to make decisions about the bodice, reforms to her healthcare system, the quality of our air and water, and much more will be at risk. >> frankel, i cannot think of anybody who is more qualified to serve as the next associate justice of the supreme court. >> follow the confirmation process on c-span through congress as judge kavanaugh meets with key senators, the senate confirmation hearings and the vote. watch live on c-span, anytime on c-span.org or listen with the free c-span radio app. >> now treasury secretary steven mnuchin testifies before the house financial services committee on the state of the international financial system. this is about three hours. [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> the committee will come to order. without objection that shares authorized to declare recess of the committee at any time and all members will have five legislative days within which to smit extraneous materials to the chair for inclusion in the record. isn't on the annual testament of the secretary of treasury and the state of the international financial system. i recognize myself or five minutes to give an opening statement. whether you're looking att unemployment, disposable family income, , gdp, small business optimism,di you name it, it is clear that many if not most

americans are enjoying the very best economy of their entire lifetimes. and no man is more responsible than president donald trump. however, if wee find ourselves mired in a full-fledged global trade war with no end in sight, all of the economic gains he is helped bring as may well be lost. i for the president boldly call for the elimination of global terrorists, i enthusiastically applaud the president or doing so. however, i also continue to hear talk from the administration of quote ending trade deficits in quote imposing reciprocal trade policies. these are not identical goals to reducing trade barriers. for example, we could and trade deficits tomorrow by simply outlawing trade and then watches gdp and disposable family income plummet. with respect reciprocal trade agreement just because other nations punish their consumers does it mean we should

necessarily follow suit. at the end of the day the tariff is a a tax, a tax measures of pt onto the consumer. so for the example when the administration first announced their tariffs on steel aluminum and washing machines earlier this year, it became more expensive for working americans to share a sixpack with their friends at the local laundry mat. as of last friday when the administration announced $34 billion in tariffs on an array of chinese goods, including auto parts, it also became more expensive to work on your car in the same laundromat parking lot. and now with an additional $200 billion in tariffs announced, who knows whether the laundromat what even be here at years end? a constituent ruby, i'm not facing increased cost in auto-parts and housing. it can't get any closer to home than that. that'll do tariffs harm american

consumers, they harm many american players and their american workers at will. since over half of her imports are intermediate components of raw materials for american business. as my constituent elizabeth from dallas wrote me quote i am a metal manufacturer. since the tariffs begin february i see major increases well over 25% from steel vendors in the mills. soon my end-users will be able to afford the cost of our products. i may have to actually lay off workers, , unquote. this is the voice but one of american business but she undoubtedly speaks for many. tariffs can also damage entire industries including strategic ones like our domestic energy industry. for most of my life america has been energy depended. now we're on the cusp of producing more oil than any country in the world. the oil and gas industry imports specialty steel and aluminum for pipelines, wells and other

infrastructures. the tariffs may just harm our ability to remain energy independent. i have yet to speak of the retaliatory tariffs of the eu, canada, mexico and china. it's a bad time to be an american suv producer or an american soybeanak farmer. soybean prices have dropped to the lowest level in almost a decade. one farmer said about his family farm quot that's $100,000 that has disappeared into thin everywhere already in the red. now it's even worse. we have known since the days of smith and david ricardo that trade is a win-win situation. no trade in contrast is a lose, lose situation. i understand our trading partners have more to lose than we do because their economies are far more export dependent, but losing less is not the same as winning m more. when the dust finally settled the administration's trade policy may prove to be brilliant i hope so.

with patience, short-term pain may pay off in long-term gains its tariff and bound tariff trade barriers are reduced. but in the meantime cap ex check books are closing andwh expansin was a being put on hold as growing uncertainty creeps throughout our economy. i hope itg is time we get on wh it. i would respectfully call upon the administration to concentrate time, resources, diplomacy on those nations consistently violate wto guidelines, enforce voluntary ip and technology transfers. in other words, it is theun most we should be uniting with our traditional allies to confront china. i would call on the administration to drop an effort to unilaterally impose tariffs under section 232, the 11-year-old honda accord i go to work today in simply does not threaten national security nor does any other vehicle. i fear for the efforts are counterproductive and will

simply undermine the administrations credibility. i do wish to consummate the president in secretary mnuchin for weight with congress on vital cfius reform it thanks to the leadership of mr. pittenger, mr. heck, , mr. barr and the rankingre member, house bill was passed 400-two andnd we look forward to going t to conference with the city. fishes of the administration and congress about parties can work together on shared trade goals. the administration should continue to work collaboratively with congress on trade and yesterday senate 88-11 vote is indicative of its importance. i now yield three minutes to the ranking member on opening statement. >> thank you very much, mr. cha. i am looking for to hearing secretary mnuchin's that's what today on the state of the international financial system. i must admit that i was surprised to learn that the trump administration had agreed to back a $13 billion capital increase for the world bank and the ifc.

that is, the international monetary fund. this positive step is a notable departure from the trump administrations unprecedented and harmful approach to multilateral agreement. however, it would be a serious mistake for the world bank to take my support for this capital increase for granted. i am concerned about the banks recent recommendations in its upcoming world development report for the f widescale dismantling of regulations protecting workers, including lowered minimum wages and greater firing d powers, particularly in developing countries. the world bank should not be rewriting the social compact to recast the balance of power between labor and capital. this will lead toab greater inequality and undermine social cohesion and ultimately harm the banks legitimacy and relevance in the fight against global poverty. that said, try to want to do appreciate the administration's support of the world bank, i'm

concerned about the actions this administration has taken and many other areas that fall into the purview of the treasury secretary as we meet today, the trump administration is waging a trade war that will have wide ranging economic consequences. last week made continental nail, america's largest nail manufacturer laid off 60 workers and announced that the whole company would go out of business by labor day. volvo no longer plans to hire 1000 workers in south carolina. the u.s. chamber of commerce is warning that you .6 million jobs are at risk. hard-working americans are already suffering as a result of the retaliatory tariffs provoked by the ensuing economic uncertainty caused by this president. moreover, this trade war comes at a time when our deficit has ballooned due to the republican tax law which has been nothing more than a giveaway to very

wealthy individuals, wall street banks and big corporation. i look forward to bring secretary mnuchin address the impact of this administration policies are having and will have on small businesses and consumers, and i get back the balance of my time. >> that chair never recognizese gentlelady from wisconsin, ranking member ranking member of the monitor policy and trade subcommittee for two minutes. >> thank you so much, mr. chairman. and i want to welcome secretary mnuchin back to the committee. aci appreciate your reply to my letter that i sent on may 17 17h picky replied just recently. the letter was related to the transfer of the universal service fund to the department of treasury. but, so look for to testimony but during the q&a we've already alerted your staff so that you could be prepared for my questions. there are outstanding issues surrounding the universal

service fund that are important to both my urban constituents and rural constituents and many of my republican colleagues here really rely on these services. like the rural healthcare program, the connect america fund and in my district there are over 50,000 households that subscribe to the lights on, just one of the programs that is supported. and as you know it connects disabled people, poor people with jobs and with healthcare assets. i'm going to appreciate hearing a detailed explanation of the regulations, resources and staff you put in place to ensure that the sec continues to use these fundsd to provide telecommunications access to americans and ensure frome you these services will not be disrupted. the specific funds that you deposit into the treasure count and the funds that you're still waiting to transfer, , that refr to in your letter and how you

plan to make up for the loss of interest that the funds were in interest-bearing accounts in tho private sector when they were there and how you're going to make it the deficits of the would not be any lapse in the village serve those constituents. i look forward to your testimony, mr. secretary, and the yield back the plethora of time that i have. >> today we welcome back to the committee for his third appearance, the honorable stephen mnuchin, secretary mnuchin has previously testified before this committee. because of bad i believe he needs no further introduction. without objection the witness statement will be part of the committee record. welcome again. you are recognized to give an oral presentation of your testimony.

>> thank you. chairman, ranking member and members of the committee. it is good to be here today to discuss the national advisory council on international monetary and financial policies report to congress another priorities. the report highlights international financial institutions roles in encouraging global economic growth and financial stability, advancing security priorities, supporting the documents for u.s. business working to alleviate poverty. we are helping to better contribute to these objectives and will continue our efforts to increase the effectiveness. i would like to note that the international monetary funds periodic review quota will be concluded next year.

every five years they review the financial resources and decide whether to increase them. at this time the united states finds the overall resources are adequate following the 2016 implementation following the quoting governments reform. i want to highlight the strength of the u.s. economy. we continue to implement the economic agenda focused on tax cuts, regulatory reform and trade. in six months since the tax cuts and jobs act, americans are seen faster gdp growth, more money in their paychecks and better career opportunities. unemployment numbers are historically low with an average of 200,000 jobs added each month. over 500 companies have announced bonuses, wage increases and enhance benefits. the national association of manufacturers and the consumer confidence index are reporting record levels of optimism.

americans are keeping more of their money and u.s. businesses more competitive. our efforts to eliminate unnecessary burdensome regulations are having a tremendous impact. we work closely with this committee and others as well as our colleagues across the administration to create a regulatory environment that is efficient and predictable for business. this is enhancing the flow of credit and supporting job creation and wage growth. we remain committed to ensuring the stability of the financial system and protecting taxpayers and consumers. our tax and regulatory reform agenda complements or trade agenda. we support to strengthen and modernize the committee on foreign investment in the united states. look at the review process and its inclusion. the administration is pleased to

work with members to maintain or open environment while ensuring certain transactions are reviewed for national security purposes. we have made great progress in implementing the president's agenda. we are working to guide multilateral financial organizations to a role more consistent with free markets, faster growth and u.s. national interests. taxpayers across the country are optimistic they will have more prosperous and secure future. we are seeing america's great potential come to fruition. i look forward to answering your questions. >> thank you. i now yield to myself or questioning. clearly as you have heard from my opening remarks i am most concerned about the status of global trade. i realize most of this was in commerce.

clearly, america's trade policies do have an impact on the international finance system. i have been heartened by comments by the president and secretary that our goal appears to be to eliminate or reduce barriers. i'm concerned because in the one trade agreement that has been modified since the administration began its policy what i think is on the korean agreement is the imposition of a quota on koreans exports to the u.s. and a 20 year extension of a 25% tariff on korean trucks. i would hope the answer would be for america to export more not import less. the question is, is korea the template for future modifications of our bilateral or multilateral trade agreemen

agreements. >> thank you. i've had the opportunity to work very closely with investor light heiser and secretary ross and others with the president. the president is very focused on free and fair trade. as he mentioned at the g-7 the president specifically said, let's sign a free trade agreement with no tariffs, no barriers no subsidies. so, the president is very much focused fighting every day on having free and fair trade. in regards to your question, there is no specific model for other agreements. we are very focused on nafta and renegotiating that. >> i would say, i appreciate the work but i am concerned about the deeds as i look at the korea trade agreement has been modified. mr. secretary, i want to speak again, i cannot say it more

clearly that many americans are seeing an economic miracle area because of the president of the work you and others have done on tax cuts, the increased jobs, rightsizing regulation, but i think the greatest economic stimulus i have seen his business optimism. my fears that may be receiving. cnbc does a survey of cfos of major u.s. companies and 65% have reported they fear u.s. trade policy will negatively impact their firms over the next six months. it has been reported as of july 6 that the minutes of the june meeting to have this in it. most participants noted that

uncertainty and risk is so deep seated with trade policy had intensified and was concerned that that risk could have negative effects on business sentiments and investment spending. i am curious, how does the administration think about business uncertainty as it calculates its trade policy? >> mr. chairman, and i assure you the president is very much focused on economic growth. i can also assure you that i am monitoring the situation carefully. i'm not familiar with that specific poll but i speak on a regular basis to many industries and people within the administration. we have not yet seen any negative impact. we are monitoring carefully the impact on uncertainty and investment. >> even as of today, the actual

tariffs were a small part of our global trade. that is soon to change if the 200 billion that has now been threatened against china comes to be in 60 days. my last question i would have is, i'm curious how the administration thinks about the possibility of a global recession. in the u.s. we are facing rising interest rates, the fed needs to have an orderly wind down of its balance sheet, you know better than others that we may be looking at an inverted yield curve at least historically it has been a leading indicator of the recession. we know about tightening monetary policy and other segments. there is already a threat to economic growth, how do you factor that in again to the administration's trade policy,

what is the risk? >> me just comment specifically, we do not have a inverted yield curve there's a flattening of it, that is somewhat reflects people's future views of rates aware rates will be. i do not think that's indicated of recession concerns. we are monitoring very carefully the impact of tariffs. we will continue to do so. we are very focused on the economic growth and are focused on what will be a big quarter of gdp. >> my time has expired. recognize the ranking member for five minutes. >> mr. secretary, this president's trade war that i mentioned in my statement, the largest manufacturer laid off 61

last week and expects to go out of business on labor day. harley-davidson, this company is is as american as motherhood and apple pie, based in wisconsin is moving jobs overseas to europe to avoid tariffs on its exports. they will no longer hire 4000 workers in south carolina, and u.s. on top of all that, american families will pay for the goods that they buy since tariffs are a tax paid by americans. it seems things are only going to get worse. yesterday trump announced that he may levy an additional 200 billion in tariffs on china. china responded that it would take further retaliatory measures possibly including more tariffs on u.s. goods. let its currency depreciate or even selling off billions of treasury bonds. the trump administration appears

to be flying by the seat at its pans with no plan for how to address the possibility of ah recession. the higher prices consumers will paye and the resulting losses d millions of american jobs. further, reports indicate while the federal reserve is concerned about the possibility of a recession resulting from a trade war, it does not have the tools necessary to combat such a self-inflicted disaster. as each day brings another announcement of the jobs in government mandated or shipped overseas and consumers paying more for goods, what are you doing as treasury secretary to prevent further harm to our economy from the growing trade war? i know you've attempted to answer this when the chairman, you know, question judah about it but it want to hear more in-depth about how your thinking about this and what you plan to

do. if there is further harm to our economy. >> thank you very much. first of all, i've noted the nail company andot to reach outo the second of commerce to see if a company is subject to some type of exception because obviously we don't want companies losing jobs. as it relates to harley-davidson, i previously publicly commented on this. i think the president has been a huge advocate of harley-davidson. i think it's unfortunate that they talk about moving jobs. my sense is this was before tariffs. i will comment specific on china because a person had been very involved in china. i said multiple negotiations with them. our objective is to great a level playing field for our companies to stop forced technology transfer. we put a modest amount of tariffs on china as result of technology transfers. china reciprocated. our tariffs were less than 10%

of what they ship. they matched that dollar for dollar and the president threatened if they did that that he would retaliate and we're now in day comment period on the 200 billion. again, , i would just assure yo, we very much are monitoring the impact on the economy of all these different issues. >> i want to thank you for that part of what to get back to harley-davidson, guess this is something that the american public really understands. they understand very much that harley-davidson is the company that we would not like to see export overseas. so you kind of mumble that the tariffs had nothing to do with them moving, exporting jobs overseas. what did you just say? >> for so, let me apologize if i mumbled. i will try to be clearer. first of all, in all fairness i have not spoken to the

harley-davidson people direct. i know this president has spoken to them. i can tell you as i've sat in meetings with the president, other leaders, he always talked about tariffs on motorcycles and cutting tariffs on motorcycles. my sense is that harley-davidson had previously planned on moving some of this manufacturing, and is not just the result but it all fairness i've not spoken to the direct. .. any jobs being moved by harley-davidson or other jobs. >> what will you do to try to do to try to get them not to move the jobs overseas. >> i will reach out to them and find the details with the secretary >> and are you saying the president's tariffs have nothing to do with them moving jobs overseas? >> i have not spoken to them direct. >> have you spoken to the president? >> yes, i have. >> what did he say? >> again, the president has been a huge advocate of

harley-davidson and is very disappointed on harley-davids harley-davidson's-- >> did he ask them to stay. yes. >> did they turn him down? . i don't know the status. >> i'll yield back my time. >> and recognizing the monetary and subtrade committee. mr. president, i promote fair and reciprocal trade. since we're on the topic, i'll stay on the topic for a while. i appreciate that you and the administration monitor the tariffs. i have concerns that tariffs and retaliatory measures on american industries could very well suppress or even reverse the record level of growth and job creation we've seen under your leadership and the president's leadership and the booming economy. as we've discussed, my home state of kentucky's signature bourbon and distilled spirits industry accounted for more

than $450 million in exports worldwide 2017. of that, nearly 200 million was exported to eu countries, where the market for bourbon has been growing at record levels in recent years and extended trade war would not only harm that iconic industry, but also kentucky's farm families, suppliers, tourism and ultimately consumers through higher prices and limited availability. similarly, our companies and workers in the auto industry are facing steep international competition for jobs, sales and innovation that's been intensified by the ongoing tariffs. toyota's 30-year-old plant in my district in georgetown, kentucky is toyota's largest manufacturing plant globally. it employs more than 8,000 team memes who produce more than 550,000 vehicles and 650,000 engines last year. toyota has told us that the tariffs have negatively impacted their supply chain. for example, the price of rolled steel is up 40% and the current price increase for engine and transmission parts

is closer to 20%. i know that you, mr. secretary, and the president fully appreciate that neither toyota camries or bourbon implicate national security, but i do want to ask you, does the administration have plans to mitigate the negative impact of retaliatory tariffs in ongoing trade negotiations that it has on american jobs and industries? >> first of all, i appreciate those specifics and i am at that familiar with them. i think, as you know, the president is in europe, he just concluded meetings yesterday with several european leaders and discussed trade that was a very significant issue. there is a planned meeting with the eu later in the month. again, we are very focused on the retaliatory measures and resolving them. >> well, thank you, and again, we do want to hear more about your plans to mitigate the negative impact that these retaliatory measures are

taking. so, please stay in touch with us on that. switching gears to north korea really quickly. by all accounts, the singapore summit was successful, but we are now hearing that north korea is actually in the process of expanding its nuclear facilities, despite the summit and last week, the north went on to criticize our quote, gangster-like calls for disarmament. i appreciate that this administration is not making the same mistake as jcpoa in upfront sanctions relief, but i do want to ask you for some reassurance about us not taking the foot off of the sanctions pedal when we continue to hear these kind of-- this kind of belligerent rhetoric from the north. and in answering that question, i just remind you that this committee produced the otto warmbier act and that bill

passed and it's over in the senate and that represents the toughest economic sanctions ever ever directed at north korea. can you use that legislation as leverage to continue to focus that maximum pressure as we continue to negotiate? >> first of all, let me just say, there are no plans to loosen up on sanctions if anything, quite the contrary. the sanctions have been very effective. as regards the legislation, we appreciate your efforts. we have tremendous tools at our disposal right now. i'm not going to comment on some of the specifics that you've said about what north korea may or may not be doing. i can assure you, i have the utmost of confidence in secretary pompeo. i think there's nobody better to be leading this effort for the administration. we speak regularly on the specific status and i would just say don't believe everything you read in the press. >> thank you. and finally on iran. is the administration on track

to have sanctions fully reime posed by the november deadline and what role do you see for congress in the role of implementing sanctions with respect towards the new policy towards iran? ments again, i think as you know, we are enforcing the maximum sanctions on iran. they have been very effective. i've had many discussions with my european counterparts. there are few situations where we will have modest winddown periods and other things, but we expect compliance with the sanctions and we've made that very clear. and many european companies have already done that. >> thank you. >> time for the j has expired. recognizing the gentle lady from new york, miss valasquez. >> thank you. secretary mnuchin following the 2008 financial crisis we learned that banks and mortgage companies engaged in deceptive marketing practices and

provided fraudulent information to home buyers in concerted effort to disguise a mortgage true cost to home buyers. this dishonest practice fueled the subprime mortgage crisis which helped fuel the crisis and brought it to the brink of collapse. just a few years ago we learned that wells fargo fraudulently opened accounts in order to inflate their business and increase their bottom line. recently it's been reported that ubs executives in puerto rico and here on the mainland purposely withheld and disguised the true risk of puerto rican government bonds that ubs packaged into mutual funds and sold to people on the island wiping out $10 billion in retirement savings.

so, mr. secretary, my question to you is, in your role as both secretary, treasury secretary and chair do you believe that fraudulent and deceptive actions practiced by financial institutions could pose a threat to financial stability? >> thank you. i do not believe that they could pose a threat at this point to financial stability, although i do acknowledge there are some very specific cases which the regulators are dealing with of improper practices. >> do you believe that fraudulent and deceptive financial practices should be criminally investigated and if necessary, prosecuted? >> not my role to comment on prosecution, but, definitely, i believe that there are-- if there are rules broken or anything else, the regulators should be responsible for.

>> so if we know that executives knowingly committed financial crimes or covered them up, they should do the time, don't you? >> i mean, again, i would just say, my role is to deal with the regulators. i'm not commenting on -- obviously it's do j's ability to enforce the law. that's not within my purview. >> on tuesday president trump imposed a second round of tariffs on the additional $200 billion of chinese goods. this left financial markets to tumble all day wednesday. the dow opened more than 100 points lower and continued to fall throughout the day losing almost 200 points at market close. so, mr. secretary, maybe reports indicate that high level talks between chinese officials and the trump administration on tariffs, on

trade, have ground to a halt. do you believe that talks will be reopened and do you plan to participate in those discussions? >> yes, i plan to participate. second of all, i would say to the extent that the chinese want to make serious efforts to make structural changes, i, and the administration, are available anytime to discuss those. as it relates to the 200 billion, i would just comment that had been previously announced. all we did the other day was announce the list, which is now out for public comment and review. >> i yield back, mr. chairman. >> gentle lady yields back, and recognizing mr. lukemeyer chairman of our financial subcommittee. >> thank you, mr. chairman. and welcome, mr. mnuchin, mr. secretary, up here. i give you a little respite from the trade talk here, i've got a couple of other questions with regards to guides and

derisking. with regards to guidance, the amount to guidance, handbooks and circulars have been issued and almost none of it withdrawn or rescinded and almost none went through notice or comment rule making or submitted to congress. i recently sent a letter to the federal financial regulators asking them that they issue directives affirming that agency statements, including guidance, that haven't gone through the notice and comment rule making do not establish binding binding legal standards. i've asked this of of chairman powell and comptroller among others. do you agree with your colleagues that guidance is guidance and rules are rules? >> i do. >> as secretary-- as treasury secretary would you include future guidance coming out of your department-- ments assure you we'll discuss this at the next meeting.

i don't think that we need guidance coming out, but we'll review that with the regulator. >> my hope would be that you would take the lead in having some sort of harm monization with all the agencies with regard to guidance and guidance issued. whenever guidance is issued, say something to the effect that this is guidance, this is not a rule. that guidance is something, punitive action to be taken on because it's guidance, it's best practices, it's a suggestion, somehow a bank should be doing something versus a rule that says you will do this. and i think it's important to be a distinction there and i think it's important in your position as the head that you could take the lead harmonizing to make sure this happens. >> i've always believed there should be consistency across the regulators so that's an issue we'll take up with them. >> appreciate that. congressman clay and i sent

findings in our subcommittees. we've heard from a variety of stake holders. we've learned that this is not only a domestic problem, but an international one. we're talking about an entire geographical region losing access to financial services and being cut out of the most regulated financial sector in the world. according to your testimony given a couple of weeks ago it's the regime, bsa, and driving this dangerous trend and right now it's impeding the flow of humanitarian aid across the globe. we've passed bipartisan legislation on operation choke point and regulators tell us it's not happening, but every witness we had before the subcommittee that day told us a different story. as to have 0 your nation's financial institutions and their customers. are you familiar with the letter, did you see the letter we wrote to you with regards to this? >> yes. >> does this trend alarm you or

are you concerned about it? do you recognize that it's a problem? >> it's something that we think there's an issue with. we are look at at bsa reform and with reform we need to strike the right balance on that. i'm not aware of any humanitarian aid that hasn't gone through as a result of this, but bsa reform is something that we are studying carefully and the derisking issue is something, we share your concern and we're looking at. >> you know, when the imf is concerned about derisking, that raises alarm bells and sometimes on the edge of regulatory oversight, but i appreciate your comments, sir. obviously, i couldn't let this opportunity go by without discussing the customer due diligence rule. we've had some concerns about that, as you well know, the bsa and we're talking about, we're trying to find a way to deal with beneficial ownership and looking for guidance from you. would you be willing-- i know we've talked about this

on a number of settings all right and trying to set up meetings and hopefully we'll be able to get that done. we want to get commitments from you to continue to try to work on that issue. >> yes, you have our commitment to continue to try to work on that issue. >> do you have any suggestions today for us? >> i have no suggestions today for you, other than i've shared in the past. >> mr. secretary, i appreciate your comments today and i know that this is an issue that is paramount with a lot of the banking industry. those folks have become basically deputized law enforcement officers and you know, with some punitive outcomes if they don't do this, and they don't need to be in the middle of this, so we want to really sincerely work with you and try to find a way to get this situation resolved. i appreciate your comments and yield back my time to the chairman. >> the gentleman yields back. and recognizing the gentleman from california. >> mr. chairman, we have in the united states have a good problem, the economy is good and we have to fight over who

gets the credit. >> the facts are these, dodd-frank stabilizeded financial system and coincidence with its effective date we have had a massive economic expansion that's produced 17 million new jobs. of those 17 million new jobs, 15 million occurred during the obama administration and 2 million occurred under the trump administration. that's 15 million under the obama administration, 2 million under the trump administration. now, this committee has seen a lot of charlatans in the financial services world, but we haven't seen one quite this-- as bad as what i'm going to say. you go to a consumer and you say we're going to give you a $500 bonus, no, $1,000 bonus, right here is the check and you fail to disclose to them in any way you understand that you're going to slap a $34,000

mortgage on their house. if any charlatan had done that, this committee would have nailed them, but that's exactly what the tax bill does. people are told they got $1,000 bonus, a few of them did, as a result of this tax bill, some got $500, most got nothing, but what wasn't mentioned was the $34,000 which is the share of the average family of five of the increase in the national debt. as to trade, mr. secretary, i'm going to send you the transcript of the hearing we did yesterday in the subcommittee, i'm going to be perhaps the one person in this room that says that mr. trump's focus on china has been a little too late, a little too hesitant, and a little too weak. we gave china mfn, most favored nation status in the year 2000. what he that happened two-thirds of of democrats

voted no. now, wall street trotted out some economists who said that the increase from that mfn bill would only be-- the increase in the trade deficit with china would only be a billion dollars a year. two-thirds of democrats were right. wall street economists bought and paid for were wrong, they were off by a factor of 25,000 percent. and so i would hope that -- and we have a chart behind you that shows the massive increase in the trade deficit with china since the beginning of this administration, but i do not think that anti-trump democrats and on most things i'm anti-trump, should change our position, two-thirds of us were right 18 years ago and we are right today and mfn should be provided to china only in the context of fair and free trade. now something far less

controversial. i want to thank you for your last appearance here when we talked about the u.s. tax treaty. you made a commitment then you'd have at least one tax lawyer spent at least 28 hours on the project and that work has not begun and it's not your fault. the armenian government has had a lurch toward democracy and transparency that many of us applaud. things are a little bit of a state state of tumult and i'm sure when things calm down the aminion government will approach us for the kind of tax treaty, and then i'll told you to the 28 hours. 28 members of congress asked for that and it's now up to 31. marijuana in a lot of states -- legal in a lot of states, and i

hope you would act so not to mess up the economy of the states, whether it be large amounts of cash moved around, very dangerous to society and invitation to crime, or the risk to land title, where people say, well, maybe i don't own this property because maybe ten years ago it was used for marijuana and the federal government might seize it. in the insurance area, the international association of insurance supervisors is continuing to pursue insurance capital standards that seem incompatible with the u.s. system of state insurance regulation. and i hope that you would answer for the record how you will ensure that the u.s. state-based regulatory system will be protected in the negotiations and i'll have another question for the record on--

on mutual funds and i yield back. >> the gentleman yields back. the chair recognizes the gentleman from michigan, chairman of our capital markets subcommittee. >> i'm sure secretary mnuchin, you are encouraged, as i am, by my colleague's new found concern for our debt situation, especially in light of a trillion plus spending that happened on the last administration on an annual basis and i hope the same colleagues will have that same enthusiasm to tackle the entitlement situation that we have here so we can actually have a safety net system that will exist for future generations. so that's where we need to focus on concentrate on. but i want to hit on a couple of things. one very briefly on the volcker rule and i need to take the opportunity as the chair of that markets committee to do that and talk about china and our debt with china and some

trade. so recently, last month, the treasury announced that the five five federal financial agencies dealing with volcker had come together and prpd some changes to ease compliance and implementing 619 with the 60-day comment period and you said that the five regulations coming together on this notice is an important first step. i'm wondering, could you explain how they can be streamlined, markets can be made more efficient? >> i think on the volcker rule, it's all about providing more clarity and making sure that the appropriate people can properly execute the rule. so i think there's a lot of ambiguities. some people refer to, you should have a lawyer and a psychiatrist to interpret it, but this is about we want to make sure that it can be enforced and enforced clearly.

>> what are the next steps treasury is exploring to help appropriately tailor the voelker rule? >> well, this is now, we have a series of suggestions on this in the executive report, but this is now being led by the regulators and is being executed by them. >> turning to china. china has a very large chunk of our debt. somewhere in the neighborhood of 1.2 trillion dollars, $1.2 trillion that china directly controls. do you have any sort of fear that they could use that as an alternative trade weapon? and if so, are there any kind of contingency plans that have been established as countermeasures if that were to happen? >> well, i would just comment to a large extent, the big component of the reason why they have that debt is because of the giant trade deficit and

then reinvesting that cash. i have no reason to believe that that's of a concern to the market at this point. the market is very liquid. it has a lot of depth, but that's something we'll continue to monitor. >> i appreciate that. unlike some of my colleagues, mr. barr and others have expressed the desire to push for better trade deals and i would join that sentiment, but we do know that sometimes victory comes at a heavy price and i wanted to explore a couple of things real briefly with this. i chair the u.s.-canada official exchange between the u.s. parliament and the u.s. house, and i can tell you our canadian allies and friends, neighbors, trading partners, are genuinely confused about why section 232 was used to

designate some of the -- some of the tariffs on that, and what are you telling your colleagues internationally about this? >> i've had very direct conversations with some of my colleagues on this, specifically the canadians. i don't want to go in detail in this setting, but i can assure you that we've had very detailed discussions. i am on my way to mexico tomorrow with secretary pompeo and obviously, nafta's a big focus now that there's the elections there. >> i'd like to explore this maybe offline with you. while i commend the goal, i'm afraid that there may be some actions trying to recapture a world that, frankly, no longer exists. that largest trading partnership in the world is u.s. and canada. section sixth largest trading

partnership is michigan and canada, autos and agriculture. and what we are seeing here is an integrated supply system that has parts for vex travelling back and forth across the border sometimes nine different times and thousands of parts doing that. so, we have to be very careful with that and i look forward to our conversation. thank you. i yield back. >> the time for the gentleman had as expired. the chair recognizes the gentle lady from new york, ranking member of our capital markets subcommittee. thank you, mr. chairman and welcome, mr. mnuchin. the last time i questioned you i asked about a critical challenge before our country and i introduced a bill at the request of, really law enforcement that said they would track money and terrorism and drugs and guns and hit an

llc and not know who owned it. they just wants to know who owns it so they could protect us better and the best time to do it is when they're filing. we have a bill in, many of us in a bipartisan way are supporting it, that this information would be available to treasury, kept at state level if they so wished and also law enforcement. i live in a city, new york, that continually faces terrorist threats and there are no threats unless there's financing. so, cracking down on terrorism financing is critical and i want to know now that you've had a chance to look at this and in light of the testimony that the director gave recently, that he believed companies should be required to disclose their beneficial honors at the time that they are formed and they are a part of treasury. i'd like to now ask you if you you have he a had a chance to look at this and in supporting

beneficial ownership and having this available to treasury and to law enforcement. >>. >> so, first of all, let me just say i fully support that it is a very important issue and we need to be able to figure out an efficient and prudent way that we have access to beneficial ownership. i wish i could tell you i already had this solved. we are having a lot of discussions. we look forward to continuing this discussion with you and members of the committee to find a solution. we need an appropriate solution to this. >> well, thank you. and as you know, our committee has been discussing legislation to reform the banks's secrecy acts and anti-money laundering rules and i believe that any legislative package on this issue must address the issue of beneficial ownership because anonymous shell companies are routinely used to finance criminal and terrorist

organizations. so, do you believe that a legislative package to strengthen our anti-money laundering rules should address the use of anonymous shell companies by criminals and terrorist organizations? >> all right, as i've said. i believe this issue needs to be solved. whether it's solved as part of bsa or whether it's solved sprit separately, these are very important issues, but we need to have access to beneficial ownership. information for law enforcement and for combatting terrorist financing. >> well, also in february, treasury, you released a report recommending that we keep dodd-frank's ordering liquidation authority for bind r winding down large financial institutions as an emergency option, and i agree with you. and i want to thank you for that report. the report also recommended changes to the liquidation authority and if there are changes that need to be made i think we should have that discussed because i strongly

oppose repealing this authority. can you discuss why you think, as your report stated, that the authority is a far preferable alternative to destabilizing financial contagion or ad hoc government restructuring or bailouts? >> i'm sorry, i think as you know, i think this is an issue we reviewed very carefully and we do support keeping it. i look forward to speaking with you about some of the specifics of the changes that we would recommend. they would require legislation. thank you. i'll look forward to those discussions and finally, if chairman of the financial stability oversight council, in that capacity as chair, what do you see as the biggest risk to the financial system right now? . well, i think the good news is, from a capital and a credit standpoint, that's not of a major concern. i would say the issue that i

focus on at the moment of most significance is cyber security, and i'm not implying in any way that there is a cybersecurity risk, but this is the area that we need to continue to invest in, we need to continue to have public-private partnerships and i'm concerned the safety of the infrastructure. >> the gentle lady yields back. and miss wagner chair of our oversight and investigations subcommittee. >> thank you, chairman hensarling and secretary mnuchin, according to the latest numbers by the united states trade association, missouri exports support some 88,000 jobs in 2016, totalling 13.9 billion dollars worth of goods. that's why earlier this year i joined many of my colleagues in urging the president to rethink his tariffs on steel aluminum

and other goods. the retaliatory tariffs levied by mexico will absolutely be felt in my home state of missouri, which i noted earlier depends heavily on trained. my constituents are concerned, as am i, that the tariffs will have had a serious impact on our state and will create winners and losers in communities across missouri. mr. secretary, as i mentioned before, some of these tariffs have targeted our allies. can you describe in detail the expected end-game for these trade actions and what is the specific time frame you expect for these policies to achieve their desired effect? >> well, first of all, let me just comment, i share your view that exports create enormous job opportunities. so, our overall view is, we should be doing things to make sure that our companies can fairly compete in and export fairly into these markets. we were in--

kind of put these in different buckets. there's obviously the nafta related issues, the eu related issues and the china related issues. as i mentioned, this is something that we meet with the president on weekly. the economic team is very focused on all of this. >> time frame? >> i can't commit to a specific time frame although as i previously mentioned, nafta is now a big priority since we have the mexican election behind us. >> mr. secretary, i want today take a second to focus on china. in 2017 growers in the united states sold nearly one third of their soy bean harvest to china. the recent chinese tariffs on american soy beans will hit missouri hard and already have. reports of farmers are expected to sell their crops at a loss. what would you say to my constituents that will be directly impacted by the present acts-- the president's actions on trade, especially vis-a-vis my farming community? >> i can assure you, i never was an expert on soy beans, but

i've know you become an expert on soy beans. >> as have i. >> i follow this market taily and we're in discussions with secretary purdue and others about this. as i've said, this is an unfortunate impact of what we're trying to do is get free and fair trade with china and they have unfairly targeted specific markets and that's not coincidental. >> no, it's not coincidental and it's causing real harm in present day to the farming community and the soybean farmers in my home state of missouri. >> and i can assure you, i and the president understand that and we're focused on that. >> if trade relations with china remain strained, commodities producers in missouri will need to find new markets, mr. secretary, for their goods. the countries seem to be natural trade partners, over half of u.s. congressional districts export more than $100 million goods every year. the countries themselves wish to see stronger trade relations

with the u.s. if the trade relations become more formalized. multilateral, bilateral, would china be pressured to institute fair trade practices? i'd like to make sure i put in a plug that we enter into some bilateral or multilateral with some of these countries to have an opportunity to have new markets for my farming and ag community and others in the district. china's ascension, mr. secretary, to the world trade organization has done little to change its predatory trade policies. mr. secretary, how can the world trade organization be restructured, in your thoughts, to better restrain china's behavior? >> that's a complicated issue that i don't have time to go through now. i'd be mile an hour to discuss that more with you. the ambassador is really an expert on this. the rules based system is okay

if the rules are being followed. the problem is, as you've out lined in the case of china, they are not following many of the things-- >> they subsidize everything. mr. secretary. there are two kinds of companies this china, those that are owned by china and those that do everything china says. so, we are going to have to look at some of, i think, tho those-- those issues when it comes to interstate commerce and such in dealing with the wto. so i look forward to continuing our conversation. i thank the chair and i yield back. >> the gentle lady yields back. >> mr. secretary, good to see you again. let me start out with a basic question and let me just see. if you were a business person and you started, you know, you own a business, you're buying a business, what would be the easiest way, the best way for the business to move forward, if bought a business that was deep in the hole or you bought a business that was at level

and moving in the right direction? what would you think would be the hardest task to accomplish? >> i'm not trying to be coy, but that's a little bit of a hypothetical question that there are opportunities in both. >> well, the hypothetical question is, if there's something, if you've got a company that's deep in the hole, something going in the wrong direction, problems all over the place, as opposed to a company that you're buying thats, you know, they've corrected some of the problems that was in there, that they're moving forward in the right direction, things are starting to improve, they're starting to hire people and things are moving in the right direction, which, as a ceo, if you came in. you know, i figure you're a business man, what would put you in the best situation? >> and again, it's completely hypothetical, but sometimes it's easier to buy things that are broke anden sometimes it's easier to buy things that are -- again, i can't comment on hypotheticals. >> don't want to comment on--

let me not give you a hypothetical. let me give awe fact. this country, when president obama was the president, was in deep debt and was losing hundreds of thousands of jobs a month and was in serious problem in the worst financial crisis since the great depression. na was the situation of this country when barack obama was the president or became the president of the united states in 2008. fact, fact, not hypothetical. when the stable genius became the president, that's what he calls himself, self-proclaimed stable genius, this country was over 100 months ago, we were gaining jobs, eight years ago moving forward, in the right

direction, creating jobs. what situation do you think is better for a president of the united states? not a hypothetical. that's a fact. unless you can deny that fact. which the stable genius denies all the time, different facts. now, let's move forward. because i'm concerned about what i saw today at nato and at the g7 because you would agree that we are more interconnected today as a world than ever before. is that not correct? that's not a hypothetical either, is it? isn't it a fact that we're more interconnected as a world today, mr. secretary? >> more relative to when? >> at any other point in our

history? >> would you deny everything moving around the world and how fast things are we're not more connected today than we were ever. >> again, we are interconnected so i'm happy to answer other questions. >> so when we were more interconnected? >> more is a relative issue. i don't know if-- >> are you a stable genius, mr. secretary? >> i'm sorry, what was the question? >> are you a stable genius? >> am i a stable genius? i'm stable. and i won't refer to myself as a genius one way or another. >> i'm just trying to find out because i know sometimes working for stable geniuses, i i'd like to know how that is. and that's not words i've used he said he's a stable genius. does he listen to you? because i listen to my colleagues and a lot of things

especially around tariffs, we agree upon. we agree that we're losing jobs and scenarios that's worrying all of us, democrats and republicans and i'm hearing you say some of the kind of things that people in the administration and people around them might be saying the same thing. i'm wondering whether or not when the presidents when you're in those rooms, is he listening to you or because he's a stable genius, that he does whatever he wants to do without listening to your advice. does the president listen to your advice? >> yes, he listens to my advice, he's the president, and i wouldn't be in this job if i didn't think that he listens to my apologies and i couldn't be more happy with the plan we're on. >> and time p recognizing the gentleman, mr. royce. >> thank you mr. secretary for being with us.

the president offered a laudable goal at the g7 meeting in quebec when he challenged our leaders to get to no tariffs, no barriers. it's reported that german automobile makers are open to the idea of sear zero tariffs. that would be a win. if we could deescalate with europe on that basis of zero tariffs between us and them, but we've seen little talk elsewhere of this as the end-game and instead, what we see is a two-front trade war, one with china, which frankly has not played by the rules, and another with our closest allies in the eu, canada and such and our domestic industries and agriculture are threatened. on the list of target, bourbon, bikes, blue jeans and even the beloved maine lobsters.

so, could we do a reposition in a different direction here because zero tariffs, for example, if we looked at autos, would be a victory for free trade and fair trade and maybe get us in a position where our allies are on the same page and when we talk to our allies in the eu, and our largest export market, canada, are we reiterating zero tariffs as the goal? i would think that that might be a first and second option in order to try to advantage a way to get us together. >> we are advocating no tariffs, no tariff barriers, no subsidies. it's a package all together. we are advocating growing exports for u.s. companies so they can compete fairly and if

we have fair trade, we will increase exports significantly and we won't have the out-sized trade imbalance that we have. >> and i would think that that outcome would also give us a position with our allies where if we can set high standards, they can then maybe do something collectively to discuss the problem with beijing's lack of following the rules. but the other thing i wanted to ask you, and this is something that blain brought up and he and steve pierce and i have talked about, is this fact that criminal organizations are infamous for using anonymous shell companies, both foreign and domestic, to open bank accounts, to launder money, to perpetrate fraud and frankly, now, to finance terrorism. and this is an area where the united states, frankly, and kenya have not been front and center in terms of doing

something about beneficial ownership. there was a 2016 financial action task force report that found the u.s. had an absence of any measures to ensure that there was adequate, accurate, and timely information on the beneficial ownership. would you agree that this is a vital issue where we should work together and work in a bipartisan way to move something quickly? >> i would, indeed. and i actually just wrote that down. we've got to figure out this beneficial ownership in the next six months. i don't want to be coming back here next year and don't have this solved so we need to work with congress on a bipartisan basis on this. >> thank you, mr. secretary. and lastly, in recent months the administration has twice raised concerns about recent legislative action on international insurance matters. first was in a memo from the department of justice raising constitutional concerns that hr 4537 would, in their words,

cont contravene, the president's exclusive authority over the conduct of diplomatic relations. i'll just share with you, i'm concerned that such actions would limit the flexibility of the treasury department to lead international negotiations on the national insurance standards and potential future covered agreements and i think the results of that could be quite negative and i'd just ask if you share those concerns. >> i'm going to follow up with you on the specifics of those offline, but thank you. >> thank you very much, mr. secretary. and mr. chairman, i yield back. >> the chairman yields back. the chair recognizes the gentleman from massachusetts. >> thank you, mr. chairman and the ranking member. thank you for being here. i want to follow up on mr. barr's line of questioning about sanctions and obviously, as a result of the president's withdrawal from the jcpoa,

we're going to have-- well, you're going to have to reinstitute sanctions against those companies, banks, and countries that continue to do business with iran. so that includes some of our closest allies, our national security partners and countries that are co-signers of that agreement, including great britain, germany, france, the eu, russia and china. earlier in your testimony, you said you have frequent conversations with china. is china going to reinstitute the ban on importing oil, iranian oil to china? >> much they're the largest single purchaser of iranian oil right now. have they agreed to join our sanctions? >> again, i think it would be inappropriate for me to comment on the-- >> i think it would be entirely appropriate.

it's the ball game right here. it's the largest single purchaser of iranian oil is not part of this deal, then that-- those sanctions are meaningless. >> what i was going to say, i think it would be inappropriate for me to comment on specifics of a conversation, but what i will tell you, it is our intent to enforce sanctions on iran-related oil against everybody, including china. >> right, and so we're in the middle of a trade war with china. i'm asking you whether they're going to join us. >> again, we intend to enforce sanctions on them, on russia, on europe, and others against iranian oil. >> wait a minute, the sanctions against iran is going to raise the value of russian oil, so, by withdrawing from the jcpoa you're helping russia. there goes sanctions against russian oil. this is going to be a windfall

for russia. they'll do much better now because they'll be a much important source of oil in that region. so, this they're going to, i'm sure, be the big winner and i'm sure the american consumer with the higher gas prices will be the big loser, i'm sure that's the national consequence of that. now, treasury, and the office of-- responsible for this, obviously you'll work with secretary pompeo and the state department to reinstitute these sanctions, right? >> that's correct, and we've already activated that plan. >> okay. well, in terms of having-- first of all, you've only got about 200 people up at ofac, they're v, very hard working and i'm concerned whether you have the ability to do this.

you've lost the top three people, they just left, they quit. your reassurances to mr. barr i don't think are well-founded. the other are on the state department. so weav so-- we've got to work with the host countries to make sure that the sanctions are observed. it would be ideal if we had an ambassador in saudi arabia, for example, but we don't have one. none has been nominated. we don't have an ambassador or a nominee, the president hasn't even nominated anybody, nobody in saudi arabia. we have no ambassador in turkey. i was just there a couple of weeks ago. i was in jordan a couple of weeks ago, we don't have an ambassador in jordan. we don't have an ambassador in egypt. i was there like three weeks ago. mexico, you think we would need an ambassador to mexico with everything we've got going on with immigration at the bo are der, plus nafta, you might think we might get an ambassador to mexico? qatar, another key person, country, australia.

azerbaijan, we don't have an ambassador in qatar, australia, azerbaijan, libya, kazakhstan, panama, venezuela, all key countries if we're going to ask them to join in sanctions. you said earlier that you have weekly meetings with the president. ask him to pick a few of these 20 or so countries and appoint an ambassador so that your treasury personnel can do a wonderful job, very wonderful, hard-working people and your treasury liaison, you've got some members over there-- some treasury liaisons handing four or five countries in the middle east. we've got a lot of work to do and i don't buy that these sanctions are going to go as you think they are. >> and the time has expired. recognizing from mu new york stock exchange, mr. pierce.

>> thank you, mr. secretary. thank you for being here, thank you, mr. chairman. so, the discussion on the oil is one that's especially timely. the u.s. is just right now in the next month or so in the position of overtaking saudi arabia as the number two producer, we will surpass russia in the very near future and that, all of that is occurring because the republicans actually put into a bill in december of 2015 the ability to export our oil for the first time in 40 years. that's allowed an unprecedented expansion into fields that were before probably not really economic. again, i compliment you on the stances of the administration with regard to energy. that's energy revolution is taking place in my home county, in the county right next to it, so that many of the entry level workers are making $100,000 bucks. so, the administration's policies of the tax cuts and

jobs act, along with this energy export is revolutionizing the world market on oil and if we would continue to allow that export then we're going to replace a lot of those foreign countries who have been-- they've just had free range in the export market. again, mr. secretary, i appreciate that. my main questions have to do with cdd and the-- you're aware of the tiff discussion committees on beneficial ownership and mr. royce just mentioned those. when we were -- when the cd rule was implemented and banks began to say we don't know exactly how to respond to this so they were being told, okay, we've got a couple of facts out, there's really no guidance. is there any idea when we'll have more specific guidance on the rule? >> i don't of the specifics of that, but i'll look into it and get back to you. >> okay. now, when director blanco was

here in front of the committee a couple of months ago, he said that really as they weren't worried too much about clients right now in the cdd rule that was an implementation. was that a full agency position or just him trying to manage the affairs under his purview? is that a broader directive or something that he's just working out? >> i think as you know, it's a multi-agency issue, but that's not a directive for me. >> okay. that was what i was trying to come up with. now, again, you just mentioned that your full intent is to get back with us in the next six months and figure out in a bipartisan way if we could accelerate that time, if we could accelerate the meeting. we really have the bank, the bsa reform bill is ready to go except for this one piece and we keep bouncing back and forth between the two sides on that. as we in the country really don't have our minds clearly

made up, we see the effects of not having a beneficial ownership and we then become one of the key places that shell companies come to operate because they know that we're in conflict on this. the other side worries about too much information in the hands of the government. have you wrestled with this any at all in your approach to it? are you leaving that to the in the-- working that out? >> no, i've actively been involved in discussions and asking the chairman to set up meetings with appropriate people on the committee. as i've said there are different solutions, there's not a perfect solution. i believe woo he -- we need to solve this and move on. >> i agree with this wholeheartedly. a penalizes businesses when shadow companies, shell companies can come in and

launder money. right now in the oil field, have a lot of companies come in and they compete mercilessly with cash that's not generated from legitimate operations and it takes away from the strength of the local business community. now, when you testified before us about a year ago, you said about 50% of your time was used on cyber crime and financing, is that true, is that still the pushing wave? . it is. >> it's something that we wrestle with in the tiff subcommittee. we plan to work with you again. appreciate your leadership and it's always been steady and been good to work with. so the stability of the agency is something that i appreciate from my perspective. the rising wage market, rising employment markets, those are things that all america is in awe of right now, the growth rate projected by the atlanta

fed last month is just phenomenal. so, again, mr. secretary, thanks for your work. yield back. the gentleman yields back. the gentleman now recognizes the gentleman from georgia, mr. scott. >> thank you very much, welcome, mr. secretary. >> mr. secretary, the people of this nation are very worried, they're very concerned about this trade war, make no mistake about it, both democrats and republicans are very much worried about it. now i really want you to listen very carefully to me, because there is no state that could be so devastating impact on this than my beloved state of georgia. let me explain to you how. let's take the fact that poultry, for example, georgia is the leading producer of poultry in the world and according to our national chicken council and leading

chicken producers like tysons food, they've informed me that in 2014, for example, u.s. chicken exports to mexico, one of our most important markets alone, totalled $800 million. but during the same period, mr. secretary, brazil, brazil's exports went up from 50 million to 200 million. if we continue to put up these trade barriers in mexico, it is clear as a bell to anybody looking at this that they will take even much more of the market, leaving american chicken for farmers and producers out in the cold. let's go to another one. let's take aluminum, for

example. in georgia, we have massive users of aluminum, manufacturers. and it's not just georgia, but all across the nation. imagine going to a grocery store and just look at how much of our food, our beverages, are contained in aluminum cans. can you imagine the impact that that will have? i want to go to another point. our pecans. did you know that half of the pecan production in georgia is exported to china? and which we are in the middle of. and georgia produces one third of all the pecans in the united states. i want you to have that. i want you to recognize georgia. i want you to tell the president how damaging this will be to georgia businesses, georgia farmers, georgia manufacturers, and not only

that, to their employees because when the aluminum purchases come in, that's going to be a one to 18 ratio in loss of jobs. now, mr. chairman-- mr. secretary, let me just ask you this. my question is this to you: are you prepared, are you ready to be the one who will take full responsibility as the treasury secretary in charge when georgia and this nation enters into this high inflationary rate. ... this is georgia and american consumers to do that. what about the loss of jobs in manufacturing? it's going to be the american people. you say that they are movin movg there also and i agree with you

but i'm curious but what i'm curious about is a cavalier attitude this administration has of the loss of jobs, of the impact on this, the side effects that we we're writing on this sugar high. so i want to just ask you this question. are you ready to assume full responsibility of the downside, with the darkness coming? are you ready to take full responsibility? >> i am come and i share your concerns. we are not taking this lightly. we are monitoring all the specific issues carefully. we are concerned about the job losses on the areas you've impacted. >> and you understand a real out inside impact this will have on our people in georgia? i want to make sure, because we're going to be paying close

attention. in the senate someone mentioned this, but the senate passed a resolution 88-11. the resolution was largely symbolic but it said that there may be and should be an expanded congressional role that oversees the care decisions. i'm concerned, do you support this? >> i do not. >> very good. tickets are. >> the time of the gentleman has expired. chair recognizes the gentleman from oklahoma, mr. lucas. >> thank you, mr. chairman. mr. secretary, i want to raise with you one capital requirement will have been subject of this rucommittee scrutiny. mr. luetkemeyer has a bill with which i and others are cosponsors which would offset purposes of capital rules in the client margin that is posted to a clearing member. this was recommendation other departments first report in 2017 and is been discussed in europe as a regulatory change. as this hearing is about

international issues i would call to your attentionld in rect cftc report stating that the market shares of u.s. banks in terms of futures options positions has decreased 10% in the last five years compared to european banks. i do think this fact points to a competitive imbalance between us and the europeans. i am more concerned about the health of clearing for derivatives. if these data are correct some capital rules might be hindering the laudable goal and policy of clearing that congress mandated in 2010. and it will not help markets and capital rules encourage participants to go elsewhere for derivatives clearing. given that, do you think that slr rule needs to be tweaked to offset client margin? and would such a change makes sense for purposes of helping clearing and the united states? >> that something where discussing with the regulators as you outlined. a moment since

trade is the topic of discussion. i represent an egg and industry. we produce more in my region and generally of those products then we can consume in the united states. thinking of natural gas and other matters. the situation we find ourselves in that the ministration is trying to dress with china and the rest of the world would seem to be something that has evolved not only in the last days or weeks, but literally the positions of our predecessors in congress and previous administrations starting after the second world war. give the world an opportunity to do business with the united states, encourage capitalism and democracy will follow. the europeans have a strong system from the second world war

and a strong politically democratic system. our friends on the other side of the pacific, while they understood that communism was not the best economic model and have adopted capitalism, some might say the old mercantile version of capitalism and automate the political steps forward that perhaps they hope for. is it fair to say that what the administration is trying to do is in general reset the trade for for the planet in a more equitable fashion? >> that is correct. free and fair trade. >> feel days of giving advantages to help create a more stable and peaceful world, that it stages now gone. it's time to make sure we are treated fair and equitably, correct? >> that's correct. when you reorder the entire world, it's not a simple process correct?

>> definitely not. >> the battle will be politically and economically challenging? >> staying the course is something we need to do? >> it is, think to. >> that said, i was young wheat farmer when president carter did the embargo against the russians which also led to our boycotting the 1980 olympics, using agriculture for a political tool on other issues. in the industries we depend on trade, this is not using us as a tool for a political goal, this is trying to achieve the survival of those industries for the long haul. correct? >> economic fairness as you have outlined. >> thank you. i you back. >> the gentleman yields back. we now recognize the gentleman from texas. the ranking member of our oversight committee.

>> thank you i think the witness were appearing. like to visit about something closer to home if i may. as you know the community reinvestment act was enacted in 1977. as you know, he was enacted because of redlining which impacted poor people and minority people for the most part. and as you know, there is now some talk of reforming the cra to some extent. it has been recorded that there is a desire to expand the definition of community developments, i'm concerned about this. because i have many constituents

who believe the cra should be strengthened to aid more poor people, it seems there is a possibility of adding business lending, some aspects of business lending to the cra, such that banks could get credit for business lending. tell me, where we currently on the cra, and this represent nation that might take place? >> i would suggest that mr. outing comes to visit you to get your views on this. i firmly believe that this is something that we should take a new look at. i think cra came help communities more so than it does. it is something i was personally involved in from running the bank working to see how they can

really look at communities and see how they speak to that. i assure you that it is not about weakening cra, it's about making it more effective for communities and making sure the benefits goes to the communiti communities. >> i appreciate what you just shared with me. i do have to indicate this, a lot of the push is coming from the banks. the banks are back, the banks are doing quite well, they are making record profits, 167 billion annually over the next three years, profits are up a hundred 35% since dad frank became the law. business lending is up and they

will receive a windfall in 2018 as a result of the tax bill. i am concerned that we are overemphasizing paperwork that the bureaucracy is creating a loss in some way for banks. banks are doing quite well. my concern is this, if we change the cra such that business lending becomes a means of which they will be able to acquire different credits, that may harm lending to poor people which is what the cra was in vision dealing with the redlining taking place. i walk on the visit but i have to ask you before you an act whatever these changes are, i like to visit with you, you are

where the buck will stop. i would like to have an audience with you so that you can know how this will impact my constituents. by the way i speak with those who are not speaking to about this country. we don't depend on things being fair. i beg that you and i have an opportunity to meet and discuss this. i'm not a person who needs a lot of time. i don't deal in small talk. i go right to the plaintiff. >> i would be more than happy to meet with you. i give you my personal assurance this is an issue i have asked the regulators to look at. i personal concern and experience that the money is not going into the communities it should be.

it is not an effort being driven by the banks. in my mind we look forward to working with you, how it banks better serve communities. >> the chair now recognizes the gentleman for florida. >> thank you for being here thank you for your service to this country. since you have taken office as a committee in congress we have tried to give you tools to do better for your economy and consumers. we did some banking, there's a lot more we would like to do. we are running out of time. there's a lot we could still do especially when it comes to housing finance. we cannot forget what happened in 2007. unfortunately we have not been able to prevent statutorily a recurrence of what may happen.

i would love to see credit risk transfers being implemented to release the burden that the government now has had back in these mortgages. yet, we are moving slow. we have to rely on you. the public remarks earlier, craig phillips said the department of treasury -- i understand that taxpayers are stuck nearly a billion dollars into this effort. i be interested to see where things stand with this effort. >> it is being implemented and something we support. more broadly i would say, we need gse reform. this is something i am determined in the next congress should be a major focus of ours hopefully on a bipartisan basis. we cannot just leave these things sitting the way they are

as i have been - that's why were relying on your department including the common security platform that complements this. do you think that platform should be available to all market participants not just fannie and freddie? my strong preference is creating a system of competition that if other people wanted to compete they could. obviously that's dependent upon certain changes we have to make. >> it's your understanding that there's plenty of capacity to take some of the. >> i believe there is. but we need an overall solution. >> for guidance, are there any other principles that we should be following to do an effective gse reform.

>> as part of this, there is either an explicit or implicit guarantee, my preferences if there is a need for the there's an explicit and taxpayers are compensated. >> that is reality and governments in insurance anymore. as a last tax stop is where were trying to get government to be. as you know, today there's about half as many companies going public than they did 20 years ago. in your opinion, why is that? lack of access to capital, regulatory burdens? >> i think it's regulatory burdens. we look forward to working with you on that. >> one thing i want to close by saying this we have the best system of regulation when it comes to insurance we are

negotiating with the international negotiating for supervisors, it's important to deal with the position of strength and we assert our ability to relate so that we are not influenced unduly by foreign markets when it comes time to reaching our deals. if you have comments i would appreciate that, otherwise i yield back. >> i think i agree with you and we will be unduly enforced. >> i yield back. >> we now recognize the gentleman from -- >> think mr. chairman. >> last week i had a meeting, tone of 5000 people in my congressional district of

missouri. i had a meeting with farmers of standing room only, we cannot get anyone else in the center. not one person believed this tara on this move by the president was good for them. every three rows of soybeans that grows in missouri goes to china. but, i don't blame the president. i may be the only person in the country, i blame congress. we have allowed over the last 30 years the president, whoever in the white house to gradually take the constitutional responsibility of congress from the war powers act of 1972, for

example, the president should have the authority to do this because the 232 tactics but expansion act requires there's a 270 day time during which we are supposed to be studying the issue in the president is waiting on us to do that. because the founders never envisioned a compliant congress so what is happened the president has power and i will never forget imus had a nervous breakdown because of anger when president obama stood up and said he would not sign that earmark. he doesn't have that power. the constitution gives that power to the congress and we're constantly given more. something as critical as this tax issue, we are just saying, despite of the fact that there's

regulation that would prohibited will do what we want to do. having said that, mr. secretary, do you believe that in spite of my farmers going crazy the world headquarters in my district kansas city southern railroad which means they go south into mexico and they are extremely concerned and frustrated so these people are misguided and they'll be okay next week? >> i don't want to imply they are misguided. i understand the impact this is having, especially the farmers who are being unfairly targeted. it's a major focus of ours to make sure that we can compete fairly and were focused on these

trade issues as you have outlined. i understand the issues. >> do you think this trade war has ever worked? >> discuss in 1930, did that work? >> i would just say, i don't think we are in a trade war, we are in the situation of trade disputes. these are not trade wars. we are very focused as i said on the nafta issue which is renegotiating an old agreement. were focused on the china issue which is complicated and fair trade. >> so if we have an agreement with my fists were not really in a fight were just in negotiations? we hit china, china had us back. that's not a war or a fight? >> i would not say that were in

a fight at all. as a matter fact the president has specifically commented on his relationship with president she and how they're helping us with north korea and other areas. i don't think we are in a fight with canada and mexico, we are very focused on the agreement. i'm going down to mexico as a sign of that importance. >> do you agree that based on the economist, the people you would respect agree that it was the act of 1930 that created less confidence in the markets which contributed to the collapse of the world economy which happened back in 29 a few minutes earlier question that did not contribute. >> i think it wasn't the only issue but it to contribute. we are monitoring this very carefully. >> the time of the gentleman has

expired. we now recognize mr. pitt inju injure. >> thank you mr. secretary for being with us today. i really appreciate your strong work and support, on the legislation to reform sify us, on a particular known i want to particularly thank you for your great work in brokering this with multiple agencies and committees. individuals in the house and senate, you did an incredible job. thank you to him. please. mr. secretary, other any aspects or concerns that you have of the current legislation that we create a loophole or other manner in which this could be exploited? by an adversarial interest. >> are you referring to pharma?

>> the farmer bill as we are negotiating between the house and senate. >> thank you for thanking us on the work. i like to thank the house and senate for the enormous bipartisan support. as i have emphasized to the chairman of both sides we want to get this passed as part of the nda a. it is very important. >> reporter: other any aspects that you would favor be concerned about? at the end of the day the final legislation that you feel like needs to more clearly address issues that remain outstanding? >> were happy with the legislation. there some slight differences between the house and senate

version. i had the opportunity to meet with the chairman before the the testimony this morning. i think we're going to work together with trying to get this done quickly. >> thank you. >> mr. secretary, following the president's trip last year to meet with the arab muslim countries, some 55 or so countries from that, i recall an announcement of an anti- terrorism finance center to be set up. do you have any further information or what has happened following that announcement? >> i have a lot of information. we are the focus of that at treasury. that was a major focus for the president's trip. i have the present pleasure of signing that mou. my trip last year was a major focus. i saw the opening of the center and will be going back in october. i have committed on an annual basis to go back. this is one of our major priorities at treasury. >> thank you. as well, would you have comments you could make referencing the mou given the concerns we have had in the past regarding the

complicit role cutters had with harboring known financiers for kidnapping or other foundations that were utilized, the safe guard mou which i have read which would cause and encourage cutter to be more engaged with us in our oversight. >> i cannot comment on past activities but on current activities, i think they've made significant progress. were working with them closely in their part of this, we've had bilateral discussions. i've met with them recently on an ongoing basis. we are very focused on working on terrorist financing with them. >> do you see any remaining concerns.

do you think that you fully turn the corner? >> i want to be careful on what i say. there's always more work to do. they've made significant efforts in the right direction. >> just changing the focus now. in reference to 2155, could you give me an idea of the role the treasury will plan terms of implementation? >> we will be actively involved. i'm check in the number. we're going to be actively involved. we have already started working on drafting regulations. we have a team of people that are ready to implement this immediately. i would hope that as soon as this is passed in the early fall we can begin implementing this. we will work with congress on

additional funding. this is one of the top priorities with treasury. it is critical to close hold in sify us that we need, particularly around joint ventures and other areas. >> at the end of the day we don't want to look back and see that we have not done this job. >> thank you. >> time has expire. we now recognize the gentle later from wisconsin. >> mr. secretary, let me say welcome to you. welcome to the let me get right to it. our chairman referred to the economic miracle of the tax cuts, and i just want to say that the only time that income inequality has been greater than it is now is when, but don, and advent of the great depression. so income inequality is not a good thing for our economy and

other peoples economy. before i go on to talk about this a little more i just want refer back to the things i talked about in my opening statement, a universal service fund. there are many, many, manyy more poor people with falling out of the middle class because of the bifurcation of benefits from that tax bill. and so despite the declarations that people have of better often we have seen wages, not stay flat but actually fall. so this notion that we have, you know, less unemployment, less unemployment but flat wages or lower wages. we are having bonuses given out. walmart is a good example. they gave $400 million of bonus to the employees and then simultaneously laid off 10,000

people. so this notion that people, the joe sixpack is better off, is just come is not something that is provable. having said that, there are more poor people and so i'm very concerned about universal service fund. even though brad bailey responded to my letter very not really come he was very unresponsive to my requests about how you all intend and plan on administering the universal service fund to make sure that it retains its purpose. and so i will be asking you outlined to do that. i want to go back to the economic miracle here. because of course whenon we implemented the tariffs, that was a double hit. i grew up in the neighborhood where harley-davidson had this

international headquarters in milwaukee, wisconsin. the president, to start taking my home loan company, so just wondering why he is a soap surprised? given the structure of the tax bill i just want to know why you are surprised. they had their corporate rate lowered from 35% to 21% and then of course they repurchased $15 million of their shares valued at nearly $700 million. it incentivized them to do that. the repatriation of tax benefits corporations rewarded people for bad behavior. they laid off workers, 800 workers but they are going higher 400 newke ones in thaila. why is the present surprise since we had a tax bill that incentivized, you know, not raising wages. why are you surprised?

why is the president surprised by harley? >> i would beg to differ but bi think the tax bill actually encouraged significant investment, and that -- >> but it didn't happen. walmart speedy there has been in wisconsin there's tremendous amount of jobs coming into wisconsin as a result of the tax bill. and as result of new facilities, new facilities -- >> foxconn? foxconn will be a $4 billion cost to the taxpayers, what i call socializing the cost and privatizing the profits. it's bigger than our dog on state budget. you know, what we are as an incentive. that dog don't hunt, quite frankly. the math doesn't work out, mr. secretary. >> unlikely to comment on the state numbers which again i -- >> right. >> my understanding is that the state analysis was quite well

thought out. >> no, i read the state analysis and it's going to cost within we're going to benefit. and so i am trying to understand why the president is surprised that this tax bill didn't trickle down into wages. you know, but just became a way to buy back shares of stockholders and did trickle down to joe sixpack. >> we would be happy to follow up with your office until you wage growth in which we've already seen and anticipate more. >> time of the gentlelady has expired. the chair now declares a recess minutes. [inaudible conversations] [inaudible conversations]

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