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[inaudible conversations] [inaudible conversations] [inaudible conversations] >> the chair now recognizes the gentleman from illinois. >> thank you, mr. chairman. mr. secretary, good to see. thank you for being here. honestly from the bottom of my heart thank you for your work. i am so encouraged as a travel around my district in illinois of optimism that the chairman talked about of this new growth we are seeing of opportunity for

everybody, and that when we have an economy, markets that are working and growing, that there's this wonderful spiral of optimism that we see happening out there. i just want to thank you. i know it's a big commitment. it's tough even to be a part of something like this. what you do know i appreciate your work and appreciate the work that you and president trump and others have done to get this economy growing again to lower unemployment and to raise hope and optimism. so with that just what to say thank you so much. i do have a lot of questions and concerns as many others have of tariffs, thank you for listening on that. i want to talk of the things if that's all right. understand the treasury department is doing a lot of thinking about how technology is disrupting the financial services. some people call it didn't equitably is partly attributable to a quickly the options for how consumers access financial products and services gingiva it's fair to say depository institutions were forced to cup

with a lot of new regulation in the wake ofof dodd-frank. that is made difficult to compete with non-depositories. i also believe it's best products and services should be successful. wonder, do you believe there's unlevel playing field for depository institutions and non-depository institutions when it comes to adapt and innovate? wondered when the treasury department would publish the report outlining some of its policy views on how technology is disrupting financial services including any recommendations about the availability of a federal charter? >> so we should be coming up with the report shortly. i've had an opportunity to review a a draft of it and it's just going through final review. look, i would say like any legacy industry or any regulated industry, there are good things that occur and develop its outside, and there's concerned and we want to strike the right balance between both of those. >> thank you. the united states

participates in the bolsa committee on banking supervision and internationalization of insurance providers. i've been critical of some of the standard established by this group and other international bodies because of the inapplicable to our financial system especially for smaller financial institutions and insurance providers. wonder come to believe these international standards setting bodies add value? as a global leader in financial services, banking and insurance capital markets what to believe the role of the trait should be in such international standard-setting bodies? >> i think in general they do provide value because we do need to be careful and make sure with consistency and do with issues. on the other hand, something our role as both the leadership in that we provide leadership in the financial markets but also to make sure our companies are represented in her industries fairly. >> thank you. passion of the treasury department includes federal insurance office. recently they been involved with the establishment of a covert agreement with the european union among other things.

wonder if you are concerned with the amount of independence this office has come has to reinstitute prudent oversight and accountability of the grid would undermine his or her ability to effectively represent the views of the treasury department and the united states?n >> i'm not concerned about independent we worked closely with>> thed area and been actiy involved in the cover agreement. >> since you last testified before our committee, director mick mulvaney has also set in the center your city and and expresses of overturning the consumer financial protection bureau into a bipartisan commission asked my friend was a classmate of mine coming into congress do you still believe the commission provides greaterm certainty to market participants and consumers and he testified he said i still believe that and as as a cosponsor of the bill when i was here. i wonder if you support turning the cpb into my person commission, why or not, and what steps the treasury department is taking to turn the bureau in thought by person commission, if they're doing that at all? >> i do share his view. we are not taking any steps, not

pursuing that at the moment because it would need bipartisan support. >> again, thank you for your work. i've a few seconds of what you'll you back to the chairman. >> gentleman yields back. the chair now recognizes the gentleman from maine, mr. poliquin. >> thank you, mr. chairman. thank you, minutia for being here. up in the great state of maine where you y would likely need to go one vacation because what vacationland, it's a great stress-free environment and assure your wife would enjoy being, and joint also our economy is doing quite well. with about 2.8% unemployment. ece getting bigger. easy to change jobs if you don't like the one you have now. we had an economy that was conducive and now we have some being able to come back home.

to be able to invest and create more jobs and opportunities for our young adults because regulations are also lower. so this whole war on jobs is over. thank you for your support in getting us there and second, i am concerned about our small savers and investors throughout maine. to deal with increasing regulations and cost in this case a pension manager or retirement manager means the rate of return is going to be lower and the nest egg is going to be smaller.

you have a tremendous amount of influence on the ten member panel of the day overseas asset managermanagers that managed ret funds for thousands and thousands of small savers in maine. then you can avoid all of these expensive regulations that are unnecessary to build up a nest egg for the small savers i'll swear. do you think that is a good idea and can i get the commitment from you that he wil you will hs down the path?

do you think will get this project? >> we will follow up promptly. >> you attribute throughout the country better paying jobs and paychecks because of the lower taxes and less regulatory environment in the country is that correct? is it a good idea of congress should work toward certainty when it comes to the individuals and small businesses to make those lower taxes prominent so that our economy can continue to grow into more opportunities? >> that is something we are already talking about and the president is very focused on. >> the transparency act 1638

when you were here we discussed it a little bit. this simply requires the united states treasury to post on its website in several different languages. it's been built up on the political and military leaders so they can see how they are being ripped off at a. would you agree that it is good, it is better for there to be more transparency for the world to see a help a small group of political and military leaders discussing a. >> that is something i want to

talk to my group about. >> i appreciate that because that did pass the committee with a big bipartisan vote and we completely appreciate that support. thank you i appreciate your candid answers. >> the gentleman from arkansas. >> appreciate the secretary being with us today thank you for all questions and appreciate your voice and leadership on the success of the tax cut bill and regulatory reforms. from a lot of my regulated financial institutions arkansas, they like the appointees that are in the oversight of a. is the impact of the term in the administratioandthe administrata

regulatory burden point of view. i would interpret that for me tailoring plaintiff views of that might be something in your capacity when you're talking to your colleagues you may want to consult on speaking of the tax bill and regulation, you are aware that some banks we want to attract the united states and sent up intermediate companies and prosper in america lending money here and serving in america are put at a disadvantage potentially by the tax code and those that have the regulatory obligation of having a total loss of capacity, regulatory requirements are in conflict with the tax bill on how we tax but dividends from companies. are you aware of this conflict? a mac we are working on specifics and understand the

conflict between the tax bill and the regulatory environment. >> i know you are in the right spot with the domestic finance to trick a sort through how to bring it through the legislative branch if we need to take action on resolutions. we are hoping we can fix it without legislation but if we can't we will definitely come back and address it. i can remember david maxwell when he was the ceo testifying in the banking committee when i was a staffer about the essential nature that if they didn't diversify its revenue sources that would go ou they wa business and that was back in 1983. i noted that the fhfa permitted

them to engage in a number of new activities, a host of pilot programs that go well beyond the traditional second mortgage market will and that is why the ghost of david maxwell echoed in my head. don't you think they ought to be focused on the core mission of the market to the low and moderate homeowners and not be allowed to go off int and do ths like competing in the private sector and potentially purchase mortgage surface rights financing for private mortgage insurance? are you aware that they are such babies pilot programs? >> i am unaware of it and i agree without commenting on it for a specific one but i do think they should stick to their core business. >> i want to echo the comments of my chair man on the trade issue there's no doubt that the constitution enumerates the power that article one is

responsible for regulating commerce between the nations that's clear and over the years since the 1930s we delegated under our oversight that parameters and certain other negotiating parameters to the executive branch and i think that's why you see the secretary's questions and that you are getting today we all have customers concerned about soybean prices and we have those concerned about steel imports and aluminum imports. i hope you will be a voice for moving these discussions along quickly and also suggest other ways than a blanket across-the-board position of 232 tarrifs. is there any other way to stop the transshipment and the dumping of steel and aluminum and i would have preferred you going directly to china to the point in using 301 rather than

the national security angle. any comment on that? >> as i said before we are monitoring all of these markets steal aluminum and everything else and we are looking at using it appropriately. >> the gentleman from pennsylvania is recognized. >> mr. secretary as you know i previously expressed concerns about the financial stability boards designation of the u.s. insurers as systemically significant. they have typically preceded the determinations and it is especially troubling that it has appeared to act as a rubber stamp. i understand it is currently reevaluating its approach to systemic risk and considering

shifting to inactivity-based approach what is the position on using this as opposed to the designated company's? >> we absolutely support that. that is something we are shifting towards an part of the reason they are looking at it is because of discussions with us. >> i understand that you are traveling to mexico. i want to encourage you in your conversations with them about the importance of developing their economy because the fact is we have a horrific drug problem here. and if you talk to the mexican officials, they believe we are responsible because there's a demand-side part of the equation but the fact is they haven't produced an economy down there where people are having the kind of jobs that would keep them gainfully employed so i continue to watch the situation with alarm at the impunity down there, the more than 100,000 people killed. very few prosecuted on that so i

encourage you in your talks with them. while you're talking about latin america though, the financial networks continue to facilitate drug and human weapons trafficking throughout latin america, groups like hezbollah are active in places like the tri- border region in venezuela. this not only poses a threat to the national security and regional stability, it also enables the doctors across the continent to fly to places like western pennsylvania with different drugs. what is the treasur treasury det and to target the networks in latin america including working with countries individually and any leverage we might have to the organizations like the imf or the world bank. >> i can assure you it is a big focus. there is more work to do, but it is a big focus. >> are there specific groups to treasury has prioritized in latin america? >> again, i am happy to go through with you privately. there's a whole bunch of

different areas that we are focused on. >> i want to thank you for your hard work on tax reform, just six months after enactment the american people see the benefits of this with tens of millions of american workers receiving better paychecks under the new tables, 4 million have received bonuses, raises our benefits and over 1 million new jobs have been created for the first time in many years there are more job openings and job seekers and this is bringing workers pushed to the sidelines in the previous administration back into the labor force, the tax cut jobs act has made our country the land of opportunity and it also established a program to ensure the benefits of the booming economy reach areas that have historically been overlooked. the opportunity program at district has several designated opportunities including the tracks in beaver falls, midland. these were communities that can thrive thanks to the tax incentives offered for the

opportunities on investments. can you provide an update on the process for the opportunity programs? >> i'm glad you asked about that because actually it is one of the most important parts of the tax plan that gets the least amount of attention. i think it is enormously powerful. we've obviously been working with all of the states on designations of opportunities. we've actually also traveled across the country meeting with investors and other groups promoting this. this is something to treasury is very actively involved with. actually on my way to puerto rico next week, on my way to the g. 20, puerto rico is an opportunity zone so somethin ths something we are excited about promoting a. can you get an idea when we might see any kind of final regulations that might be to implement this? >> i think you will see regulations soon and again, people will be able to invest in it.

we have had very specific conversations with many investors. do you care to put any parameters suing? >> as soon as this year. is there anything the congress can do to help facilitate the process? >> i think we are all set. now that the u.s. has withdrawn we have the opportunity to use additional sanctions to change the behavior. how does the administration intend to apply sanctions going forward to achieve the desired result? >> how does the administration intend to apply sanctions to achieve the results we want to see? >> we are going to snap bac bacl of the iran nuclear sanctions that are in place and we will continue to roll out them on nuclear sanctions as we have in the past. >> the time has expired. >> the gentleman from texas is recognized for five minutes. >> thank you mr. chairman and mr. secretary for being here. and thank you for your candid testimony. we appreciate that.

this morning, and for your dedication to the country, but this congress and the trump administration are keeping the promises that they made to the american people, promises like rolling back regulations and reforming the tax code to make businesses more competitive. they risk damaging effects on the historical games that we need the past two years. i look forward to working with you in our trade representatives and presidents to combat unfair trade practices and to safeguard american jobs and promote free trade.

we need a united front against kim jong and the tarrifs. can you discuss in detail the expected endgame for these actions and what is the specific timeframe you expect for these policies to achieve the desired affect? >> i think the intent is that we are focused on having free and fair trade for american companies and making sure american companies can compete fairly thick as i said i put them in three buckets. one bucket is nafta, canada and mexico which are big priority. that's something we're very focused on. the other is the eu. the president was just in europe having direct discussions with

european leaders. he will be beating beaming witu late in the month. the third is china which unfortunately many of our talks have broken down and they reciprocated with tariffs. but again i think our objectives are pretty clear. >> another question. now that the ministry has withdrawn from the jcpoa how will u.s. sanctions bring about the behavioral change in iran required for long-term suspension of the countries enrichment activities? >> i think we are already beginning to see the impacts. we see many companies already announced they're going to do with the drawing on their investments there. i thinkts we expect that the iranian oil shipments will decrease significantly. we are already having conversations withig our allies about cutting their purchases. so i think we're beginning to see a tremendous impact. >> and lastly, kenya, on trade reduce sanctions as a tool to cut off the flow of north korea's weapons programs and acupressure countries such as

china to do more and take a tougher stand against north korea's weapons program? >> the sanctions have been very effective and that's a major reason why they have come to the table to negotiate and agree to give up nuclear weapons and as i mentioned earlier china has. ben a very important part of cooperating with us on that. >> i just want to close by saying thank you for being here. appreciate your efforts. let's keep what we doing business is good. thank you a lot. >> gentleman from texas yields back. that gentleman from minnesota's like record for five minutes. >> thank you, mr. chairman. thank you, mr. secretary for being here and sitting through this rather long hearing. mr. secretary, you talk about the importance of initial public offerings as a means of creating capital. you have done that before this committee during your last two visits. we've expressed our concerns, many of whichwe you share come with the overall reduction or lackluster performance of ipos

compared to historical trends. for its part t the committee continues to move legislation to build the success can build on the success of o efforts like te jobs act to enhance capital formation. earlier this week the house unanimously adopted the main street growth act, which will allow for the creation of specialized venture exchanges to encourage small and emerging companies to go public and help them generate investor attention and capital they need to be successful. encouraging more companies to participate in an ipo is one thing, but encouraging small, early-stage companies to go this route is especially important. based on your experience in the financial sector, can you speak to why it is so important for new and emerging companies to go public? how these newnd early-stage entrance make our markets more dynamic and help businesses and everyday americans alike? >> despite the fact there's isn abundance of private capital right now for early-stage

companies, the ipo market has long been critical in the public financing, that's was made of our companies are successful, access to the most liquid capital markets of the world to grow and raise capital to with a full to working you on it. >> thank you. i understandn the treasury, andi think mr. hultgren and others may have referred to your upcoming reports i apologize because we come and go. .. apologize. i've been taking a close or loot how the advances can be used to help entrepreneurs start a business to improve the w i think you are asked but i was not clear, and again, i was coming and going. can you give us a timeframe first we expect the report to be out?

>> i mentioned, i just recently reviewed a draft of the report. i would hope it comes out in the next 30 days. >> and again, i do not mean to cover old ground i want to be clear. one of the statistics that i found very concerning of late is that the atpercentage of americans under 30 years of age, that on a private business is at a 24 year low. having this figure as recent as 2010 stood at 6.1 percent. and its peak it stood at over 10 percent in 1989. you commented a little bit earlier or at least you are asked about the issue, the draft you reviewed, do not hear this clearly, is it going to be covered in that draft? >> yes, love the issues will be addressed. >> wonderful.

lastly, i want to ask you you are no stranger to the complexity of the secrecy act and .anti-money laundering regulatory structure. last summer when you testified before the committee, a representative asked about ways to improve the harmonization of the bsa aml system. they been working on legislation to encourage treasury to take a more prominent role in coordinating bsa aml policy and up limitation. which i believe most of our financial institutions and entities support. as this committee and congress continue to work the issue, are there additional efforts underway of treasury to approve regulatory harmonization among the other federal regulators when it comes to the bsa aml regulatory structure? >> yes. we have a team working on that now. both a team of treasury and the tfi area. they're working with others and

is actively underway. >> you anticipate they will put out some type of report? obviously they will report to you but we have an opportunity to see what the recommendations and suggestions are and >> i'm not sure will be in the form of report that we will make sure that we communicate back to you in terms of us putting out some type of guidance or general comments along those. >> excellent i look forward to that. i look forward to that time. >> the gentleman from michigan, you're recognized for five minutes. >> thank you mr. chairman and thank you mr. secretary for your time today and all of your tremendous work on our economy and job growth. it is just amazing. one of the benefits of going at the batting order is i get to listen to all of my colleagues and respond to some of them. for the record, i consider you to be a genius. >> thank you, i take that >> take it as a compliment. >> the long is by definition, i am. >> for the record, mr. meeks is

misguided when he suggest you go back and admonish the president. the real problem we all know is the senate. there are 569 bills that have been passed out of the house that are dead in the senate. and i for one, sam happy you will have to be here the month of august to get some work done and hopefully they will confirm a few investors. mr. scott from georgia suggested that his state would be the most hard-hit state by the trade war. i take issue with that. my state of michigan no doubt will suffer the most of the trade war ends badly. it is my concern. and i spent 30 years in business, a lot of deals, found work in collaborative rather than a scorched earth approach is more productive. we consider the president's comments in qucbec, his comments yesterday in brussels, the comments about the wall, i worry that it is going to be difficult to reform nafta in a way that will not end up hurting my state, the state of

michigan peer by the way eemy district has the largest number of ford motor employees of any district in the country.y.and so, i just like your thoughts. he said you've been to canada, you going to mexico. i would like answer from you and how you address some of the bluster from the president which diagain, john is a different story. you say is complicated so talk about that another day. i do want to know we will end up in a good place as it relates to my state of michigan. >> i'm cautiously optimistic but i suspect will end up in a good place. that is a major priority. >> i think that the rhetoric though, to be more specific, i think we look at the prime minister justin trudeau for example after qucbec, i think it makes it more difficult for him to reach a fair and free trade agreement with the united states. because if he does, i think you will be -- i do worry as it relates to trade and our allies.in response to mr.

ross, you suggested in the next congress, housing finance reform would be a priority. i'm glad to hear that because i do worry that we are moving towards more relaxed underwriting guidelines.with respect to fannie and freddie, you mentioned earlier, see like to see a bipartisan solution. that would be great. it has been very elusive for the congress to come up with a bipartisan solution on housing finance reform. 10 years in the making, perhaps. assuming that is not possible, which is not a big leap of faith, would it be possible, would you support the hundred 16 congress, a more simple approach just to get fannie and freddie out of the second mortgage market and to get them out of the refinance market, the refinance loans represent two thirds of fannie and freddie is portfolio. that alone would significantly overnight, over time, diminish the role in housing finance. >> again, i want to be careful

of specific comments. i do not support them getting out of the refi market. i think to the extent refi loans are underwritten properly, there should be several limitations but to the extent rates go down and homeowners want to refinance, i do not think that they should be penalized. >> but again, if rates go down and they have a good credit score and the refinance, and then property values drop, the government essentially will be exposed again. >> again, without getting into all the details as a result of poor underwriting standards and buying many loans subprime loans and other things that they never should have been purchasing. i think that there is a prudent solution, my preference is we do this rathrough congressional action. if not, we will look at administrative options. >> thank you. last question.

the orderly liquidation authority outlined entitled dodd frank continues to be a concern because i believe it could be a license for fdic's use dollars at treasury to bail out banks. i think it should be a priority in the next congress to try and revisit that process so we can come up with a better solution? >> i think there are recommendations we have made on that. and we will be happy to work with you and others with the desire to move forward on that. >> thank you, mr. secretary. >> now recognizes gemma from north carolina. >> thank you, mr. chairman. thank you for being here, it is good to see you again. i would like to commend you on implanting tax cuts and jobs act. as many of those that think you would like to continue in that. we are growing at three percent. some would say even more. ori know i speak for a number o us today that we appreciate the role you played. >> says it is the hearing on the state of international financial systems i wanted to

switch from hr one to move to things of importance for me. as you know, we operate under a state-based system of regulation. the u.s. insurance market has long been one of the largest insurance systems in the world. in fact, more than half of the worlds 50 largest insurance markets are u.s. states. north carolina market for example is bigger itself than the entire market of belgium, sweden and denmark and finland. yet, u.s. officials have been engaging in overseas negotiations that would ultimately import european-style capital standards. for the u.s. companies and their policyholders on main street across america. this is why i cosponsored and voted to pass the chairman duffy's international insurance standards act on tuesday to protect our companies at home from being harmed by european centric regulation.

mr. secretary, would you agree the u.s. system of state based insurance regulations works well? and it is well-capitalized and solvent for the most part and that it is important for the treasury secretary to defend the system from the intrusion from both federal and foreign regulations? >> i do. >> at risk of sounding like my high school in which teacher would you care to elaborate. do you care to share more on that? >> in general, we very much support the state-based system. it works. it has worked well. there are certain issues that again, do require some federal intervention and oversight but this is a system that works. it is not broken and we do not need to change it. we need to make sure that u.s. companies that do international business and operate appropriately and that is the reason to participate in the international forums. but we are not looking to

change the system. >> very good, thank you.just to point out for many of the committee one of the recently passed this is because we feel like u.s. interests are not being represented well overseas. if that is the case then congress will step in in a bipartisan fashion as referenced by this week's unanimous vote. switching briefly to another topic, mr. secretary. some have called for congressional action to improve and expand upon existing information sharing tools which are financial institutions and government authorities. as well as among financial institutions in cases of suspected money laundering and terrorist financing. including changes to the scope of liability safe harbors and types of information that may be shared. can you please discuss treasuries relationship with the private sector to enhance and facilitate counterterrorist financing objectives? >> we work very closely with the private sector.it is very important. i think i mentioned in the past paris financing mis a major

priority of the department in a major priority of mine and i think we have a very good collaborative effort with the private sector. although congress intended section 3 14b of the patriot act to allow banks to share information on illicit financial activity between themselves, things have felt constrained by the rules interpreting of the statute. is it time to address this issue and allow banks to share such information with appropriate safeguards? like that is a specific issue we are working with them on. >> thank you. would you be for legislation that achieves the objective? >>. i would but i want to make sure we work on the specifics of that with you. >> thank you, mr. chairman, i yield back. >> the chair recognizes ms. love. >> thank you mr. chairman thank you mr. secretary for being here today. i want to be clear that the

questions you're getting today i usually go to my district and ask what questions they would like me to ask of the secretary. just note that these are coming from people who have genuine concerns. you are before congress today and forgive me also if you have answered some of these questions. i need to make sure that i get these on record. you're here before congress today to report on the status of international financial systems include less involvement in the international monetary fund. in the recent world economic outlook, the imf expects concerns of the prospect of trade restrictions threatened to undermine confidence and zero global growth prematurely. do you share those concerns? >> i don't. i would comment support the imf, i also question some of the productions on the u.s. economy as well. >> okay. back in may, on the 23 rerecorded saying that tariffs are on hold. yet, less than seven weeks

later, new tariffs on chinese goods went into effect and were immediately met by retaliatory tariffs by china. clearly, other people in the administration were not as interested in keeping things on hold. in the meantime i heard concerns from many different people in utah, industries in utah about the negative impact that they are already seeing from the uncertainty and the new tensions in our trading relationships. just yesterday actually had a small business owner from my office come to my office, the utah metal works and with recycled metals and says about 40 percent of the business over is overseas. they are suffering from uncertainty. and they want to see an agreement be reached, not just the president beating up on trading partners at the end of the day, they want to see some results. it is not going to impact their consumers. do you know what the end goal is? is there master plan?

we are trying to figure this out. your answer haquestions from ou constituents and is very difficult to try and figure out what the strategy is. we know what the end goal is but to know if the strategy is? do you know if there is a master plan? >> first, let me say the tariffs were on hold. we were close to having an agreement. we cannot reach an overall agreement and that is why the president decided not to keep them on hold. as it relates to a master plan, it is pretty simple. we told china we've given them a long list of issues. i think the answer is, we want to make sure that they open up their markets and that they treat our companies fairly so that we can increase exports. i think you know they buy about 130 billion of our goods and we buy about 500 billion of their goods. there is a huge opportunity for companies to compete fairly and increase exports significantly. the master plan is for them to open up. >> the federal reserve last

week said right before the new tariffs on china imports were imposed, that the possibility of a trade war has forced companies to put on hold their investment plans. we now find ourselves in a situation where the uncertainty over global trade policies cause businesses to scale back or postpone their capital spending plans. plans that were incentivized by what we did in congress in terms of implementing the new tax law. and tariffs on the other hand, we all know it is really a tax on the consumer. and it will hit american businesses and consumers it seems like one hand, is contradicting with the other hand is doing and they are not working. what are you doing with the administration to ensure that trade policies do not undermine the growth that we are seeing in the businesses and that we are experiencing? >> well, let me first say,

tariffs are sometimes a, by the consumer and sometimes they are paid by the seller. so i do not believe they are necessarily always the tax that is passed on. i would also just say that the president is very focused on economic growth. it is something he campaigned on. from the beginning we have been focused on regulatory relief, taxes and trade.and i can assure you that we are not going to do anything that will jeopardize the great growth of the economy. although i recognize there are certain areas and certain markets have been targeted that we need to be careful and sensitive to. >> you do recognize uncertainty does hurt our economy and it really makes a difficult for people to invest. >> i recognize that. >> just the uncertainty, anyway, implore that you would work, thank you. >> time has expired. the chair wishes to inform

members that votes on the floor are imminent. and per agreement with our witness, he will be released no later than w1:15 pm. currently i expect to clear three more members. gentlemen from georgia is now recognized. >> thank you, mr. chairman. t thank you mr. secretary for spending a good part of your day with us. this is probably not the most entertaining were the most productive thing you can do today but it is important for us and our public to do this. real quickly, just one issue i want to touch on. something that i am hearing when i go back to georgia, especially from local banks and credit unions. is the customer due diligence rule. most of them feel that for a part of it it is very intrusive and burdensome. and they are still unclear on a lot of the compliance and they find it very difficult to implement because of the lack

of clarity. if i can, i would like to just, share a few anecdotes of some things that i have been told recently by these banks. one of the most common frustrations is that it has been very vague in telling banks what to do if new customer wants to open an account. but cannot provide the required information. they say the occ has indicated they should not even open the account and in that case they have provided no guidance on the issue. another one is if an existing customer wants to open a new account but is unable to provide the required information or refuses to do so, should the bank terminate the entire relationship or just not open the new account since the rule went into effect on may 11? >> if the bank closes all the accounts, is that frowned upon ras de-risking by the regulators? they get caught in this no win situation. but if they do open the account, many times they feel they are in violation of the regulation. and so, it has resulted in i

significant delay for a lot of the customers. another problem is when a customer opens a new account. two weeks later they want to oget a debit card. one month later they want to enroll in online banking. the banks do not know, do they have to fill out the forms again for each one of those events? some banks have used forms of simply certifying the beneficial ownership has not changed but bank examiners say it is not acceptable. another main concern is that banks are no having to ask people who have been there customers for years, even decades, for this information. the customers do not understand why the bank is asking them and now they think the bank no longer trust them and it hurts the anfoundation of the banks relationship with the customer. an example, a longtime customer simply change their address. nothing else has changed other than address. the new beneficial ownership forms, do they have to be completed? this also applies to routine

renewals of lines of credit, certificate of deposit etc. and the last one, the rule is also causing issues for accounts that may not have a beneficial owner.such as accounts for class reunion, civic organizations, school clubs and churches. in one case a child was recently diagnosed with cancer and the school did fundraising campaign to help the family. the mother worked at the school and was a customer of the bank at the bank turned her away because they were afraid of getting the beneficial ownership questions wrong. so my question is, i'm sure you are aware of these problems and since they currently do not have any plans to issue formal guidance, for the cdd rule, what would you suggest that banks do to get clarity on these specific issues? >> you have asked some very good questions. many which i'm not going to answer the specifics of what i will follow-up and as i said before i'm a big fan of proper regulation but i'm also a big fan of proper guidance so that they can follow the regulation. i think you raised a bunch of issues.

i will say as a broad comment, customer due diligence is very important. we need to have banks know their customers. and we need to get this right between what is particularly on small banks, a big burden. and the customer and making sure we have the information. i have been a customer who has to provide the stuff and i know it is quite difficult and many of the minor changes we should make sure that the banks know how to deal with these issues. >> okay. i think you and i look forward to your response in these in more detail.i yield back. >> there is a vote pending on the floor. a little over 10 minutes. the chair expects to clear two more members but restrict them to three minutes. the gentleman from ohio, mr. davidson, is recognized for three minutes. >> thank you, chairman. mr. secretary, thank you very

much for your testimony today. they have been asked discussed extensively i appreciate your sentiment that perhaps a heavy hand of government is not necessary. perhaps the presumption might resemble way we treat the second amendment more than the way that we treat other things. where everyone is held liable to provide information subject to criminal penalties if they don't.i do not think we need to find new ways to make more people criminals. we do need to get after the finance out there i think that is the sentiment, that part unites us. the approach is got us fairly divided. i look forward to in any way be able to collaborate in beneficial ownership more broadly. i really appreciate what you've given as secretary to illicit finance be we saw that kind of marginalize and take a backseat under the previous administration. our operations, reciprocity, cannot be put on the table now or is there, what is the

status? of those efforts? >> the things youare being considered. >> you're still deciding whether to pursue the investigations? >> i want to be careful and commenting on specifics.>> okay, thank you. we talk a lot about trade. there has been a lot of attention given to trade deficits. mercantilism emphasized trade deficits and under mercantilism we were largely using -- to settles current account per gold can be hoarded.there was an idea that it was a zero-sum game. today we do not have that. we something consumable, the petrodollar the basis for currency. it is consumed. so people do not hoard it. trade deficits are commonly misunderstood as zero-sum game.

are you confident that the dialogue being had today as we negotiate with our allies and with our competitors, strategic competitors, in the marketplace, that we are focused on trade, free, fair reciprocal trade and not a more mercantilist zero-sum idea? >> i am completely. but in many of the cases where we have the trade deficits, is because there are unfair trade practices. >> there certainly unfair trade practices. before coming to congress i was a manufacturer and was on the receiving end of many of those unfair trade practices. however, the deficit is largely attributable to the account balance. we have the free flow of goods and services but will also have the free flow of capital. could you address the idea that in reality, the only likely way the first increase the deficit is to enter into a recession. >> i don't agree with that at

all. >> time for the german has expired for the german now recognizes the gentle lady from new york. she will be the last member recognize before we dismiss the witness. >> thank you, mr. chairman. thank you secretary for being here. just some commentary and quick questions. i do appreciate the presence position on realigning global markets making sure anyone has access to the greatest marketplace in the world, the us, it is done in a fair and reciprocal way. i'm concerned and i will express this because i knew answered it. a little about what is happening in new york state in my district where dairy is one of the number-one industries. we contend with canada who has violated class vii pricing. we have differences of opinion on that. i would like to, and obviously new york state, we have trouble with an oppressive tax regime in albany has made it really

difficult for dairy farmers to survive. another area is crops and particularly hate. it again goes back to where we are going with trade and tariffs with canada and border states, agricultural products on the us. i hope that i want to bring that to light because there happening in new york state. and want to be sure and aware of those. also i'm sure the president and comments made by colleagues on the other side is delighted that they are occupying or that he is occupying some space because they are reading his twitter account regularly. i thought that was amusing. but i do happen to think that you are a stable genius and i do think the president geopolitical and political instants are proving to be may be, true. so, i want to get to something nonfat in a little bit back. maybe a deeper dive into the

idea of iran sanctions and the iranian state model. i know going through just quickly, we know that you've highlighted a little bit of this. the waiver on the islamic republic of iran broadcasting actually it expires today. do you believe is the best interest of our nation to allow them to expire and would you be willing to reinstate those and the fact that they already placed them under direct general sanctions pair with that be something you could support as of today? >> again, i would rather you follow up with us privately. i get your views but it's as if you have an opinion on this. i would like you to share with us. >> thank you. i know it is something headlining and it is happening. the past administration was pursuing waivers and i want to know where we will go today. we know that some of the resources that have been used

under the former jcpoa was used for terrorist means. i appreciate you getting back to us. thank you again for your great work and tax cuts and jobs act have been, it was a difficult process but it has been a godsend for my region and i don't know what a business small medium large that hasn't talked about jobs and bonuses and raises for their people. >> i would like to thank our secretary for being here today. -- they should be forwarded to the witness for the response. we asked the secretary to please respond as promptly as you are able. this hearing stands adjourned.

[inaudible conversations] >> we live this morning. the pew charitable trusts for a speech from senator susan collins. she will talk about prescription drug prices this morning. senator collins enters the agent committee purchases reducing the cost of drugs is one of her top priorities. senator collins will be introduced by the executive vice president to the pew charitable trusts. live coverage here on c-span2.

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[inaudible conversations] >> good morning everyone. i am the executive vice president and chief program officer at pew charitable trusts. we have a diverse mix of initiatives ranging from health, state, consumer and