administration. i look forward to getting updated on them. it's not a regulator, it's not meant to be a regulator. we were not supported being a primary regulator. can you put some constraints on it that would help her to act against abuses? >> we would take suggestions. >> i look forward to the dialogue. >> in the time left i went to switch over and discuss hezbollah who has a very sophisticated network of criminal activities in lebanon and throughout the world. they pretty much used funding from iran. the u.s. treasury department plays a vital role in helping identify and stop the flow of illicit funds.

mr. secretary, what steps is the treasury currently taking to stop the flow of resources to hezbollah? what are we doing to stop iranian resources from going to hezbollah? >> we have the toughest sanctions on iran. we are very focused on has below working on people in the region. one reason i need to leave this evening is because i have a by lap focused on combating -- >> last year the congress passed the has below international amendments act of 2018 to increase our ability to target the global financial and reach. what steps has the treasury taken to implement specifically this new legislation? >> first while we appreciate the additional funding we have had

to build up these resources. again, since were running out of time will follow up with you on the specific steps. >> thank you. >> i now recognize myself for five minutes. mr. secretary, you recently had an encounter with ethics and this had to do with an entity you sold tiered then fiancé, now why. and by the way this is no way intended to demean her in any way nor is it intended to demean you. but use storm sold to storm chaser productions to her and after having reviewed it concluded that given that you gave an indication, let's call it a promise to recuse yourself if there any future dealings with the government storm chaser, there would be no penalties imposed. is this true? >> i appreciate you raising this. i. >> i need to know if this is

true. i really don't want to dwell on it. i'm going to something else. is it true? >> that i have committed to recuse? i have signed a new ethics agreement that has clarified. but to be clear, had there been conflicts before i would have recuse myself. i have been in touch with the ethics officials for the last two years. >> thank you. i don't intend to dwell on that issue. but, i do plan to go to another issue that moore involves an entity known as rat pack doom. are you familiar with rat pectin? >> i am familiar with the. >> is it true that maybe you have sold your interest in rat pack doom. >> yes, sold a long time ago. >> is it true that you have indicated you need not expose the third party that you sold it to? >> i'm sorry. >> is a true you've indicated

that you need not and will not expose the third party that you sold it to. >> it was a confidential transaction. >> which means, we have no idea, we meeting the oversight committee have no idea as to what the terms and the conditions were, not that i'm overly interested in your personal business. but we don't know what the provisions are no we don't know what the entity is that purchased. is that a fair statement? >> the transaction was fully approved by the judge ethics people at treasury. so i don't anticipate there is any issue. >> is it true that we are charged with the responsibility of oversight, correct? >> you agree. sure you do. >> i'm not an expert on your oversight. >> 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 mention it to you because we live in a world mr. secretary where it is not enough for things to be right. they must also work right. this may look right to some, but the truth be told, the american public is concerned in the case that you have with your wife, you signed an agreement to recuse and if there is a conflict, we would be aware of that 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. therefore, we cannot ascertain based on empirical evidence whether you should recuse.

my.is this. it would seem to me that in the interest of the public having a belief that our system functions fairly improperly with transparency, that you would reveal to whom you sold the interests. you don't have to tell us how much, there are numbers floating around, 25 million. it would seem that you would reveal this. you said you won't. so, i will not ask you to do it. it just 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. it seems that would be appropriate. i want to ask you to respond. >> i do want to have the opportunity to respond. i just want to make one thing clarified in this is in the public domain.

the entity not only do i not have any interest had that entity in this., but nobody has interest in that. that entity there couldn't possibly be any ongoing conflict whatsoever. >> i will take your word for it. >> unfortunately, have to. how you back my time and recognize the gentleman from ohio, mr. gonzales. >> thank you, chair. thank you secretary for being here. i think there's a lot of reasons for us to be excited about the state of the united states economy. certainly when you look at what's going on in europe and the entire world we can look at gdp, unemployment, wage growth. i agree, think a lot of it has to do primarily with the deregulation and tax cuts.

when i think about the next stage of growth we 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. i think now the curtain has been pulled back on the entire country has a good sense of how disruptive they have been. i want to ask a tactical question. my only real concern is that we have been going it alone on that one. we are pursuing at the moment what seems like primarily a bilateral agreement. i guess i would like to hear your perspective on why we have chosen bilateral versus partnering with other allies and if there is a plan to do that. it strikes me that would be a more forceful and durable fronts. >> we do talk about these issues of china trade at the g7.

is something important. having said that, we have been unsuccessful for a long time doing this on a multilateral basis. . . . we have been unsuccessful for a long time doing this on a multilateral basis. i think we are making a lot of if we are able to conclude that some of these would be the most significant structural changes that have ever occurred. if we are able to conclude this, there will be an enforcement that is very important to this. there will be an enforcement department built under a vice premier. we still have significant issues but this will be one of the biggest accomplishments for same trade, u.s. companies, [singing] workers were able to open the market on a fair and lovely things and get structural changes.>> i completely agree. i applaud the effort hopefully don't mistake my comments for suggesting otherwise. you touched on the enforcement

piece and i saw last week china said they would shut down their factories. and from northeast ohio, fennel and opiates have been a huge challenge for our community. as an incredible promise the fenext question is only enforcement specific to that on the fresno what levels of enforcement we have in place or how can we assure they are actually doing this? >> the only reason why they that no because it was a personal request from president trump to president xi jinping. they put dual laws and am very confident they are going to follow through on this. independent of any of our trade negotiations. it's a very important issue, tens of thousands of people. >> just to clarify, if we can't get the broader trade agreement your suspicion is that but no

band will still be in place and will be able to enforce it. >> i have every expectation that was not a conditional agreement. clocks great. shifting the boat in the world a little bit.i just saw that china recently expanded into italy with us. it's hard to figure out exactly what they are doing. last congress the past is not here. we passed better utilization investments leading to development, the build act. signed into law to help counteract china's emergence in new markets. what in addition can we do to push back on china's growing presence in the international development sphere. >> i think the single best thing is we now have david malpass my undersecretary of head of the world bank. i think both the ims and world big transparency of being portion issues. i think the world bank combined

with a rebuild act and other things can be a serious competitor to their belt in the world. >> with that i yield back to balance my time. >> i yield myself five minutes. thank you mr. chairman for being here. if i was reviewing your statement in paragraph four of your statement you note that opportunity zones are a key component of the tax cut in jobs act. t he also say that opportunities zones will offer capital gains tax relief for investments in businesses in distressed communities. i would like to know when that is going to happen. how many dollars will be put into distressed communities and how will you deal with to protect and assure us that will have gentrification in these

communities. >> when it's going to happen, it's already started. people already started creating opportunities on funds. we put out some regulations, we are putting out more regulations. we hope to get those out within the next few weeks. they are critical to create some today. >> where some of those are already in existence? where are the dollars? what are the communities? >> the funds have started. so 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 i've heard people make i could extrapolate i think this is going to be over $,100 billion and the issue of gentrification is something we are going to have to monitor very carefully and will be part of the reporting process. >>. >> you would be able to put in

writing for me how we would make sure we don't take these minority or urban communities. and all the dollars and change them were those individuals no longer have a place to live? >> absolutely and we look forward to working with you in your office on these issues. our objective is to create more jobs, more opportunities in those communities. not to change them quickly switch to another area of interest to me and also in your testimony earlier use language to eliminate poverty and talk about growth. i make that a direct connection as you recall when you were here last year i asked you about a family, office of minority women inclusion. you didn't do so well, if i was writing you with the test score. you didn't know who your director was. he didn't have a lot of information to offer me about family. now can you tell me who your only director is? >> i want to thank you because

you did point this out to me, lorraine crawl 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, i'd like to enter into the record that we requested the ing to take a look into your department's compliance with section 342 of the doc frank act. it didn't come up so well. when i read the report, the ing, inspector general, found that the only at your department will not likely be able to fulfill its responsibility at the same level as the other homilies in the other revelatory offices because of insufficient staffing. i asked the same question to the new director of the cfpb en last week. it was a yes or no question, will you put enough money in

there to maintain doctor cole and give her the appropriate staff in section 342 states, yes or no? right now we know it saying you only have two people. we know that's not enough. are you going to put it up to a standard that 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 to make sure she thinks she has enough staff. >> the last question that i have, are you aware of what the inspector general's report stated? do you have any idea of the diversity, if organ talk about growth and eliminating poverty and were going to go into distressed communities, do you have any idea of what your department looks like with women and d minorities? if not you can send it to me in writing. i only have a few seconds, i'm

gonna reclaim my time because i like to take my last two seconds to recognize the honorable jesse jackson being in our hearing. and quite appropriate today when we are talking about national 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 five minutes. >> it's great to see you again. i appreciate the time you've invested with us thus far. i know one of the things we worked on in the last congress and we continue to work on this congress on both sides of the aisle but especially the side of the aisle is developing an ecosystem in terms of financial regulation, ecfinancial oversight, where every banker, of all different sizes can participate hopefully grow successfully because ultimately

then being able to grow successfully helps communities grow successfully. i certainly believe in an ecosystem where everyone completes on him double playing field and that one has the opportunity compete for good business. i hope you might be able to speak, especially in advance of tomorrow, about how it serves american interest. not only american corporate interest but american government interest in having super large banks headquartered rphere in the united states. and how that empowers treasury and how it empowers the american consumer and how it empowers american companies to have very large institutions that can serve the need a very large american companies. >> i think it's important, i don't know about the word super large, i would say large well-capitalized u.s. institutions critical to the u.s. economy that have sufficient capital to supply businesses both large and small aland global business.

very important to the u.s. economy. >> as he talked about earlier with regard to trade, indiana has a very high percentage of its states gdp is dependent on trade. u.s. companies are competing, selling, importing, exporting sabroad and it's important we have institutions that can do that kind of cross-border work. in the absence, other institutions would stop in and do that work and perhaps they might be not headquartered in the united states. it continues to be really important to me to ensure we have an ecosystem where our large institutions can compete r as well. i wondered if you might also talk a little bit about the importance even foreign owned banks that operate and invest here in the united states and have a role to play in the financial services ecosystem as well. >> we encourage a system where foreign banks can invest in the u.s., we want to make sure they are properly regulated. properly capitalized. but like any other type of investment, we encourage foreign companies or foreign

individuals to invest in the united states. >> as you say, properly regulated and properly capitalized, i know one of the concerning issues we had a few times let's come up is making sure there is parity between the two. we don't want fair and institutions to be advantaged in some way or disadvantage in nssome way, we want them be thoughtfully capitalized they can compete on a level playing field with u.s. firms. so hopefully the american consumer an american company seeking to use them will find a competitive environment they can get the best possible deal. >> that's correct. it's important as a part of treasury's work the sanctions the financial restrictions that treasury doesn't is important aspect about and much of the strength of that comes from our being a reserve currency. the u.s. financial system being such a large part of the global financial system and i wondered if you might talk about what

threats there might be to that system and the architecture of that system coming from some of our large counterpart countries. >> it is a tremendous benefit for us to be the reserve currency of the world. it's a tremendous responsibility and that's why when we look at sanctions we have to take lots of distant issues and considerations but there's no question sanctions are effective because we are the reserve currency of the world and for the u.s. financial system. it is an utmost importance as maintaining that status. >> right. those things, those policy threats that might imperil us being the reserve currency, imperil our financial system, restrict the ability of our financial system to reach and compete globally, those might adversely impact in the long run the efficacy of these sanctions in the united states being a leader in being able to

conduct those operations around the world, right? >> it would. and our ability to raise capital all over the world. >> certainly many challenges but that's an important one that i think is frequently lost that the efficacy of these sanctions programs depends on us continuing to be a capital market, continuing to be a financial services industry that competes around the world and every large presence around the world. they are intricately linked and i'm glad you pointed that out. >> thank you for the time today. i yield back. >> the gentleman from washington, mr. heck is recognized for five minutes. >> thank you. i like to quickly follow-up on some of the line and questioning of my friends mr. stivers and mr. his anger regarding the export import bank. first to correct the record, the bank was not as indicated as established in 1945 is established in 1934 it's celebrating its 85th year. but i quibble. the larger point i'd like to correct is the representation that exists only to assist small businesses. a simple reading of the history of the bank over 85 eayears is

that it assists with export credit in three areas where the market isn't perfect. the market is indeed perfect in helping small businesses stand up, sales to foreign countries. it is also imperfect in its sales to countries that are developing because banks don't have international ability necessarily to collect within developing certain developing countries. thirdly, banks are disinclined to engage in long-term financing for long-lived large dollar items. so think massive earthmoving equipment by caterpillars building highways and it's in this regard that i think it's really important to clarify that even though caterpillar as an example might be a very large business, caterpillar supply chain is made up of thousands and thousands of small businesses who were hurt by the fact that the bank does not have a quorum and therefore cannot approved deals above $10 million. simply put emma would you

acknowledge small business are being hurt by the absence of a quorum on the export import bank? >> i would come with a $10 million threshold is an awfully low threshold. i think we would agree that there are lots of small ly businesses, medium-size businesses, as you pointed out, 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 various export credit authorities have issued in loan guarantees or loans the last two years?>> it's enormous and multiples of anything we would do no matter what we ended up doing what the export import. >> would it surprise you to learn they've issued more credit in the last two ofyears that are export import bay has in its entire 85 year history. >> that would not surprise me.

>> would you acknowledge in this era where china is emerging that is clearly a highly competitive long-term strategic competitor that utilizes whole of 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 to which to compete with them. >> i can tell you that the nd 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 and whatever reforms it is important from an economic standpoint to get the banks and back open and that means loans ã >> do you have any idea why we call it the export import bank when it doesn't do any important business whatsoever? >> i don't know the history of

that. >> i want to shift to the proposal by the administration to reform the government-sponsored enterprise the presence obviously directed new and secretary carson to come forth with the plan to reform fannie mae and freddie mac and also lay down some benchmarks by which that proposal would be measured. i like to respectfully suggest the addition of two more benchmarks. the first is mapredicated on th clear evidence that we have a shortage of homes in this country. an earlier subcommittee meeting in the 1970s we built 12,000 units for every million people in america and now we are building 4000 for every million. clearly we have a shortage that's been documented to be at least $1.5 million. one part of the solution to that because we assess that construction financing sometimes gets benched, not necessarily but sometimes consumer access to credit construction financing gets benched.

would you support at least the current level of support by the gse's construction financing and secondly, as we or if we stand up a new gsc, would you commit to ensuring that smaller banks and credit unions have a means of laying off their mortgages so that they can compete effectively with larger banks who can create their own securitization market? would you support those two benchmarks? >> i can assure you on the second benchmark i completely support that i want to make sure there's a fair and level playing field. on the first benchmark i'm not an expert but we will reach out to your office and as we put together a proposal we will absolutely take into account your ideas. >> thank you mr. secretary.nt >> i yield back. >> gentlemen's time is up. the gentleman from wisconsin mr. stout is recognized for five minutes. >> thank you secretary mission for being here.

first question is the role of large banks in our economy the u.s. has large and dynamic economy producing many globally successful companies, businesses, our world leaders manufacturing services, technology consumer goods. they create opportunities for workers, families, and downstream suppliers. i experience first-hand the impact this can rehave an manufacturing in southeast wisconsin and successful american business generating job sustaining communities and investing in innovation. the u.s. is home to several large financial institutions .among other things provide the critical services to american companies engaged in global commerce. to fulfill an important role in four financial system. as i look at it as the world's top 10 largest banks for chinese several others are european by my account only couple our u.s. base. this matter, what would happen to our economy if large global 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 being competitive. having strong well-capitalized leading banks are very important to the structure of our economy and us being competitive throughout the eded world. >> am going to shift to finance and human trafficking. it's something that's important rtto me. according to the latest estimates, more than 40 million people around the world are subjected to human mtraffickin. research estimates 25% of these people are children. 75% are women and girls. it's a terrible crime and regardless of party geography would gotta be committed to stopping this but unfortunately it's also big business. that means we need to target

the financial crimes associated with this ill-gotten profits from human trafficking which is why i introduced a bill earlier today that require government to hold countries accountable to turn a blind eye to illicit financial activity in regards look in the treasury department to prevent human trafficking and associates from abusing the u.s. natural system to facilitate their times. >> we have the proper intelligence and working with the state department we have many sentient authorities that we can utilize and go after for these issues and i'm not familiar with your bill but we look forward to learning about it. >> i appreciate you taking the time today. i yield back. >> gentlemen, mr. saint nicholas is recognized for five minutes. >> thank you madam chair. thank you mr. secretary for being with us this afternoon. i wanted to have a conversation about the old income tax

credit. how it creates a unique liability for the treasury. the earned income tax credit for a ãbtaxpayer difference between their income tax refund under income tax withholdings is a treasury liability is that correct? >> i believe that is the case but now we're into accounting. >> basically they earn x amount is withheld if the refund exceeds withheld there's actually a treasury liability treasury has to pay is a correct? >> i want to make sure i'm following your technical issue. there are withholding taxes, there is the eit c. i think what you are saying is ãbi'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 treasury responsible for paying out the earned income

tax credit if there is no withholding to pay and fund it. ask the treasury is responsible for paying out the eit c, that's correct. >> of the treasury from the liability by diverting funds for education, health or public itsafety cannot. >> the treasury funds everything on a general basis. there is no specific allocations from one program to any other program. >> to reiterate the treasury is responsible for funding the earned income tax credit. >> the treasury is responsible for dispersing the earned income tax credit. the u.s. government is d responsible for hefunding it. >> am glad we have this on the record mr. secretary because i'm a delegate from guam and since 2008 guam has been absorbing 100% of the earned income tax credit payouts that have been filed from our taxpayers and territory. this has actually ballooned to account for over 50% of the annual set-aside rehab for tax reforms altogether.

so what i'm really hoping especially 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 on guam who are claiming the credit. i want to put on the record also mr. secretary that this is not something new, the treasury has for years already been paying out the additional child tax credit on guam and so in order for us to be consistent with the treasury funding, the ect c, i humbly ask the treasury oalso do its part to fund the eit c. 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

covers in the territory of guam to fund the eit c payouts impacts education and impacts health and impacts public safety. those diversions also result in deficits to the territory because we are having to pull tax resources that would have otherwise been used to meet our appropriations projections. i think the time has come for us to have the conversation of not only having the treasury fund the eit c on guam going forward but i would deeply appreciate if the treasury could also work with the government in guam to eareconci all the earned income tax credits that been paid out since 2008 so we can recover those funds. it resulted in deficits, it's resulted in debt, it's resulted in deferred maintenance. we don't even have textbooks in our public schools that are within the reasonable seven year age of the textbooks.

there are so many fun diversions going on in the territory and the crtc liability of $56 million a year accounts for a significant chunk of that. i appreciate your forthrightness and i'm sure questions in respect to responsible for paying the and i look forward to the treasury working together. >> let me just comment i am aware guam has some highly technical tax issues. barbara actually met with the governor last time he was here with the office of tax policy, i would be happy for you to come in also on this. please follow up with my office on these specific issues. i know there is this a bunch of other technical issues we been trying to help him. >> i want to zero in on this, thank you mr. secretary. >> the gentleman from kentucky, mr. barr is recognized for five minutes. >> thank you madam chairwoman. mr. secretary, in the last congress i was pleased to chair the subcommittee that oversaw the development of the foreign investment risk review

modernization act or firm. i appreciate your support in that effort. i later served on the conference committee that ãb this committee's leadership has been united in its prioritization from rulemaking and i would like for unanimous consent to enter into the corecord a letter that i cosign with chairwoman waters, former chairman ãand former subcommittee ranking member gwen moore detailing congressional intent behind some provisions. >> without objection. >> mr. secretary, i have a few questions for you on the status of the current rulemaking process. ãbwhile cps has some discretion on which countries it targets, clearly congress wanted to see china take it seriously. how would you go about ensuring that china and other bad actors are the focus of rulemaking and not u.s. allies such as canada,

japan, israel and partners in europe? >> first of all, we are very much supportive of the legislation. thank you. this is a priority of ours executing it. exi can assure you we are not just focused on china, we are focused on other countries as well. we look forward to working with you. i think the regulations will be clear as we roll this out the pilot in the full-time that we want to encourage investment, we don't want to discourage investment but this is about protecting national security interest. >> thank you for your balancing those interests, including maintaining open investment climate.i was pleased to see the present budget contained significantly more resources for cps. does the president expanded request to congress mean that you currently don't see a need to impose filing fees? >> we anticipate there will be filing fees as well. >> but nothing more than what

is contemplated? >> it's in our budget, it takes into account the new filing fees but we will follow up at your office on it. >> thank you. >> i think you will find the filing fee fees will be reasonable. >> mr. secretary i was encouraged to see the administration announces designation of the islamic revolutionary guard corps as a former terrorist organization. the irt c and cuts force have been responsible for the deaths of numerous americans abroad. what ways will this designation restrict irg c financial activity that previous executive orders and the countering ãbthe treasury's been very involved in something

we think that's very important. from a financial and standpoint we've already had financial sanctions in place. this puts in other restrictions both in ict people entering the country and doing business and other things so this is even stronger sanctions. >> i applaud the administrations designation and i know treasury is going to have an important role to play in implementation. he mentioned your interest in commenting on the leverage loan issue. obviously large lending is increasing 75% is estimated through non-bank firms but as i understand it nearly 70% of u.s. companies are not investment grade in order to leverage loan simply loans to well-known noninvestment grade companies like dell, american airlines, burger king, hilton hotels, that permit these companies to grow, thrive, and hire american workers and if these loans were shut off wouldn't it be very bad for the company's and their employees one with broader same economy?

>> that's true. leverage lending is a very important part of the economy. working at f sock and starting leverage lending issue. just because people have raised this to make sure there are no problems. but it's something we are on top of. >> know you recognize that the economy has a downturn in prices will drop in certain high debt will be difficult to cut. unlikely to fall on investment vehicles like clo's with stable offunding the present little threat of damaging sales. given the clo's provide long-term capital not subject to the short-term or junctions or applause we see in retail and institutions. what do you believe unlike some current rhetoric in washington today, that clo's can represent a vital source of liquidity to the below investment grade companies? >> i do indeed and that's one of the reasons we are comfortable a lot of the capital has moved out of the

banking the regulated banking center into ceos which are permanent capital vehicles. >> they perform very well over the 30 year history including financial crisis. >>. >> gentlemen, your time is up ã >> madam chair excuse me for one second, i don't mean to be disrespectful but we had a disagreement i was gonna leave you at 5:00 p.m., iv have a very significant by let it would be embarrassing. in the last six years there's never been a secretary of treasury who sat for more than three hours and 15 minutes. i as a courtesy and happy to stay until 5:15 pm but it would be very embarrassing to a foreign government if this committee expected me to not show up for that meeting. >> if we still have members here with questions and we have members on both side who too had prepared for these questions, would you be willing to come back to committee in

may? >> @alwaysdoing to come back to the committee, i look forward to working with chairwoman waters on an appropriate time. >> he would commit to coming back in may? >> absolutely. i will make sure the committee always has time to answer all your questions.>> thank you. >> if i am going to come back though i would propose we could break so i'm not late for this meeting. >> if we continue and stop at your deadline, if we need more than one hearing would you onicommit to coming back at lea twice? >> i would deal with previous secretaries have done, i can't see why it's not iesufficient t come back but as opposed to trying to negotiate this in this format, i have every aspect, i'd 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. kasten. >> madam chair, inquiry of the

chair, at this point there are equal numbers of questions asked by republicans and democrats. if we can adjourn in five minutes then we need to divide the remaining time between republicans and democrats. just to be fair under our committee rules. >> i have no problem, we been doing that the entire time. >> it's 5:10 pm, five more minutes is taken and the secretary has to leave in five minutes. >> the question will go to the secretary to state for one democrat and one republican. >> the gentleman from illinois, mr. kasten is recognized for five minutes? >> thank you madam chair, thank you for your time. would you support united states return to the gold standard? >> i would not. >> do you agree with the president's recent call for a renewal of quantitative easing?

>> do you agree with the presence recent suggestions we should renew quantitative easing? >> is my role treasury secretary would be inappropriate for me to make specific comments on what the federal reserve should or should not do. >> okay. from significantly expanded deficit spending to significantly expand borrowing we are pursuing a very expansion policies of the 2015 tax cuts in spite of rising gdp and falling unemployment as a general matter do you support the pro rata than countercyclical fiscal policy we been pursuing relative to the larger economy? >> i don't think you can put all fiscal policy the same. i think this will create growth that will pay for it but we pralso had significant governme spending on top of that we gotta be careful because we can't spend the money twice. >> the reason for my question

is that i think this morning the imf cut the global growth outlook to the lowest level since the crisis. domestically were seeing in version from three months of the 10 year treasury bonds looking into inverted yield curve. how concerned should we be that 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, have slowed significantly. ias it relates to the inverted yield curve i'm not particularly concerned about the inverted yield curve at all. from everything we see we see for the next three years still very strong robust u.s. growth. >> i certainly hope you're right. i think i've yet to see a downturn people predicted from the right moment. if we did with all the wealthy by now. if it comes, here's my concern. in the last downturn we have the tremendous good fortune to have exceptionally confident

policy driven technocrats at the helm from mr. bianchi to mr. paulson, these men were uniquely suited to the moment and i think we can second-guess they did pretty well in the circumstances. ypresident trump as to put it mildly not proven himself capable of retracting or retaining people that caliber nlrb clear i do not put you in that category. you're an extremely smart guy, your resume qualifies you for this. but i do have real concerns given some of his recent suggested nominees to various federal reserve posts might've answered some of these questions differently than you have. that when the next downturn comes, we are not going to nha people with the skills necessary to handle it and certainly without the trust of the market that the prior esgeneration had. i'm not going to ask whether you agree with that order that

would be an awkward question for you. i suspect given your background you might share some concerns at night. my question for you as the congress, given that potential and given your experience and wisdom, how would you advise we hedge against that future risk?t >> 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 regulators or in the commerce department and tray department larry kudlow in the white house, i think we have is robust and economic team as we had in previous areas and i'm glad to hear you like these previous people. i work for secretary paulson for a long period of time and i g understand that. >> i guess my concern is as much ãbthe president keeps family members around him. there's a lot of turnover in the rest. i'm concerned the trust financial markets will have individuals putting policy versus those basic

skills. that's concern i feel we have to hedge against. >> is there a question? >> i think with respect to your time i will yield back the balance of my time. >> the gentleman from georgia mr. ãis recognized for five minutes. >> thank you madam chair. mr. secretary thank you. we will be very conscientious of your time. even though i'm a member of congress and also an american citizen and i think it's very important that we put the best light of our nation with the rest of the world especially with foreign leaders. i got a whole suite of questions i'm just going to narrow down to one.

four years ago we passed the national association registers agents and brokers assigned in law and it can be stood up at the treasury department but what's holding it back is that we haven't nominated the board of directors yet to be confirmed by the senate, they haven't been appointed. i'm leaving a bipartisan back camera letter to the president several have signed on to it. expressing the urgency to go ahead and move forward. i know 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, i yield back the balance of my time.>> mr. secretary, if i may, you had indicated you would like to have a press conference in this room. >> i'm going to cancel that. i don't have time for that. >> that's what i was going to ask you is if you instead of having the 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 p.m., rather than 5:15 pm. is it possible you could give us another 15 minutes? >> i have a foreign leader waiting in my office at 5:30 p.m.. i agreed to stay longer, it would be embarrassing if i keep this person where waiting for long period of time. i wasn't gonna have a press conference i was can have a short rest gaggle, not going to do that. i assure you, i'm happy to come back and asked answer more of the questions which i respect the committee and we want a good working relationship with you. i hope you understand them are really going to be late for my 5:30 p.m. meeting. >> i do understand. we are late all the utime unfortunately.we are all pressed for time. i do get it. however, i think i indicated early on that we would request to require that you come back at least two more times in the month of may, is that something

you are agreeing to? >> madam chair i find this to be, i have here every single time jack lew and other people come here. there's nobody that's ever been here more than three hours and 15 minutes. absent here for over three r hours and 15 minutes, i told you all will come back.i don't believe we are sitting here negotiating when i come back. we will follow up with your office. how long would you like me to ac come back for next time? i told you i will accommodate you. >> i appreciate e that and i appreciate your reminding us of the length of time other secretaries have been here. this is a new way and it's a new day and it's a new chair and i have the gavel at this point. if you wish to leave, you may. >> can 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. , member, you have a foreign dignitary in your office. >> the previous ãbthe republicans did not treat the e secretary of the treasury this way. is this the way you want to treat me i will rethink whether i want to voluntarily come back to testify, which i've 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. if you want to use them as examples, you have acted differently than they have acted and as i've said if you wish to leave, you may. >> if you'd wish to keep me here so that i don't have my limportant meeting, and contin

to grill me, then we can do that. i will cancel my meeting and i will not be back here. i will be very clear, if that's the way you like to have this relationship. >> thank you. the gentleman, the secretary has agreed to stay to hear all of the rest of the members. who is next on the list? >> you are instructing me to ã ãi did not make an offer. you are ordering me to stay here. >> no i'm not ordering you. i'm responding. i said you may leave anytime you want. you said okay. if that's what you want to do, i will cancel my appointments and i will stay here. i'm responding to your request. if that's what you want to do. that's not what i want to do. >> what would you like to do? >> i told you i thought it was respectful but you let me leave at 5:15 pm. >> you are free to leave anytime 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'm supposed to conduct this committee. please, gentle lady, the time belongs to the chair. who's next? the gentlewoman from pennsylvania miss dean is recognized for five minutes. >> you madam chairman, thank you mr. secretary. i'm not sure the secretary has the attention right now. >> so my understanding of just been advised that i'm under no obligation to stay, and here voluntarily. i will leave at 5:30 p.m., which is going to make me already 20 minutes late. i'm happy to listen for another 10 minutes. then ã >> would you proceed. >> i withdraw 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. n,mr. secretary, how do you do? good. i'm disappointed to hear you threaten not to come back. that isn't really what we hope of our cabinet officials in this administration or any other administration. thank you for staying on. who's the foreign dignitary you are meeting with? >> i am meeting with a very senior person from bahrain that is here to talk about national security issues and sanctions. >> thank you. maybe you heard this but last week general secretary was before a joint session of congress. he gave a beautiful staring speech. his concerns regarding russia where the following, in 2014 russia illegally annexed ãb the first time in europe country has taken a part of another by force since you world war ii. he said we see this as "a

pattern of russian behavior including a massive military buildup from the arctic to the mediterranean. in the black sea to the baltic. this use of the military grade nerve agent in the united kingdom. support for asad's murder in syria. consistent cyber attacks on nato allies and partners, targeting everything from parliament grades, power grids, sophisticated information campaign, and attempts to interfere democracy itself. did you have a chance to hear his speech? >> i didn't but your recommendation i will get a copy of it and read it. >> it's beautiful. he prefaced it and ended it with, it's good to have friends. he was really recalling the history of nato and the partnership of 70 years among nations there. he ended it with, it's good to have friends. in the middle he implied or at least i inferred, but it's also good to know who your friends are not. in this world. with that history of what has been going on with russia aggression i'm puzzled how it

was you decided to delist three sanctioned russian companies with i guess majority ownership by ãbwhat was your decision for delisting them from sanctions? >> thank you for raising that, it's a very important issue. first of all, the important issue as we decided to sanction the companies and i think in particularly you are talking about rousseau and the related entities they were all a a grou of entities. we did that under the various different authorities that we had. >> why did you delist them? >> and want the whole history. >> we delisted them because the company approached us, the company approached us, a large group of people negotiated an agreement. >> the majority control cannot. >> it's no longer majority control by him. >> he now has what percentage

ownership? >> he has, he and related entities have a 45 percent ownership in a 35 percent of vote. >> and he shared some ownership to whom? >> various different entities. >> who? family members? related members? >> there were shares transfer to his children pursuant >>to a divorce decree he was legally to do. >> he retained 44 percent ownership his children got other shares. so likely among the family they have more than a majority of ownership. >> no they don't have e more th a majority in the family. >> but we don't know that for sure, are you able to provide us the full detail in? >> i believe in a confidential basis we been more than happy to give you all those details. >> speaking of conflicts of interest, when did you take the position of secretary? >> i believe february 13. >> 2017? >> that is correct. >> you sold the company that you owned to your fiancc, then wife.

>> that was fully approved by the ethics department of treasury. >> that took place when? >> i don't have the exact date but ã >> after seu assume secretary? >> that was in my ethics ftssagreement i was given a cer amount of time to sell assets. that was appropriate. which i did. >> what you thought it appropriate to sell to your fiancc, now wife? that would clear you have conflict of interest? >> just to be clear, that transaction was fully vetted and fully approved and consistent with the ã >> what questions did you ask of ethics counsel surrounding that? >> extensive questions both internally to our designated ethics advisor as well to nsoutside counsel i have. i wanted to make sure is fully in compliance. >> because you were concerned about a conflict of interest or the appearance of a conflict of interest. >> not because i was concerned, i was never concerned about the conflict of interest. quite frankly, i don't think i

should amanda sell it but i agree to comply with what was the decision of the oge. >> why did they tell you needed to sell it? >> i don't know. >> you took on that transaction ãband you don't know why they recommended that was what you needed to do. >> again, i want to be esclear, divested every virtually every single asset that i owned. again, as part of the agreement i entered into, i agreed to sell the asset. i was fully compliant when i sold it to my fiancc. >> i see a strange parallel here. >> the gentleman from tennessee, mr. rose, is recognized for the rest of the time we now at 5:30 p.m. on the secretary will be leaving. >> thank you secretary minasian for being with us today. for being so generous with your

time. i like to yield 30 seconds of my time to mr. king. >> thank you for that. secretary, and respect your time i will take five seconds to say i will submit a written question to you, if it's okay with you, regarding cps and china. with that i go back to the gentleman. >> thank you. the annual report has previously stated the council reaffirms its few that housing finance reform legislation is needed to create a more sustainable system. the white house recently issued a memo as you know on housing finance reform on march 29 with a number of outlining a number of initiatives. >> i understand you cannot go into the weeds to much and tell me more about treasury's view at a high level of what housings reforms should look like but could you give me some guidance as to what you believe in treasury believes housing reforms should look like. >> this is an area i've been involved with for over 30 years.

it's something i have talked as about and i believe it should be twofold. one as it relates to the gsc's we should have a system where taxpayers are not at risk. e'we want a robust system where people can access mortgage capital 30 year mortgages but not put taxpayers at risk. and the reason why we are focused on housing reform and not just gse reform as you want to make sure we don't take the risk, fannie mae and freddie mac include all fha and transfer it to taxpayers in another bucket. this is something i really hope we can work on a bipartisan basis. i've said my first choice is to do legislation with congress and i hope we can do something quickly this year. >> i appreciate your interest in making housing finance reform a priority while the last administration did express interest in the issue, they do not provide the leadership

necessary to get reform over the finish line and your leadership makes me optimistic this will get done. madam chair, ask unanimous consent to submit the record a list of previous appearances by treasury secretary's along with the time that they gave. >> without objection such as the order. thank you very much. >> i yield the balance. >> mr. secretary, thank you for staying until 5:30 p.m.. with out objection all members will have five legislative days in which to submit additional written questions to the chair which will be forwarded to the secretary for his response. and i asked the secretary to please respond as promptly as you are able. and i 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 five legislative days within which to submit extraneous material to the chair for inclusion in this record.

this committee is adjourned. >> thank you and i look forward to being back in may. we will work on a date. thank you very much. appreciate it. [inaudible chatter] [inaudible chatter]

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while congress was away on a two week break representatives and senators are at home meeting with constituents or traveling on fact-finding trips in the u.s. or abroad. they returned to capitol hill on monday, april 20 net. the house plans to work on federal spending for the next budget year and immigration reform remains a priority.the senate will continue the confirmation process for district court judges and high level jobs in the trump administration. thursday morning justice department will release a redacted version of the mueller report. it can be given the congress and released publicly at the same time. once the report is released c-span will open our phone lines for your reaction. also one available you will be able to find the report online at c-span.org. the c-span buses stopping at middle and high schools across the country.to present prizes and awards to the winners of our student cam video

competition. and throughout this month you can see the top 21 winning entries every morning before washington journal and watch every winning student cam documentary along with those honorably mentioned added the behind-the-scenes winners online. at student cam.org. starting now it's booktv on c-span2. ...

next, former homeland security secretary janet napolitano on american security at home post 911. she spoke at an event hosted by the 911 memorial and museum in new york city. this is 50 minutes. >> good evening. welcome. i know -- president and ceo of the 911 memorial and museum and as always, my pleasure to welcome you to tonight's program and jeanine into our five web broadcast at 911 memorial .or .o -