500 today, Texas Instruments, down about 7 . Thats your biggest decliner in the Philadelphia Semiconductor index, dragging most of the chip stocks lower. A lot of folks thought that the decline in those chip stocks, the decline in that memory cycle, that hit bottom. The results we got out of Texas Instruments seems to suggest that bottom not quite there. And youre seeing bids coming into the havens. 10year treasury yield down to 1. 73. Its interesting, the bond bulls not deterred, buying the dip every chance they get. We dont look at bitcoin very often, but worth it today. Down about 8 , down to levels we saw back in june. A lot of this tied to whats about to happen on capitol hill today. A lot of concern here that some of the scrutiny surrounding facebook and leeb i cant, thats weighing on the bitcoin space, weighing on easter, tether, and a lot of other coins out there. Something to keep an eye on here as we move into the rest of the day. Guy well look for that testify. British pound a little further, but not by much. We are waiting to find out how bad its going to be granted by the e. U. Stoxx 600 absolutely flat today. Fewer earnings over here to think about, but more coming tomorrow. The german 10year yield, big today, three basis point. Romaine . Romaine for more on what to expect from Mark Zuckerberg, were joined here in new york by bloombergs sarah frier. This has been a long time coming. Congress has been trying to get facebook back in front of them. I was looking at the list of things they plan to talk about. This is going to go a lot deeper than leeb i cant. Sarah way deerp. Once zuckerberg is up there defending that idea, it is going to be open season, really. Anyone can ask him about anything. They can ask him about his political advertising rules. They can ask him about discrimination and facebook, which is another big topic the committee wants to focus on. They can ask him about the 2020 election and whether facebook s the protectionses it needs to make sure theres not another round of interference in Foreign Government in that election. We expect zuckerberg on the hot seat for many hours. Guy sarah, has zuckerberg made of error being the face libra . You wonder why facebook is so synonymous with leeb aand whether or not thats a mistake. Sarah thats another thing that facebook has been saying openly. Maybe were not the right messenger for this. Facebook knows theyre under this extreme level of scrutiny compared to other companies. Unfortunately, theyre the ones who came up with the idea, and theyre the ones who put together this coalition, and so, yes, i mean, this is a little bit tougher. Theyre going out and saying were not going to do this. Unless we have regulatory support. I dont see how they can ever end up in a place where they have full regulatory support, because theres always going to be somebody against it, theres always going to be some critique. I do think its slowing things down, and the facebook of three or four years ago, just launch this, not ask questions, and move fast, break things mentality facebook is famous for, its not that era of facebook anymore. Romaine were going to have full coverage of everything Mark Zuckerberg says once we get to the q a. Im sure well flare you later as well. Guy lets talk about the fed and whats going on there. That brief bout of turmoil last month in the repo market had market watchers drawing all sorts of conclusions about the implications for Bank Regulations, benchmark interest rates, and while fundamentally not much needs changing, could there be some more steps the fed could do to help the market function a little bit more slowly . Thats the view of former new york fed president bill dudley. He had penned a piece for bloomberg opinion. Its out this morning on the bloomberg. He joins us now on the phone. If i may, can i start off broad brush here and just get your assessment of what is happening here. Your sense is the fed has got this. My question is, why arent they communicating that properly . Bill i think theyve got to, because theyve added sufficient Bank Reserves to get repo rates back down. That said, theres a lot of issues that have been raised about this pressure that we saw in repo rates. People are saying we should roll back regulation on liquidity. Other people are claiming this means we shouldnt move from line yor to the secure overnight lending rate some. People even called into question whether the frame work is good from the fed, where they pay interest on reserves. I think the fed could some things to clarify, no, we shouldnt roll back regulation. Two, we can make it even more secure by putting in place a standing repo facility to prevent this kind of pressure on repo rates. And currents theres enough reserves in the system and the fed is making that so. Guy hold that thought for a moment. Mark zuckerberg just walking into the room in washington, just to say that we are going to continue to monitor the situation. Were not going bring you the Opening Statements. We are going to bring you, though, that crucial q a, which is going to be, to put it mildly, wide ranging. Let me come back to you and discuss this a little bit more. Jamie dimon said he could have helped if Bank Regulations or liquidity were a little easier. Why dont you think we should roll those regulations back . And do you think theyre joined up enough to allow the market to function properly . Bill of course, whenever something bad happens in markets, people point to regulation and ask for them to be unwound, and i think that we have to reflect on the fact that these regulations were in place for a good reason, to make sure banks have strong buffers during times of stress and help resolve the big banks so theyre no longer too big to fail. The only thing that i think would make some sense is to exempt reserves from the capital leverage ratio. Right now the leverage ratio is equity divided by total assets, including reserves. One could make the case that you should exclude reserves from the ratio, because reserves, one, have no risk, and two, banks dont control how many reserves they have to hold. Thats really driven by how big the fed Balance Sheet is. You dont want to be in a situation where the fed is trying to stimulate the economy by quantitative easing, and that at the same time is making the leverage ratio for banks more binding and banks less willing to lend. Simple solution there, exempt reserves, recalibrate the leverage ratio so Capital Requirements arent reduced, and you solve the problem. Romijn one of the criticisms, one of the questions here when we had that repo scare, whatever you want to call it, was this concern that while there might be ample liquidity on aggregate basis across the financial sector, it wasnt necessarily evenly distributed and there was concern here that once you got past some of the big Money Centers centre banks that some of that liquidity, some of the reserves werent as ample as what maybe it should e. Bill the fed is now going to buy 60 billion of treasury bills a month and build back up the amount of Bank Reserves in the system, so were back to where we were six months ago when the fed before the fed had run off shrunk its Balance Sheet. Its easily solved. The fed can just buy more shortterm treasury bills, and thats what theyre going to do. So i dont think theres a problem keeping repo rates down f. Youre worried about it, then introduce a facility in place that has a repo rate available from the fed at a rate slightly above what the market rate is, and then that way youre not going get spikes n rpo rates to 6 to 8 . Romaine until we goat that day, assuming it happens, you still have the fed thats mainly purchasing t bills, mainly purchasing on the short end of the curve, and there are some concern that that could distort maybe the longer part of the curve with regards to the treasury picture here. And im wondering, as we sort of are in this interim period where the fed tries to figure it out, is there a risk that weve sort of given up on any sort of ideal of normalization and the distortion could end up causing further shocks down the road . Bill look, i think normalization wasnt a great word, balls the fed is changing their monetary frame work policy. Before, they had few reserves in the system, didnt pay interest on reserves. Now they pay interest on reserves, and they have a much bigger Balance Sheet. The new regime is a better regime. Were not going back to the old regime, for good reasons. The new regime basically makes the Payment Systems more efficient, because banks have more cash on hand to execute their payments. It also means that if theres a time of crisis, the fed can offer liquidity back stops that are openended because it doesnt have to worry about, gee, what happens if people use liquidity back stops and a lot of reserves go into the system . If you add a lot of reserves, the fed could have lost control of Monetary Policy. The regime is a much better regime, i think the fed needs to get more up front and explain that to people. Guy one final question. Mark zuckerberg, were watching him on capitol hill right now, hes about to be questioned about libra. Can you ever see libra becoming a viable currency . Bill never say never. But i think the u. S. Dollar works quite well. And i think at the end of the day, you really have to look at these currencies and ask yourself, how are they actually back stopped . Whats behind the cryptocurrency to keep you 100 confident the support is going to be there in good disciples bad . Thats the fundamental questions. Romaine our thanks to bill dudley from Princeton University center for economic policy, and, of course, he was the former president of the new york fed. Coming up, what youre looking at on your screen there, c. E. O. Mark zuckerberg, the c. E. O. And founder of facebook, now in front of the House Financial Services committee, going to be asked a lot of questions there. You see the chairwoman of that committee, maxine watters. Were also expecting a pretty wide range of questions about facebooks practices. Were going bring you all of that coming up next. From new york and london, this is bloomberg. Romaine live from new york, im romaine. Guy and from london, im guy johnson. Lets go to washington. The facebook hearing now underway. Were not going bring you the Opening Statement. That is what is happening right now in the House Financial Services committee hearing. We will, though, bring you the crucial q a when that kicks off. Were expecting that in around 10 minutes time. Romaine . Romaine a lot of news out there, and earnings season in full swing here. Caterpillar booking its first decline since 2016, also lowering its forecast for the year. It blamed heightened Economic Uncertainty for slowing customer purchases. Lets bring in brooke sutherland. She has more. Brooke, something that stood out to me, the c. F. O. Said, this was in an interview, our customers arent facing financial difficulties, its more that they seem to be waiting to see what happens with the economic outlook. Are the issues plaguing caterpillar, is this more of a broad issue . Brooke this is certainly more of a broad issue, and thats the concern. Can we worry ourselves into a recession . Is there so much uncertainty, so much keeping people on the sidelines that you can really see a recession . Weve already started to see some signs of that in the manufacturing sector. Caterpillars results today just adding to that sign of bleakness. The question is, can this be turned around . When you talk to c. E. O. s, in the second quarter, they were Still Holding out hope the trade deal could turn this around if, in fact, we could get one, bring us back from the brink of recession. Of course, thats easier said than done, but does seem to be were still in this sort of stalling period where you are seeing a slowdown, but parts of the economy are still relatively healthy, and you could see this bounce back if, in fact, we were able to start to see some actual certainty in the markets. Guy given the inventory being run down, how quick would the bounceback be . Brooke they expect inventories to further slide in the Fourth Quarter at caterpillar. On the one hand, thats not great. You see the continued pattern. But then that also leaves you with a more reasonable inventory level as you go into 2020. So that does sort of offset some of the negativity that were seeing in the Third Quarter from this report today. The other thing is caterpillar is going maintain the stock buyback activity, even though its seeing demand dip. They probably make up for that with production cuts and probably some job cuts as well. But interesting to see that dynamic playing out. Romaine one of the other stories thats baffling. Boeing up 3. 5 , despite the fact they gave earnings that were pretty dismal. But we were expecting them to be dismal. But they were kind of upbeat on getting the 737 max back into the air, this year. Brooke i think its a matter number of news is good news. The fact they havent changed their expectations having the 737 recertified in the Fourth Quarter is a positive sign. Theres also no major charge on top of the ones that theyve already taken as far as customer reimbursement. Now, that said, we have not had the call yet for boeings earnings. I would be curious to see whether or not this mentality of no news is good news is holds up. Once analysts get an opportunity to ask questions, push back on some of this, see where the potential cracks are here, i wonder if that stock gain is going to hold up. Guy thats the last earnings call, do you think . Brooke i think that is the question, and i would expect him to get a lot of questions about his tenure, whether or not he feels like hes still the right person to lead this company. Remember, of course, boeing has already taken away its chairman title on the pretense of allowing mullenberg to focus more acutely on returning the 737 max to service. Of course, that raises the question of what exactly the board thinks he has been doing the past seven months while the plane has been grounded. Boeing yesterday said the head of the commercial airplane division, the one responsible for the max, is stepping down. Kevin mcallister joined in 2016 from g. E. , so he was there for less than three years, joining after much of the certification process for the max had been completed, but theres lot of report from customers that he just was not present enough and proactive enough in managing their concerns while the max stays grounded. Romaine brooke, always great to have you. Guy lets talk about brexit. Its the other big story were watching. The e. U. Appears to be getting closer to granting another extension. Lets figure out what happens next. The managing director of emea and global fiscal research, joins us now. Christopher, the big question 130 on the 20 to cable rate. Brexit. A no, nodeal read the political tea leaves for me. Well, guy, i guess the fundamental drive is now whether theres going to be the timing of a general election in the u. K. Theres two options, a snap election in the next few weeks, or that would be pre brexit, because implementing the legislation has been held up and amended to the dissatisfaction of the u. K. Government and the Prime Minister johnson all the u. K. Election, which has become relatively soon, because the country is pretty well ungovernable, and until that happens, will be delayed until after brexit is legally completed, the orderly brexit, and that would be perhaps sometime up to the early spring of next year. Now, in that frame work to your question, the future volatility in sterling will be, i guess, i guess more benign scenario for sterling, which would probably see it grinding out is the second one where theres no snap election. Boris johnson swallows amendments to the implementing legislation, having worked out with the opposition leader, jeremy corneren, a fresh procedural time table, taking advantage of the e. U. Extension that you quite rightly said is definitely going to be granted. And then signaling to his base, johnsons base, that having an election early next year, any amendment such obliging the u. K. Government to seek a Customs Union for its longterm settlement would be unpicked. I think thats quite benign. The market would have to discount the possibility of that future unpicking. , t the prospect of less trade fewer frictions in the longterm would be positive for sterling. Once brecks sit done, passions have subsided, new government comes in, could be a conservative government, might not be. Then the whole agenda will move on longterm negotiations, so its more we nifpblete i think thats the answer. If, however, with the negotiations with corbyn break down, snap election, much more sterling volatility, but remember, in that scenario, perhaps a bit less likely this morning, but still possible, there is more upside because the remaining option would till be on the table pending a late november election. Romaine we have seen a change in sentiment in stocks. Weve seen a rotation until a lot of the domestic stocks. There is a bet the u. K. Economy, not only is it going to survive this, but its actually going to thrive once we get a little bit more clarity. How long is this process here . Once we get to brexit itself, theres still the idea of negotiating these trade agreements and getting some sort of semblance of normality for a lot of these questions. Quite right, romaine, and thats years of uncertainty. The lack of cap ex, which has been holding back in the u. K. Over the u. K. Economy very much supported by consumer demand since the brexit referendum, not much fuel left in that u. K. Household. And that cap ex obviously would be expected to revive once the worst brexit risks have been overcome, ordinarily brexit maintained, but then businesses will look through to the next round of uncertainty. So i think not much more than some relief and respite rather than some breakup. Guy in terms of the election, can i talk about what could come after that . At the moment, i look through the polls this morning, christopher, as you probably did as well, the chances of labour winning are very low. Labour has said, or Jeremy Corbyn has said, if he loses such election, he will leave. The corbyn risk is also out there as well for sterling. If that was removed, how big a sort of increase would you see on the back of that . I think clearly the market, it once the worst risks are out of the way, and they pretty well are, the risk of a nodeal scenario for the u. K. , u. K. The sterling and u. K. Will begin to discount perhaps more actively the risk of a labour government, labor our policies. As you quite rightly say, it would take some tectonic shift in voter intentions to bring about any prospect of an outright majority labour government, whenever the election is held. So i think that those risks are moderate. The minority labour government, or one put up by other parties, such as the scottish nationalists, would be much less well placed to put in some of the more radical policies that could serve domestic u. K. Equities, utilities, which would be subject to nationalization risk, for example, and so on. Is not that risk also too acute. As for the sterling, not too radical. Romaine christopher, youre going stick with us, mcing director of Global Political research. Still ahead were keeping an eye on Mark Zuckerberg on capitol hill, giving his Opening Statements. Were going to bring you coverage once the q a starts. From new york and london, this is bloomberg. Guy Mark Zuckerberg, c. E. O. And founder of facebook, giving Opening Statements on capitol hill. Lawmakers on the House Financial Services committee are expected to begin questioning the facebook c. E. O. Very, very short. I think hes on page 3 of 6 right now. The q a will follow very, very shortly. We will bring that to you live right here on bloomberg. There is a ticker running on your bloomberg as well. Follow along there. This is bloomberg. Guy lets take to you washington right now. Facebook c. E. O. Mark zuckerberg now taking questions from congress. Lets listen in. Seems to me that you shifted your stance because you realized that you can use your size and your users data to dominate the cryptocurrency market. You change your policy when it benefits you. You reinstated ads because you had planned to start your own cryptocurrency. So this brings me back to your new policy on political speech. My question, is how does this new policy benefit you . Because it stheems a policy that allows politicians to lie, mislead, and deceive would also allow facebook to sell more ads to those politicians, thus making your company more money. But you can tell me, how does facebook benefit . Chairwoman, thanks for those questions. Id like to address all of the things you mentioned in there. On elections, youre right, that in 2016, we were on our back foot in terms of preventing russia from attempting to interfere in our election. We spent a lot of the last few years Building Systems that are more sophisticated than any other company as of this point, and frankly, lot of governments, too, for defending against foreign interference. This monday we announced that e had proactively identified a network of fake russian accounts and a few networks of iranian fake accounts that we proactively took down, which certainly, as you say, signals that these nation states are still attempting to interfere, but i hope will also give us confidence that our systems are now more sophisticated to proactively identify and address these things. On your question about political ads, look, from a business perspective, the very small percent of our business that is made up of political ads does not come anywhere close to justifying the controversy than this incurs for our company. So this really is not about money. This is on principle, nibble giving people a voice. I believe that ads can be an important part of voice. I think especially in the political process for challenger candidates and for local candidates or advocacy groups whose message might not otherwise be covered by the mediaportant way to inject your message in. Let me interrupt you for a minute. Are you telling me i think you said to me before, you plan on doing no Fact Checking on political ads. Chairwoman, our policy is that we do not fact check politician speech, and the reason for that is that we believe that, in a democracy, it is important that people can see for themselves what politicians are saying. Political speech is some of the more scrutinized speech already in the world. Do you fact check on any ads . At all . Yes. Describe what you fact check on. Well, chairwoman, actually, thank you for the opportunity to clarify. Facebook itself tuelly does not fact check. What we do is, we have feedback that team our community dont want to see viral hoaxes or kind of let me be clear. You do no Fact Checking on any ads, is that correct . Chairwoman, what we do is we work with a set of independent Fact Checkers who somebody fact checks on ads. You contract with someone to do that, is that right . Chairwoman, yes. And tell me, who is it that they fact check on . Chairwoman, what we do is when content is getting a lot of distribution, and its flagged by members of our community, or by our technical systems, it can go into a queue to be reviewed by a set of independent Fact Checkers. They cant fact check everything, but the things they get to, and if they mark something as false all right. My time has expired, and someone else will continue on this line of questioning. And i now calber, mr. Mchenry, be recognized for five minutes. As i mentioned, i think there are bigger challenges and opportunities facing america than your ad model. Or even the question of libra. So lets start with your speech last week. Have you changed your view in erms of technology in china . From before your speech on friday to what we sandread heard from your speech on friday. Congressman, no, ive not changed my views in the last week. 10 years ago versus today on your view of china and technology, versus your speech on friday. Congressman, i think its fire say that my views have evolved. I think he probably, 10 years ago, would have been more optimistic that trying to work in china could have contributed to making a more open society, and today it seems that in some cases working in china not snl does not do that, but compromises American Companies ability to promote our values around the world. I think weve seen that in the last few weeks. In a number of cases. You mentioned, in your speech, you said a decade ago, 10 of 10 of the Top Companies on the internet were american. Now 6 of 10 are chinese. For you, stion i have why are we seeing emerging technologies driven by block chain projects and Digital Currencies being developed elsewhere . , such as the case of libra . Well, congressman, we have a lot of competition around the world. Youre right. Over the last decade, pretty much all of the major internet platforms have been American Companies with strong, Free Expression values. I think theres no guarantee that that is the state of the world going forward. Today, 6 of the top 10 companies are coming out of china, and certainly do not share our values on things like expression. So on that, why switzerland for libra, why not the United States . The Libra Association is an independent association. Were trying to set up a global Payment System. Switzerland is where a lot of the International Organizations are. Greater regulatory certainty in switzerland than here in the United States for this type of technology . I think switzerland has certainly been forwardleaning on wanting to work through systems like this. But i dont want this to come across as if and the United States is not. Well, congressman, one of the things i want to be clear on is that the independent Libra Association is independent, were a part of it, we help stand it up, we dont control it, but i want to make sure its 100 clear to everyone today that my commitment running facebook is were not going to launch anything that is a product a part of this until we have full support from u. S. Regulators regardless of what the International Regulation s. The project of libra internally before you handed this technology over to the association, lets think of this. Why is that project like that . Is this competition with your peers globally . Is that a component . Association i did not hear that. You have no payment platform on facebook. Facebook is not a payments platform, is that correct . Yes. Ok. So in seeking to develop a payments platform, internally, before you handed the technology over to the association for libra, was that because of examples globally of competitors creating payment platforms . Congressman, it was partially that, and its partially because i view the financial infrastructure in the United States as outdated. There are two sets of work that we do on payments. One is building Payment Systems that allow people to send money on top of the existing Financial System that exists. Were doing tarned the world in different countries, on top of existing Payment Systems. Theres another set of work which is what were trying to do with libra, which is trying to help rethink what a modern infrastructure for the Financial System would be if you started it today, rather than, you know, 50 years ago on a lot of outdated systems i just look at the fact that you can send a text message around the world. Let me just drill down on this. Ali pay has 900 million users. That is a global competitor, in my view, to facebook. You see ali and a we chat pay working. Why not zwruste a facebook version of ali pay in order to level this . Congressman, i think youre right that theyre certainly competing not just with us, but with all the American Companies on this. Part of the infrastructure that theyre building on is a lot more modern than some of what we would have to build on here. As soon as we put forward the white paper around the libra project, china immediately announced a Publicprivate Partnership working with Companies Like that to extend the work that theyd already done with ali pay into a digital renminbi as part of the initiative they have. And theyre planning on launching that the next few months. Thank you. The gentlewoman from new york, mrs. Maloney, also the chair for the Sub Committee on Investor Protection entrepreneurship in capital markets, is recognized for five minutes. Thank you. Mr. Zuckerberg, you said on page 3 of your testimony that facebook will not be part of launching libra anywhere in the world until all the u. S. Regulators approve. So which u. S. Regulators are you talking about . There are actually many financialing aretors such as the fed, the fdic, the o. C. C. , cfpb,. C. , cftc, the fhfa and many more, and to be clear, libra would affect all of those regulators. So which of those regulators do you believe need to approve libra before you will support the launch, and what kind of approval do you believe is necessary . You need to see brain approval from each regulator. Will those approvals be public . Congress woman, thanks for the question. My understanding is probably all of them, for different things. Different regulators focus on different areas, whether its Financial Stability or fighting crimes and fraud and terrorist, different areas if the work needs to get zpon are overseen by different regulators. I think the profits for each of them might be a little bit different. But were committed to getting all of the appropriate u. S. Approvals before launching the libra Payment System in any country in the world, even where those approvals might not be strictly required. Just to be clear, will you commit to waiting until you get approval from every u. S. Regulator that libra affects before youll support launching libra, yes or no . Congresswoman, all of the regulators that have jurisdiction over part behalf were doing, we are working with them, and well seek approval from. A bill of mine passed the house yesterday, which would crack down on Anonymous Shell Companies in the United States. Its become a nightmare for Law Enforcement. Vehicle he perfect for laundering money and criminal activity. Now with the creation of various digital occurrence success, you face a new challenge with Financial Transactions being anonymous. Thats why im concerned that the use of anonymous wallets would make libra attractive to those that are looking to launder money. Its my understanding that libra wallet wouldnt be anonymous, but i havent heard anything about competing a wallet. So when you commit not to supporting any other anonymous wallet for libra, i tchr a National Security issue. Congresswoman, thank you for this question. I think it builds on a question that the chairwoman was asking before as well about our position on cryptocurrency overall. We see a range of different cryptocurrency projects out there, from completely decentralized and deregular tate things, to what were trying to do is build a safe and secure and regulated alternative. We think that the Digital Payment space needs that. Of course, as a big company were not going to do something thats unregulated or decentralized. Were going to work with government to build something that gets to the same standard on antiMoney Laundering and cft that all of the other worldclass Payment Systems ave or exceed those standards. Association i forgot the actual question. Caught up in answering the chairwomans question. Well, i dont think you have you can have strong antiMoney Laundering controls and anonymous wallets. So i see this as a new loophole for criminals looking to hide and launder money. What is your position on anonymous wallets . Will you commit you wont have anonymous wallets so it will be transparent otherwise well face problems where we are iding trafficking money, terrorism financing, criminal activity of all kinds, its the huge problem for americans, and its a huge problem Law Enforcement. This is the number one concern, this bill we passed yesterday. With bipartisan support, but youre creating the whole new currency that could potentially be anonymous and could hide all types of criminal activity, which is a huge concern to the safety of americans. And National Security. Yes, congress woman, i will commit that facebook will do what you are saying. Our version of this, our wallet is going to have strong work with s going to the regulators to make sure that we are at the standard of cft that people expect or xceeded. You have my commitment from facebook. Thank you very much, and i yield back. The gentleman from missouri, the gentlewoman from missouri, mrs. Wagner, is recognized for five minutes. Thank you for being here. When libra was announced, 28 companies joined as founding members. By signing a nonbinding attempt of intent to join. Tpwhut recent weeks, many of the founding members have dropped out of the association. Perhaps theyre not so sure its going to work either. Pay pal, visa, mastercard, stripe, bookings holdings, bay, theyve lost these stable partners, i would say, and i find it highly concerning. What do you make of these sudden departures from the association, and why do a number of these founding members have concerns that whether youre up to the task of meeting our Money Laundering and regulatory standards . Congresswoman, thanks for the question. And this is this project is too big for any one company to do on its own, which is why we set up this independent Libra Association with a number of other companies and nonprofits. Its a very complex project. And as you say, its risky. Why have they departed . Scores of stable partners have dropped out. Why . I think youd have to ask them specifically. Why do you think they dropped out . I think because its a risky project, and theres been a lot of scrutiny. Why i, its a risky project. So let my move on to something thats near and dear to my heart. As you may know, i fight the bill to fight online six trafficking act. I am committed to rooting out online sex trafficking and believe that what else illegal offline should indeed be illegal online. Three weeks ago, the New York Times ran a report titled the internet is overrun with images of child sex abuse, and id like to submit this for the record. Without objection. Without obj 16. 8 million, 16. 8 million as confirmed by the department of justice of the 18. 4 million world whide reports of child sexual abuse materials are on facebook. 16. 8 of the 18. 4 million. These 18. 4 million reports from last year included a record 45 million photos and videos. These are absolutely shocking numbers. Moreover, its estimated that 70 of facebooks valuable reporting to the National Center on missing and exploited children would be lost if facebook implements its end to end encryption proposal. Mr. Zuckerberg, how much is this figure growing year after year, and if you enact end to end encryption, what will become of the children who will be harmed as a result that theyre not recorded . Congresswoman, thanks. Child exploitation is one of the most serious threats that we focus on. What is facebook doing . 16. 8 of the 18. 4 million. Well, congresswoman, the reason those reports come from facebook. The reason why the vast majority come from facebook is because i think we work harder than any other company to identify this behavior. What are you doing to shut it down . These accounts peddle horrific content what exploits women and children. What are you doing to shut this down . Congresswoman, we build sophisticated systems to find this behavior. 16. 8 million and growing . Of the 18. 4 millions . Well, congresswoman, i dont think facebook is the only place on the internet before weather this behavior is happening. I think the vast majority of those reports come from us reflect we do a better job than anybody else of finding it and acting on it. And youre right that in an impending cryptic world, one of the risks that im worried about, among others, to safety, is that it will be harder to find some of this behavior. But you have said you want end to end encryption. Whats going to happen to these children . They wont be reported then. And you are responsible, facebook is responsible for 16. 8 million of the 18. 4 million that are out there, last year alone. Again, i believe that there are probably a lot more than 18 million out there, and i think were doing a good job of finding this. What are you going to do to shut it down, mr. Zuckerberg . Were working with Law Enforcement in building technical systems to identify youre not working hard enough, sir. And end to end encryption is not going to help the reporting process. Im over my time. I have many more questions that ill submit for the record, but were going to talk about this, and i yield back. Thank you. The gentlewoman from new york is recognized for five minutes. Thank you. Mr. Zuckerberg, libra has pledged it will not share account information or Financial Data with facebook or any third Party Without customer consent. However, facebook has had a history of problems safeguarding users data. In july, facebook was forced to pay a 5 billion fine to the ftc, by far the largest penalty ever imposed to a company for violating consumers privacy rights as part of a settlement related to the 2018 Cambridge Analytica scandal. Let me start off by asking you a very simple question. Why should we believe what you and calibra are saying about protecting customer privacy and Financial Data . Well, congresswoman, i think this is an important question for us on all of the new services that we build. We certainly have work to do to build trust. I think that the settlement and order that we entered into with the ftc will help us set a new standard for our industry in terms of the rig or for the privacy flam were building. Were now basically building out a Privacy Program for peoples data that is parallel to what the Sarbanes Oxley requirements would be for a public cop peoples Financial Data. In terms of audits internally, any manager whos overseeing a team that handles peoples data has to certify quarterly that theyre meeting their commitments, and that goes up to me. And vile to certify that. Thank you for your answer. It has been publicly reported that when you require what isapp, facebook officials coached the companys founder to tell european regulators that it will be, and i quote, really difficult to merge or blend data. Between facebook and whatsapp, and there was no desire integrate the two systems. 18 months later, the platforms were linked to European Union fined facebook for providing incorrect or misleading ask, do n, so let me you understand why this record makes us concerned with facebook entering the cryptocurrency space . Do you realize that you and facebook have a credibility issue here . Thained we have work to build trust on this, and that means making commitments, and even if we learn new things in the future that could change our mind on how we should operate, that i think were going to need to make sure the commitments that we make have you learned that you should not lie . Congress woman, i would disagree with the characterization of lying. Well, youre saying you went to the european regulators and you said that it will not link, it will that it will be impossible, and yet 18 months later, it happened. And you were fined for that. Lets continue. I hope that you learned something about that, about not lying. Facebooks internal model was for a long time move fast and break things. Mr. Zurks we do not want to break the International Monetary system. Last week the g7 released a report stating that global stable coins could have significant adverse effects, both domestically and internationally, on the information of Monetary Policy as well as Financial Stability. Given the g7 concerns and the concerns voiced by us here today, would you commit to a moratorium on launching libra on to congress can develop, not the regulators, you said before that you will not move until all the regulators sign into and support for you to move forward. Here, congress, the peoples house, have their opportunity to work on a legal frame work so that we provide the guidance to the regulators. Would you commit to that, yes or no . Congresswoman, my understanding is that congress exercises significant oversight over the regulators through these committees. That would seem like the appropriate way for that to happen. So that is a no. Thank you. The gentleman from oklahoma, mr. Lucas, is recognized for five minutes. Thank you, madam chairwoman. Mr. Zuckerberg, the problem of addressing underbanked and unbanked individuals is both real and important. However, significant portion and i know the libra project is intended to reach this population. However, a significant portion of the underbanked simply do not trust banks. I suspect they may not trust captains of industry or members of congress either, for that matter. Do you see this as being a major hurdle in the wide adoption of libra . Congressman how do you persuade those people that youre trust worthy and to use the system . Congressman, weve certainly had a lot of issues over the last few years, but i think its worth remembering that every day billions of people come our services because they trust that they can share content messages, photos, comments, with the people they care about, and more than 100 billion times a day, people do that. They share something with a set of people because they know that that content is just going to reach the people that they want it to. So i think that if were table move forward with this project there, may be some people who dont want to use it because they dont trust us or dont like us, and thats one of the values of having an independent association where there will be other competitor wall and its other approaches, too. But i think that this is an area where being able to put ideas out into the world and letting the market work and letting People Choose for themselves what they trust and what services they want to use is probably the right approach. I just suggest that it will take a lot of energy and effort to reach that group, the underbanked, unbanked, and its real and its growing more substantially. Lets shift focus for just a moment. I also serve, along with the congressman, on the space and technology committee, and those of us who worked on that committee know as all of us do that the digital images can be altered to make it merely impossible to distinguish between what is real and what is. Facebook recently launched the deep Fake Technology challenge in clap wration microsoft and others to address this problem. This seems like a step in the right direction on behalf of the companies involved. From your perspective, how great is is a threat is the deceptive use of deep Fake Technology . In what ways do you anticipate the detection challenge will be successful . Thank you, congressman. I think deep fake are clearly one of the emerging threats that we need to get in front of and develop policy around to address. Were currently working on what the policy should be to differentiate between media that has been manipulated by a. I. Tools like deke fakes, with the intent to mislead people and compare that to just normal content that might have been an interview that might have been cut differently, and someone might not like the way its cut. But is not a deep fake, and is not kind of misleading content in that way. So were working on that policy. This is a very important area. The deep fake challenge to technically figure out how to identify these things will certainly help inform the policy, and this is one of the areas that i think its quite important going forward. One final question. Many experts have suggested that we need to educate the public on how to consume trusted information. Facebook recently announced an Initiative Support project on media literally. Could you elaborate on these projects and what you see as facebooks role, given your critical position within the industry . Yes, congressman. This question may be premature to ask, although later this week, we actually have a big announcement coming up on launching a Big Initiative around news and journalism where were partnering with a new f folks to build a product thats supporting highquality journalism. I think theres an opportunity within zpb our services to build a dedicated surface tab within the apps, for example, where people who really want to see highquality, curated news, not just social content, but from highquality pub can go and consume that content and that could create a place where we can form new business partnerships to help fund highquality journalism as well. So im looking forward to discussing that at more length in the coming days. I yield back the balance of my time, madam chair. Thank you. The gentleman from new york, mr. Meeks, who is also the chair for the subcommittee on Consumer Protection and Financial Institutions, is recognized for five minutes. Mr. Zuckerberg . You came in, and your Opening Statement sounded great. I think that your advisors advised you as to what we wanted to hear and interest you think that members of congress of various sides wanted. But words are different than actions, sir. One of the first things i heard you say when you were testifying was that you were interested in the unbanked and underbanked. As the chairwoman said, the Consumer Protection and Financial Institutions subcommittee, we had a hearing yesterday dealing with what we call minority deposit tarry institutions. Facebook is a multibillion dollar, multitrillion dollar company. You concerned about the underbanked and unbanked , how much of facebooks money is in m. D. I. s that will provide services and help to unbanked and underbanked . Have you invested in any of the institutions in america or any place else in the world . Any ofamerica or anyplace else . Any of your money sitting in those banks . Answer toure of the that question. What i do know is a lot of the people be served around the world are under bank. This is beyond the u. S. I understand beyond the u. S. , but we are here right now. You have just indicated that you want you would not move anyplace else unless you were in compliance with the United States. What i am saying is for example i dont even know when you talk about international whether or not going after the on bank and under bank whether or not you intend to
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