tv Status-- Financial CSPAN December 15, 2013 12:50pm-2:21pm EST
give the keep your doctor if they pay more according to ezekiel emanuel? >> they can choose the network whether doctor is available spent and play more? >> whether doctors not available based on the kind of premium, the kind of deductible, the kind of -- >> i see my time has expired so thank you, madam secretary,. >> the chair thanks the gentlelady. that concludes our questioning at the present. madam secretary, we'll have some follow-up questions were sent to you. we will ask that you please respond probably. we have a couple of unanimous consent request that i would like unanimous consent to submit to the record a letter from doctor julie welch, an emergency medicine physician and educator from indianapolis. without objection, so ordered. dr. burgess? >> thank you, mr. chairman. dr. gingrey referenced an offer from the health to the president to provide a platform for the market exchange, and i would
like to submit his letter for the record. and i will make this part of a question for the record that i would to a follow-up. >> without objection so ordered. ranking member? >> one is for my constituents in piscataway, anthony weill, that i referenced. another is the one that ms. schakowsky reference. you know, these are the different individuals impacted by the aca. >> without objection spent and then a third one from ms. schakowsky. >> without objection, so ordered. thank you, madam secretary, for your patience, for respond to all of our questions. i remind members they have 10 business days to submit questions for the record, and that means they should submit the question by the close of business on tuesday, december 31. another important hearing. thank you, madam secretary, for your indulgence. wi
the house passed an agreement on the 2014 budget. the senate returns today at 1:00 eastern. harry reid expected to move forward on the budget agreement and defense authorization. you can watch the senate live on c-span2 in about 10 minutes. the group in charge of brokering the deal talked about the deal this morning on "meet the press." did not get everything we wanted. i will tell you what we did get paid certainty for the next two years. not going to tell everybody we will throw the economy in a tailspin because we have to have something. importantly, a budget agreement is about how we can manage resources so we can have the things i do care passionately about, whether education, health care, or transportation infrastructure.
we were not managing our country in a way to get the things i cared about. >> my colleague spoke to your colleague, marco rubio. he called this an un-american deal. other groups are saying you and others made a promise of across the board cuts. you are going back on that and there will be consequences, they warn. >> my response is the budget control act said to replace the sequester one for one. we have exceeded that. this results in net visit reduction. >> but not much. >> we are not saying this is a massive agreement. it just gets government working. but it has $85 billion of savings to pay for $63 billion of sequester. half goes to defense, a big concern of many republicans. you do not get everything you want in a divided government. >> does marco rubio say it is
un-american because he is running for president? >> i will not go into his rationale or motivations for that. i know what i think is the right thing to do. getting a budget agreement that reduces the deficit without raising taxes and prevents two government shutdowns from happening in 2014. in my opinion, it is the right thing to do. >> the senate is scheduled to be in in about five minutes. they will be moving forward on the budget agreement. you can watch the action live on c-span2 or online at www.c- span.org. tomorrow, we will be hearing from the former u.s. trade representatives about nafta on the 20th anniversary of the north american free trade span2.ent on c- also tomorrow, the outgoing chair and ceo of gm will be speaking at the national press club about the progress of the u.s. auto industry and his company's plans for his
investments -- for investments in the u.s. >> if you are a middle or high school student, the video competition wants to know the most important issue congress should dress --address next year. be sure to include c-span programming for your chance to win the grand prize of $5,000. the deadline is january 20. >> the treasury secretary testified thursday before the house financial services committee about the international financial system. he also addressed u.s. financial regulations, ongoing trade talks, and iran's sanctions. this is one hour -- an hour and a half.
>> this hearing is on the state of the financial system. i would like to make a few preliminary comments. i want to thank the members and staff for their flexibility in scheduling. passing of the late nelson mandela, in order to accommodate the number of members and the secretary for both his funeral and memorial services, we moved this hearing to this morning. as many members know, today the committee will feature a double feature. we will see the rest of you at 2:00 as well for our monetary policy hearing. members will have an opportunity
for lots of quality bonding time today. i wish to also announce ahead of time that at 11:00 a.m., i will declare a short recess of the committee. i now recognize myself for five minutes to give an opening statement. the committee meets today to receive the annual testimony of the secretary of treasury on reforming the international monetary fund and broader international financial system. there are important questions that must be raised. hard-working american taxpayers suffer from bailout fatigue having been forced to pay for the bailouts of aig, fannie mae, freddie mac, chrysler, gm, banks big and small, and most recently the federal housing administration. many americans question the wisdom of supporting the imf and other multilateral financial
institutions to take their hard- earned dollars and use them to bail out other countries. americans do not want to be part of a bailout nation a bailout planet. the important question at the outset is whether the administration's come -- credibility has been compromised and has compromised our ability to reform multilateral financial institutions. american presidents' most awe- inspiring power may not be to spy, but when he speaks the world listens. lately that moral authority of our nation has been under question. is a deal with iran that dismantles sanctions but is not in the march toward a nuclear bomb or revolutions -- revelations about spying on our
allies. we live in our world weren't too many of our friends no longer trust is an too many of our adversaries no longer fear is. many americans took the president at his word when he promised that americans could keep their health insurance if they liked it. they now know better. although the last couple of months have brought some welcome news on the jobs front, americans continue to suffer through the slowest, weakest to cover in his generations, thus regardless of the wisdom, many americans downright question our ability to continue supporting multilateral financial its additions like the imf. >> when president obama took office, poverty is up, income inequality is up, the debt has
never been higher, small businesses are drowning in the greatest sea of red tape and our nation's history, and a number of americans in the labor force are at its lower us level in 30 years. five years into these policies, hardship and anxiety abound. just listen to what i hear from my district in the fifth financial district and texas. nancy writes i have been looking for it up or close to two years. god has blessed me with many jobs on and off but that does not pay the bills. who said "i have spent more time on employed in the last four years than i have employed." from alba in my district writes that he is had to close his business and says "i am 70 years old and i have tried to find a job, but nobody wants to hire a 70-year-old when so many younger people are out of work." better than deserve the results of this
administration's economic policy, which brings us back to the central truths josh you cannot --you cannot strengthen the global economy without strengthening the american company. both fundamental tax or from an tax relief, freezing red tape that is hindering job creation, giving 1/6 of the economy, that is health care, back to the american people. that means ceasing to spend money we do not have. the single greatest threat to a stronger economy is our growing national debt. witness the national debt clock to my left and right. it is a debt that has mushroomed under this president theodore never in our history have so few under this president. never in our history have so few indebted so many. it is unsalable and i believe to be immoral. president dismisses
this threat at every opportunity and i fear leads a parade of washington debt deniers. under the current policies we have it is not a question of whether a debt crisis will come, it is a matter of when. for the sake of our economy, our children, our freedom i call on the president to work with our congress now. our nation deserves better. i now yield six minutes to the ranking member for her opening statement. >> i want to thank the chairman for holding this hearing and i'm delighted to welcome you secretary lew to our committee to testify today. i would like to discuss what i believe to be one of the biggest social economic and political challenges we face today both domestically and internationally and that is the problem of growing inequality. over the past 30 years income and equality in the united states has been steadily
increasing. this was the case even during periods of growth. before the financial crisis levels of inequality in the united states reached peeks not seen since the late 1920's. while other committees have also experienced rising income inequality, the most shocking shortcomings are right here in the united states which has the highest level of inequality of any advanced industrial nation. in fact today 20% of the income in our country goes to the top 1% of americans. if you look at inequality of wealth, it's even worse. the top 1% holds about 40% of the country's wealth. the gap between the rich and poor in america has become a chasm. the gains from growth during the recent recovery have acude to the wealthiest people in society. almost 95% of the income gains
since the recovery began have been captured by the top 1%. this means that the most unequal advanced industrial economy in the world is becoming even more so. i recognize that in a capitalist system some degree of inequality is necessary for the function of a market economy since it creates incentives to work hard and take risks. but left entirely to its own the market system will produce more inequality that is economically necessary. here in our country we have much more inequality than is necessary for efficiency. i believe this is a moral problem from the standpoint of equity. but excessive inequality undermines social and political cohesion. it has also recently been shown to have negative effects on growth and stability as well. recent research at the i.m.f. has shown that excessive inequality slows growth because
depressed earnings lead to weaker demand and lower consumption. reducing inequality is increasingly understood to contribute to economic growth. inequality is also a political problem. we now have an increasing degree of resistance on the part of many americans to new trade agreements because they see themselves as victims of globalization rather than as participants in its benefits. i believe our international economy policy has in fact been too one sided, too focused on elevating the interest of capital over all other considerations. this was based on the misguided believe that unfettered markets would create wealth and stability and trickle benefits down to others in society. this isn't what has happened. in fact, one of the most important lessons we learned from the recent financial crisis is markets must be deeply embedded in systems of governance.
markets are efficient and self- correcting has received a modern blow. i believe in capitalism and i believe the markets are the main engines of wealth creation in our country and elsewhere. but in order to be truly supportive of the free market i believe you must also be supportive of government. we need to have an appropriate set of public policies in place to reign in the excesses of the market to help maintain stability and to ensure capitalism and growth are shared. we need to do a better job of dealing with equity questions at home. we should be increasing the minimum wage, extending unemployment insurance and other assistance for those in the u.s. clustered in the low skilled end who are disadvantaged by globalization. until we do that and people begin to feel secure at home we will not have the political support we need for more active engagement by the united states with the international economy.
mr. chairman, i thank you for holding this hearing today. some of what i have eluded to in my statement are issues that are being dealt with as we consider the budget today. and these issues i have eluded to include the unemployment benefits that i understand may not be in the budget agreement. also i believe providing trade adjustment and other assistance for those i pointed to in the low skill end are issues that we have not sufficiently dealt with and i am looking forward to engage you and others on these issues so that we can get at how we will deal with this income inequality that is a central theme of my testimony today.
i yield back the balance of my time. >> the chair now recognize it is the gentleman from california, mr. campbell for three minutes. >> thank you, mr. chairman. and welcome secretary lew. your testimony is required by the international institutions act. there is no shortage of issues we can discuss. i will let my written statement stand for itself. one of the things i believe you will discuss is the i.m.f. as a reminder, the 2009 congress authorized $100 billion commitment to the i.m.f. in an account called new arguments to borrow. now there is discussion of transferring $63 billion of that into a permanent paid in capital. there is a lot of concern about
this, secretary lew. we don't believe this is just a bookkeeping entry this. this puts this $63 million significantly at risk where currently it is not. secondly there is a lot of concerns when we are cutting domestic issues is this a time we should be increasing funding to first world countries around the world and there is some concern of whether a lot of this money could go to european countries and yes they have crisis and problems but can't they deal with those within europe without the u.s. taxpayer being involved. there is concern about moral hazard. would the i.m.f. by making more loans to countries that are deeply in debt be encouraging that kind of indebtedness rather than trying to encourage these countries to get out of their debt and not to spend so much and borrow so much.
and finally there are reforms involved with the i.m.f. and this addition contribution and concern about whether those are really enough, whether they go far enough to change the governance of the i.m.f. if the administration f you, if -- if you, if the president are committed to and want this $63 billion transfer, we need a couple of things. we need three things actually. we need first of all, you to make a formal request which has not yet been received by this committee for this money for this transfer. secondly we need you to address these issues. and we need you and we need the president, if this is a priority for $63 billion of u.s. taxpayer money, we need you and the president to volley art late why articulate why
this is a priority in this era of limited budgets and why these concerns that people have on this committee are not well founded. >> thank you. i look forward to your testimony. i yield back mr. chairman. >> the chair now recognize it is gentleman from illinois, mr. foster for one minute. >> thank you, mr. chairman. thank you for joining us today. mr. secretary, when you left your first tour of duty in the white house in 2001, we were paying down our debt to the tune of a couple hundred billion dollars a year and down to zero by 2008. in the next eight years we saw the surplus reversed and the deficit exceeding $1 trillion a year in the next eight years. we're also sitting on eight straight years of uninterrupted job growth and we saw in the eight years following your first depart you're zero net job
growth. 20 million people entered the job market with zero jobs produced for them. we've made significant progress since entering the worst recession since the great depression. we've seen private sector job growth and there is much work left to be done and i thank you for appearing today. >> the chair recognizes the gentleman from washington for one minute. >> thank you, mr. chair. secretary lew, thank you for your service to country and for appearing at this hearing today. but the hearing i am most interested in is taking place at your treasury department as we speak. the bank secrecy act advisory group is meeting right now and confronting the question of how to allow legal marijuana businesses to access the banking system. as you know, the voters in my state and colorado last year approved initiatives to make marijuana legal for adults. these policies go into effect in
the new year but we need cooperation from the federal government to make it work. if federal banking regulations continue to prohibit marijuana businesses from using the banking systems, these all cash businesses will be a manage net -- a magnet for robberies and organized crime. you have the power to prevent that secretary. i hope the advisory group agrees on a new workable guidance today and i hope you swiftly approve it. >> the time of the gentleman has expired. the chair recognize it is gentle lady from new york for 30 seconds. >> it's my pleasure to welcome the secretary from the great state of new york and new yorkers are proud of your public service. my question concerns g.s.c. reform. you mentioned our growing economy and your main job is to create jobs.
many economists have testified one of the most important things we could do is bring certainty to housing finances. i hope you'll comment on the efforts of the administration to support housing finances reform uncertainty in that area. welcome. i look forward to your testimony. >> today we welcome the testimony of the honorable jack the secretary treasury of the united states. secretary lew appeared before our committee earlier this year so i believe he needs no further introduction. the secretary's written statement will be made part of the record. welcome to the committee. you are now recognized for your oral testimony. >> thank you, mr. chairman, ranking member waters, members of the committee, i appreciate the opportunity to testify today and thank you for the flexibility of rescheduling so a number of us could attend the memorial services for nelson
mandela. economic concerns are improving in advance countries led by the united states. despite political head winds our economy has been growing. our business versus created more than 8 million jobs. we have more to do to create jobs, accelerate growth and put our economy on a firmer foundation. economic progress depends in part on the global economy and the global economy faces many challenges. the long recession in the euro area seems to be ending. europe is in a position to reduce unemployment which remains high in many countries. in japan, the authorities have taken forceful action to begin ending deflation. japan needs to undertake structural reforms to strengthen domestic demand growth. some emerging market versus
slowed. emerging markets need to make reforms that increase their resilience and address growth. china's new leadership announced bold commitments to reform. the character of these reforms will shape their transition to consumer-led growth and away from export growth. an important part of my job is to create the most favorable environment for jobs and businesses. the financial institution and monetary fund and banks are indispensable in this effort. we must preserve our leadership in these institutions. that's why it's so important congress approve the governance reform. at the g-20 summit in 2010 we secured reforms that preserved the veto without increasing the u.s. financial commitment to the i.m.f. right now u.s. approval is the only remaining step needed for these important reforms to go into effect. if we fail to act we risk a loss
of influence at the i.m.f. to implement the quatta reforms the administration provided draft legislation to reduce u.s. participation and increase the size of the u.s. quota in the i.m.f. by an equal amount. our investment is safe and sound. when the i.m.f. lends it does so to portfolio conditions and with safeguards it's repaid and it's repayment record is outstanding. investments also provide substantial returns. these institutions leverage our limited contributions and multiply our impact by attracting contributions from other nations. they also effectively promote our national security and economic priorities including opening up markets for u.s. businesses abroad. it's important to note that the u.s. will be making new commitments to the international development association of the world bank in the african
development fund this year. these are the two largest sources of finances for the world's poorest country and their impact is enormous. as we maintain our commitments to the financial institutions, it's crucial we continue to strengthen the world's financial system. the united states has led the global effort on regulatory reform with dodd-frank largely completed at home. on tuesday the volcker rule, a centerpiece of these reforms was fulfilled. this rule is strong and comprehensive. it will change behavior and practice across our financial system. it also full fills the president's vision and statute's intent by setting tough but workable restrictions while continuing banks to perform necessary functions. in 2014 we'll work with the g-20
and financial stability board to promote high quality relations. we'll focus on advancing implementation of basil 3. and the high quality capital standard is met. we'll also focus on strengthening arrangements for cross border resolution of large financial institution, promote swift implementation for over the counter derivatives markets, and develop a roadmap to address risks posed by shadow banking. we've been at the forefront of efforts to advance key national security and foreign policy goals. nowhere have our efforts been more concentrated than using sanctions to advance our policy and prevent iran from obtaining a nuclear weapon. together with our international partners and with congress we have built the most effective sanctions regime in history. even as we explore the
possibility of a long term agreement with iran that would provide assurance that iran cannot obtain a nuclear weapon, we will continue to enforce our sanctions vigorously as our action this morning imposing sanctions on more than a dozen entities demonstrates. across the global landscape there is much work ahead. with your support i am confident we will continue to protect america's interest abroad and at home. thank you and i look forward to your questions. >> thank you, mr. secretary. the chair yields himself five minutes for the purposes of questioning. as o.m.b. director in february of 2011. you were quoted at saying it's an accurate statement that our current spending will not be increasing the debt. we've stopped spending money we don't have. you said that while introducing
the president's 2012 budget which add $12.5 trillion to the national debt over a ten year budget window and under your watch as omb director, $1.4 trillion was added to the gross national debt. i'm trying to get some insight into the administration's view of our national debt. do you still stand by those comments? is there some context for those comments? >> at the time i was trying to explain the difference between a primary balance, primary surplus and spending, new spending, new commitments that are being made. the definition of primary balance is when the only deficits are related to paying interest on the national debt. and other than that we are covering all of our expenses. >> let me then move on to a statement the president made fairly recently about six weeks ago. "don't pretend as if america is going bankrupt at a time when
deficits have been cut in half." isn't it true, mr. secretary, these deficits have only been cut relative to the largest deficits in our nation's history save world war ii? >> if you look at the deficit since 2009, we've seen the most rapid reduction in the deficit -- >> weren't these the largest in our nation's history save world war ii? >> we inherited a very large deficit and out of control. >> if you are unaware, i would have your aids take a look into it and i think you will find it probably is true. also, c.b.o. released their latest long term out look. have you had a chance to look at it? it came out about six weeks ago. >> i'm aware of it, yes. >> and in that outlook under current law or current policy, these deficits come down temporarily until 2015 and rise
thereafter with no end in sight, isn't that true mr. secretary? >> mr. chairman, i came here prepared to discuss a wide range of issues. i have not reviewed the cbo report in detail. i can speak generally about this issue and i'd be happy to. >> isn't it true the administration has never submitted a budget that balances in ten years, 50 years or anytime. >> the administration has submitted budgets that took a fiscal situation out of control and brought it in control. we've reduced the deficit. >> has the administration ever submitted a budget that balances over any time span -- >> i don't believe that balances >> i get to ask the questions here. so if you don't know or you -- >> there is a point when it
balances in the far distant future but it's not in the ten year -- >> not according to the budget office. so according to whose analysis? is this treasury's analysis, omb's analysis, whose analysis in -- >> mr. chairman, i'm happy to look at the projections of the budget. i did come to testify on a wide range of -- >> let me move on to the debt ceiling. i think you know every package has been attached to a debt ceiling. even today's budget control act, every president in your lifetime and my lifetime has negotiated on a debt ceiling. i've had our capable staff research the issue. the debt ceiling tends to be the early warning system that spending is out of control, yet on september 15 of this year the president took the unprecedented
radical action of stating "i will not negotiate on the debt ceiling." so is it the position of this administration that if congress does not functionally repeal the debt ceiling and allow the president to spend what he wishes that he is threatening default on our sovereign debt? >> mr. chairman, i would disagree with the characterization of the debt ceiling as an early warning. the debt ceiling is at the very end. all the decisions congress makes on entitlement programs that determines -- >> my time is almost up -- are you aware of any other president in our lifetime who has taken the radical position of stating he will not negotiate deficit reduction on the debt sealing? >> mr. chairman, i think we learned in 2011, we learned again just this past october that treating the debt limit the way congress did put our economy in grave danger. every president in my lifetime has said the same thing.
it is imperative to raise the debt ceiling and congress' responsibility to take that action. >> the time of the chairman has expired. and i would say every president in your lifetime has negotiated on the debt ceiling. the chair now recognizes the ranking member for five minutes. >> thank you, mr. chairman. i would like to see if i can get a clearer understanding about where we are in relationship to finance discussions and trade talks with europe. i sent a letter to you and the president basically stating my position on whether or not we
would be including financial services provisions in a trade agreement and it would be undermining to address cross border oversight. and i notice in a "wall street journal" report that secretary lew poured cold water on a push by the european unit market regulator to include negotiations of a financial services regulation in e.u.-u.s. trade talks, but then i also note that there is another article that talks about the possibility that we are softening our position. so i would like some clarification from you today about where we are in those discussions. >> congresswoman waters, i think the issues of working on an international bases to make sure that we have a race to the top to the highest standards possible in terms of financial stability is very important. we work actively through the g-
20 and financial stability board to try and drive that process. i'm actually of the belief and am proud that the united states is a leader. that we've taken decisive action, the most decisive action of any country in the world after the deep recession and economic crisis of 2008 and 2009. i've said i do not believe trade agreements are an appropriate place for to us dilute the impact of the steps that we've take on the safe guard the u.s. economy. and i think that we should make a call to the world community in the appropriate form like the g- 20 and f.s.b. to try and drive that race to the top. i've said that in public and in private conversations with the europeans. obviously a trade agreement is very important. i think it would open up opportunities for u.s. economic growth and european economic growth. i'd point out europe is 20% of
the u.s. export market, so europe's core economy is important to us and keeping that line of trade open is important to us. i look forward to making progress in the trade negotiations and i look forward to having progress in terms of opening up access to financial markets for even more u.s. competition and more u.s. investment. >> i would like to try and understand how much pressure are you receiving to introduce financial regulatory issues into these negotiations? >> the issue has come up really for the entire time that i've been secretary since february, march. it has been an issue that europeans have raised. i responded as i just did in response to your question. i made some pretty public remarks last week where i called on our international partners to work through the g-20 and f.s.b. to tighten standards. i've tried to be clear on what our policy is.
>> of course you are aware, you understand that efforts are already under way to deal with cross water financial regulations, including the g-0 and financial stability board. so our concerns and some of the criticisms from other law makers are that other administration trade initiatives would effectively side track domestic regulation in favor of international laws. and some of our members are saying they fear the ambitious transpacific partnership could create rules affecting technology development. >> congresswoman, on the financial issues i'm quite familiar with it. on the technology issues that's
that is an issue that the u.s. trade representative would be more appropriate to address. on the financial issues, i've been clear in every conversation that i've had that we are going to in the text of agreements promote opening markets for u.s. access, having standards consistent our own, and i have been very clear that watering down in any way u.s. regulatory standards is not appropriate in trade agreements in terms of protecting our financial markets, our financial system and our economy. i do think separately we have to discuss what does it mean to harmonize across international boundaries, and we've seen very constructive developments where we took an initial action and the international community responded and there is a reconciliation so we can have the world community reach the u.s. standard. we may have to make some conforming changes for that to work --
>> the time of the gentlelady has expired. the chair now recognizes the gentleman from california, mr. campbell, for five minutes. >> thank you, mr. chairman. let me go back for one minute. one thing i know an e-mail from a staff member with language does not constitute a formal request. if congress is to consider the money we need a formal request from you according to the law. i don't want to get into too much minutia on that. but one thing is what this thing costs and would you agree that if you move this $63 billion into paid and capital it is not without risk? >> congressman, i think if you look at the history of the i.m.f. it supports the statement i made there is very little risk. >> but it's not zero? >> i believe it's awfully close to zero. >> shouldn't we have cbo tell us what they think? >> cbo has looked at this. if i could go back because i think the question of request is
tied to the fact, and we've been trying to be flexible. we proposed this to be done as an authorization as a mandatory provision. we heard back they preferred to deal with it as an appropriations matter. at the time cbo -- authorizing -- >> authorizing committees like this don't like things that go directly through appropriations without the people looking at the issues. so we would i think on a bipartisan basis prefer it be done that way. we think cbo should score this at risk. is the president supportive of this transfer? >> yes, the president is very much supportive of it. he's told me it's a very high priority in terms of our staying at the strong point we're at. on the cost side c.b.o. scored it. c.b.o.'s score was in the neighborhood of $300 million. it was not in the neighborhood
of $63 billion. >> there are different ways they score things and if they score it on a risk bases. we have to look at that. let me get into the issue of trade. i hear you say that you think the g-20 is a better venue for negotiating financial services harmonization, than with the european tread agreement. europeans make the same argument at the g-20 they will here. why is that any better than trying to harmonize as best we can through a trade agreement
given how the borders in financial matters have dropped so much? >> i think if you look at the progress we've made internationally since 2009, the g-20 and f.s.b. have been effective places to work through complex financial regulatory matters. i don't think the trade context is the ideal place for that to be done. the people at the table are not necessarily the right people and the mechanisms already exist in the g-20 and the real point regardless of where we do it is the core issue. >> you had a meeting in brussels on november 27. >> i don't remember the date but yeah. >> what was the outcome of that meeting with the europeans? >> i think, as i acknowledged in my response to congresswoman waters, i've discussed this a number of times with the europeans. they do make the argument it should be in the trade agreement. we make the argument it should be in the g-20 and f.s.b. wherever we do it they elude. our protection of the u.s. economy is the core principle that applies wherever we are doing business.
>> is our position that we have the perfect financial regulation worldwide and everybody else in the world should copy us? i fail to understand why talking with the europeans about this understanding better what they want to do why that's a problem. what is the risk to the u.s. financial system to do that? >> none at all. we talk to the europeans and to the asian partners in the g-20 and the f.s.b. we learn from each other and take best practices from each other. we are very open. the question is in trade agreement whether it's a question of financial regulation or environmental regulation is a trade agreement the appropriate place to do it? normally the pressure is to lower standards on things like that and that is something we think is not acceptable. >> if i can stop you. i only have a few seconds. the chairman and i have written several letters to you about this. we think and urge you to try at
the european level because the purpose of a trade agreement is to facilitate trade that benefits both economies. we can do that in the financial services area and we should do it. i yield back. >> our core goal is consistent. we think we can achieve an agreement that opens up markets for even more robust, cross- border trade and relations and that's our goal. our issue is not that we don't want to coordinate we do. it is critically important and one of the biggest priorities we have. >> the time has expired. the chair recognizes gentleman from missouri, mr. clay, for five minutes. >> thank you, mr. chairman. as you know an earthquake devastated haiti in 2010.
the american people and global community rallied to provide relief to the haitian people. as the center for economic policy and research points out in a recent report, despite billions of dollars pledged to build back better haiti more than 350,000 haitians remain internally displaced and it is unclear what impact our funds have had. secretary, can you give members of this committee a progress report post earthquake humanitarian reconstruction development efforts in haiti? >> i would have to get back to you on an update. i was deeply involved in putting together the haitian relief package when i was deputy secretary of state. and i have not had the opportunity in the last few months to become familiar with the detailed up to date assessment. but i'm happy to do so and get back to you. >> this is the second time i've inquired about this and one of your deputy secretaries was supposed to get back to me a couple of months ago and i
haven't heard anything. >> we'll be happy to get back to you. i was not aware of that. if you look at the relief response in haiti, we responded quickly with the emergency assistance. we responded generously with economic assistance. i know the question you are asking is the efficacy of that effort. i share the concern that when we go in we have to be successful and i'll look at it and get back to you. i was personally very committed to putting that package together and i'll get back to you on that. >> i look forward to your response. on the euro zone economic growth is a continue challenge with the g.d.p. growth at minus 0.1 in the e.u. for 2014.
european commission president stated that the economic austerity policies in europe have reached their limits and they should receive minimum political and social support. he also pointed out that e.u. should focus on growth measures in the shorter term as reforms in the public finances sector should take time to have any effect. additionally, a recent report by the i.m.f. states that too much austerity is self-defeating. that means that the continuous fiscal austerity for some countries in the eurozone, especially in the south, leads to a deeper recession, in most cases deeper than projected. in this vein how do you think the u.s. more particularly through it's participation in the i.m.f. could channel its efforts in alleviating the harsh consequences of this crisis that
has brought traumas to these countries? >> we have been deeply involved in discussions on the response to europe's economic challenges. i know in my own conversations with finances ministers around europe i've made the case very strongly that europe needs to worry about growth, that it looks at the weakest economies in europe, it needs to stay focused on the reforms. but they also have to look at the enormous unemployment and the economic effect and the social effect that that has. i think we've made some progress in these conversations and i don't want to exaggerate how much progress we've made. i think you see more flexibility in terms of timetables for fiscal consolidation. you're seeing recognition that the structural changes are hard and as countries make them they need to have breathing room.
but you are seeing pressure to stay on the sustained path. it is not sustainable for europe's economies or their national finances to be in a place that is unsustainable. but i think when you look at 20 and 30 plus% unemployment rates that has a serious impact on domestic demand and potential for growth and instability. i believe we are making progress. i think the i.m.f. is sensitive to the tradeoff. if you look at the g-20 communication over the last years they express recognize the view i'm expressing. >> thank you. >> thank you, mr. chairman. thank you, mr. secretary, for joining us today.
the treasury released guidelines on financing coal fired power plants in emerging markets. i represent a state that exports 30% of the total coal exports because we can't burn them at home and are having difficulty with the president's war on coal and now seems like it's an international war on coal. explain to me this policy and are you really part of your stated goals were supposed to be fast growing african countries represent new opportunities for u.s. businesses. what kind of energy development is going on if we can't help them with the cheapest most affordable and reliable base load energy production that we have around the world? >> our policy on coal and on the climate impact is one i know we have some differences on. we believe very strongly that we need to drive towards developing
technologies that have a less adverse impact on the climate situation. so we have taken the view that we need to at home use fuel more efficiently and develop energy technologies. we believe we have potential to export technology overseas. you look at the developing countries, in some cases hydro electric power is abundant power . in many cases highly distributed renewable energy. >> are you talking like wind and solar? >> wind and solar. >> and you are aware how much we have to subsidize it here to make any benefit? >> it is something we have dedicated a lot of energy to it. we believe we are getting there and we believe to meet our objectives on climate, it's
important we have a consistent approach internationally. >> i don't disagree on the ultimate goal to make it cleaner, more efficient and less emissions. i'm all for that. but i feel like if you are cutting off the emerging markets which are the fastest growing markets, from being able to finances these kinds of facilities, you're going to stifle innovation in this country because universities and such aren't going to devote the resources to it when they think they are looking at a deadened here. not only from the human element of these folks in africa who can't even access just baseline power generation. i'm very concerned about it. and another thing is i represent a lot of natural gas. we have a glut of natural gas in this country. it's wonderful. it creates jobs all down spectrum and you know this in your position. we are embarking on should we be exporting our natural gas.
is part of this global initiative -- natural gas as a carbon fuel -- is that the next thing that won't have any kind of financing opportunities through the m.l.b.'s? >> we've been developing natural gas resources in this country aggressively and other less emitting fossil fuels. we have been encouraging the development. i think the export question is a different one. the department of energy has responsibility for reviewing natural gas export license proposals. obviously it's been a source of enormous strength in our economy we've had an energy revolution, where the cost of energy into production has made the united states a much more attractive place to invest and we are anxious to continue that. invest, and we are anxious to continue that. i would defer to the department of energy to review these export licenses and would be happy to
follow up with you on that. on the question of the need for power in the third world, we totally agree. one of the president's initiatives is power africa which is we need to make sure that the african continent has access to electricity to fuel economic growth. we are working side by side in the international community to be very strong partners in that. >> and many of these countries that you are working with, germany for instance, are building themselves more coal fire power plants in their own country because they had to shut down their nuclears because of the potential negatives there. i am very concerned about this because it hurts the american innovator and american jobs and picks winners and losers in this country. i love living in west virginia, but this administration has picked us as one of the ones to lose and i resent that. thank you.
>> the chair recognizes the gentleman from texas, mr. hinojosa. >> thank you, mr. chairman. secretary, thank you for your testimony. thank you for being here was today. i'm going to ask a question outside the realm of international finances. i would like to first ask you about an issue i have great interest in. as co-chair of the financial and economic literacy caucus i am am interested in the progress of the financial literacy and education commission which you are chair, and also the upcoming president's advisory council on the financial capability for youth which the treasury will coordinate. it was coordinated by congress. what is your personal philosophy on financial literacy and what do you hope to achieve in 2014? >> i am a strong believer in financial literacy and have been for a long time. i think that people have to make
informed decisions when they make financial decisions in their life, and for all too many americans it's a mystery when they make those decisions. i've taken it very seriously. i've gone to several meetings. i've worked with the director on these issues. we have made it clear that it's a matter of importance to us personally that we continue to make progress in this area. i actually think if you look at the work that the cfpb has done, they've made a lot of progress creating the tools for financial literacy. part of the challenge that is people have to understand the documents that they end up looking at when they enter into tractions. part of the is making sure the documents are understandable. if you look at the disclosure forms that they recently issued, it is approached a level where people who are not professionals
actually understand the documents they are about to sign. but it has to work in both directions. you have to increase the awareness and education of the people in the economy. but you also have to make sure that the transactions are not so masked in language that is not comprehensible understand pages pages and pages of detail that hide the key points. and i think they've made significant progress in that area. >> i look forward to working with you this next two years and try to take it to a much higher level. i'm going to move into international situation that we're discussing. in your testimony that i read you state europe has made great gains toward financial stability. like you, i am cautiously optimistic about the improving economies of the united states and europe. secretary, how confident are you in the health of the economies of the eurozone and what are the indicators that you are watching the closest?
>> i look at the progress of the eurozone and think about watching on a daily basis in the spring and summer of 2012 when there was the real fear that any day could bring a crisis. and we've made a lot of progress from there. there are still a lot of problems, difficult situations that need to be worked through, tough structural decision that have to be implemented and risks that are still there. but it's not in the same place of fear that there is going to be an immediate crisis that it was just a year ago. i think they've made a lot of progress and have a lot more to make. i this the g.d.p. measures are significant. they were negative broadly and now they are positive broadly. it's not equally distributed. some of the committees particularly in northern europe are doing much better. if you look at the economies of europe there is a correlation between how well they are recovering and how much they
embraced the need to make tough changes. one of the things we continue to do is try to be very understanding of how hard that is and the impact it has on the short term, but to keep the pressure on because that's the path they need to follow. >> i've read some of the countries like greece and italy and spain and portugal have very high unemployment rate from the group of 18 to 25 years of age, very similar to the problems we have in the united states. how are they addressing that? >> they do have very high unemployment rates and the youth unemployment rate is very high. i think one of the reasons i mentioned earlier that we're seeing some additional flexibility on timetables is recognition of that. excuse me congressman, i'm getting over a cold.
if you'll just bear with me. the economy in europe is i think moving in the right direction. some of the structural changes are significant in terms of opening opportunity to young workers. one of the keys is opening up the channels of credit so that small and medium size enterprise versus access to capital. >> the time has expired. the chair recognizes the gentleman from new jersey for five minutes. >> thank you, mr. chairman. today i wanted to focus my time on two important issues, that's accountability and transparency to the american people. i've been quite disturbed at this administration's clear
pattern of stonewalling anyone who dare shines the light of day into the inner workings of this administration whether it's benghazi to eric holder's refuse toll turn over key documents to a lack of cooperation with obamacare failed implementation. requests have been met with silence or refusal by this administration. this pattern has continued at the department of treasury under your leadership. mr. clay had a simple question and your answer was don't blame me, i didn't know, it was my staff. in my case i sent a letter to you asking three simple questions regarding the i.r.s. scandal. first i asked when it was first time you became aware of the i.r.s. targeting groups independent on the i.g.'s investigation. curiously the answer came not from you but from some assistant secretary a month and a half later basically refusing to answer the questions. the second question i asked was whether you attended any
meetings with then commissioner and whether there was any decision discussions at the concerning the i.r.s. targeting any organizations and a couple of other simple yes or no questions. again, a refusal from you to answer yes or no questions. so then after several months more passed i called your office and said would you give me five would you give me five minutes on the phone and your answer was no, i cannot talk to you, too busy. so i offered to have a meeting with you, not in my office. i agreed to go to your office at your convenience anytime to discuss this and your answer was no you were too busy for the last six months to meet with a member of congress. is it appropriate for you or your staff to deny even a five minute phone call or a discussion with a member of congress on important issues relevant to them?
that's a yes or no question. >> i answered congressman clay's question directly. >> can you answer mine now? >> i will follow up on it and get back to him. you and i went back and forth at the hearing. i appeared before. i gave you all the information i had and that remains the case now. >> you never answered the three questions in the letter so to this day have you not. do you think it's appropriate you would not pick up the phone and talk to a member of congress? >> i have responded to your question on multiple occasions. >> you did not. in six months i have not gotten an answer from you. i still am not getting an answer from you. i think it's deplorable you won't answer a member of congress. >> on the question of the letter it is for generations traditional for the assist
ant to respond -- >> your assistant did not answer the question. when i followed up and asked to speak to you, you would not answer it. let's move on because obviously you are continuing in the pattern of this administration of not answering simple yes or no questions. i'm wasting my time because you are wasting the american public's time. that's a simple yes or no question. let's look at the volcker situation and the rules that have just come out on this. do you believe there is any negative impact on the corporate >> will there be any negative impact upon the corporate bond market? >> i think -- >> yes or no? >> it's not a yes or no. it's a complicated issue. i'm happy to respond to you but
it's not a yes or no question. we make sure they -- >> let's stop there. let's stop there mr. secretary. you are saying that it is okay for them to take on risk such as the unsovereign debt but not corporate dealt? you created exceptions so they could invest in detroit which is a failed bankrupt city, they could invest in foreign banks? that's a yes or no question. >> they protect our markets and protect taxpayers from being exposed to inappropriate risk. i think the agency did an excellent job striking that balance to keep growth going and protect the taxpayer. >> the time has expired. the chair recognizes the gentleman --
>> thank you. >> i have a couple of questions. we learned early on there is something in every space, and so this is a question asking just for your opinion, who do you think or what would happen if there is a void left as a result of the united states non- leadership in i.m.f.? >> congressman, i think u.s. leadership in the world is important to the united states and it's important for the world. as i talk with my counter arts in asia and europe, i hear over and over again we need the united states to be the strong lead they're you are. so in the i.m.f. what we see is with our contribution which is less than 20% of the entirety of
the i.m.f., we have enormous influence. we have veto over important decisions and the influence that goes with that to help drive decision making to serve u.s. industry and a sounder global commitment i think that's important for the united states and it's important for the world. we are already seeing if the united states in any way steps back, there is a rush to come in and kind of starts to fraction, kind of break apart some of that influence. i don't think we should let that happen. it is too important. >> i think in some ways we are wanting to become isolists in the world and i have problems with expansions, things we do but i am concerned about the imf and our leadership.
my other question -- i represent kansas city, missouri, not kansas. that is important. i am just getting the amen from my colleagues. >> i started out working here with somebody who said all politics is local. i get it. >> kansas city used to be the second-largest manufacturer of automobiles in the world behind detroit. i think we are -- in recent times we have been building up again. when i speak with the automobile manufacturers and the workers, the unions, their biggest concern is currency manipulation. i was part of a group that sent a letter to the president asking for currency manipulation
discipline in the tpp. is that possible? what is your position on that or what is the administration's position on that? >> we have worked hard on currency issues for a long time. from the moment i stepped in the treasury it is an issue that has been very much on my agenda. if you look at the progress we have made working in the g 20 and the g7, we have gotten the leading economies of the world to agree to principles that reflect our own which is that currencies should be market determined and the tools governments use should be domestic tools for domestic purposes. we have maintained our focus on that in bilateral conversations. we have seen progress in the conversations. any trade agreement that we reach has to be built on the principles that we have worked to reach in places like the g 20. the principles that undergird
everything we do. without addressing the specifics of any of the negotiations, there is a core underlying bedrock principle that we are going to be driving for market determined exchange rates. we believe the g 20 is an appropriate place to do that and we have made great progress there. >> thank you for that. it will be difficult for a lot of people to support it. in light of the currency manipulation that is going on with china. as you know, that creates an imbalance in the sale of automobiles. >> i have engaged directly with the chinese on a regular basis on this and we have seen real progress in terms of the exchange rate approaching, not reaching that approaching the point that we are pressing them to get to. i think they understand they
have to get to a market determined exchange rate. we try to focus a great detail on progress and where there are still concerns. we have to keep pressing on it and that is what we are doing. >> the time of the gentleman is expired. the chairman recognizes the gentleman from texas five minutes. >> thank you, mr. chairman. i do, secretary for being here. i wrote a letter to the federal insurance office inquiring about free reports that are required by law to be submitted to this committee. one of those reports on insurance moderation is nearly three years overdue. not surprisingly i have not received any response to my letter. do you find it acceptable that these reports have not been submitted to this committee and in some cases are over three years past to do?
>> congressman, i know that there is a report that is virtually complete and will be here very shortly. i hope even before you leave for your break. >> mr. secretary, i appreciate that but on a number of occasions that is the same story that i have gotten. we are going to have that shortly. that dialogue began last year. it is not like these are a little bit late. some of these reports are three years late. we -- this administration talks a lot about transparency. you have heard some of my colleagues say we are concerned that it is hard to have transparency when you're not hearing from the administration. >> the report is a very important piece of work. they have virtually completed it. it is in the stages of final production which is why i can say with some confidence that it will be here very shortly.
>> is that shortly next year or the year after? >> i am hoping, as i say, before you leave. i am hoping it is days, not weeks. the work they have done is very important. they have brought a knowledge of insurance into treasury at a time when we know that the insurance industry is highly interconnected with other aspects of the financial system. it is a complicated system where we have a lot of respect for state regulation but there are issues of national importance as well. i think this report when it is issued, won't resolve these issues, but will queue up serious discussion. i look forward to engaging with you on those. the report will not be the final word. it is going to be opening the conversation so that we can work together on this. >> actually that segues into my next question. the g 20 leaders' declaration
that coming out of the st. petersburg meeting, they look forward to the international association of insurance supervisors further work to develop a comprehensive framework for internationally active insurance groups including capital standards. were you personally consulted about that statement? did you have input into that statement? >> i am aware of it. it is something that was part of the discussions. >> did you support the inclusion of that language in the report? >> i very much support them being part of the international conversation and asking these questions so that as we inquire domestically as to what the right steps to take, we do it in concert with our international partners. the statement doesn't prescribe the end result. it is a process that i think we should be engaged in. >> your model is more bank-like in the way they regulate their
insurance industry over there. do you support that same kind of regulatory framework for u.s. domestic companies that have a much different regulatory structure? >> i think that raises some very important and complicated issues. i think that where there is an appropriate need for regulation, we ought to be sensitive to the differences between insurance companies and other financial institutions. i know the regulators have looked at this and they are looking at being flexible as they use the tools they have. if they don't have all the tools they need, it is something we should talk about. to the extent that there is a need for regulation of insurance companies, it ought to reflect the characteristics of insurance companies. >> as this dialogue is going on, there is not a lot of transparency again in this process. the industry, particularly the
u.s. the mystic insurance industry, feels like they are being left out of this debate and discussion. i think they are concerned that there is some movement within treasury and others to move to a european model for regulating u.s. insurance companies that many people feel like, when you go back and look at the crisis, the insurance industry fared very favorably. >> the inquiries that have taken place with regard to the financials oversight council have been questions of determining whether there is systemic risk. the question of how to regulate is a totally different question. the standard make the determination on risk. we are very much interested as the regulators follow through that they think this through very carefully and we not jump to a conclusion that says the next insurance companies are exactly the same. >> the time of the gentleman has
expired. the chair recognizes the gentleman from illinois for five minutes. >> thank you, mr. chairman. i would like to switch for a moment to the question of the sanctions. first off, congratulations on the recent designation of the initial batch of these. however it seems to me that the rate at which these have been coming out is sort of erratic. six weeks prior to the iranian elections in june, the treasury department issued seven notices of designations of sanction violators that include more than 100 new companies since june 14 when rouhani was elected. the treasury department issued only to designation notices that identified only six people and for companies as violating the sanctions. now we have a new batch. my question is, to what do you attribute this erratic batch by batch nature of the designations?
>> congressmen, the work of enforcing sanctions is painstaking work that we have an extra ordinary talented team and treasury working on. there are dedicated, committed to it. they make progress at the pace that they make progress. the designations today reflect the fine work they have done and the determination we have that is true to what i said in my opening remarks. we will continue to investigate for violations of sanctions and take action where we find them. that is important to the sanctions being effective. >> in light of the six-month freeze and negotiating window, many people including myself have a concern that companies will say, oh boy, the sanctions are going to go away in six months and you will see massive cheating on the sanctions. companies are trying to gain a
commercial advantage with anticipating the easing of the sanctions. i was wondering, do you feel like you have all the authority you need to make sure that any company that is caught cheating on the sanctions gains no commercial advantage from that? >> enforcement is the answer. i have said in every meeting i have had with ceos since the agreement that there should be no uncertainty. we are continuing to enforce sanctions. no one should think that having iran on financial record is going to go unnoticed. we are going to stay on this. this is not an opening up of any door to relaxing our core financial banking and oil sanctions. i said it in a public speech again last night. i have probably talked to several hundred ceos and deliver the message personally.
i don't know how to be more clear than that. it is not like we have some other mechanism other than enforcement. we are very clear that any ceo, any business that steps into a space that violates sanctions is doing it at the risk of having an enforcement action. >> do you anticipate that companies caught cheating on this will have sanctions that extend past the time that normal sanctions would be released? >> the duration of sanctions is something that depending on the violation and the provision. rather than give you an off-the- cuff answer i would rather follow up and do it on a more detailed basis based on which provision you are referring to. >> i would like to change the things that relate to your position on some important issues. one is the application of banking capital standards to insurance companies. i wonder if you have any reaction to the appropriateness of that. >> to be clear, the only actions taken regarding insurance companies were to designate the institutions that met the standard of financial --
presenting that degree of financial risk. the question of how they are regulated is something that each of the regulators will be dealing with. they are looking at how to do this in a way that works. the charge is not to implement. it is to make the determination as to whether or not there is that kind of systemic risk. the tools of each of the regulators will be used as appropriate. as i tried to indicate in my response, we understand that banks and insurance companies are not identical. >> another issue related to this is the issue of collateralized loan obligations and risk retention. clo's were not involved in our financial collapse and the specter of risk retention is something that is -- makes a lot of people uncomfortable. i was wondering if you had a
reaction to that. >> in general, the idea that firms should internalize their risks is a very important principle. there are many ways to achieve that. we have tried as we laid out our actions in response to financial reform to make it clear. our firms putting themselves at risk rather than taxpayers at risk for business decisions they are making? capital is part of it. restrictions like the vocal rule are part of it and leverage as well. >> the time of the gentleman has expired. the chair recognizes the gentleman from north carolina for five minutes. >> i request unanimous consent to submit for the record five letters from the leadership of this committee to the treasury secretary and two responses run treasury to those letters. secretary lew, thank you for being here. for the record, article one of
the u.s. constitution establishes and makes my dopey oversight and authority of the congress vis-a-vis the executive branch and i am sure you agree with that notion. your treasury department has stiff armed this committee and its oversight capacity in its refusal to provide complete answers to this committee. chairman garrett covered his concern. i sent you a letter in august requesting documents that were the subject of a request made by public interest groups. the treasury post position would provide only redacted documents. this implies that it is applicable to congress. i hope that you would understand that it does not apply to congress. and that you will direct your affairs staff, that they will provide those documents
promptly. for the more, on november 6, 2013, the chairman sent a letter to the new york fed requesting information regarding contingency planning related to u.s. debt limit. the new york fed wanted the finger at treasury department claiming they needed treasury's permission. although we have rejected the fed's claim that it needs treasury permission, i ask that you commit to resolving this issue and insuring that the committee receives the requested documents by the date of december 18. you can respond in writing. we will move forward. additionally, this question of prioritization of debt. you have mentioned in the past that you are unsure of your department, whether or not it has the legal authority to prioritize debt payments in the event of a failure to raise the debt cei
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