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Tackle IMF Leadership Issues
00:06:12
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unidentified
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For you. | |
| Sparklight supports C-SPAN as a public service, along with these other television providers, giving you a front-row seat to democracy. | ||
| Treasury Secretary Scott Besson took questions for members of Congress related to President Trump's tariff policies, trade negotiations, and the economy. | ||
| His testimony before the House Financial Services Committee is about three hours. | ||
| This will | ||
| come to order. | ||
| Without objection, the Chair is authorized to declare a recess at any time. | ||
| This hearing is titled The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System. | ||
| Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. | ||
| I now recognize myself for an opening statement. | ||
| I want to welcome Treasury Secretary Besson to his first appearance before our committee. | ||
| The President is fortunate to have a cabinet official of this fine caliber. | ||
| This annual hearing is meant to examine the international financial system. | ||
| The International Monetary Fund, the World Bank, and the regional development banks play in a key role in advancing U.S. interests. | ||
| But in recent years, they've surrendered to mission creep. | ||
| Under the Biden administration, the IMF's management tried to turn the fund into World Bank Light, launching initiatives on climate change and social policy. | ||
| If the Trump administration wants to pull back the IMF's mission creep, it can start by scrapping the resilience and sustainability facility and instead focus on the poverty reduction and growth trust. | ||
| Other reforms are just as vital. | ||
| In 2021, the IMF management pushed through an allocation of special drawing rights, SDRs, that gave China over $40 billion in unconditional liquidity, with another $17 billion going to Russia and around $5 billion each going to Iran and Venezuela. | ||
| Congress had no say in the matter. | ||
| Any future SDR allocations must have elected lawmakers by it. | ||
| Moving forward, we need leadership at the IMF that cares more about the fund's core mission rather than hurting the feelings of the Chinese Communist Party. | ||
| Think about it. | ||
| No one can say what the true growth rate is of the world's second largest economy. | ||
| No one really understands how China manages its exchange rate. | ||
| It nearly has a trillion-dollar trade surplus and a central bank controlled by authoritarian dictatorial political party. | ||
| Its opaque predatory lending to developing countries has seen no significant restructuring. | ||
| All this is an indictment of the IMF's leadership, and we need greater transparency. | ||
| Turning from the IMF, the World Bank and the Asian Development Bank still greenlight a billion dollars per year for Chinese projects. | ||
| I urge the Trump administration to end all World Bank and Asian Development Bank assistance to China by the end of President Trump's term. | ||
| At the same time, I commend the World Bank for its recent openness to financing nuclear energy, which is a priority of mine and enjoys bipartisan support here in Congress. | ||
| During the spring meetings last month, I met with officials from around the world who agreed that nuclear power is an obvious fit for the development bank's core mission. | ||
| I was pleased to see you, Mr. Secretary, echo your support for nuclear energy in your remarks at the bank meetings as well. | ||
| If we care about back-to-basics approach, the banks can go even further by recommitting themselves to public health, education, and infrastructure. | ||
| For example, 70% of 10-year-olds in low- and middle-income countries can't understand a simple written text. | ||
| Over 400,000 children die of malaria each year. | ||
| Half of sub-Saharan Africa has no reliable electricity. | ||
| But for too long, the World Bank and others have spent more time and more money on climate change and empty, empty rhetoric than trying to tackle these urgent development challenges. | ||
| Mr. Secretary, our committee appreciated your remarks at the IMF and World Bank spring meetings where you outlined an active approach to these issues and noted the critical leadership role that the United States plays in our multilateral financial institutions. | ||
| We should all be pleased that Treasury has a leader who has signaled that he will tackle these issues in a serious way. | ||
| I look forward to discussing our international financial institutions with you as well as hearing from our members on the various priorities that are important to them. | ||
| I yield back. | ||
| The chair now recognizes the ranking member of the committee, Ms. Waters, for four minutes for an opening statement. | ||
| Thank you, Mr. Chairman. | ||
| Since the first day of the Trump administration, members of Congress and the American public have demanded transparency and accountability regarding the economic calamity this regime has caused. | ||
| Instead, we've been met with flat outline lies, deception, and unfathomable level of gaslighting by officials like today's witness, Secretary of Visent. | ||
| You are about to go down in history as the man who oversaw one of the most significant economic downfalls in modern history. | ||
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Steering America's Economy Back On Track
00:07:26
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| The U.S. economy, which had the strongest recovery from the pandemic compared to other large economies in the world, is now falling behind. | ||
| In the first quarter since Trump took office, the United States economy shrank, with our gross domestic product decreasing by 0.3 percent. | ||
| We are falling behind while Canada, Europe, and China are racing ahead. | ||
| What happened to the golden age you and President Trump promised the American people? | ||
| Mr. Redson, you are also the face of what the Hall Street Journal has described as, and I quote, the dumbest trade war in history. | ||
| As a result of this stupidity, U.S. stock markets have experienced the worst first 100 days of any presidential term in more than 50 years. | ||
| America's CEOs are sounding the alarm of what's to come. | ||
| Empty shelves and higher prices that the American consumer will pay. | ||
| Companies are already running out of inventory. | ||
| Port volume is down, and small businesses are warning that they will not survive this. | ||
| Moreover, inflation remains a problem, and housing affordability continues to be a challenge, with home builders estimating Trump's tariffs will add $11,000 to each new home they build. | ||
| I have no doubt that what I'm telling you, I'm telling you stuff you already know. | ||
| It has already been reported that you yourself admitted in an April 22nd closed-door investor summit that Trump's tariffs on China are, quote, unsustainable, quote, unquote. | ||
| But in public, you've twisted yourself into a presto trying to justify them. | ||
| You're gaslighting the American people into believing that this chaos is all a part of some master plan. | ||
| Well, if the plan is to steer the U.S. economy into a recession, as economists are predicting, then it's working. | ||
| Economists say Trump tariffs will cost, on the average, each American family nearly $5,000 more per year. | ||
| Mr. Besson, Because you and your ultra-wealthy group of insiders can afford this, most Americans cannot. | ||
| The American people also deserve to know why you handed Elon Musk and his Doge minions access to Treasury's payment system and the Consumer Financial Protection Bureau's database. | ||
| Today, you need to tell the American people why you're dismantling agencies that protect consumers from financial fraud and abuse and weakening ones meant to support the small businesses struggling under the weight of your policies. | ||
| You need to answer for this and you need to answer for why senior members of this administration are trying to make a buck off of this market manipulation and blatant brazen corruption. | ||
| Chairman Hill, if I were you, I'd swear this witness in before he begins his testimony. | ||
| The gentlewoman yields back. | ||
| The chair recognizes the chair of the subcommittee on national security, illicit finance, and international financial institutions, Mr. Warren Davidson, for one minute for an opening statement. | ||
| Mr. Davidson. | ||
| Thank you, Chairman. | ||
| Mr. Secretary, thank you for joining us today. | ||
| We really appreciate you. | ||
| As this committee gathers to discuss the state of the international financial system, your remarks at the conclusion of the IMF World Bank spring meetings hit the bullseye. | ||
| Your vision to steer the IMF and World Bank back to their core missions, macroeconomic stability and economic development, while cutting through mission creep is exactly what we need. | ||
| By championing fiscal discipline, anti-corruption measures, and private sector-led growth, you are paving the way for a sustainable global economy. | ||
| America has done bankrolling China's games and their trade scams. | ||
| Your call for fairness and U.S. leadership nails it. | ||
| Tying our dollars to hard reforms at these international institutions, that's accountability that we can and should trust. | ||
| America First must mean that America's resources advance America's interests. | ||
| So thank you for your clarity and your tireless efforts, Mr. Secretary. | ||
| Let's make sure that the global financial system serves Main Street Americans, not globalist elites. | ||
| Mr. Chairman, I yield back. | ||
| Gentleman yields back. | ||
| The Chair recognizes the ranking member of the Subcommittee on National Security, Illicit Finance, and International Financial Institution, Ms. Beatty, for one minute for an opening statement. | ||
| Mr. Chairman, Ranking Member, and Mr. Secretary, first let me start by associating myself with the words of Ranking Member Water. | ||
| Mr. Secretary, hardworking American families have been struggling, as I'm sure you should know, since the pandemic to put food on their tables and to keep their small businesses open. | ||
| And just when the Biden administration has started to provide some relief, the Trump administration came in and needlessly say tanked the economy. | ||
| Despite promises to lower costs for American families, we are seeing the direct opposite. | ||
| I lay the blame on the Trump administration. | ||
| Inflation is up, borrowing and housing costs are rising. | ||
| The stock market is in chaos, endangering Americans' retirement savings, and the United States economy shrank in the first quarter since Trump took office. | ||
| And just to add insult to injury, Republicans are cutting Medicaid and food stamps to pay for huge tax cuts to billionaires. | ||
| Our constituents deserve better. | ||
| I yield back. | ||
| Gentlemen yields back. | ||
| Today, we welcome the testimony of the Honorable Scott Vissant, Secretary of the Treasury. | ||
| We thank you for taking time to be with us. | ||
| You will be recognized for five minutes to give an oral presentation of your testimony. | ||
| Without objection, your written statement will be made part of the record. | ||
| Mr. Secretary, you are now recognized for five minutes. | ||
| Chairman Hill, Ranking Member Waters, and members of the committee, I am grateful to join you today. | ||
| At the IMF and World Bank spring meetings last month, I relayed an important message: America First does not mean America alone. | ||
| To the contrary, America First seeks to expand U.S. leadership in international institutions like the IMF and the World Bank. | ||
| By embracing a stronger leadership role, the United States will restore fairness to the international economic system. | ||
| I look forward to answering your questions on this topic today, and I look forward to providing you with a broad overview of Treasury's achievements and future plans. | ||
| Specifically, I would like to highlight the Department's efforts to boost U.S. economic growth, improve government efficiency, and target illicit actors that threaten our national security. | ||
| The core components of the Trump economic agenda are trade, tax cuts, and deregulations. | ||
| These are not standalone policies, they are interlocking parts of an engine designed to drive economic growth and domestic manufacturing. | ||
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Employment Gains Persist
00:03:35
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| Tax cuts and cost savings from deregulation raise real incomes for families and businesses. | ||
| Tariffs create an incentive for reassuring jobs and fair trade, and deregulation complements tariffs by making it easier to invest in energy and manufacturing projects. | ||
| Already, this agenda is bearing fruit. | ||
| In the first 100 days of the new administration, 464,000 new jobs were added to the economy. | ||
| In April alone, over 177,000 American jobs were added, more than 40,000 more than economists predicted. | ||
| All the while, employment remains low while real hourly wages continue to grow. | ||
| As important as spurring job growth is wrangling inflation, and in this endeavor, the Administration continues to make tangible progress. | ||
| The CPI for energy goods declined in March, as did the price index for core goods, and the CPI for all items declined for the first time since the COVID pandemic. | ||
| While the cost of goods is decreasing, so are energy prices. | ||
| Complementary to our efforts to grow American prosperity, we are focused on improving efficiency across all levels of government, but especially the IRS. | ||
| We just concluded a successful tax filing season, but the IRS still needs significant reforms to deliver efficient and cost-friendly results for the American people. | ||
| In this endeavor, we have successfully cut $2 billion from the IRS IT budget without any operational disruptions. | ||
| We achieved these cost savings by eliminating, renegotiating, and de-scoping wasteful IT and professional service contracts and addressing long-standing efficiencies such as auto-renewed licenses unused for years. | ||
| This intervention alone will save taxpayers hundreds of millions of dollars each year. | ||
| We are also taking steps at the IRS to reduce administrative costs with a particular focus on paper processing, which has been a longstanding bipartisan goal. | ||
| Last year, the IRS spent approximately $450 million on paper processing, with nearly 6,500 full-time staff dedicated to the task. | ||
| Through policy changes and automation, Treasury aims to reduce this expense to under $20 million by the end of President Trump's second term. | ||
| In addition to making government more efficient, Treasury is committed to working alongside the White House to make America safe again. | ||
| To that end, we have launched a maximum pressure campaign against violent cartels and terrorist networks. | ||
| We have assessed tens of millions of dollars in civil penalties against organizations facilitating money laundering along the southern border. | ||
| And by levering sanctions, we are choking off the financial lifelines of terrorists, criminals, and hackers from Mexico and Guatemala to China and Iran. | ||
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Administration's Goals for Economic Growth
00:06:29
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| In the first 100 days of the new administration, we have set the table for a robust economy that allows Main Street to grow. | ||
| With Congress and the White House working hand in hand, we expect to see even more positive results over the next few months. | ||
| Key to expanding economic opportunity for all Americans is making the Trump tax cuts permanent. | ||
| We are eager to work closely with members of this committee to pass this bill into law. | ||
| Together, we can build a stronger, safer, and more prosperous America. | ||
| Thank you. | ||
| Thank you, Mr. Secretary. | ||
| We will now turn to member questions, and the chair recognizes himself for five minutes for questions. | ||
| Mr. Secretary, as I noted in my opening statement, I was pleased to see your endorsement of nuclear energy projects during the World Bank spring meetings last month. | ||
| And on a bipartisan basis, this committee recently passed my International Nuclear Energy Financing Act, which would establish trust funds at the World Bank, the European Bank for Reconstruction Development, and potentially other multilateral development banks. | ||
| Senators from both sides of the aisle also support this concept. | ||
| So would you support the idea of trust funds to benefit nuclear energy financing at the multilateral development banks? | ||
| Mr. Chairman, this administration supports an across-the-board effort to increase the nuclear power for civilian use throughout the world, and we think that the World Bank should make that a key effort. | ||
| Thank you. | ||
| I also referenced my work over the past five years with the Treasury and others about IMF reforms. | ||
| You also referenced that in your talk. | ||
| Recently, the IMF shareholders agreed to a quota increase. | ||
| And I appreciate the agreement that this agreement does nothing to increase the voting power of China or Russia. | ||
| But were Congress to approve this agreement, it would allow future administrations to greenlight more general special drawing rights allocations close to a trillion dollars. | ||
| And that would mean $60 billion of new unconditional liquidity for the Chinese Communist Party, $25 billion for Moscow, and $7 billion each for the regimes in Caracas and Iran, with no sign-off from Congress. | ||
| So even if rogue regime SDRs are rejected by Western countries, which we have seen in the case of sanctioned countries, they still could be exchanged behind the scenes for Chinese RMB, for example. | ||
| And I believe this is unacceptable. | ||
| Would a Treasury under your leadership work with me to reform the SDR allocation process at the IMF? | ||
| Mr. Chairman, we believe the SDR process at the IMF should serve the goals of the United States of America and not other States. | ||
| And as I said in my speech during IMF week, this administration is aligned with you in your goals on the SDR. | ||
| And furthermore, we believe that the IMF needs to get back to basics in working with countries when there is a market failure in financial markets rather than helping large, well-financed countries. | ||
| Thank you. | ||
| Well, we look forward to following up with you and walking through this. | ||
| It won't be an easy task, but with international leadership from the United States, I think we can get there and I think we will all benefit. | ||
| And that means countries in trouble will benefit instead of just a general allocation approach. | ||
| The President, since he has been in office, has championed high-profile investment issues revolving China. | ||
| As everyone knows, he has been negotiating U.S. investors' acquisition of control, for example, over TikTok. | ||
| In his State of the Union address, President Trump announced a major investment would see Americans take control of two ports near the Panama Canal that are currently owned by a Hong Kong-based business. | ||
| I'm concerned that recently established outbound investment restrictions could make deals like this even more challenging. | ||
| Under the regulations, U.S. investors don't actually know which companies are off limits, and Americans face bureaucratic hurdles if they want to take control from Chinese owners. | ||
| What are your views on revising outbound program to change this, since the President wants strategically to see American investors take control perhaps of some Chinese-owned entities? | ||
| How do we make sure we get outbound rules right? | ||
| Mr. Chairman, I want to thank you and the members of this committee for leadership on this. | ||
| I had a very good discussion with two members yesterday where we talked about the importance of establishing either red light or green light and not having a yellow zone for outbound investment. | ||
| The outbound investment security program is an important national security tool in our effort to restrict the PRC from exploiting the benefits of U.S. investment. | ||
| We have been receiving notifications from the outbound program. | ||
| We are monitoring the market and we are trying to ensure that the investment community is aware and familiar with the program. | ||
| We appreciate the answers from Congress. | ||
| And while legislation will be important and helpful, we would like a bit more time to process, including the work mandated by the President, to inform legislation. | ||
| I appreciate that. | ||
| We look forward to working with you. | ||
| I yield back. | ||
| And I'll turn to the distinguished ranking member of the committee, Ms. Waters, for five minutes. | ||
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Doge Access Controversy
00:05:56
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| Thank you very much, Mr. Chairman. | ||
| Secretary Besides, this is the first time we've met. | ||
| Is that correct? | ||
| No, ma'am. | ||
| We actually met one New Year's Eve in the Bahamas. | ||
| And I was. | ||
| He didn't make any impression. | ||
| I don't. | ||
| I remember that. | ||
| Well, you were much better at the electric slide than I was. | ||
| And I was with the Prime Minister of the Bahamas yesterday, Prime Minister Davis, who sends his regards. | ||
| Well, were you with my husband when he was the ambassador to the Bahamas appointed by Clinton? | ||
| Well, you're not going to like this. | ||
| And so this is the first time I didn't remember that. | ||
| But that's odd because you've been at Treasury and I've sent you five letters to ask about what was going on under your leadership and only received a couple of cursory replies from your staff. | ||
| Why don't you respond? | ||
| Ma'am? | ||
| I guess you don't know why you didn't respond. | ||
| Secretary Bisson, you worked in finance before, right? | ||
| You will find bipartisan support on this committee for small businesses and the institutions that finance them. | ||
| I worked with Trump's first Treasury Secretary to pass $12 billion in support for community development, financial institutions, and minority banks and credit unions. | ||
| So I was surprised when Trump first tried to eliminate the CDFIs, but it caught you by surprise also. | ||
| You said that the CDFI fund plays an important role in expanding financial access. | ||
| Unfortunately, you were not very persuasive last week. | ||
| Trump proposed to basically cut all CDFI funding. | ||
| Now, let's discuss your job before a Clemens Secretary. | ||
| Your hedge fund had a secret sauce for how you would make money for investors, a proprietary trading strategy. | ||
| As CEO, you guarded that strategy. | ||
| You never allowed unrelated persons to access your firm's computer records, data, personnel files, and algorithms, right? | ||
| And I'm sure you wouldn't have allowed just anyone unfettered access to copy, change, or to use those records, right? | ||
| I suspect not. | ||
| And that makes good sense. | ||
| What doesn't make good sense is why, as Treasury Secretary and acting CFPB director, you would allow Doge unfettered access to the government system that handles trillions of dollars in payments to the proprietary business records of entities regulated by the CFPB, or most alarmingly, to the tax records of hundreds of millions of Americans. | ||
| But you still threw the gates of our finance system open to Elon Musk and his band of 22-year-olds. | ||
| Yes or no, do you know the level, type, or nature of the clearances and security training required for individuals to access the information held in the computers of Treasury, IRS, or CFPB? | ||
| Yes, I do, and I think we would have a disagreement over the definition of the word unfettered. | ||
| Mr. Secretary, did all the individuals working with Doge who were given access to Treasuries and CFPB's computer databases receive all of the required clearances and security training before they were granted access? | ||
| Again, they were granted read-only access at Treasury. | ||
| There were two. | ||
| You can't filibuster here. | ||
| This is not the filibuster playground. | ||
| And so what you did was you let these strangers into our Treasury with access to all of the data, all of the personnel information, and you just opened the door. | ||
| Why'd you do that? | ||
| No, ma'am. | ||
| They were Treasury employees. | ||
| Oh, are you saying today in front of this committee that all of them were Treasury employees? | ||
| That the 25-year-old who's being identified, who worked for Elon Musk, was not allowed, was allowed into the Treasury? | ||
| Was that person there? | ||
| He was a Treasury employee, as was Tom Krauss, the senior person on the Doge team. | ||
| There were only two people. | ||
| There were Doge employees also. | ||
| Sorry. | ||
| you know, were you aware that there were Doge employees coming into our Treasury getting all of our personal information? | ||
| Ma'am, there is no such thing as a Doge employee. | ||
| There were Treasury employees. | ||
| I tend to disagree with you based on the information I have. | ||
| Has any information been downloaded by anyone working with Doge from any of Treasury's or CFPB's computers? | ||
| Answer, yes or no? | ||
| Not to my knowledge. | ||
| You better learn. | ||
| Gentlewoman yields back. | ||
| The gentleman from Michigan, the vice chairman of our committee, Mr. Heiska, recognized for five minutes. | ||
| Thank you, Mr. Secretary, for being here. | ||
| And I just have to note that it's ironic that this has been declared a no-filibuster zone by the same people who walked out of a hearing yesterday in filibuster. | ||
| So just to give you one quick brief moment, are you saying that there was no unauthorized or unsanctioned persons that had access to the systems that you are in control of? | ||
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Burma's Junta and Sanctions
00:03:20
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| Again, there were two employees. | ||
| There were very strict guardrails, and they were there for an ERP function. | ||
| Yeah, so they were authorized and they were sanctioned. | ||
| Yes. | ||
| So not unknown, and Elon Musk wasn't one of those two people? | ||
| No, to my knowledge. | ||
| Mr. Musk has never been in the Treasury building. | ||
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unidentified
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Okay. | |
| All right. | ||
| I have to hit on Burma and a little crypto, and if we have time, China. | ||
| So I want to thank you for your actions that Treasury took this past Monday regarding Burma. | ||
| The KNA, the Karen National Army, has become a haven for transnational criminal organizations that run illicit operations such as human trafficking and smuggling. | ||
| The group has strong ties to the Burmese Army, which has targeted religious and ethnic minorities such as the Rohingya since the Civil War broke out in 2021. | ||
| While the U.S. and our allies continue to impose sanctions against the military junta, unfortunately the atrocities continue. | ||
| My district, the 4th District of Michigan, is home to approximately 5,000 of these ethnic Burmese. | ||
| And I'm just asking you, we need to do more to protect the people of Burma and to stop the genocide. | ||
| Yesterday, I reintroduced the Brave Burma Act, a bipartisan piece of legislation that would require the President to determine on an annual basis whether to impose stronger blocking sanctions against the Myanmar oil and gas enterprise, the Myanmar Economic Bank, and foreign persons operating in the jet fuel sector of the Burmese economy, which has been a tremendous amount of their revenue. | ||
| And it further limits the junta's ability to borrow at the IMF, which I think is one of the issues that the chairman was touching on. | ||
| So these actions would target the heart of the military junta's revenue. | ||
| So can I get your commitment that you're going to continue to work with my staff and us on a bipartisan basis as we try to address these issues in Burma? | ||
| Congressman, we're happy to work with your staff on this legislation and thank you for your leadership on this issue. | ||
| I share your concern about imposing consequences on persons who threaten the peace, security, and stability of Burma. | ||
| Treasury has tools to continue to take action for the people of Burma. | ||
| And working with you, we will continue to do so. | ||
| That's great. | ||
| And what's frustrating is while some of these sanctions have been put in place, a sanction is only as good as the willingness to enforce it. | ||
| And we have seen them receiving financial support, the junta, from around the world, especially, frankly, as they ramped up production during the last administration. | ||
| So I'll note it's not just Burma, it's places like Iran that this illicit activity that has gone around the sanctions has been allowed. | ||
| In some cases, Treasury has granted these licenses. | ||
| I said on the Foreign Affairs Committee as well, and we see this all the time. | ||
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Why We Left CNBC
00:15:57
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| I want to touch on crypto. | ||
| Yesterday, as I had mentioned, the committee held a hearing with House Agriculture, or attempted to hold a hearing with the House Agriculture Committee. | ||
| It turned into a very important roundtable as well regarding digital asset market structure reform. | ||
| So, can you quickly explain how important it is for America to take the lead here, especially as we see China leaping ahead? | ||
| Yes, sir. | ||
| We believe that the United States should be the premier destination for digital assets, and as members of this committee and the Senate are attempting to do, create good market structure around that so that U.S. best practices are used around the world. | ||
| And that's really the point, right? | ||
| Is having American U.S. best practices to sort of set the pace for others to follow rather than us trying to fill in the holes that may be created by as others set that pace? | ||
| Yes, sir. | ||
| And also, that digital assets are an important source of innovation that can drive usage of the U.S. dollar around the world, as with stablecoin legislation. | ||
| There is speculation that there may be up to $2 trillion of demand over the next few years for U.S. government securities from digital assets. | ||
| My time has expired, but I will send you my question regarding Chinese debt-trap diplomacy. | ||
| So, with that, I yield back. | ||
| The gentleman yields back. | ||
| The gentleman from New York, Ranking Member of the Small Business Committee, Ms. Velasquez, is recognized for five minutes. | ||
| Mr. Chairman, I want to raise a point of order. | ||
| Yes, ma'am. | ||
| But I don't want the clock to be eating my time. | ||
| I would like for the witness to be swearing in before I ask my questions. | ||
| The chair doesn't see the need for that. | ||
| You may ask your question. | ||
| Your time can start. | ||
| Short the gentlewoman's time over five minutes. | ||
| Secretary Besson. | ||
| You were on CNBC earlier this week making claims saying we are very close and maybe we will see some deals this week on tariffs. | ||
| So tell us, tell the American people, tell small businesses and consumers, tell retirees, specifically which countries are you close to striking deals with? | ||
| Sorry, Congresswoman, but that would not benefit the United States. | ||
| No, no, no. | ||
| I'm asking you a question based on the statement that you made on CNBC. | ||
| And I am telling you that it would be detrimental to the interest of the United States for me to answer that question. | ||
| Why would that be detrimental? | ||
| Because as the negotiations may still be in process as we speak, as we are not at the end of the week yet, I am sure that you, through your question, would not want to compromise the U.S. negotiations. | ||
| Reclaiming my time, Secretary Besson, the President goes into a press conference and claims that there are negotiations going on. | ||
| And then the next day, there's no negotiations going on. | ||
| So why would you not answer my question? | ||
| And that will be considered detrimental to the American people, to the American economy. | ||
| I do not understand. | ||
| Despite your claim. | ||
| I am happy to say there are negotiations going on. | ||
| I am not going to reveal the details. | ||
| No filibuster here. | ||
| So how long do you think those negotiations will take before they are concluded? | ||
| There are numerous countries, as I have said, if you saw my CNBC interview, which you reference, that there are 18 important trading partners, and we are moving forward at all deliberate speed with those. | ||
| Do you consider these negotiations advanced negotiations? | ||
| Some of them are quite advanced. | ||
| So you expect this deal to be more than memorandums of understanding? | ||
| Do you expect them to be full negotiated trade deals? | ||
| I believe that they will be the agreements in principle, and then we will paper them over in the coming months. | ||
| But once we reach an agreement, then I am sure that the other countries will live up to it. | ||
| Okay. | ||
| In congressional testimony yesterday, you said the U.S. has not started negotiating with China on tariff reductions. | ||
| Does that continue to be your position, yes or no? | ||
| As you may have read in the past. | ||
| Yes or no, sir? | ||
| As you may have read in the press, I will be going to Switzerland, and the negotiations will begin on Saturday. | ||
| Okay. | ||
| So the president told you that that would be your answer today. | ||
| So can you tell who from the Trump administration is engaged in those discussions? | ||
| Which discussions? | ||
| With China. | ||
| Trade discussions? | ||
| Pardon? | ||
| I'm sorry. | ||
| Trade discussions. | ||
| Yes, sir. | ||
| Well, the trade negotiations will be led by myself and Ambassador Jamison Greer and USTR. | ||
| What about Pete Navarro? | ||
| Sorry? | ||
| Peter Navarro. | ||
| He will not be joining us in Geneva. | ||
| Thank God for that. | ||
| Are those negotiations considered advanced? | ||
| Pardon? | ||
| Are those negotiations considered advanced? | ||
| As I said, on Saturday, we will begin, which I believe is the opposite of advance. | ||
| Secretary Besson, as Treasury Secretary and a senior member of President Trump's economic team, has President Trump given you the authority to finalize any trade agreement with China or any other trading partner? | ||
| As President Trump has stated, he will have the final decision on any trade agreement. | ||
| So you are telling me all of these increased prices, the stock market losses, the production delays are all based on the wins of Donald Trump, that you could strike the best deal with Canada, Mexico, or even China. | ||
| That is completely in our favor, giving us everything that means. | ||
| The gentleman has expired. | ||
| And if President Trump decides at any certain moment for whatever reason not to take the deal, that will be it. | ||
| I yield back. | ||
| The gentleman from Oklahoma, Mr. Lucas, who is chair of our task force on monetary policy, is recognized for five minutes. | ||
|
unidentified
|
Thank you, Mr. Chairman. | |
| Mr. Secretary, as the dust has continued to settle after last month's episode of Treasury market volatility, can you give an updated assessment of those events and how would you characterize the functioning of the market during that period? | ||
| Throwing the dust up in Treasury. | ||
| The market was very well functioning. | ||
| It was volatile, but the underlying infrastructure worked quite smoothly, sir. | ||
|
unidentified
|
Does the Treasury Department have the tools necessary to address market volatility? | |
| You said you may increase the use of the buyback program. | ||
| Are these or other authorities that are there other authorities that might be helpful to address the challenges of the market? | ||
| Yes, sir. | ||
| We have a very large toolkit that we can deploy, as does the Federal Reserve. | ||
|
unidentified
|
Taking a step back, Mr. Secretary, can you provide us with a sense of what regulations the Administration is working on to bolster resilience in the Treasury market and the timelines when you would expect those changes to be announced? | |
| This is a core issue on the task force I and a number of my colleagues are working on. | ||
| Sir, the auction sizes, the current issuance sizes leave us well positioned to address potential changes in borrowing needs. | ||
| I can tell you that investor participation in auctions, there's been broad investor support. | ||
| Our weighted average maturity is about 61.2 months, which is quite fulsome. | ||
| And we have implemented a buyback program with two objectives, liquidity support and cash management. | ||
|
unidentified
|
One last question along that line. | |
| I've long said that the administration should look at reforming regulations like the supplemental leverage ratio to relieve some of the constraints that market participants are facing in the Treasury market. | ||
| I hope you'll consider looking at that. | ||
| Sir, Treasury does not look at that, but I believe that it is a high priority for the three regulators, the OCC, the FDIC, and the Federal Reserve. | ||
|
unidentified
|
Thank you. | |
| And as the SEC continues to implement their clearing rule, a number of firms, including those outside the United States, are looking to provide clearing services for U.S. Treasuries and their derivatives. | ||
| How are you working with the SEC and the CFTC to ensure the integrity of the Treasury markets as these firms look to intermediate? | ||
| Sir, the Treasury market is a global market, and we welcome new participants, and we want to make sure that best practices employed in the U.S. are also employed globally. | ||
|
unidentified
|
And the reason I ask that is, and if you could specifically comment on the clearing of U.S. sovereign debt outside of the United States, what risk could that potentially present? | |
| And I come at that from the perspective: if there is a challenge in the market, if it is a U.S.-based entity, then the regulators who would make the difficult decisions are here. | ||
| If it is outside of the United States, they might have a different perspective. | ||
| We are constantly studying that, sir. | ||
| As of now, we do not believe that it presents a risk. | ||
| But as we continue our studies, I will have my staff interact with your team. | ||
|
unidentified
|
Absolutely, Mr. Secretary. | |
| And one final question. | ||
| Primary dealerships has become an expensive proposition for firms, which in one explanation for participants leaving the market, it's one of the many explanations. | ||
| Should we be looking at ways to make the environment friendlier to investors wanting to become primary dealers? | ||
| Sir, we saw at the recent auction very low participation by the primary dealers, which tells me that there may be the regulatory function there that is preventing them from using their balance sheet for the benefit of the U.S. Treasury. | ||
|
unidentified
|
So clearly, the task force that Chairman Hill was kind enough to set up and yourself, we have work to do. | |
| Thank you, Mr. Speaker. | ||
| Would you yield? | ||
| I would yield to the gentleman from Michigan. | ||
| Thank you. | ||
| And I can get my China question in, so I appreciate my colleague doing that. | ||
| I want to talk a little bit about the international financial institutions, the IFEs, such as IMF, World Bank, and they are falling short of addressing key challenges. | ||
| So China, whether it is in Africa or Burma, has really engaged in a debt-trap diplomacy. | ||
| How should the IMF really help borrowers take the funds advice when it keeps giving China a free pass? | ||
| Well, Congressman, as I said in a public interview after one of my IMF speeches, it is time for China to graduate from developing country status. | ||
| It is the second largest economy in the world. | ||
| They are a large, important economy, and they should no longer be granted the status of a developing economy. | ||
| I would like to invite you, Mr. Secretary, to continue that answer in writing, and I thank the Vice Chairman and Mr. Lucas. | ||
| Yes. | ||
| Let me call on the gentleman from California, the ranking member for our capital markets subcommittee, Mr. Sherman. | ||
| First of all, since the last speaker had an extra 30 seconds, can I have an extra 30 seconds? | ||
|
unidentified
|
Right. | |
| Mr. Chairman, I'll be insistent. | ||
| You give the extra 30 seconds to the next couple of minutes. | ||
| I would be happy to do that. | ||
| Mr. Chairman, I agree with you that special drawing rights should be increased only with congressional input, and I agree with Mr. Huizinga that we have to focus on Burma-Myanmar. | ||
| I ask unanimous consent to put in the record a chart showing how the value of the dollar compared to other currencies has declined precipitously since Trump's so-called liberation date, and to also put into the record a CBO report issued just an hour ago that shows that Republican proposals to change Medicaid would in one case take 1.5 million people, would lose their Medicaid benefits, | ||
| and in another proposal would cost 3.9 million Americans their Medicaid benefits. | ||
| Without objection. | ||
| I also ask unanimous consent to put in the record a letter I sent to the Secretary responded to by his Assistant Secretary dealing with direct file, which means you don't have to pay turbo tax because the IRS has the software. | ||
| And the response that I got, an absurd response, was basically, well, as long as we just want to make sure TurboTax makes a lot of money, so we're not going to do that. | ||
| And I would point out that the IRS could send every American for their voluntary use a proposed first draft of the tax return since you already have the W-2, you already have the 1099, and you don't have all the input errors that come from people doing their own returns. | ||
| But that is something that your administration is stopping. | ||
| I would ask you, Mr. Without objection. | ||
| Yes. | ||
| I ask you, Mr. Secretary, to provide for the record within one week your best estimate of when the U.S. will hit the debt ceiling and exhaust our borrowing capacity. | ||
| Can I count on you to provide that for the record? | ||
| Sir, the so-called X date is a moving target. | ||
| I would like your best shot. | ||
| As I stated yesterday, we are moving onto the warning track, and we don't want to be on the warning track in any case. | ||
| I would ask you to provide the Congress the best information you can, but I'm going to go on to another question. | ||
|
People Want ETFs Treated Like Stocks
00:07:49
|
||
| I represent one of the two areas devastated by the Los Angeles fires. | ||
| I spoke directly and on camera to President Trump and asked him to exempt building materials from these tariffs. | ||
| The National Association of Home Builders says that these tariffs will add $11,000 to the cost of these fire victims rebuilding their homes. | ||
| Can you assure us that in a country where we have a devastating housing shortage in general, but we have thousands of people in Los Angeles have to rebuild their homes in particular, that these fire victims are not going to face this additional cost to rebuild their home? | ||
| I will look into that matter. | ||
| That is exactly what the President said in January this weekend, and I toured the devastation. | ||
| Thank you. | ||
| I hope you saw the devastation of the Palisades, and I hope you won't be imposing another $11,000 cost on every home builder. | ||
| Now, as to capital markets, where I devote most of my time, all of us on the subcommittee agree that we are trying to get people to invest in American stocks and build the American economy. | ||
| And in fact, our tax code has hundreds of billions of dollars of incentives to get people to invest in America. | ||
| China also has incentives to get the Chinese people to invest in Chinese stocks. | ||
| But there's a difference. | ||
| China only provides those incentives to Chinese people if they invest in Chinese stocks. | ||
| American billionaires like investing in China, making tens and hundreds of millions of dollars in profit. | ||
| Can you think of a reason why the American tax code should provide enormous tax benefits like the capital gains allowance to American billionaires who invest in Chinese stocks? | ||
| Why is that in our national interest? | ||
| Sir, it's not just available to billionaires. | ||
| If you were to buy a ETH. | ||
|
unidentified
|
Right. | |
| So why do we want to encourage a Chinese ETF, a very small state? | ||
| Why would we be neutral on whether I buy an American ETF or a China ETF? | ||
| Don't we prefer American capital to be invested in America, or are we just fine with encouraging Americans to invest abroad? | ||
| Well, sir, we don't want to close the capital account, and we do want investors to be investigated by their judgment where they should invest in the US. | ||
| Let me go on to one more thing. | ||
|
unidentified
|
I have said I wouldn't bet against the U.S., but next question. | |
| Abu Dhabi and United Air Mayor Mitch just announced that they were going to give $2 billion coin put forward by World Liberty Financial. | ||
| This stablecoin pays no interest. | ||
| So you and I are both finance people. | ||
| Just want to check my math. | ||
| Assuming a 4 percent rate of return, is this interest-free loan of $2 billion worth $80 million every year to World Liberty Financial and its Trump owners? | ||
| Sir, I haven't seen that. | ||
| I don't know the expense ratio. | ||
| And as far as I know, no stablecoins pay interest. | ||
| So the New York Times is wrong. | ||
| Please read the article. | ||
| I yield back. | ||
| The gentleman yields back. | ||
| The gentleman from Texas, Mr. Sessions, is recognized for five minutes. | ||
|
unidentified
|
Mr. Chairman, thank you very much. | |
| Secretary, welcome. | ||
| We are delighted that you are here. | ||
| Part of the challenge against you this morning, and I am sure some days, is the explanation of the tariff matter that President Trump has initiated and sticking by. | ||
| I'd like to provide just my input on that, if I could, that I think that President Trump sees the relationship with China by what it really is, and that is an unfair relationship, one which needs to be not only looked at, but really something done about it. | ||
| And I know that while we have PNTR, it should mean that we treat them the same way they treat us, but that is not happening. | ||
| President Trump, as part of these changes, has changed the de minimis rule, and that de minimis rule was the amount of money that a package when it comes into our country under this circumstance, whether it was looked at or not, whether a tariff was paid upon it. | ||
| And I believe that there were Chinese companies taking advantage of that. | ||
| Some 4 million packages a day were coming to the United States. | ||
| And I say were coming because I do not believe that that rate is still occurring. | ||
| As a result of that, what happened is it contributed to the fentanyl issue that we had because we did not look at these packages with the same viewpoint that others did. | ||
| My point in bringing this up is that I believe that with the new numbers of 177,000 net new American jobs being created in the private sector, that there's an understanding by people who want to invest in America that this president is finally taking on the Chinese, who undermined not just intellectual property, but undermined with their government, | ||
| the Chinese government, undercutting the price and manufacture of many products that were American-made. | ||
| Many of them or some of them might be power tools. | ||
| And of course, we know craftsman is an American-made product. | ||
| But it is not uncommon, was not uncommon, for their tools to be on the Internet at $400 or $500 and for a Chinese product to be brought in for $40 or $50. | ||
| That undermined not just our intellectual property, but actually undermined the manufacturing that takes place in this country. | ||
| And I am delighted that you and the President are engaged in balancing that out. | ||
| And I think that's what this 177,000 new American jobs net provided for us because it's people who want to invest in the United States knowing that finally we have a president that will protect that onslaught of Chinese goods undercutting American, not just jobs and intellectual property, but the events that take place therein. | ||
| And I think this President has done a great job and I want to offer my support for that because I think that part of what the President has done is set a new challenge and mark for Americans now to pick up that part that was before challenged by China. | ||
| Mr. Secretary, Russia still earns over $700 million a day in fossil fuel revenue that helps its war against Ukraine. | ||
| And I think that most of us here would like to see Russia held accountable. | ||
| Can you talk to me about sanctions or sanctions that are or are being considered against Russia energy firms as it relates to selling their products to China? | ||
| Yes, sir. | ||
| And I will tell you that the Biden administration exercised with regards to Russia and Ukraine support a big dichotomy. | ||
|
Iran's Oil and National Emergency
00:11:17
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| On one hand, they were giving aid to government of Ukraine. | ||
| On the other hand, their sanctions against the Russian Federation were very, very weak. | ||
| The sanctions were just against some of the lower-level oil companies. | ||
| There was a price cap that has never worked. | ||
| On his way out the door, in a fit of bravery, the National Security Advisor Jake Sullivan raised the sanctions because the Biden administration had been worried about upsetting the oil price, pushing up oil prices during an election year. | ||
| The Trump administration, through our energy abundance and signaling to the energy markets, crude oil is down about 20% thus far this year. | ||
| And I read with great interest this morning that Russian Federation revenues were down 12% last month, which will put a dent in the Russian war machine, sir. | ||
|
unidentified
|
Gentlemen, Secretary, I hope that you'll find today valuable for us and yourself, and I hope you'll know that we will. | |
| Thank you very much, Mr. Chairman. | ||
| Gentlemen from New York, Mr. Meeks is recognized for five minutes. | ||
| Thank you, Mr. Chairman. | ||
| Mr. Bassett, let me, you know, I'm just a plain, simple man, the average everyday American that's looking at this hearing today. | ||
| So can you tell me first, does trade deficits constitute a national emergency? | ||
| The hollowing out of the U.S. mandate. | ||
| No, just yes or no. | ||
| Yes or no? | ||
| Yes or no? | ||
| It's a national emergency, sir. | ||
| It does. | ||
| You're telling me trade deficits equals a national creation. | ||
| Persistent and prolonged. | ||
|
unidentified
|
Yes, sir. | |
| And do you know also, sir, that for the last four decades, we've had trade deficits in the United States of America, and nobody said it was an emergency? | ||
| Democratic and Republican presidents? | ||
| You know what that says to me? | ||
| That is not an emergency because it hasn't been for four decades. | ||
| It says to me that we should bring tariffs back to the United States Congress so that we can make that determination as the Constitution has said and not try to go around Congress. | ||
| That's just unbelievable to me. | ||
| Let me ask this question. | ||
| Maybe I'm missed it. | ||
| Who was the president and who has been the president since January 20th, 2025? | ||
| Donald J. Trump. | ||
| Okay. | ||
| And who was the president in 2024? | ||
| One believes President Biden. | ||
| One believes? | ||
| Are you one of those non-believers at the election, the American people didn't vote? | ||
| I am not. | ||
| You're not? | ||
| You said one believes? | ||
| Do you believe in the Constitution of the United States? | ||
| I believe in the Constitution of the United States. | ||
| So you believe in it? | ||
| Without any second thought. | ||
| You don't have to think about it. | ||
| You believe in it and you would abide by it. | ||
| Is that correct? | ||
| I have an I do, sir. | ||
| Okay. | ||
| But do you know that a president has said he may or may not, he don't know? | ||
| Let me ask this question. | ||
| I can't, I couldn't believe my ears. | ||
| Sunday, during NBC's meet the press, President Trump credited himself for the strong economy in 2024 when Joe Biden was president. | ||
| But then he blamed President Biden for a weak economy in 2025 when he was president. | ||
| Now, I'm not so sure how the American people puts that together. | ||
| In 2024, Strong economy, he tries to take the credit. | ||
| In 2025, when he's the president, he blames Joe Biden. | ||
| That doesn't make sense to me. | ||
| I don't think it makes sense to most Americans. | ||
| And I hope, Mr. Secretary, you're a businessman. | ||
| It doesn't make sense to you either. | ||
| It can't possibly make sense to you. | ||
| Let me ask this question. | ||
| If a government, take Argentina, I remember when I came here, and Argentina kept failing to pay its debt, not once or twice or three times, and we were all upset about it, and we said that they needed a host, somebody to take over their government. | ||
| You know, somebody should help the president of Argentina. | ||
| If the United States didn't pay its debt or something like that, we'd be very upset about that if we couldn't pay our debt. | ||
| I mean, that's one of our focuses. | ||
| Is that not correct? | ||
| Sir, the United States will always meet its debt obligations. | ||
| Always. | ||
| Well, let me ask you this. | ||
| Donald Trump, the deal maker, and you didn't answer Ms. Velasquez's questions, no deals, even though he said three weeks ago that there would be deals. | ||
| But Donald Trump, not once, not twice, not three times, not four times, not five times, but six times, failed to pay his debts and his business and went bankrupt. | ||
| And you're going to call that a good business, ma'am? | ||
| I wouldn't invest in that company. | ||
| The gentleman's time has expired. | ||
| The gentlewoman from Missouri, Ms. Wagner, the chair of our subcommittee on capital markets is recognized for five minutes. | ||
| I thank you, Mr. Chairman. | ||
| And I will try to keep my tone down. | ||
| And I thank Secretary Besant for your testimony. | ||
| I, sir, am going to try to stick to the actual title of this hearing and why we're supposed to be here today, which is the state of the international financial system. | ||
|
unidentified
|
So here we go. | |
| Mr. Secretary, under the Biden administration, Congress required Treasury to determine whether any Chinese financial institutions were engaged in oil purchases from Iran, no matter how small or how large the transaction. | ||
| This determination would subject these Chinese entities to secondary sanctions, sir. | ||
| And just last week, the president himself ordered such sanctions for any purchase of Iranian oil, which helps, obviously, the Ayatollah finance terrorism around the world. | ||
| Mr. Secretary, can you describe how, well, I think we all know how Iran uses oil sales to fund its proxies, including Hamas, Hezbollah, the Houthis in Yemen, to the extent that there's any Yemen left. | ||
| Treasury is now over half a year late with its statutory determination on Chinese buyers of Iranian oil. | ||
| And I have three questions, sir, related to missing this deadline. | ||
| The first is, why has it not been submitted to Congress? | ||
| Had the previous administration done anything to prepare this determination? | ||
| And third, when can Congress expect to receive it? | ||
| To all three of those, I will have my staff get back to you on that. | ||
| And Representative Wagner, what I will tell you is that since I become Treasury Secretary, the Treasury has repeatedly sanctioned so-called Chinese teapot refiners, who are very large buyers of Iranian oil. | ||
| These are independent refiners away from the state-owned enterprises. | ||
| We have begun that program over the past few weeks, and we will continue as needed. | ||
|
unidentified
|
Good. | |
| Well, and I know that you're in negotiations with, I'll say, that 18th country, which is China. | ||
| We are thrilled to hear of your trip there. | ||
| And I hope this is something that you will discuss with them in terms of their purchasing of Iranian oil that does nothing but lift up a regime that is funding terrorism throughout our world, I'll say. | ||
| What actions has Treasury taken to combat cooperation between Iran and China on illicit finance and money laundering? | ||
| Well, again, the secondary sanctions on these teapot refiners has been a very fulsome effort, and we will continue that. | ||
| When President Trump left office, Iranian oil exports were between 100 and 300,000 barrels per day. | ||
| Now they are 1.6 million barrels per day, which allows the regime to finance its terror proxies, not just in the Middle East, but all around the world. | ||
|
unidentified
|
Correct. | |
| Yes, and we've seen it, and we've lived it, and it has caused unbelievable death, devastation, and grief, and resources, and loss of life throughout our world. | ||
| And I am proud that the President himself endorsed sanctions just last week for any purchase, any purchase, not just from China, of Iranian oil. | ||
| So I hope that these, we can get a report on what's been happening with China. | ||
| Switching gears, in February, several members of this committee and the Senate, including myself and the Chairman and the Senate Banking Committee, sent you a letter voicing concerns about the European Union's Corporate Sustainability Due Diligence Directive, or CSED. | ||
| This directive, which was finalized by the EU last year, will require many American companies to evaluate their supply chains and end certain business activities not based on U.S. law, but due to UN principles. | ||
|
Questioning Neutrality Policies
00:11:50
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| This directive not only hurts our economic competitiveness, but also undermines our jurisdictional sovereignty, sir. | ||
| It would force both public and private companies to comply with regulations that have not been approved by Congress while also exposing them to increased litigation and risk in the EU. | ||
| I am running out of time, Mr. Chairman, but this is something I feel very strongly about. | ||
| It is in the international realm here, and I have two questions regarding this that I will submit for the record. | ||
| Thank you. | ||
| It will be submitted for the record. | ||
| Recognize Mr. Scott, the gentleman from Georgia, for five minutes. | ||
|
unidentified
|
Thank you, Chairman. | |
| Secretary Abison, let me ask you this. | ||
| Do you agree that the FDIC plays a very essential role in safeguarding our depositors, ensuring prudent bank supervisors, and maintaining the safety and soundness of our financial system? | ||
| Congressman, I agree that a well-functioning FDIC is essential to the U.S. financial system. | ||
|
unidentified
|
And on Monday, you said this, and I quote, you said this, that the President tasked you with helping him choose the leader of the financial regulators so that we are all aligned, all regulators, to be safe, sound, and smart. | |
| And you went on to list the key positions that you've done that, including a new vice chairman for supervision of the Fed, a new head of the OCC, and Paul Atkins of the Securities and Exchange Commission, and a new CFTC commission. | ||
| But as of this morning, we have no FDIC chairman full-time. | ||
| It is now under temporary leadership of an acting chair named Travis Hill, with the president having no current plans to either formally nominate him or find a replacement. | ||
| The nation is watching us. | ||
| Why we don't have the head of the FDIC. | ||
| So my question is, have you not helped President Trump in selecting a chairman to lead the FDIC? | ||
| Congressman, I would point out that under the previous administration, there was only an acting chair of the OCC for five years, five years. | ||
| That Mr. Hill is the acting. | ||
| And as a matter of fact, the head of the OCC, the head of the CFTC, have not been confirmed, so those are in fact acting also. | ||
| Mr. Hill is a very capable regulator, having been on the board of the FDIC. | ||
|
unidentified
|
Yeah, I'm not questioning you. | |
| And you're Philip. | ||
| We are pursuing that. | ||
|
unidentified
|
I'm not questioning. | |
| Have you been instructed by President Trump to refrain from offering a list of viable candidates to lead the FDIC? | ||
| No, sir. | ||
| I am constantly reviewing the list and thinking who is best to lead that important institution. | ||
|
unidentified
|
Well, I want you to know that I wrote a letter to the Trump administration. | |
| Here it is, expressing grave concern with the erosion of financial regulatory agency independence. | ||
| And Mr. Chairman, I'd like to submit this for the record. | ||
| Without objection. | ||
|
unidentified
|
And we remain highly alarmed by this growing perception that our financial regulators have acquiesced to political pressure from this administration, perhaps even from the President of the United States. | |
| If I were president, I wouldn't have this vacancy at a time when we're running tariffs all over the country, when our economy is in these kinds of difficulties. | ||
| The nation is watching us. | ||
| Russia is operating us. | ||
| As the President is going around the country dealing with upsetting Canada, places around the world. | ||
| So I just want to know that where are we going? | ||
| When are we going to have a chairman? | ||
| Are we going to have it? | ||
| And answer me truthfully. | ||
| Has President Trump asked you to delay this appointment? | ||
| And if so, why? | ||
| Sir, that statement is incorrect. | ||
| He has not asked me to delay that appointment. | ||
| And I believe that your question is, when are we going to have an FDIC nominee? | ||
| And we have OCC nominees. | ||
| We have a CFTC nominee. | ||
| We have a Vice Chair from Mustamas. | ||
| Mr. Chairman, I would ask you to urge our Senate colleagues on the Democratic side to vote for them. | ||
| Thankfully, Mr. Gunnar. | ||
| Ms. Scott, your time is expiring. | ||
|
unidentified
|
Thank you. | |
| Excellent discussion. | ||
|
unidentified
|
Thank you. | |
| I recognize the distinguished chair of our financial institutions subcommittee, Mr. Barr of Kentucky, for five minutes. | ||
| Secretary Besson, thank you and President Trump for, in February, issuing the National Security Memorandum entitled America First Investment Policy, directing federal agencies to address outbound investments in China. | ||
| In March, as you know, Senator Cornyn and I reintroduced my bill to restrict outbound investment into China, specifically into Chinese military-industrial complex entities, primarily through OFAC sanctions. | ||
| Tell me, Mr. Secretary, what do you think about that legislation in the context of the President's national security memorandum? | ||
| Good. | ||
| Congressman, I want to thank you for your leadership on this matter. | ||
| My team and I appreciate your input and molding this important issue, one of the most important financial issues of our time. | ||
| It is a new national security tool that we restrict the PRC from exploiting the benefits. | ||
| And we appreciate that Congress wants to move forward legislation that is important and helpful. | ||
| And we would like a bit more time for our process, including the work mandated by the President to inform the legislation so that it is durable because of the importance of this. | ||
| Well, thank you. | ||
| And I look forward to working with you and the President to align our legislation with the President's policy on this. | ||
| And I want to give you and President Trump another tool of economic statecraft to increase President Trump's leverage in his negotiations with General Secretary Xi. | ||
| This is a very important issue. | ||
| And as you probably noticed, there was recently a $75 million venture investment into a Chinese artificial intelligence firm, Manus. | ||
| Is Manus AI on the CMIC Treasury entity list? | ||
| I will have my staff get back to you on that, sir. | ||
| And I think the answer is no, and that's why we need this legislation so that our outbound restrictions look not just at entities but also technologies of national security concern like militarized artificial intelligence that this entity, Manus AI, is doing. | ||
| I would also note that the waiver authority that I embed in this legislation with Senator Cornyn would give you, as Treasury Secretary, the ability to authorize BlackRock or other U.S. firms to invest in Panama to displace the Chinese. | ||
| So thank you for your collaboration with us on that. | ||
| Secretary, you've said that with President Trump we're going to reprivatize the American economy. | ||
| That is music to my ears. | ||
| That's music to the American people's ears. | ||
| When federal bank regulators are talking about reproposing the Basel III endgame proposal, they have been saying now for a long time we should do it in a capital neutral way, abandoning former Vice Chair Barr's approach of a huge gold plating of bank capital. | ||
| Since the Federal Reserve started to use the term capital neutrality in 2019, however, capital has increased by 10 to 20 percent, making the concept of capital neutrality really arbitrary. | ||
| Large banks are now subject to stress tests, CCAR, GSIB surcharge, and a number of liquidity and resolution requirements. | ||
| When looking at our bank capital regulations in the context of an America first agenda, Mr. Secretary, should we be aiming for capital neutrality or should we be instead looking at capital levels that actually promote American competitiveness? | ||
| Congressman, as you know, I have been very concerned about our community banks, our small banks, our small regional banks, and the growth of private credit by the regulated system tells me that many of the regulations may be too tight and that the business is pulled into the so-called shadow market. | ||
| I think we want to safely and soundly expand the regulated financial system and get them on equal footing. | ||
| And I think that these capital levels that are predictable are very important for that. | ||
| Last question about China investment in Venezuela. | ||
| Last week, Venezuelan Vice President Rodriguez asked Chinese officials to increase oil purchases as the country is feeling the squeeze on its energy sales. | ||
| Tell me what you think about OFAC licenses for U.S. companies operating in Venezuela when those American firms could displace China to enhance American energy dominance. | ||
| It is a very acute balancing act there between displacing China but U.S. entities providing hard currency for the Maduro regime, and we are constantly weighing... | ||
|
Security Council Chat Risks
00:04:44
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| Gentleman's time has expired. | ||
| I look forward to working with you on that issue. | ||
| Thank you. | ||
| I yield back. | ||
| I recognize the distinguished gentleman from Massachusetts, our ranking member of the Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee, Mr. Lynch, for five minutes. | ||
| Thank you, Mr. Chairman. | ||
| Mr. Secretary, thank you for coming before this committee and helping us with our work. | ||
| Mr. Secretary, between March 11th and March 15th, 2025, you and more than a dozen senior officials of the Trump administration, including Secretary Hegset, | ||
| Director of National Intelligence, Telsey Gabbard, National Security Advisor Mike Walsh, used a commercially available non-governmental encrypted non-secure app to discuss and coordinate imminent U.S. military strikes in Yemen in a group chat entitled Houdi PC Small Group. | ||
| Particularly, Defense Secretary Hegseth shared actionable intelligence, including sensitive and classified details of an imminent military operation against Houthi rebels and other military plans. | ||
| These included precise launch times for U.S. jet fighter assets, targeting locations for those Houthi rebels who were, by the way, equipped with anti-aircraft systems. | ||
| Mr. Hegset shared the targeting sequencing against Houdi rebels and described the weapon systems, the U.S. weapon systems involved. | ||
| National Security Council has confirmed that this signal chat was authentic and that you had participated. | ||
| You realize that for you, Mr. Secretary, because of the responsibilities you have, even outside the principles committee, that group, you have a target on your back from our adversaries, China, North Korea, Russia, and others. | ||
| Can I ask you, have you been briefed on the proper protocols for discussing information such as active military plans? | ||
| I have, by my general counsel, if you will look, my- I've got a bunch of questions. | ||
| I'm just trying to narrow this down because this is really a concern. | ||
| Just reclaiming my time. | ||
| So let me ask you, which was let me ask the questions and you provide the answers, okay? | ||
| How about that? | ||
| Waiting for the question. | ||
| Are you preserving records, Mr. Secretary, of these communications as required by the Public Records Act? | ||
| Yes, sir. | ||
| Okay. | ||
| Are you still discussing sensitive military intelligence on a non-secure line? | ||
| I have never done that. | ||
| Okay. | ||
| The National Security Council says you were on a chat that discussed those details. | ||
| Are you saying that wasn't the case? | ||
| I had said that I have never discussed them. | ||
| Someone discussed it with you. | ||
| You were on a non-secure line for a meeting with other secretaries, right? | ||
| Those people I just mentioned, you weren't on that chat? | ||
| I was, but you were. | ||
| You okay. | ||
| That's what I'm talking about. | ||
| So you could have intervened. | ||
| You could have brought it up. | ||
| You could have said this is an insecure line. | ||
| We shouldn't be doing this. | ||
| We're putting our sons and daughters in uniform at risk pre-attack. | ||
| You could have done all that. | ||
| Mr. Hegsett, this is not involving you, but Mr. Hegsett afterwards did the same thing with a family chat. | ||
| His wife, his brother, his sister, family attorney. | ||
| You do understand the troublesome nature of that, right? | ||
| Are you dismissing that and calling this a roaring success as others have done, as the White House has done? | ||
| This is troubling. | ||
| And I just want the reassurances for this committee and for other members of Congress, other committees, and for most importantly, for the families of Americans who send their sons and daughters into harm's way, they put on that uniform. | ||
|
Thresholds and Concerns
00:15:10
|
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| I just want the reassurances that we're not doing, you know, this buffoonery has to stop, right? | ||
| At some point, there are serious consequences to not complying with security protocols. | ||
| Mr. Secretary, you are a smart guy. | ||
| You are a smart guy. | ||
| You didn't create this situation. | ||
| You were drawn into it. | ||
| I am just trying to reassure the committee that this stuff is not happening anymore. | ||
| Gentleman's time has expired. | ||
| Allow the gentleman to answer. | ||
| Be a yes or no. | ||
| I think the gentleman's time has expired. | ||
| Well, Congressman, I am happy to say that because of my age, I pick up the phone and call people. | ||
| There you go. | ||
| Gentleman's time has expired. | ||
| The gentleman from Georgia, the Vice Chairman or Financial Institution Supplementary Mr. Laubermelt, recognized for five minutes. | ||
| So thank you, Mr. Chairman, Secretary. | ||
| Thank you for being here. | ||
| I think you and I are both aware of the paradox of the U.S. reserve currency status. | ||
| The so-called Triffin dilemma says that to maintain the benefits of a global reserve currency status, we may always run a concurrent account deficit, which in turn risks undermining global confidence in the dollar. | ||
| The U.S. enjoys an exorbitant privilege from the dollar's reserve status. | ||
| This means that among other benefits, there is a high demand for dollar-dominated assets worldwide, substantially lowering borrowing costs. | ||
| It also allows us to run sustained trade deficits and drives capital investment into the United States. | ||
| So my first question is, how is our current reserve status different from what it was under the Brenton Woods system when the dollar was convertible to a fixed amount of gold rather than floating? | ||
| Well, sir, it's now based on the full faith and credit of the United States rather than backed by gold. | ||
| Okay. | ||
| Does the demand for dollars and the U.S. debt worldwide and the reduced borrowing costs that come with it contribute in a meaningful way to some of our failings as fiscal stewards? | ||
| Well, I would say that the unfettered ability to borrow has made us more prolific as there is very little potential for market discipline to date. | ||
| There is the potential that the market may discipline the United States government one day, and I am, along with the administration, President Trump, trying to set the country on a path to avoid that. | ||
| And we appreciate that. | ||
| I've long said that I don't feel that there is the political will within Congress anymore to restrict spending and balance the budget. | ||
| And so I appreciate the work that you are doing there. | ||
| Is there a world where we can have our cake and eat it too? | ||
| In other words, is there a policy configuration where the U.S. can maintain the best elements of its exorbitant privilege while also having a balanced export economy? | ||
| Yes, sir, there is. | ||
| And I would point out that the exorbitant privilege, as I believe it was a French politician called it, does not always result in the lowest interest rates. | ||
| Japan's interest rates are lower than ours. | ||
| China's interest rates are lower than ours. | ||
| Most of the EU interest rates are lower than ours. | ||
| Okay. | ||
| I want to shift gears just slightly. | ||
| For several years, I have called for FinCEN to raise the threshold for currency transaction reports from 10,000 to some higher value. | ||
| Working on legislation have been for the last several years, and I do have read legislation again this year on that. | ||
| If adjusted for inflation from the 1970s, this threshold would be somewhere between $74,000 and $80,000. | ||
| But we haven't. | ||
| We're still stuck at that $10,000 limit. | ||
| In your opinion, what threshold value best balances privacy and compliance costs against the utility that these reports have for law enforcement? | ||
| Congressman, I am not sure what the equilibrium level is. | ||
| What we have discovered, so you were talking about the threshold for a suspicious activity report, or the concerns, currency transaction reports, which is in a sense. | ||
| So we are now examining that, and we are finding that sometimes higher is better, sometimes lower is better. | ||
| We have discovered that there are approximately 40 counties on the U.S.-Mexico border that account for a substantial amount of nefarious behavior by the cartels. | ||
| So we have lowered that to $200, and we are finding great efficacy there in pushing the cartels back into Mexico and not allowing them to deal in the United States. | ||
| So I would say, sir, it is a moving target. | ||
| Okay. | ||
| And I can understand and appreciate that. | ||
| One of the issues that we have from a nationwide status is the compliance cost that goes to small financial institutions and even from law enforcement. | ||
| The complaint is trying to find illicit financing currently is like looking for a needle in the haystack because of the pure volume of reports that are being made. | ||
| And so my argument has been from a nationwide status, and I'm sure we can work on something to make exemptions during times like you're talking about now in locations, but is not to increase the size of the haystack, but reduce the haystack so it becomes more prevalent, the illicit financing. | ||
| Look, Congressman, I am hypersensitive to the needs of the small and community banks and the undue burden that much compliance is placing on them, and we are working across a variety of ways to lower that cost. | ||
| Look forward to working with you on these things. | ||
|
unidentified
|
Thank you. | |
| The gentleman yields back. | ||
| The ranking member on the Oversight Investigation Subcommittee, the gentleman from Texas, Mr. Greene, is recognized. | ||
| Thank you, Mr. Chairman. | ||
| Thank the Ranking Member, and I thank the witness for appearing. | ||
| Mr. Treasurer, when you testified before the Senate, you indicated that the CDFI fund is a very important program. | ||
| It is very important to us. | ||
| Is this correct? | ||
| I did, sir. | ||
| And is it true that you would not agree that it is a woke program, it has cultural Marxism associated with it, and that it is abused? | ||
| You wouldn't agree with that, would you? | ||
| Sorry. | ||
| I think the CDFI fund is performing its statutory functions as required. | ||
| So you would not agree then that it is woke. | ||
| Is it statutory function to be woke? | ||
| I have never seen that in the statute, sir. | ||
|
unidentified
|
Okay. | |
| What about Marxism? | ||
| Is that associated with it in the statute? | ||
| Again, sir, I have never seen that. | ||
| Okay, now, given that the President desires to cut into this program, you're the Secretary of the Treasury. | ||
| What are you going to do about it to protect it? | ||
| Sir, The skinny budget does propose a new $100 million award program that will provide access to affordable financing. | ||
| Does that take care of the many billions that we put in, $12 billion to support the CDFIs? | ||
| That's quite a distance from the $12 billion, sir. | ||
| What are you going to do about it? | ||
| Look, I understand. | ||
| Do you advise the President? | ||
| Sorry? | ||
| Do you advise the President? | ||
| I advise the President on a wide range of matters. | ||
| Is this considered a part of a wide range of matters? | ||
| Would you advise the President that he shouldn't cut these funds? | ||
| I look forward to working with you and the committee to ensure these programs operate efficiently for taxpayers. | ||
| What about efficiently for taxpayers and efficiently as a result of them being in place to do so? | ||
| If you don't have the money, they can't be efficient. | ||
| They can't serve taxpayers if you don't have the money. | ||
| 61 percent of these programs are in Republican districts. | ||
| Is there a question? | ||
| Yes, it is a question in the sense that I am asking you to suggest to the President that this is important and that you not cut it. | ||
|
unidentified
|
So the skinny, as I said, $100 million is quite a distance from $12 billion. | |
| Well, that's not the annual appropriate ⁇ $12 billion is not the annual appropriation. | ||
| No, but $12 billion is what we, a bipartisan group of folk, put into the CDFIs as well as into the minority depository institutions. | ||
| We don't want to see that cut. | ||
| Let's go to another area. | ||
| Do you agree that when a tariff is imposed upon a product that is coming into this country, that the tariff is collected at the border? | ||
| Yes, sir. | ||
| And do you agree that that money that is collected goes into the Treasury's coffer? | ||
| Yes, sir. | ||
| And do you agree also that if the person that is importing this product is of the opinion that it is something that his clientele, his customers, desire, that he will pay that tariff? | ||
| Yes, sir. | ||
| And do you agree that when he pays that tariff, he is likely to pass it on to his customers, his consumers? | ||
| Sir, the laws of economics would say that they are very elastic. | ||
| I understand, but do you agree that he is likely to do that? | ||
| Do you agree that he does it sometime? | ||
| Do you agree that he does it sometime? | ||
| Again, it could be. | ||
| Do you agree that he ever does it? | ||
| Does he ever do it? | ||
| Sure. | ||
| So your position is, as the great treasurer you are, that this is not passed on to the taxpayers? | ||
| It could be. | ||
| The consumers. | ||
| It could be. | ||
| Well, is it ever? | ||
| It is hard to say yes, isn't it? | ||
| It really is. | ||
|
unidentified
|
It is not passed. | |
| Listen, sir. | ||
| You don't have to fear. | ||
| Don't fear the President, sir. | ||
| Is it ever passed on? | ||
| Have you ever heard of this tax money being collected and passed on to the consumer to pay? | ||
| Have you ever heard of that? | ||
| Well, the most recent studies from Okay, let's go on to this point. | ||
| I have a better point to make. | ||
| Excuse me, I'm reclaiming my time. | ||
| I have a better point. | ||
| Listen just a second. | ||
| I only have a little bit of time. | ||
| And when it goes into the coffers, that money is then going to be a part of the tax dollars that can be accorded to persons in terms of a tax cut. | ||
| Is this true? | ||
| It is part of the overall. | ||
| Yes, it is true. | ||
| Which means that the consumer, the person who pays that tax, this tariff tax, when he makes that purchase, is going to put his money in your coffer, our coffer, and then the President later on can say, you got a tax cut, but it is really the money that the consumer has put into your coffer. | ||
| That is true. | ||
| I yield back. | ||
| The gentleman yields back. | ||
| The gentleman from Ohio, the chair of the National Security, Illicit Finance, and International Financial Institutions Subcommittee, Mr. Davidson, is recognized for five minutes. | ||
| Thank you, Chairman. | ||
| Mr. Secretary, I applaud your eloquent message at the Milliken Institute, clarifying the Trump administration's coherent and effective strategy, and thank you for helping lead that. | ||
| My committee on national security, illicit finance, and international finances aligns completely with your efforts on illicit finance, on trade, with the pending reauthorization of the Defense Production Act, the national interest with outbound investment laws and clarity, and on focused international financial institutions. | ||
| I remain highly concerned about the future of money and, frankly, probably the most important policy debate we're having. | ||
| I'll save that part for future hearings. | ||
| But on illicit finance, I applaud your FinCEN final interim rule removing beneficial ownership reporting requirements for U.S. companies and citizens. | ||
| The prior approach was collecting information on millions of Americans and companies, even homeowners' associations, under the guise of illicit finance. | ||
| Lots of noise and very little signal. | ||
| By narrowing the scope of the rule, you are focusing on the signal. | ||
| Given the shift in focus, millions of Americans have shared sensitive, personally identifiable information. | ||
| Mr. Secretary, as the committee moves forward clarifying the rule, would you commit to supporting the deletion of data already collected under the previous rule? | ||
| Sir, my staff is working on what will happen to that data, and we will get back to you on that. | ||
| Appreciate it. | ||
| We work with you and certainly hope you safeguard it always, but it would be especially safe if it was deleted. | ||
| Speaking of legislation, my bill, the Chinese Currency Accountability Act of 2025, it would require the Secretary, you in this case, to instruct the United States Governor of the United States Executive Director at the IMF to use the voice and vote of the United States to oppose any increase in the weight of the Chinese RMB in the basket of currencies used to determine the value of special drawing rights. | ||
| This bill has passed the House on a bipartisan basis, most recently in February, and it still awaits Senate action. | ||
| Mr. Secretary, far more effective than waiting for the Senate is your leadership on this issue. | ||
| Will you advocate for opposing an increase in the RMB until China straightens itself out? | ||
| I look forward to working with Congress on this issue on whether additional legislation is needed to address the Chinese practices or whether it could be done through trade negotiations. | ||
| I wish you great success in your pending negotiations. | ||
| And certainly, if you look at the IFIs, things like Argentina's recent restructuring under the IMF basically built out the Belt and Road. | ||
| They never really have to worry about the fault at the Belt and Road. | ||
| They're using their influence in the international finance institutions like the IMF and the World Bank to, frankly, cover risk at the Belt and Road. | ||
| So hopefully that'll be restructured. | ||
| You've already covered outbound, and I really appreciate the dialogue on that. | ||
| But I'd like to turn to the Defense Production Act. | ||
| I mean, when you look at how you've organized and communicated the President's approach there and the administration's approach, national security is, of course, paramount to that. | ||
| And as we organize and update and reauthorize the Defense Production Act, of course, it deals with the Department of Defense, deals with Commerce, who does a lot of those things, but it's been structured under the authority of the Department of Treasury. | ||
|
Committing To Reauthorization
00:02:22
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| Would you commit to working with our Committee on National Security and Finance to gather the input and get a final reauthorization across the finish line this year? | ||
| I think that is an important piece of legislation. | ||
| We look forward to working with you on that. | ||
| Thank you, Mr. Secretary. | ||
| And then lastly, you've spoken eloquently about the kind of mission creep that comes in to some of our international financial institutions. | ||
| And as you know, the IMF set up a climate fund in 2022 known as the Resilience and Sustainability Trust. | ||
| Given concerns about IMF mission creep, will you work to eliminate RST so that the IMF can get back to its core mission? | ||
| Congressman, at my speech during IMF week, I stressed the need to get back to basics at all of the multilateral development banks, especially the IMF. | ||
| Yeah, thank you. | ||
| And I mean, the World Bank's spending a massive amount on that. | ||
| And as Chairman Hill and I met with the Inter-American Development Bank, they highlighted things that they were doing to deal with natural disasters that are important for tourism for them. | ||
| So some of this is characterizing things that are really infrastructure for those countries as climate change, maybe to appease the previous administration. | ||
| I'm confident you'll get it right to the extent we can be helpful in that as we reauthorize these programs and we consider doing it. | ||
| I thank you for your clarity talking about American leadership there so that America's interests are focused with the use of Americans' resources. | ||
| I thank you for your steadfast work and your testimony today and I yield back. | ||
| The gentleman yields back. | ||
| The gentleman from Illinois, the ranking member on the Financial Institutions Subcommittee, Dr. Foster, is recognized for five minutes. | ||
| Thank you, Mr. Chairman and Secretary Besant for your appearance here today, as well as your very nice courtesy call where we were able to identify areas of common interest like digital citizenship. | ||
| I'd like to speak today about the strength of the U.S. dollar and the decline of U.S. manufacturing, which, as you know, I'm very concerned about. | ||
| I started this company back when I was 19 years old that now provides over 1,500 manufacturing jobs in the Midwest. | ||
|
Strength Of The Dollar
00:15:06
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||
| And it's not been easy. | ||
| We started our country, our company, in the beginning of the Reagan inflation. | ||
| Then we had to live through all of the Bush policies and the China shock that occurred on his watch. | ||
| We lived through just all the ups and downs of this. | ||
| And it's not an easy thing. | ||
| And now, in terms of the strength of the dollar, it's affected by many things. | ||
| It's including central bank policies, interest rates, tariffs, and the balance of trade. | ||
| But in the long run, I believe that the strength of the dollar reflects the world's confidence in the U.S. economy, in the competence of U.S. leadership, in the value of products made by American workers, and our reputation as a fair place to do business and the rule of law in America. | ||
| Now, Secretary Besson, earlier this week, you ran an op-ed in the Wall Street Journal, echoing many of the points you made in your testimony. | ||
| And in that op-ed, you promised Inter-Alia more jobs, more manufacturing, more deregulation, lower taxes, less national debt, all while maintaining a strong dollar. | ||
| On the other hand, Stephen Mirin, Trump's choice for the chair of the Council of Economic Advisers, wrote a paper last year arguing for weakening the dollar through something he called the Mar-a-Lago Accords, which you have reportedly been placed in charge of negotiating. | ||
| The President himself has just been all over the map on almost a daily basis on whether a strong dollar or a weak dollar will make America great again. | ||
| So my question is, what is it? | ||
| Does the administration support a strong dollar or a weak dollar? | ||
| Sir, I'll work a little backwards. | ||
| C. Hed Myron paper was when he was in the private sector, and I think it related to a range of outcomes. | ||
| Two, that I believe that the conditions for a strong dollar are important for international competence. | ||
| And again, when we think of strong dollar, what is a strong dollar? | ||
| Is it the composite on the Bloomberg of all currencies? | ||
| Is it a trade-weighted dollar? | ||
| And then we can also look at bilateral relationships because much of that could be not so much a strong dollar, but other countries manipulating and suppressing their currencies, which would be a good idea. | ||
| Well, we lived through that in the Bush administration and is not in reaction to what China was doing. | ||
| I know all about that. | ||
| But I think it's interesting to look at the historical record here. | ||
| And I think I have behind me a plot of the strength of the U.S. dollar under recent presidents. | ||
| And I believe your staff has a copy of a one-page handout that could be given to you if it's easier to read. | ||
| And what it says is remarkable, that it says that under every president, from every Republican president, Reagan, Bush, Bush Jr., Trump 1, or now Trump 2, the dollar has weakened. | ||
| Under every Democratic president, without exception, Clinton, Obama, Biden, the dollar has gone up significantly. | ||
| And I don't think that's an accident. | ||
| I think it's because of all the factors, including predominantly the confidence that the U.S. will maintain a well-regulated and well-governed economy and a fair place to do business. | ||
| Now, also on that handout, which I think has actually been given, do you have the copy of the handout with the graphs on it? | ||
| It's a double-sided single-page. | ||
| We can get you another copy if you want. | ||
| It also has, you know, the argument in favor of a weak dollar, it should make manufacturing easier in the United States. | ||
| That's one of the arguments for it. | ||
| But if you look at the historical record here, if you just look at, for example, change in manufacturing employment under Democratic and Republican presidents, it's remarkable for longer than you or I have been alive. | ||
| Democratic presidents have increased manufacturing employment and Republican presidents have decreased manufacturing employment. | ||
| From FDR, Truman, Kennedy, Johnson, Carter, Clinton, Obama, and Biden all increased manufacturing employment. | ||
| Eisenhower, Nixon, Ford, Reagan, Bush, Bush II, it all dropped. | ||
| I don't think this is an accident. | ||
| But the thing I want to ask you about is how did the Republicans manage to weaken the dollar and weaken manufacturing employment at the same time? | ||
| Because it seems like that is completely crossways to the narrative that we are hearing from this administration. | ||
| Well, sir, the gentleman's time has expired. | ||
| The Secretary can answer in writing. | ||
| The gentleman from Tennessee, the Vice Chairman and Oversight and Investigation Subcommittee, Mr. Rose, is recognized for five minutes. | ||
| Thank you, Chairman Stahl. | ||
| And I want to thank Chairman Hill and Ranking Member Waters for holding this important hearing. | ||
| And Secretary Bessinet, thank you for being here with us today and answering our questions. | ||
| Secretary Besson, given that the Mint, the U.S. Mint's own fiscal year 24 report shows that the nickel, the U.S. nickel now costs 13.78 cents to produce, and that experience in other countries suggests that our nickel production or demand would double, triple, maybe even multiple times beyond that if we eliminate the penny. | ||
| Is Treasury analyzing the risk that stopping penny production alone could actually worsen our coinage losses or seniorage losses by pushing annual nickel losses well past $200 million? | ||
| Congressman Rose, we have looked at this and we believe that it is possible by changing the composition of the nickel to bring down the cost to 5 cents or less. | ||
| Absolutely. | ||
| That was going to be my next follow-up question to you. | ||
| I will point out that the dime is very profitable. | ||
| Yes. | ||
| And it will sound like a little self-interest, but a Tennessee company is one of the folks that could lower the cost of the nickel and has made a proposal that I know you are. | ||
| We are investigating that with them and are very intent on maintaining those jobs, sir. | ||
| And I would just say from my deep dive into both penny and nickel production, it seems to me that there are significant savings beyond just saving on composition of the nickel. | ||
| So I would encourage Treasury and the Mint to take a look at refocusing how we produce those coins to make them actually positive for the balance in terms of producing seniorage for the United States. | ||
| So I'm glad to hear that you are moving in that direction. | ||
| Secretary Besson, the President has recently made budget requests that propose significant cuts to the Community Development Financial Institutions, or CDFIs, or the CDFI fund, and suggests to end core CDFI programs. | ||
| I know you have recently made public comments about the statutory basis for the CDFI programs. | ||
| What is your position on the future of the CDFI fund, and do you believe it should continue to play a role in supporting access to capital in underserved communities across the country? | ||
| The Congressman, as I told the Congressman on the other side of the aisle, we are creating a new $100 billion award program that would provide access to affordable financing, and this will be mostly in rural America. | ||
| Excellent. | ||
| I am glad to hear that. | ||
| And I understand we always need to be addressing how these programs work and whether they are efficient and cost-effective and produce the outcomes we want. | ||
| But I am glad to hear that you are making moves in that direction. | ||
| And I just want to pause at this point and say broadly, it is refreshing to have competent, aggressive, energetic leadership. | ||
| And so I commend you for that. | ||
| And I am very excited about the things that you are doing at Treasury. | ||
| Secretary, can you discuss the significance of confirming President Trump's regulatory appointees in advancing his America First agenda? | ||
| Specifically, how do these appointments impact the implementation of these important policies to move America forward? | ||
| Yes, sir. | ||
| I believe that we need to get them appointed as soon as possible. | ||
| We have some very good acting, the chairs or directors of these. | ||
| But the sooner we can do it, the sooner we can get down to the business of making these institutions work better for the American people and making sure that Main Street can prosper, because I have been very concerned. | ||
| As I mentioned today, I've met, I think, the personal meetings with over 50 community bankers. | ||
| I spoke to more than 300. | ||
| And I think it is very important to get these regulators in place so that community banks, small banks, small regional banks can make sure that Main Street participates with the rest of the country. | ||
| Thank you. | ||
| I completely agree, and that's what we are hearing, what I am hearing from the regulated entities in my district and across Tennessee. | ||
| Secretary, given the IMF's limited success in pushing China on transparency and debt restructuring, how can Treasury justify supporting the IMF's current leadership? | ||
| We are in constant discussions. | ||
| It is leadership that I inherited. | ||
| Thus far, they seem very open to the Trump agenda, America First, and advancing the issues that most affect the United States and working Americans. | ||
| So we will keep pushing them on that. | ||
| Thank you, Mr. Secretary. | ||
| Mr. Chairman, I yield back. | ||
| The gentleman yields back. | ||
| The gentlewoman from Ohio, the ranking member on the National Security Illicit Finance and International Institutions Subcommittee, Ms. Beatty is recognized for five minutes. | ||
| Thank you, Mr. Chairman and Ranking Member, and to you, Secretary Benson. | ||
| The Trump administration has alleged that detecting and deteriorating transnational criminal organizations such as Iranian terrorist groups and their proxies is a priority for national security. | ||
| But on March 2nd, 2025, your department announced that it would not enforce any penalties or fines associated with the BOI reporting rule, nor will it enforce the CTA against U.S. citizens, domestic reporting companies, or their beneficial owners. | ||
| So I'm a little confused about how you square those two things. | ||
| So my question is: can you explain to, or would you explain to the American public how you undermine the bipartisan CTA and expect law enforcement and national security agencies to quickly and effectively know the true owners behind shell companies registered in the United States now that foreigners, | ||
| including a drug cartel, gang members, could register a company in the United States with no state or any federal ownership reporting requirements. | ||
| And I remind you in your testimony, you talked about illicit actors. | ||
| Well, these are some of our illicit actors. | ||
| Congresswoman, an overwhelming majority of the domestic entities that you're describing are hardworking Americans with small businesses. | ||
| We bifurcated the bill, and any foreign entities must still file. | ||
| So are you saying to me it's not true that they must file and do, the foreign entities must file the BOI? | ||
| Yes. | ||
| We bifurcated the CTA program that domestics do not have to. | ||
| So maybe I'm asking it the wrong way. | ||
| So it appears that they are doing it registering to avoid the transparency of who the companies are. | ||
| I'm not sure what your question is. | ||
| I'd be happy to answer it. | ||
| So I guess I'm looking at it as, and if you're saying it is not true and that they now are complying and completing the BOI, so let's take it one step at a time. | ||
| So you're saying everybody is completing the BOI. | ||
| You're enforcing it. | ||
| No, ma'am. | ||
| I am saying that we have bifurcated it, that U.S. nationals do not have to file, and that foreign nationals do. | ||
| Okay, so I guess when we look at this, if we're limiting enforcements of the rule just to the foreign entities, that creates a giant loophole whereby any foreign entity can register in the United States and evade or not do the BOI reporting requirements. | ||
| Well, they would be subject to all, they would have to come through a U.S. financial institution, so they would be subject to all U.S. institutions. | ||
| Including the BOI, including the BOI, including the BOI, yes or no? | ||
| Because the answer is no. | ||
| I mean, you can say it however you want to, but the answer is no. | ||
| And this makes it easier, and this is what I want the American folks to know. | ||
| It makes it easier for human and drug traffickers, cartels, terrorists, organizations, and other criminals to do business in the United States. | ||
| And when you're limiting the enforcement just to foreign entities, it exempts 99% of the entities that Congress intended the law to cover when it was passed into law. | ||
| So I think I do have my answer. | ||
| We're just not agreeing on it, and we know why. | ||
| So let me go to my second question. | ||
|
unidentified
|
I mean, it's my time. | |
| Let me go to my second question. | ||
| The clock is running. | ||
| It's my time. | ||
| It is my time. | ||
| You will not do this on my time. | ||
| Now, I'm going to ask for a few more seconds since he refused to comply with my time, not his time. | ||
| In 2016, former Secretary Jack Liu announced that Harriet Tugman was to be the new face of the $20 bill. | ||
|
Mr. Chairman's Inquiry
00:03:56
|
||
| Can you tell me what's the current status of this project? | ||
| No, ma'am, I can't, but my staff will get back to you. | ||
| No, I want you to get back to me. | ||
| Because, see, there seems to be an issue when it comes to things that affect people of color or people who live in poverty, whether it is what you're doing with Social Security, what you are doing with restricting funds. | ||
| The gentlewoman's time is. | ||
| Mr. Chairman, I need him to answer if he will respond. | ||
|
unidentified
|
I'm not asking you to present me to have his staff report. | |
| Mr. Chairman, I'm addressing it to you to ask him. | ||
| The gentleman's time has expired. | ||
| Mr. Chairman, I need him to address. | ||
| No, I'm not going to respond to you to answer to me as a member of Congress. | ||
| The gentlewoman's time has expired. | ||
| The gentlewoman has offered that she can submit questions. | ||
| The gentlewoman is not offering an appropriate parliamentary inquiry. | ||
| Does the gentlewoman have a parliamentary inquiry? | ||
|
unidentified
|
I do. | |
| Please state the parliamentary inquiry. | ||
| As a member of the United States Congress addressing the Secretary, I am asking you to rule on asking this hostile witness to direct his response to me versus having him tell me that his staff will respond to me. | ||
| My staff person didn't ask him the question. | ||
| I did. | ||
| The gentlewoman does not state a parliamentary inquiry. | ||
| So let me ask the point of privilege to you, Mr. Chairman, because I'm not going to stop this this morning until you respond to me then. | ||
| If you will direct the Secretary to respond to me as a member of Congress. | ||
| Or let me ask you. | ||
| It is not a point of privilege. | ||
| The gentlewoman's time. | ||
| The gentlewoman's time has expired. | ||
| The gentlewoman will respond to me. | ||
| The gentlewoman will suspend. | ||
|
unidentified
|
If he responds to the result. | |
| If he will respond. | ||
| If the gentlewoman makes a legitimate request, a personal privilege. | ||
| You can simply ask him to respond. | ||
| Just ask him to respond if he'll respond to a member of Congress versus saying a staffer. | ||
| It's simple as that. | ||
| I ask that members keep decorum and remain cordial during today's hearing. | ||
|
unidentified
|
I am being cordial to the state. | |
| The gentlewoman will suspend. | ||
| The chair has the time. | ||
| Mr. Chairman, the chair has the time. | ||
| The gentlewoman will suspend. | ||
| I ask that members keep decorum and remain cordial during today's meeting. | ||
| I am being cordial. | ||
| I resent your statement to imply that I am not. | ||
| I am a member of the U.S. Congress. | ||
| I am asking this secretary to begin with. | ||
| The gentlewoman may submit QFRs for the record, which will be responded to by the Secretary. | ||
| Thank you. | ||
| The gentlewoman's time has expired. | ||
| The gentleman from Texas, the chairman of the Small Business Committee, Mr. Williams, is recognized for five minutes. | ||
| Thank you, Mr. Chairman, and thank you, Mr. Secretary for being here. | ||
| It may be a little easier on you here. | ||
| I will try to move it fast forward. | ||
| The Chinese Communist Party has enabled their economy to serve as a central hub for money laundering, human trafficking, and the export of chemicals used to manufacture fentanyl. | ||
| Increasingly, Chinese nationals of financial works have informed operational alliances with Mexican drug cartels, providing laundering services, digital payment platforms, and chemical shipments that fuel the trafficking of fentanyl across our southern border. | ||
| These criminal partnerships exploit the international financial system and pose a direct threat to U.S. national security, public health, and financial integrity. | ||
|
Steps To Disrupt Illicit Financing
00:14:44
|
||
| So, my question, Mr. Secretary, is, can you elaborate on the steps Treasury is taking to disrupt the flow of illicit financing, money laundering, and drug trafficking between Chinese entities and Mexican drug cartels? | ||
| Thank you, Congressman, for that very important question. | ||
| And note that they are interlinked, that the Chinese provide precursor drugs that are then converted into fentanyl by the Mexican Carnapels. | ||
| And just today, I signed an order that will be made public within the next few days identifying Chinese entities who are engaged in the fentanyl trade. | ||
| Great. | ||
| Far too long, China has taken advantage of the international financial system and has become the world's largest creditor. | ||
| The IMF and World Bank's focus on climate and social initiatives has resulted in a lack of accountability for the Chinese unreliable economic data, currency manipulation, and opaque predatory lending practices. | ||
| In addition to the lack of accountability, this shift in focus to climate has forced many developing countries to turn to Chinese financing. | ||
| The United States must leverage its leadership of the world stage to counter China's growing influence as a global lender and put an end to the deceptive economic practices. | ||
| So, Secretary, how is Treasury working to prevent IMF and the World Bank resources from indirectly legitimizing China's debt-trap diplomacy and economic oppression? | ||
| Well, Congressman, in various ways. | ||
| One, as you would have noticed, I will have said that when this horrible Russia-Ukraine conflict ends, that no country or person who financed the Russian war machine will be eligible for any rebuild in Ukraine, especially that financed by the World Bank or any of the other multilateral development banks. | ||
| Also, we are working with the OECD especially to look at and the IMF and the World Bank to look at the true debt levels for these countries. | ||
| Everyone agrees, or everyone save one country, agrees that this is a problem, that there are rapacious mineral deals, that there are tolling arrangements, and it is impossible to know and assist a country that has experienced economic hardship when we don't know the true levels or if there is an undisclosed priority payment to another creditor. | ||
| Let me try to get to my last question. | ||
| I was encouraged to hear that you are taking a fresh look at the bank regulatory framework to better reflect actual risk and ensure a level playing field across the financial system. | ||
| And as part of that review, I hope you will consider where U.S. regulations may be putting banks and financial institutions at a disadvantage compared to our foreign competitors. | ||
| In particular, I urge you to weigh the combined impact of proposals like Basel III Endgame, the GSIB surcharge and leverage requirements, especially whether these changes could limit banks' ability to support the economy and complete globally. | ||
| So in your work so far, are there any specific areas where you plan to address these concerns about regulatory putting U.S. institutions at a disadvantage, such as in the reproposal of the Basel III endgame rule by amending the GSIB surcharge regulation? | ||
| Congressman, we are looking across all areas and know that this is at the top of our agenda, that most countries have very concentrated banking systems. | ||
| In many cases, the banking systems are larger than the GDP of the countries. | ||
| So they have very different needs than the United States. | ||
| The strength of the United States, lending, capital markets, and economy is the breadth and depth of our financial institutions, and we will continue to advocate for them both at home and abroad. | ||
| Thank you for your service. | ||
| I think you are doing a great job. | ||
| I yield back. | ||
| The gentleman yields back. | ||
| The gentleman from California, the ranking member on the task force on monetary policy, Mr. Vargas, is recognized for five minutes. | ||
|
unidentified
|
Thank you very much, Mr. Chair and Ranking Member, for holding this hearing. | |
| Mr. Secretary, welcome. | ||
| It is great to have you here. | ||
| I want to thank my colleague and friend from Texas for asking the question about Russia. | ||
| Do you consider Vladimir Putin a war criminal? | ||
| Yes. | ||
|
unidentified
|
Would you negotiate with a war criminal? | |
| I think that is the nature of diplomacy. | ||
| One must negotiate with both sides, sir. | ||
|
unidentified
|
So you will be negotiating then with the war criminal? | |
| I believe that negotiation was needed with the Japanese after World War II. | ||
|
unidentified
|
Okay. | |
| Thank you for that answer. | ||
| Are you familiar with what President Trump has called his one big beautiful bill? | ||
| Yes, sir. | ||
|
unidentified
|
Could you describe the basics of that bill? | |
| It is a combination. | ||
| The core of that bill is to make the 2017 tax cuts and jobs acts permanent. | ||
|
unidentified
|
If this, what he quotes, a big, beautiful bill passes, will the deficit go up or will the deficit go down? | |
| I believe over time the deficit to GDP, which is the important number, even Secretary Yellen agrees with that, will stabilize and go down. | ||
|
unidentified
|
So next year, will it go down? | |
| Sir, yes. | ||
| I believe, yes. | ||
|
unidentified
|
So if the big, beautiful bill passes, you believe the deficit will go down next year? | |
| The deficit to GDP will. | ||
| Because, again, what is important is that we grow the economy faster than the US. | ||
|
unidentified
|
I understand that. | |
| I understand that, of course. | ||
| But you say that in the long term, I am asking in the short term, will the deficit go down? | ||
| I believe the debt to GDP can go down. | ||
|
unidentified
|
But what about the deficit itself? | |
| The amount of money, the amount of money that comes in as opposed to goes out, will the deficit go down next year? | ||
| Will it go down from 2024 and 2025? | ||
| I believe it will, because these are extraordinary ones. | ||
|
unidentified
|
What about the long-term debt? | |
| Will it go up or down if this big, beautiful bill passes? | ||
| Again, sir, I think the reason you are having a hard time answering is that. | ||
| I am not having a hard time answering because what is important isn't the absolute level of debt. | ||
| It is, as Secretary Yellen said, the debt to GDP. | ||
| So that if our GDP were 100... | ||
|
unidentified
|
Everyone is talking about the $37 billion. | |
| Is it going to go up or down? | ||
| Sir? | ||
|
unidentified
|
Yes. | |
| Is it going to go up or down? | ||
| It will likely go up, but if the GDP goes up. | ||
|
unidentified
|
And I asked, I think that is the interesting thing. | |
| My colleagues on the other side always talk about reducing the debt and reducing the deficit, and yet the hypocrisy of trying to pass the big, beautiful bill that will cause both of them to go up. | ||
| No, sir, I did not say the deficit. | ||
|
unidentified
|
No, I know you didn't say it. | |
| You're trying not to say it, but that's exactly what's going to happen. | ||
| I actually said it would not go up. | ||
|
unidentified
|
I know you did. | |
| And just to be clear. | ||
|
unidentified
|
You said the number would go up. | |
| Just to be clear, last year, 6.7 percent deficit to GDP. | ||
|
unidentified
|
No, no, I'm asking the number. | |
| No, no, no. | ||
| I'm asking the actual number. | ||
| No, we're looking at the previous administration. | ||
| We're asking about numbers here when we were not in a recession and not. | ||
|
unidentified
|
I'm not going to let you get away with that one because it's very clear what's going to happen if they pass their bill. | |
| The deficit is going to go up and the debt's going to go up, and we're going to see the hypocrisy of them always saying cut the budget so the deficit is going to go down and the debt is going to go down. | ||
| It's not. | ||
| It's going to go up. | ||
| Now, I do want to ask you about the independence of the Fed. | ||
| Yes, sir. | ||
|
unidentified
|
You have kind of been on both sides of the fence on this. | |
| You seem to say that we need an independent Fed, but at the same time, you said there should have been a shadow Fed. | ||
| Sir, since taking office, I have refrained from commenting on Fed monetary policy, and I have said that monetary policy is a jewel box that must be preserved. | ||
|
unidentified
|
And lastly, I do want to ask this because a number of my colleagues have brought it up about elite, the coastal elites. | |
| Where did you go to school? | ||
| Sorry? | ||
| I grew up in Little River, South Carolina. | ||
|
unidentified
|
And what universities did you graduate? | |
| You graduated from Yale. | ||
| You were part of Wolfheads Society. | ||
| Congressman. | ||
|
unidentified
|
One of the big three. | |
| Congressman, I worked three jobs to put myself in the bank. | ||
|
unidentified
|
I grew up just as poor as you did. | |
| I agree with that, too. | ||
| So the thing that I always get is the funny part is always talk about the coastal elite. | ||
| You're a billionaire that went to Yale. | ||
| I don't hold that against you. | ||
| I just find it interesting that my colleagues are always talking about the coastal elites, and yet the President and yourself are both coastal elite. | ||
| And I made all my own money, sir. | ||
| The gentleman yields back. | ||
| I recognize myself for five minutes for the purpose of asking a question. | ||
| Secretary, thank you for being here. | ||
| Earlier today, you referenced the electric slide. | ||
| I'll share my concerns that during four years of the Biden administration, we were sliding behind foreign competition, in particular in the digital asset space from the Bahamas to China. | ||
| And I want to ask you what would happen if we put our heads in the sand, if we object, if we walk out of that type of leadership role, which I think is so essential, to make sure that the United States continues to lead the way in Web 3 as we did in Web 2. | ||
| And in particular, how does the leadership in digital assets play into President Trump's broader agenda? | ||
| And specifically, how do dollar denominated stable coins impact dollar dominance in Treasury markets? | ||
| Congressman, thank you for that very important question. | ||
| Our goal is to encourage firms to reshore, bring back to the United States best practices, their digital asset innovation and experimentation here in the United States without scaling back their ambition to influence the global industry. | ||
| The administration's efforts to promote clear regulatory frameworks for digital assets will contribute to this goal. | ||
| So will ongoing efforts from a fair access, interoperability of payment technologies across all borders. | ||
| We will continue to support private sector solutions and discourage public sector solutions that distort markets and stifle competition. | ||
| Let me jump in. | ||
| Let me jump in because I think that's spot on. | ||
| And then let's talk about what happens if we fail to act. | ||
| Yesterday, some members objected, walked out of a hearing to discuss market structure and digital assets, an absolutely essential leadership role the United States has to play. | ||
| What happens if we walk out on our responsibility to lead in the digital asset space in what would occur if Web3 center of gravity shifts away from the United States to countries like China or other locations? | ||
| Well, numerous things could occur, sir. | ||
| As we saw under the previous administration, an entire ecosystem, the unregulated and renegade, springs up outside the U.S. and illicit actors abuse the value of these transfer systems, and there is a technological loss here. | ||
| Can you walk us through or share any of your impressions from the conversations you've had with your counterparts abroad as it relates to their experience with regulating in the digital asset space? | ||
| They believe it's very important, and I believe that they are a little worried that the U.S. is willing to restore its leadership here. | ||
| And as I said earlier, there is a chance that digital assets can provide a substantial source of demand for the U.S. dollar. | ||
| In my bill, the Stable Act, which regulates dollar-denominated stable coins, we give the Treasury the authority to identify which foreign stablecoin regulatory regimes are comparable to ours. | ||
| What are the key aspects of comparable regime, and are there lessons or criteria that we can draw from other similar areas in the financial services space? | ||
| Congressman, I think that we have the blueprint with the bank regulation and adherence to anti-money laundering laws around the world, financial stability, and that I would guess that 70% of the countries would be very easy to judge yes, no. | ||
| And then there will be another group. | ||
| That's why I believe that some of the bills encourage phasing this in. | ||
| A lot of stablecoin, a lot of digital asset space needs reliable banking services. | ||
| Could you comment briefly on how the Treasury is working with bank regulators to ensure that financial institutions can safely participate in this emerging industry? | ||
| We have recently delivered a report to the President on this. | ||
| So we have safe and sound best practices. | ||
| And we want to work with the financial industry, with new companies and entrepreneurs, as well as incumbents, the banks. | ||
| There is a solution to banks to participate in this business, whether it's through custody or their own coins. | ||
| Let me shift gears really quickly. | ||
| In my final 30 seconds, President Trump issued an executive order on modernizing payments to and from Americans' bank accounts. | ||
| The executive order noted that the Treasury checks are 16 times more likely to be reported lost or stolen or returned as compared to electric transfer funds. | ||
| Do you think we're making real progress in this space? | ||
| We are working all speed ahead. | ||
| Congresswoman from Staten Island told me of numerous losses of checks in the postal system, and it is both cost-cutting and good practice, sir. | ||
|
Prioritizing American Textile Industry Support
00:10:11
|
||
| Thank you very much. | ||
| Thanks for being here today. | ||
| I now recognize the gentleman from Texas, Mr. Gonzalez, for five minutes. | ||
|
unidentified
|
Mr. Secretary, thank you for joining us this morning. | |
| According to the Wall Street Journal, oil and gas companies have lost over $280 billion in market value in April of this year alone, more than any other sector. | ||
| This decline is attributed to a combination of factors, but mostly attributed to the tariffs. | ||
| At a recent Dallas Federal Reserve meeting, a veteran CEO, Energy CEO, said, quote, I have never felt more uncertainty about our business in my entire 40 years in the industry, and this turmoil is no accident. | ||
| It's a direct result of Mr. Trump's vandalism. | ||
| Just yesterday, Diamondback Energy, one of the largest Permian producers, told shareholders that tariffs are adding significant costs of drilling activity. | ||
| That's mostly due to the tariffs to our neighbors to the north and the south. | ||
| Mr. Secretary, the chaos in the energy sector has eclipsed any gains from President Trump's industry-friendly regulatory rollbacks that they were so much looking forward to. | ||
| Stable energy prices depend on stable policy. | ||
| The Trump administration pledged to support American energy sector. | ||
| However, this decline demonstrates the opposite. | ||
| Given these outcomes, how do you reconcile the administration's stated support for our energy sector with policies that appear to have directly undermined its stability and global competitiveness? | ||
| Sir, I would take issue with the idea that it was tariffs. | ||
| We have seen one of the largest decreases in the underlying price of crude in history. | ||
| That's right. | ||
|
unidentified
|
100 percent. | |
| There is not a single energy CEO in America right now that would agree with you. | ||
| They are all attributing their downfall right now and the troubles that they're having to the tariffs, and they need some relief. | ||
| What's the administration going to do? | ||
| Congressman, you and I must speak to different energy executives because I speak to them quite often. | ||
| I spoke to API today. | ||
| I will note that OPEC has done a substantial supply increase and the history of substantial OPEC supply increase. | ||
|
unidentified
|
And the tariffs are just making it worse. | |
| China is no longer buying our LNG, neither is a lot of other countries around the world. | ||
| And I think we've seen Harold Hamm, the head of Continental Resources, has said that he is reshoring his supply chain, and he believes that over time, he did not save any money, any money, by outsourcing the equipment. | ||
|
unidentified
|
Secretary, our energy industry is hurting, and they need your help. | |
| And I know you're a smart man, and you're one of the most stable people in this administration. | ||
| You need to talk to the President about this. | ||
| This is hurting the industry, and it's hurting the American people, and more needs to be done. | ||
| I have another question that I want to talk to you about that's hopefully a little easier, and it has to do with our shrimping and fishing industry. | ||
| As you may know, our domestic shrimping and fishing continue to experience economic hardships caused by an increase of foreign imports, high fuel prices, labor shortage, immigration regulation, all to make matters worse. | ||
| Plus, we have flooded the domestic seafood markets with foreign farm-raised shrimps, many which are subsidized by American federal dollars and the international financial institutions. | ||
| We need to put an end to this. | ||
| What are we doing in terms of tariffs to helping this industry that is hurting? | ||
| I know, I mean, if we want to talk tariffs, there are some that work, and I think this is certainly an industry that needs a lot of help. | ||
| It's been ignored. | ||
| It's on the verge of collapse. | ||
| If we continue down this path, we will rely on imported seafood and certainly imported shrimp, which is hurting the worst within the seafood industry. | ||
| And I don't know how familiar you are with this industry, but I'm curious to hear your opinions and what can be done to improve this. | ||
| Well, sir, as I mentioned earlier, this coastal elite grew up in a fishing village that when I was young was 500 people, so I'm very attuned to that. | ||
| And again, on one hand, you're saying you don't like tariffs. | ||
|
unidentified
|
On the other, they don't like tariffs on our energy sector. | |
| Yeah, we do need tariffs in certain industries. | ||
| This is one of them that I think would make sense. | ||
| And I agree, and I'd be happy to work with you on this. | ||
| We've worked with the Alaska delegation extensively on what's happening with Russian illegal fishing and illegal or sales to China that's then transshiped back to the U.S. | ||
| So we'd be happy to work with you on that. | ||
|
unidentified
|
I'd love that. | |
| Okay, I'll be in touch with you. | ||
| Thank you so much, and I yield back. | ||
| Thank you. | ||
| The gentleman yields back. | ||
| The gentleman from South Carolina, Mr. Timmons, is recognized for five minutes. | ||
|
unidentified
|
Thank you, Mr. Chairman. | |
| Secretary Bussett, thank you for being here with us today. | ||
| You are respected by the President, his economic team, leaders on Wall Street, and the broader international financial community. | ||
| Your study leadership is appreciated on both sides of the aisle. | ||
| And after an abysmal four years, it is encouraging to see thoughtful and serious leadership guiding this discussion once again. | ||
| And I would like to add a personal note. | ||
| Both of us proudly call South Carolina home, and my family, like yours, also came to Charleston in the 1600s. | ||
| I know you understand the economic landscape of South Carolina deeply, and that perspective is invaluable in the position that you hold. | ||
| Let me start with a question about the textile industry. | ||
| South Carolina, and especially my district in the upstate, has a long history in textiles. | ||
| For over 100 years, it was more than just an economic sector. | ||
| It was part of the cultural and social fabric in our communities. | ||
| But there was a drastic shift in the 70s and the 80s. | ||
| Well-intentioned regulations from Washington related to labor and the environment made the U.S. economy no longer competitive. | ||
| And while I agree with the policies that we should not dump dyes and chemicals into the rivers and we should not have 120 degrees in factories and people should only work 40 hours a week, we need to focus on being competitive. | ||
| And those regulations, all they did was push all of our textile jobs to China, or most of our textile jobs to China. | ||
| China took advantage of it and they incentivized and subsidized textile manufacturing, capturing an enormous amount of the market share. | ||
| Hundreds of thousands of jobs were lost in the South. | ||
| Recently, you made a comment suggesting we do not need to bring the booming textile industry that once defined the region where we both grew up back. | ||
| And that statement stirred some concern from some of the textile companies that survived in the district. | ||
| And I agree with your broader point that we should not return to producing low-quality goods just for the sake of manufacturing in the United States. | ||
| I do want to ask: do you agree that we should prioritize support for the American textile industry that are still here, and particularly leaders that are in innovation and high-tech manufacturing and people that are producing barrier amendment products for our warfighters? | ||
| Congressman, what I mean and meant was the survivors in this industry have done it through innovation, and they will continue to innovate, and they are high-end textile manufacturers. | ||
| I remember going to China in the 1990s and 2000s and seeing everything that had been outsourced there in the textile industry, Sock City, Underwear City, and those are the jobs you and I grew up with many people or family friends involved with. | ||
| And I think that we, through good tariff policy, we can make sure that these existing businesses can grow and thrive, especially in the high end. | ||
| And again, anyone who has survived has done it through innovation, hard work. | ||
|
unidentified
|
And that's what I told them. | |
| I told them that we still support them and we are going to make sure that they continue to prove. | ||
| Absolutely. | ||
| Absolutely. | ||
| So I want to turn to the automotive industry and specifically BMW, which operates its largest plant in the world in Spartanburg, South Carolina. | ||
| That facility, which opened in 1994, has helped make our state the top auto exporter in the U.S. | ||
| It employs either directly or through a nearby supply network indirectly almost 80,000 of my constituents, almost one in 10 of them. | ||
| And foreign automakers like BMW are continuing to invest heavily in U.S. manufacturing. | ||
| Incredibly, they have invested an additional $4 billion in the last three years, and that investment has real lasting benefits for American workers, exports, and innovation. | ||
| It is President Trump's promise to the American people to renew the U.S. economy's competitiveness in the global economy, and this is an effort long overdue. | ||
| My question is: this: As President Trump renegotiates our trade relationships with the world, is it fair to say that BMW, the type of investment that BMW has made, a generational investment, is what we are hoping to incentivize? | ||
| Yes, Congressman. | ||
| I regularly see at the Port of Charleston, the BMW X series sitting there for export. | ||
| And I think that the President recently met with the heads of the three German auto companies and is working toward a solution for more American content and more made in the U.S. rather than just as assemblers. | ||
| There would be more jobs in your district. | ||
|
unidentified
|
And that message was heard loud and clear, and they're going to continue to invest. | |
| They've been a very good partner. | ||
| And I'm just excited because interest rates coming down, energy costs going down, regulatory relief, a more fair trade deal. | ||
|
Mr. Lebrick's Administrative Leave
00:07:05
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|
unidentified
|
We are going to be the best place to start to grow to build a business. | |
| And I appreciate your leadership in that regard. | ||
| Thank you, sir. | ||
| I yield back. | ||
| Gentleman yields back. | ||
| Gentleman, who's the vice ranking member of the full committee, Mr. Castens, recognized for five minutes. | ||
| Thank you, Mr. Chair. | ||
| Secretary Besant, I'm starting my seventh year in Congress, and in those seven years, I have never received more phone calls from my constituents on any issue than the hack into the Treasury payment system earlier this year. | ||
| As you know well, this is the system that manages over $5 trillion a year of federal payments, payments to taxpayers, payers to Social Security beneficiaries, payers to embedded foreign assets who are overseas and undercover, and it has their personal information and their routing information. | ||
| This is a purple district. | ||
| People were nervous. | ||
| We sent a letter to your office along with 150 colleagues asking 20 questions. | ||
| Your response that we just received was non-responsive on all 20. | ||
| Mr. Chairman, I'd like unanimous consent to enter those two letters into the record. | ||
| Without objection. | ||
| I want to get through a lot of those questions right now, Secretary Besant, and I would ask you to be as brief as you were in your response, but I would very much like a more fulsome answer in writing. | ||
| In January, the New York Times reported that you pressured David Lebrick out of his role overseeing that after he refused to grant that access to people that Elon Musk had imposed. | ||
| Can you confirm the accuracy of those reports? | ||
| That's incorrect. | ||
| You met with him on January 30th, put him on administrative leave, and he left the day later. | ||
|
unidentified
|
Is that accurate? | |
| They did not put him on administrative leave, administrative leave. | ||
| I asked him to take I met with him 90 minutes ago. | ||
| So you're denying the New York Times report. | ||
| Was it your choice? | ||
| I am adamantly saying that the New York Times is inaccurate. | ||
| Okay, all right, fine. | ||
| That's yes or no. | ||
| New York Times is inaccurate. | ||
| Fine. | ||
| Was it leave, and he subsequently resigned after sending numerous. | ||
| Sir, I'm just asking for yes or no questions. | ||
| If you want to be voluminous, please write me a letter. | ||
| Was it your decision to terminate Mr. Lebrick, or were you pressured by others? | ||
| He resigned. | ||
| Who had made the decision to put him on administrative leave? | ||
| You or someone else? | ||
| Again, sir, he was not put on administrative leave. | ||
| Okay, so you're denying the New York Times. | ||
| I leave your end knife. | ||
| Tom Krause, you a fan of him, who's now playing that role? | ||
| Yes. | ||
| Okay. | ||
| You had mentioned earlier he was in that role. | ||
| Do you agree that that role includes duties that include managing Treasury's payment system to ensure timely Social Security payments, overseeing auctions for U.S. Treasury bonds, which determine interest rates, and ensuring the U.S. doesn't breach the debt limit? | ||
| Would you agree that that's all part of the functions of that job that Mr. Rouse is now holding? | ||
| No. | ||
| No. | ||
| Shocking? | ||
| Okay. | ||
| Does Mr. Krauss have any prior experience in government service? | ||
| He does not. | ||
| Neither do I. Does Mr. Kraus have any prior experience in the financial sector, which of course you do? | ||
| You can answer him. | ||
| You don't need to agree. | ||
| I'm doing this solo. | ||
| You don't need the people behind you to help you. | ||
| Does Mr. Krauss have any prior experience in the financial sector? | ||
| In the financial sector, yes. | ||
| He's put together more than 2000. | ||
| No, no, no. | ||
| Did he work for a bank? | ||
| Did he work for a hedge fund? | ||
| Did he work for a private equity firm? | ||
| He worked for a private equity firm. | ||
| He's the CEO of a software company. | ||
| He's done more than $100 billion of tech deals. | ||
| He runs a software company. | ||
| He's still the CEO of that software company, isn't he? | ||
| I'm not sure. | ||
| He is. | ||
| Is it your view that that job that he's holding is a part-time job? | ||
| Managing $5 trillion a year of distributions. | ||
| That's a part-time job, or does that require full-time? | ||
| No, sir. | ||
| He is not managing $5 trillion a year of distributions. | ||
| He is doing a tech upgrade. | ||
| And ERPC. | ||
| That's all that Mr. Lebrick was doing? | ||
| Was a tech upgrade? | ||
| Sorry. | ||
| Mr. Lebrick, who said I'm not going to allow people to hack into this system, he was just doing a tech upgrade? | ||
| Or you've downgraded what that job function is? | ||
| Mr. Lebrick was in charge of 1.5 billion payments a year, which one-third did not have a tax identification. | ||
| Sir, come on, come on, come on. | ||
| Come on, we're going to move along. | ||
| The chairman, notably a moment ago, did not swear you in, so you are not under oath right now. | ||
| February 4th, in your response to a Senate Democrats letter, you said that Mr. Kraus will only have read-only access. | ||
| A moment ago, in response to our chair, you said, and I quote, they were only granted read-only access at Treasury. | ||
| You are not under oath right now. | ||
| You could be, but you are not. | ||
| Mr. Giwelli testified under oath in a recent hearing saying that Mario Alez was given right access to the Treasury payment system. | ||
| Do you wish to correct your remarks to the chair, the ranking member that no one was given right access? | ||
| I never granted anything other than. | ||
| But Mario Alez was granted right access. | ||
| I never granted anything other than Mr. Alez left the Treasury Department in part after it was discovered that he said normalize Indian hate and I just want a eugenic immigration policy. | ||
| Do you agree with those sentiments? | ||
| I do not at all. | ||
| Do you think that someone who has those sentiments should be employed in your department? | ||
| That I had a conversation with the Vice President. | ||
| I admired his grace. | ||
| He then went to HHS. | ||
| The gentleman's time has expired. | ||
| Thank the gentleman from Illinois. | ||
| The gentleman from Indiana is now recognized, Mr. Stutzman, for five minutes. | ||
| Thank you, Mr. Chairman. | ||
| And Mr. Secretary, thank you for being here. | ||
| And frankly, I apologize for the fact that you are getting a lot of accusations thrown at you, and you haven't had much chance to respond to some of them. | ||
| That are fair questions that I know that you have good answers for. | ||
| So with respect to the individuals originally referenced by Ranking Member Waters who may have had access to certain BFS systems, and in response to Mr. Kasten, do you want to add any additional information on that matter? | ||
| I would say that that is in litigation and I never authorized access. | ||
| Thank you. | ||
| Well, I just want to say thank you for your service and for your willingness to come serve in Washington, D.C. at a critical time and the fact that you heeded President Trump's call and it's refreshing, honestly. | ||
| You know, we see a lot of ups and downs. | ||
| You know, things are happening around the world, but here at home, there's a reset that's happening, and that does create some volatility. | ||
| But I'll tell you what, there's a lot of good news that I think the other side is missing. | ||
| And I find it ironic that this chart was handed out earlier. | ||
| And of course, it tries to show that all the blame is on the Republican or presidents over the past century or so. | ||
|
Focus Shifts in Economics
00:04:26
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||
| But the one that really comes. | ||
| Congressman, if I may interrupt, as a former finance professor, that chart we get an F. | ||
| Well, I agree. | ||
| And it's interesting that this big drop off right here after President Clinton, I live in one of the heaviest manufacturing districts in the country. | ||
| And I know that businesses don't turn on a dime that quickly, but that was because of different trade policies. | ||
| Something happened during the President Clinton era that caused a lot of jobs to leave. | ||
| And that's what President Trump and you are trying to fix. | ||
| Is that correct? | ||
| I think that thing was called NAPTA, sir. | ||
| Exactly. | ||
| Well, thank you for doing that because we saw jobs growing up in Northeast Indiana and the auto industry and agriculture, manufacturing just continue to have this slow decline. | ||
| And manufacturing is critical to a nation, and manufacturing has built America. | ||
| And we've seen jobs leave because of bad policies over years. | ||
| But because of President Trump and because of you, sir, we're now seeing headlines that say Rolls-Royce planning to shift production to the United States to avoid Trump's tariffs. | ||
| We see headlines saying Johnson Johnson to invest over $55 billion in the U.S. in the next four years. | ||
| Even in my district, GM has announced that they're increasing truck production. | ||
| I know coming from a manufacturing family that we're seeing opportunities. | ||
| Is it going to happen overnight? | ||
| Absolutely not. | ||
| But it's at least giving us the opportunity to look forward and say there's an opportunity because you all are setting, resetting the table to look out for America first. | ||
| And so I want to say thank you. | ||
| And if you don't, and if I have heard you say this before, that President Trump has tasked you with reducing debt and deficits as well as keeping the economy strong, that's a huge task, but it's one that has to happen. | ||
| And I appreciate what you've been doing because a debt crisis would just flat out limit us to any sort of recovery. | ||
| It would be very difficult. | ||
| I want to ask you real quick about the Federal Reserve's dual mandate. | ||
| Generally speaking, should the Federal Reserve focus more on fighting inflation or providing maximum employment? | ||
| And what should the Fed focus on if the economy enters stagflation? | ||
| Sir, I will just comment on monetary policy in general rather than the Federal Reserve. | ||
| I think the two are inexorably linked. | ||
| And as we saw during the terrible inflation during the Biden years, employment picked up, but that was a slingshot effect as we came into post-COVID recovery that financed by debt-fueled government spending, and we are trying to end that. | ||
| So the Federal Reserve should focus on both, and it's at different times. | ||
| But look, keeping inflation down, President Trump won because of, I believe, because real wages for working Americans dropped. | ||
| No, that's absolutely right. | ||
| And we saw the cost of living go up. | ||
| The last four years have been the hardest on Americans due to the former administration's policies. | ||
| And I know that there's a huge recovery, and people are still trying to recover and are hopeful and optimistic. | ||
| And my time is about to expire, but I just wish you the best, and I want to say thank you. | ||
| And working together here in this committee, there's plenty of places to work together and try to get us back on track rather than pointing fingers. | ||
| The gentleman's time has expired. | ||
| We now recognize the gentlewoman from Massachusetts, Ms. Presley, for five minutes. | ||
| Thank you. | ||
| Secretary Bessie, you have heard from Democrats publicly, and I'm certain you've heard from Republicans privately, that this administration's reckless and chaotic tariff policy is wreaking havoc on our economy. | ||
| Rather than delivering stability for our country, this Trump tariff tantrum has been inconsistent, counterproductive, and disconnected from reality. | ||
|
Tariffs and American Manufacturing
00:15:31
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| In my district of Massachusetts 7th, I'm hearing it from everyone. | ||
| Small business owners are reeling from the unpredictable on-again, off-again tariffs. | ||
| They're holding back on expansion, delaying hiring, and bracing for the impact. | ||
| Local and state officials are telling me about the effect tariffs will have on our state budget. | ||
| Simultaneously, Massachusetts will see energy bills increase while revenue from tourism will decrease. | ||
| But I want to focus on the constituent outreach that I receive from everyday families who are just fighting to make ends meet. | ||
| Yes or no? | ||
| Mr. Secretary, do you know what a car seat is? | ||
| I have two children, yes. | ||
| I figured as much. | ||
|
unidentified
|
It's correct. | |
| You and your husband have two children. | ||
| So I'm sure you know that car seats are absolutely essential for families when traveling with babies and toddlers to school, to worship, to doctor's appointments, just everyday living. | ||
| But not only are car seats essential, they are the law of the land. | ||
| It's the law of the land in 50 states. | ||
| So there's no getting around that. | ||
| Mr. Secretary, what's your estimate of how many babies are born in the United States each year? | ||
| I would guess two to three million. | ||
| Well, while the number fluctuates, there have consistently been more than 3.5 million babies born in the United States. | ||
| That means millions of families in this country are doing what? | ||
| Buying a car seat because it's essential and it is the law of the land in all 50 states. | ||
| But now that cost is going up because Trump has announced up to 145 percent tariffs on Chinese imported products. | ||
| Approximately nine out of every 10 car seats in the U.S. come from China. | ||
| That's a steep cost. | ||
| Steep cost hike for families all over the country. | ||
| The price is up in Republican districts and in Democratic districts. | ||
| And it's not just the car seats that are impacted. | ||
| We're talking about strollers, cribs, high chairs. | ||
| No family is exempt from the harm of these Trump tariffs on essential baby products. | ||
| But don't just take my word for it. | ||
| Mr. Chair, I would like to enter into the record a Yahoo finance article from May 2025 entitled, First Year Baby Expenses Already Top $20,000 and Tariffs Adding to the Bill as China dominates key imports. | ||
| Without objection. | ||
| Look, I support improving manufacturing in America, but that is not going into effect overnight like these tariffs are. | ||
| There needs to be an exemption to help America's families. | ||
| Trump has used his power for tariff exemptions on thermoplastics, semiconductors, but what about baby products? | ||
| Mr. Secretary, do you support an exemption to tariffs on items that parents need to care for their kids? | ||
| Yes or no? | ||
| Congresswoman, what you're referring to are what you're referring to are E4000. | ||
| I'm reclaiming my time because I don't want you to fill a buster and give me some macroeconomic answer. | ||
| Families at home are hurting, and they so just give me a direct answer. | ||
|
unidentified
|
I am going to agree with you that they do support an exemption on tariffs for products that are essential for families for their babies. | |
| Exemptions on E4 items, which. | ||
| I'm sorry, I have to reclaim my time. | ||
| I'm reclaiming my time. | ||
| Mr. Chair, I am reclaiming my time. | ||
| Give me my time back. | ||
| I'm reclaiming my time. | ||
| I just want a simple yes or no. | ||
| Do you support an exemption to tariffs on items that parents need to care for their kids? | ||
| Because you all claim you're pro-family. | ||
| I cannot hear the words you say because I see the things that you do every day. | ||
| So clear it up. | ||
| Yes or no? | ||
| Do you support an exemption to tariffs on items that parents need to care for their babies? | ||
| It is under consideration. | ||
|
unidentified
|
Great. | |
| Good. | ||
| I don't know what's stopping an exemption from going into effect today, so do it now. | ||
| In Donald Trump's Americas, price is not, yesterday's price is not today's price. | ||
| Costs are going up. | ||
| Everyone is suffering, especially our families with young children. | ||
| Mr. Secretary, I'm making an appeal to you on behalf of the people of this country. | ||
| Please tell Occupant Trump to reverse course and stop hurting America's families. | ||
| I yield back. | ||
| Gentlewoman yields back. | ||
| Gentleman from Pennsylvania, our chair of our oversight and investigation subcommittee, Mr. Muser, recognized for five minutes. | ||
| Mr. Secretary, great to be with you. | ||
| Thank you. | ||
| Boy, oh boy, I sure wish we had colleagues that were upset about the Biden 20% inflation and lack of wage growth along with that inflation and the high energy costs that were costing families throughout my district thousands of dollars. | ||
| I wish we would have heard a peep about that. | ||
| And yet we have just angry, angry voices over the potentiality of bringing manufacturing back to the United States that, in fact, hasn't even got into effect yet. | ||
| It's nuts. | ||
| Mr. Secretary, the ongoing litigation response to the Democrats' questions about the Treasury Doge team, is it true that they can find all the information, find all the available information there? | ||
| Yes, sir. | ||
| Okay, thank you. | ||
| Also, regarding the beneficial ownership rule, which was a disaster for my small businesses, I mean all of them, 100%, complained about it. | ||
| The original intent of the Corporate Transparency Act was to root out bad actors. | ||
| The previous administration, however, turned it into a massive data collection with over 50 questions. | ||
| Originally, there were four that outraged small business, accountants, attorneys, anybody who had anything to do with it. | ||
| In fact, only 20% of the small businesses were even able to comply by the January 1st deadline. | ||
| And meanwhile, they were threatened with fines up to $500 per day and up to $10,000. | ||
| Small businesses. | ||
| They were beside themselves. | ||
| You listened to the small businesses and did something immediately to correct course, exempting U.S. companies from reporting. | ||
| And my small businesses throughout my district, throughout Pennsylvania, applaud you for eliminating a needless, bureaucratic reporting regime. | ||
| So thank you. | ||
| And Congressman, I'm just sorry that so many of them had to waste their hard-earned dollars, either complying or preparing to comply. | ||
| And losing sleep and everything else, and some even going out of business because they found it preposterous. | ||
| Thank you. | ||
| Let's talk about removing the ideological, subjective, even capricious regulators that how would you, under the Biden administration, bank supervisors focused more on ideological concerns and less on material, bright-line financial rules versus the risks. | ||
| How will you work with bank regulators to refocus supervision on bright-lines rules rather than issue unrelated to safety and soundness? | ||
| Again, Congressman, very important point. | ||
| We could see that we had three, under the previous administration, we had three of the largest bank failures in U.S. history. | ||
| Two weeks before that, the Financial Stability Oversight Council published a report that said that climate was the biggest threat to the financial system, not the deposit volatility, not over-leveraged bond portfolios. | ||
| So we are promoting common sense back to basics. | ||
| Yes, thank you. | ||
| Okay. | ||
| The efforts related to the removal of reputational risk as a basis of supervisory criticism. | ||
| Can you comment on that? | ||
| Yes, sir. | ||
| Many people, many individuals, many organizations were debanked because of their political beliefs, and regulators used that as the ellipnus test and that it is a very capricious category in bank regulation. | ||
| So we have moved to remove that as a criteria. | ||
| We believe that financial ratios are much more important than whether you are a Democrat, a Republican, or an Independent. | ||
| Thank you. | ||
| Yes, well put, and appreciate the fact that you see things that way, as should be seen. | ||
| Capital requirements. | ||
| Basel III endgame, of course, the G-SIB surcharge and other proposed capital rules might put U.S. banks at an international disadvantage. | ||
| What do you believe, if you've got an idea of the right level for capital requirements? | ||
| Sir, we are examining that now, and we will weigh in heavily at the BIS and the other rulemaking entities. | ||
| But again, this one-size-fits-all. | ||
| And I believe one of the reasons we've seen the stagnation in many other countries is the regulatory, the framework, the very tight regulatory framework that they put around their regulated financial institutions. | ||
| Thank you. | ||
| I'm almost out of time. | ||
| I'll yield back. | ||
| Thank you very much, Mr. Secretary. | ||
| Thank you. | ||
| I thank the gentleman. | ||
| The gentleman from New York, Mr. Torres, is recognized for five minutes. | ||
| Thank you, Mr. Chair. | ||
| During so-called Liberation Day, Donald Trump imposed tariffs on territories populated not by humans but by penguins. | ||
| He imposed tariffs on countries with which the United States runs a trade surplus, not a trade deficit. | ||
| He imposed tariffs on products that cannot be produced domestically, which means a higher cost for American consumers without any benefit to American manufacturers. | ||
| He imposed tariffs on impoverished nations like Lesotho, which cannot afford to buy as much from us as we buy from them. | ||
| If President Joe Biden had put in place these absurd tariffs, every single Republican, without exception, would have condemned his trade policy as the height of incompetence. | ||
| And you, Mr. Besson, would have joined that chorus of criticism. | ||
| There's no doubt in my mind. | ||
| But swap out Biden's name for Trump's and suddenly the moral outrage from Republicans vanishes like magic. | ||
| I have a simple yes or no question. | ||
| Do you think excessive taxation undermines the competitiveness of American manufacturing? | ||
| Yes, sir. | ||
| Now, the Trump tariff regime is a breeding ground for the excessive taxation of American manufacturing. | ||
| Consider as an example Intel's manufacturing of CPUs. | ||
| Intel sources foreign components, which is subject to the first layer of taxation. | ||
| It then manufactures the CPUs in the United States before exporting it to China, which will face a second layer of taxation. | ||
| And finally, China will export the CPU back to the United States, where it will face a third layer of taxation, taxation upon taxation upon taxation of American manufacturing goods. | ||
| Do you think that kind of compounding taxation of American manufacturing goods like Intel CPU will strengthen or weaken American manufacturing? | ||
| Sir, I just want to be clear. | ||
| You're saying that taxes raise cost. | ||
| I'm sorry? | ||
| You're saying that taxes raise costs. | ||
| Taxing the intermediate goods that go into a manufactured products raise costs, yes. | ||
| You're saying that taxes are inflationary. | ||
| Taxes are inflation? | ||
|
unidentified
|
Yes. | |
| Good, then we should cut taxes. | ||
| In the context of tariffs, yes. | ||
| Then we should cut taxes, and you should join the terminal. | ||
| Can you answer my question about the tariffs? | ||
| In the tax bill. | ||
| Can you answer my questions about the tariffs? | ||
| I'm not sure I know. | ||
| CPU's Intel would face three levels of the Chinese tariffs. | ||
| Do you think that that kind of compounded taxation hinders or helps American manufacturing? | ||
| I think that strategic American manufacturer is very important, like Intel, and I think we have to bring that back to the U.S. Do you think taxing intermediate goods that go inside American manufactured products helps or hinders manufacturing? | ||
| I believe that as the Intel example you give, we have to bring these strategic industries back to the U.S. | ||
| We are not going to bring every component. | ||
| A Boeing aircraft, 747, has 6 million components. | ||
| There is no universe in which we are going to manufacture all 6 million components in the United States. | ||
| And so if you impose a tax on those foreign components, you are hindering the manufacturing of Boeing 747 here in the United States. | ||
| Do you even acknowledge that? | ||
| I acknowledge that the supply chains are wide, but we've also, for the automakers, we have given an exemption. | ||
| I'm not asking you about the automakers. | ||
| I'm asking you about Boeing aircraft. | ||
| Let me move on. | ||
| Critical minerals are central to the military defense of the United States. | ||
| China controls almost all of the world's rare earth mining and almost all of the world's critical mineral processing and refining. | ||
| The Trump administration has chosen to wage a total trade war with China without first building a critical mineral supply chain here at home. | ||
| Just like it would be foolish to enter a car race without enough fuel in the tank or enter a weightlifting competition without sufficient strength to lift the weights, it seems equally foolish to wage an all-out trade war on China without a domestic critical mineral supply chain, breaking China's strongest chokehold over the United States, the CCP's chokehold on critical minerals and rare earth elements, is a precondition for winning the trade war against China. | ||
| Do you agree with that? | ||
| I believe that we have to bring the rare earth, as you correctly said, processing back, or not even back to the U.S. | ||
| We have to bring it. | ||
| It's not only processing, it's rare earth mining as well. | ||
| And it's critical mineral processing and refining. | ||
| Strategic minerals. | ||
| And the weaponization of critical minerals against the United States is the opposite of making America safe again. | ||
| Rarers are not that rare. | ||
| Processing is rare. | ||
| The mining is rare, too. | ||
| We have an insufficient mining industry here in the United States, and you know that. | ||
|
unidentified
|
Good. | |
| Then I hope you'll join us in the deregulation of many of these onerous mining requirements. | ||
|
Why Financial Literacy Matters
00:10:33
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| I think my time has expired. | ||
| Appreciate the gentleman from New York, the gentlewoman from California, Ms. Kim, is recognized for five minutes. | ||
| Thank you, Chairman Hill and Ranking Member Waters, for holding this hearing. | ||
| Secretary Besson, good to see you, and thank you so much for coming. | ||
| Southern California, where I'm from and the district that I represent, serves as the primary gateway to Pacific Rim. | ||
| And Asian goods into the United States come through the ports of LA and Long Beach. | ||
| But we are already starting to see a drop in volume as the ports of L.A. and Long Beach are expected to see 35% to 30% drop when compared to a year ago. | ||
| Cargo volume is one of the largest economic drivers in the region, and long-term drop will not just impact families at the grocery stores and small businesses bottom line, but also result in truckers and duck workers losing their jobs. | ||
| So, Secretary Besson, I would like to ask: how can you ensure that our tariff policy will not unintentionally harm American small businesses and workers in the long term? | ||
| Congresswoman, we believe over the long term that it will drive growth in the economy. | ||
| And as I've said many times, it is a mistake to look at trade in isolation. | ||
| The Trump economic policy is a three-legged stool: trade, taxes, and deregulation. | ||
| And we believe that the sum of the parts, that the whole, is greater than the parts. | ||
| And as we complete each one of those, the U.S. will see substantial economic growth. | ||
| Thank you. | ||
| You know, I know that a lot of my constituents share these concerns that we raised. | ||
| So I'd like to continue this discussion on this specific topic with you moving forward because I'm concerned that these long-scale tariffs, if they continue in the long term, then American working families and small businesses will suffer under price hikes and a lack of certainty. | ||
| But I want to shift gears and discuss the Financial Stability Oversight Council, FSOC. | ||
| Under the previous administration, Secretary Yellen rescinded the non-bank systematically important financial institution and replaced it with a new framework for assessing the financial risk. | ||
| And this new framework overlooks the importance of prioritizing an activity-based standard and a cost-benefit analysis. | ||
| So, Secretary Besson, does FSOC intend to reassess the 2023 guidance so that it is more closely aligned with the thoughtful process that was created in 2019? | ||
| Congresswoman, that is on our agenda. | ||
| Thank you. | ||
| You know, as you finalize that decision, I want to emphasize that my support for a return to an activity-based standard that more appropriately addresses the risk of non-banks. | ||
| Treasury, you'd be happy to work with your team on that. | ||
| Thank you. | ||
| And finally, I'd like to urge you to continue your support for CDFI. | ||
| CDFI fund programs are statutory, as you know, and it has been critical in promoting the local economy in Orange County. | ||
| So, do you still agree that the CDFI fund has a critical role to play in fostering economic opportunity? | ||
| I think I know the answer because you stated very clearly in public statements. | ||
| We believe that if CDFIs follow their statutory obligations and do not digress into more ideological boundaries, they can be important institutions. | ||
| Thank you. | ||
| As you know, last week I attended the Financial Literacy Roundtable that your team put together, and thank you so much for inviting me. | ||
| I think I just missed you. | ||
| But your team was very well represented. | ||
| And again, I want to thank you so much because as a co-chair of the Financial Literacy and Wealth Creation Caucus, events like that, bringing the stakeholders together and having a meaningful dialogue and conversation, I think is critically important. | ||
| And we need to continue that. | ||
| So can you talk about how you can continue to advance financial literacy initiatives now that we are past the financial literacy month? | ||
| I mean, I was able to take the leadership and pass the bill that proclaims month of April as the financial literacy month. | ||
| And I hope that we can continue to work in this space together. | ||
| As you should know, it is a strong core belief of mine that financial literacy is the only path to economic independence and well-being. | ||
| So the more Americans who can be educated, and I think we should probably go state to state and encourage each state to put in financial literacy standards for their students. | ||
| General Woman, Mr. Sardin. | ||
| The gentlewoman from Texas, Ms. Garcia, is recognized for five minutes. | ||
| Thank you, Mr. Chairman, and thank you to the Secretary for being with us today. | ||
| I want to start first by just clarifying your testimony and its delivery. | ||
| Why did you ask for your witness statement to be embargoed until this morning? | ||
| Sir Amey, pardon me? | ||
| Your testimony reads right at the very top, embargoed until delivery, which means that we didn't follow the usual practice of this committee of getting the testimony 24 hours in advance so that committee members can review it and prepare for questions. | ||
| Yours was posted at 10.01. | ||
| The committee was at 10. | ||
| Well, it looks like you need to. | ||
| My staff is just telling me that it's standard practice. | ||
| It's your standard practice? | ||
| It's not our standard practice as a committee. | ||
| I'm told that it was standard practice. | ||
| Okay, you were told by whom, sir? | ||
| Sorry. | ||
| My comms team and legislative affairs team working with the committee. | ||
| Well, Mr. Chairman, I think for the record, I think you should clarify to the gentleman that that is not our standard. | ||
| And I know that at least I didn't know anything about this until I got it here. | ||
| And I don't think our committee staff on the Democratic side was notified that we would be getting all your testimony late. | ||
| I just wondered why you had made that request. | ||
| And clearly at the top, embargoed until delivery. | ||
| Well, embargoed to delivery, I think that was mostly meant for the press. | ||
| We're not pressed, sir. | ||
| We're the members of Congress that have oversight. | ||
| So, Mr. Chairman, I would hope that you not condone this kind of late submission. | ||
| It just doesn't help, frankly, for some of the atmosphere that's created when we all just sit down and we still don't have your testimony. | ||
| Well, then, you know, we just sort of don't feel really good about that. | ||
| It's not our customer. | ||
| Congressman, I appreciate the importance that you put on my statement. | ||
| Well, thank you. | ||
| Notice it's important, sir. | ||
| Do you know what the poverty rate is in our country? | ||
| I believe that the poverty level is a fixed number. | ||
| Now, do you know the poverty rate in this country? | ||
| I believe it is in the teens. | ||
| The teens. | ||
|
unidentified
|
Okay. | |
| Well, it's about a little over 11%. | ||
| It just strikes me that most of all of your testimony is always about the tax cuts and cutting costs. | ||
| And it's always about tax cuts and it's always about the rich. | ||
| But nothing is ever said about poor other than you suggesting that you work yourself in college. | ||
| No tax on tips, no tax on Social Security, no tax on overtime action. | ||
| Sure, I read your testimony. | ||
| That's not anywhere in here. | ||
| Deductibility. | ||
| That is not in here, sir. | ||
| Deductibility activity. | ||
| I am referring to your testimony and what I've listened to. | ||
| I said, right up front, I can see you and I can hear you. | ||
| You've not said one thing about what we're doing to help the poor. | ||
| In fact, even when we were talking, even when we were talking about the car seats, you know, that impacts poor people more than anyone else, because not only can they usually not even afford a car seat and have to go to a garage sale to find one, now it's going to be even higher. | ||
| You know, your president is suggesting that he wants to give a $5,000 bonus to women to have babies, and then what? | ||
| Just leave them out on the cold alone? | ||
| No car seat, no food, no Medicaid, no medic, no carrying away. | ||
| Congressman, I can tell you the worst thing. | ||
| And I'm asking you right now, sir. | ||
| The worst thing for working families will be the expiration of the 2000s. | ||
| As Secretary of Treasurer, it's not just about the inflation rate. | ||
| It's not just about the GDP. | ||
| It's also about making sure that we keep the poverty rate in this country low. | ||
| There are people who are living in poverty that never have lived in poverty before. | ||
| You know, you also failed to say here, you say unemployment remains low. | ||
| I mean, somebody should have read unemployment went up. | ||
| I guess it did. | ||
| Under the Biden administration. | ||
| And the growth administration. | ||
| We're not talking about Biden's. | ||
| We're talking about your testimony here today about the current president and his plans. | ||
| Because I can tell you, I'm from Houston. | ||
| I'm concerned, too, about some of the terrorism on energy. | ||
| You know, we have done a lot to increase trade in Houston, construction, everything after the pandemic. | ||
| And all things were growing. | ||
| Everything has been growing. | ||
| But now that the Trump terrors have surfaced, it is threatening Houston's economy. | ||
| I represent the area where almost the entire ship channel is in. | ||
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| The petrochemical companies all are in my district. | ||
| The port is in my district. | ||
| Everybody is trying to figure out what the hell we're going to do. | ||
| Mr. Chairman. | ||
| Thank you, Member. | ||
| I ask unanimous consent to enter into the record the opinion and order by the United States District Court in the Southern District of New York in the matter of New York versus Donald Trump that directly contradicts several responses the Secretary gave to me about Doge's access to Treasury payment system. | ||
| Without objection. | ||
| I want to thank our witness today. | ||
| We appreciate Secretary Besson's testimony. | ||
| Without objection, all members will have five legislative days to submit additional written questions for the witness to the chair. | ||
| The questions will be forwarded to our witness for his response. | ||
| Secretary Bessett, please respond no later than June 2nd, 2025. | ||
| This hearing is adjourned. | ||
|
unidentified
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