Transcripts For CSPAN3 Politics Public Policy Today 20150320

On my part . Congressman, the action that the administration took obviously was to try within the law, within the authorities we have to remove restrictions that we thought were counterproductive, and if anything working against the goal of getting the kind of change in cuba that we all want which is a Movement Towards giving human rights and other issues of importance greater attention. I think that, you know, the transactions between the u. S. And cuban parties will be governed by law so there will be things like food sales. The payments will be easier for companies to comply with and purchasers to comply with, so i think it will be easier for u. S. Firms to do business with cuba but we havent opened up all the forms of support that exist in countries that we have normal relations with and weve been clear that cuba still has a long way to go to make the changes it has to make before we would have that kind of conversation. I agree that were not there yet. In 1993 cuba actually made the u. S. Dollar legal tender. And in my first year in the house in 2004 cuba then placed a 20 surcharge on remittances, dollars coming into cuba, which created i hate this term. I dont know how to use it on a human being but the term they use, mules carrying u. S. Dollars into cuba illegally and, you know, giving it out to their relatives, which i completely understand. With this going on is there any i dont want to know about the negotiations. Im not going to ask you about negotiations in a public hearing. But it would be my hope that there is something being done in terms of remittances as we move toward normalization. Is that something that youre in the steps that we took among other things there was some easing of travel restrictions and remittances so that would be easier for families. But as importantly, telecommunications has opened up, because exposure of cubans to the west, to the United States, to our values is part of what we think will bring real lasting change in cuba. Western union, actually, even sim remittances through western union. The concern i think its a pretty heavy surcharge on the u. S. Dollar. My time is rungning out. Thank you, mr. Chair. The gentlemans time has run out. The chair now recognizes the gentleman from new mexico, mr. Pierce. Its hard to know where to look. Further to the right than you think. But not all the way. The imf broke its longstanding rules according to the wall street journal and just in the inspection of loans or bailouts or however you want to say it, to greece. Would you be willing to commit today to reinstating those previous principles that were bypassed in the deal with greece . I dont think i would agree with that characterization. I think the imf did have an Exceptional Access Program with greece but thats something youll have to fight that out with people that say that you did. I think if you look at what was going on at the time if the imf had not stepped in the risk to the Global Economy was quite severe. And still is, frankly. So whats your stance on the export Oil Export Ban . Do you have a stance . Im sorry the Oil Export Ban for the u. S. . Its actually a matter thats not directly in my area. You dont have an opinion . I try to comment on the things that im responsible for. Mr. Secretary we just heardheard my friend from new york say that you are the secretary of treasury. The secretary of treasury who has come here to talk about our economy and to talk about the World Economy. It would be nice if you had with all respect, sir, i just have an observation to make. Im reading your written statement, and its replete with considerable progress in the rainbow stew that is characterized in the report of the World Economy and our economy in general. But when i google this morning i see that manufacturing is down in february. Another article comes up, manufacturing in new york is down in march. Another article said wholesale prices in decline for four months. As the secretary of treasury as the secretary of treasury here to tell us about the economy it would be nice if you told us some of those dark clouds instead of the sunny horizon that has been painted here. I find the lack of transparency in the report that youve issued to be stunning. In fact, one point you said we should in answer to a question of one of our friends on the other side of the aisle that we should teach the world about good policy. Now, we did teach the world about good policy because when we started printing money, the quantitative easing after 2008 a policy that improves your economy in a philosophy called beggar thy neighbor, and im goog ling to morning and im seeing Companies Across america are being devastated by the race to the bottom, that we talk to the rest of the world about economic principles and with them printing money and the value of our dollar is increasing dramatically, the losses that are being passed on to American Companies are being felt right now. So that would be a critical piece for you to be relaying to us, but i didnt hear anything about that. So, mr. Secretary of the treasury, that would have been a nice thing that you put in here. Im happy to answer the question. Im just making observations here at the end of the day, because we have people pointing out that there is nothing to talk about in the economic situation. But in the whole deal, much of the report goes into imf and the responsibilities to the imf. Nothing in your report says that the whole game depends on the europeans, primarily germany, to keep balingiling out greece. Now, the finance minister for greece just recently made a comment that we ought to tear up the whole agreement. Now, that is causing, just on the 13th of march, it would have been nice if your report said on the 13th of march the german population switched pretty dramatically to where they dont favor greece getting my more bailout. In fact, they want greece out of the eu which then sets up the prospect that other nations who are financing the sovereign debt for europe would be extremely cautious about loaning to italy to spain, to portugal, to other nations. Those would have been the nice things to hear about in this report about the economy, mr. Secretary, mr. Secretary of the World Economy that we heard youre here to testify about, but i didnt hear any of that. I yield back, mr. Chairman. The chair now recognizes the gentleman from colorado, mr. Froman. Thank you, mr. Chair and to my friend in new mexico, im going to give the secretary a chance to talk about that economy. Hopefully its a little closer so you can see it, sir, a slide from the economic reserve data chart, and what this is is civilian employment since 1970 and i circled the last few years in terms of job losses in 2008 coupled with job gains since then. Would you care to comment . This is for the United States as a whole. I have another slide mr. Secretary, that is for colorado where we suffered the same as the United States generally where our unemployment went sky high in 0809. It started coming down in the Obama Administration. It is now down to about 3. 5 or 4 . Would you like to comment on job growth . Thank you congressman, and i do appreciate the chance to comment, because undoubtedly there are Economic Statistics that go up and down month to month. There is a variety of them. There is no denying the trend of the u. S. Economy over this last year has been very strong growth. For several years, theres been strong employment growth. You compare the United States to europe or other parts of the world, were growing better and were creating more jobs than most of the developed world put together. I think if you ask the question of why i believe its because as i said earlier, we have a flexible and resilient people, and we responded with policy that worked. And i realize that the policy has not always been something that has been unanimous opinion about. I dont think the results are subject to question. We are in a better place now. Let me give you another slide from fred. And this is dow jones from 2005, and it shows a steady increase up to 18000 from a low point of about 6,000 in 2008 early 2009. Do you want to comment on that . Well, obviously, there has been a recovery in our Financial Markets where the losses from the Great Recession have been reversed, and if you look at the trend, the picture you just showed, people had their Retirement Savings restored investors got back what they lost. Weve seen in housing that Property Values are starting to come back up. There are still areas where its not fully there. Where weve seen a problem is that Income Growth has been slow to come back. The last year weve seen about 2 growth in wages. Thats good but wed like to see more. Were starting to see some pressure on wage growth, which is a good thing. For those of us who came of age in the 70s and 80s rooting for inflation does not feel like a national thing. But too low inflation is not a good thing. Everyone is now shooting to get to 2 and 2 is hard to achieve. Let me give you one more slide, and this one is on 30year conventional mortgages, which have seen a continual decline to the benefit of homeowners who are in a position to take advantage of that, down to about 3 or 3. 5 . There is no doubt that the affordability of Mortgage Finance has stayed very much within reach in terms of historical standards. The challenge, as we were discussing a bit earlier is that the process of qualifying for a mortgage has been too challenging for some. Let me change the subject. The good news is its still a market where mortgage financing is still very affordable. Let me just change it to someplace where i think there are some headwinds, and i would ask you as the secretary of treasury to watch out. And that is in this tremendous drop in oil and gas prices which i come from colorado so were an energyproducing state. Weve seen some layoffs. Now, i think our economy is Strong Enough to move forward through those layoffs but there is, within the Energy Sector you know, a lot of concern, and you know, there are a number of ways to deal with it. I would ask that your agency your department be mindful of this. Whether or not we may want to put some kind of tariff and be protectionists for our local industry i dont know, but ill let you respond. Without a doubt, if you look across the whole u. S. Economy, Lower Energy Prices have actually been a shot in the arm. Its been like a tax cut for most consumers and most businesses because everybody skumz consumes and relatively few produce. Equally undeniable is there are pockets of the country where rigorous activity has been slower. I would ask that the charts i have be entered into the record. Without objection, and the time for the gentleman has expired. The chair now recognizes the gentleman from ohio, mr. Stivers. Thank you, mr. Chairman. Mr. Secretary, im over here. By the way, i appreciate you recognizing the benefit of tax cuts just now. I want to talk to you a little bit about the economy and then Community Banks, and if we have time, Insurance Standards and maybe whats going on with the dol. But my local foundation the columbus foundation, just put out a report that said 145,000 people in central ohio in my area have been left out of this economic recovery because theyve given up looking for work. They dont have the skills they need, there is a real skill gap. If you extrapolate that across the country that means theres 11 Million People suffering today every day even though the state unemployment rates are down to u6. It still says 11 so thats a big number. I hope youre focusing today on those people that are left out. Im not going to ask for comment on that but i hope and pray youre focused on that because these are Great American people who are left out of our recovery and i hope youll spend a little time thinking about them. I do want to follow up on a question mr. Lucas brought up, or questions, about the plight of Community Banks. I had a recent conversation with a lady named linda. Shes shopping for a house and her local Community Bank stopped offering mortgages because they felt like the Regulatory Compliance was too heavy for them. Theyre a small Community Bank. And i wanted to kind of talk to you about in your role at epfsoc. Youve been there a little over two years in your role at fsoc. Im curious, how much time do you spend in your meetings at fsoc talking about trickledown regulation and how people like linda can get loans at their local banks. My district is legalrural. There are no big banks theyre rural. If they deny loans people cant get them. What do you put on that in round numbers . Im not sure i could give you a number. I can tell you every time weve discussed the Housing Finance system every time weve discussed rules, whether its at fsoc or informal conversations that we have, there is a very strong focus on what is the impact on Community Banks and how do we distinguish between is it a standalone agenda item at every fsoc meeting . If its not, i would just urge you to make it a standalone item of impact on our banks . If you could do it people like linda across this country would benefit from it. I do want to switch to International Insurance stuff. Im from columbus, ohio, the ohio state championship football team. I want to use a football analogy for you. It has team usa on the international Insurance Standards sort of taking a pause, taking a timeout to make sure we understand the impact on our domestic carriers of these International Rules before we move forward and charge ahead of importing european standards for American Companies. So congressman i dont think there is any plan to just import standards from europe. Our representatives participate in those to try to make sure there are high standards around the world but ultimately u. S. Authorities will make the u. S. Rules, National Authorities will make National Rules for the u. S. Thank you. Thats great. So have you conducted, as part of team usa in these international Insurance Standards, an analysis of how these potential impacts of the iais standards on domestic Insurance Industries in terms of financial, legal, accounting rejeemzre regimes these u. S. Companies now confront . There is ongoing work on this, and i know our office, Insurance Office pays a great deal of attention to what the impact of any rules changes would be. Do you do it in terms of what it means to policy, alters and customers . Do you take it to that level . I think the analysis is broad. I would be happy to get back to you. Please do and again getting back to people like linda that i talked to, there are a lot of policy holders and a lot of consumers that want to buy insurance products. Any standards you make will affect their ability and their cost of those products. So i would urge you to really take a look at that. I only have 16 seconds left. Have you coordinated or your department coordinated at treasury with the department of labor on this standard, new fiduciary standard the dol is proposing . Have they kept your labor folks in the loop and your policy . We have been aware as its gone through the process. Would you call it coordination, or is it just informing you . Theres been interagency discussion on the policy, butt its but its a department of labor rule. Time has expired. The chair recognizes the gentleman, mr. Ellison. Ive been talking about somalia for a long time, as you know but as you also know weve reached a frustrating point. Back on february 6, the bank that was doing most of the facilitation of International Transfers stepped out of the work, and now were pretty much at the end of the line. What can your office do to try to facilitate these remittances . Congressman, you and i have discussed this a number of times. I know the deep concern you have and were very sensitive to the problems that youre trying to address. I believe you had a discussion recently with our acting undersecretary and discussed the issue at some length. I think that the challenge is and i dont think there is any disagreement on this we all want to stop the flow of money to bad actors. No disagreement on that. I think we all also agree that people who are just trying to send money to their family members who are not bad actors is heartbreaking that they cant do so easily. Forgive me, secretary, i must say it is heartbreaking and i agree. But i think its also a National Security problem for the United States, and heres why. The narrative of al shabaab is the United States is your enemy, they wont even let your cousin send you money for school fees or for food. Dont worry about it, well give you the money. All you got to do is be our soldier soldier. Thats another factor that i think we absolutely cannot ignore. Its a humanitarian crisis but we are also playing to the narrative of a terrorist organization. I would like it if you guys would start thinking of it in both of those ways, not just a humanitarian way. The challenge is while we strive to be clear and we will work with you to be as clear as we can what the requirements are, what the rules are, we do not tell banks or Financial Institutions they cannot participate in this. We also cant give a whole harmless to a firm at the same time. Its challenging. But see, so we have a situation where we need some creativity. And thats what im asking you for. We will work for you and try to be as creative as we can. Let me ask you this. There was legislation that was passed that created a safe harbor but was opposed by treasury. In light of the difficulty, would you guys at least go back and look over a potential legislation that could allow these transactions to go forward and would prevent money from going to terrorist organizations . We will look at whatever proposals are forthcoming, including looking again at things that weve looked at in the past, and we will work with you to be as creative as possible. Earlier in the hearing we were talking about Financial Institutions that are trying to avoid any risk by not by saying theyre not going to do activity at all as opposed to doing it in a way that complies. I think we have a challenge of making clear what the rules are but that doesnt mean that its saying no activity at all. Financial institutions are responsible for knowing what theyre doing. But you know what, mr. Secretary, with all due respect to what youre saying if you listen to the banks they would say that we want to do the transactions but the level of Regulatory Burden is just so high and the level so youre saying youre not stopping them, but theyre saying its more of a wink and a nod that you are stopping them. And youre in communication with these banks, too, and so i find it a little bit frustrating when i hear our federal agency says, oh, were not stopping them from doing transactions but the bank say youre not saying we cant do them, but youre creating an environment where we cant do them. The cancers are not all the same and i certainly dont mean to compare mexico and somalia, but we made progress with mexico working with the Mexican Government and the Financial Institutions where theyre raising their level of scrutiny so that theyre able to avoid having to shut down correspondent relationships they were worried about. I think somalia is a much more challenging environment, obviously. We will work with you on this issue. I only have 35 seconds so let me ask you this. I think one solution is to stand up a somalia banking solution that meets requirements to stop Money Laundering. Were sending them money to fight the troops in al shabaab. How about sending them money where they can have a system thats trustworthy on International Standards . Im happy to look at that. 7 seconds to go. Im sure theres something i should be able to say but thank you, mr. Secretary. The treasury will be in touch. Does the gentleman yield back . I think im over. The chair recognizes the gentleman from tennessee mr. Pitcher. Thank you mr. Chairman and thank you, mr. Secretary, for being here today. We recognize the treasury is going beyond International Standards. We are seeing effects of uncoordinated mandates on our Financial Markets, and in turn, in the real economy. The story is unfolding right before our eyes starting with the socalled october 15 liquidity issues. To cite a few examples, a bloomberg article had the issue that the world manager blackrot quoted, the totality of the regulations have had a dramatic impact on the financing market. A senior at global institution, rbc, noted that the liquidity is nonexistent and a volatile market stating, quote, we took that test october 15 and failed. The wall street journal followed with a piece entitled quote, the treasury markets liquidity is drying up. It rather bluntly notes that, quote, bond trading desks have reduced inventories and response to regulations like bosso 3 in the vocal room. Recently a leader in the fca noted there was low liquidity does not monitor total regulatory monitoring of what can be done. Bloomberg had another article entitled, quote, the total markets legendary liquidity has been drying up. It highlights impacts on quote, the u. S. Costs to borrow and implications for, quote governments, businesses and individuals when they borrow. Rather directly it cites quote unintentional consequences of new financial regulations that have made nondealers less likely to regulatory and implement trades. Lastly, the nonpartisan and independent Center Financial stability recently released a report on the dire situation entitled liquidity shortage houston, we have a problem. It outlines storage drops and bank risk taking, and the stars Financial Markets from liquidity and is detrimental to future growth by exposing the economy to potentially unnecessary shocks. The reduction shows no sign of abating with a series of successive drops. Mr. Secretary, with this mounting evidence of all of these experts, when is it time to get worried . And what datadriven reexamination is fsoc or the u. S. Regulators doing on combined effects of regulations . So, congressman, i think the question of liquidity is an important one, obviously. The liquidity of our markets has been a source of great strength. I think that a lot of the incident analysis on october 15 was not datadriven, and i think as we come to understand more about what happened on october 15, we realize that it was a confluence of factors, and i look forward to discussing it at length. I think what was going on was a combination of reaction to the news of the day and Decision Making, and were obviously looking at whether there were questions of liquidity. But i dont think jumping to the assumption that it was a result of regulation will bear out to be with all due respect mr. Secretary, and youre very knowledgeable when it comes to these issues, but these are experts that are dealing with this every day that know their business very well, and theyre seeing these things actually happen. And so what were saying is show us where are we . Are we going to continue to just add more and more and more without having you know, something concrete of this actually working or hurting . I think on the broad question of is it working, if you look at the result of financial reform, weve made our system safer and more resilient. That is a positive that were seeing benefits. We have made our liquidity problem worse by drying up the market and not allowing banks to be able to loan money to people and help folks out. Thats whats happening. On liquidity, there are important questions, but there are a lot of things going on including where we are in the Business Cycle and how new markets are developing and new trading platforms are developing. And i think it is just oversimplified to say the only thing happening ive got 15 seconds. Would you be willing to just work with committee or provide us data driven id be happy to. This is an important question. Obviously five minutes is not enough time to exhaust it. I would be happy to do it. Thanks very much. The gentlemans time has expired. The chair now recognizes the gentleman from michigan mr. Kildee. Thank you for being here and happy st. Patricks day. Before i get to my question, i just want to ask you something i know ive raised with you and your staff regarding maybe communities particularly in my state and the district that have been hit hard over the decades that they have markets that are essentially not functioning because of the overhang of abandoned, empty, did ilapidated structures for which there is no market and there is no market to take those structures down. People wont come and take them out because theres no use for the property. You have been quite willing, in working with us through the t. A. R. P. Program through hardest hit dollars. As you said earlier in the hearing today to tailor the use of those dollars particularly for the community that has been really struggling to kind of get their markets reset. I mention that only because obviously we have a bigger problem yet to solve. What weve been able to do with hardest hit has been very significant, and i just ask that you continue to Work Together to try to find solutions to that particular problem. Congressman im very proud of the work that weve been able to help the city of detroit do in that regard. I think its been very significant in the citys whole Recovery Plan and have remained in touch as you know with the mayor to be of assistance and provide advice. I know weve had some discussions about hamp. Hopefully we can continue those discussions. There might be a way to get there as well. I wish i could be optimistic, but were looking to see what we can do and would like to see the city of detroit be able to continue to remove dilapidated housing. Its had a huge important effect. I appreciate that. I have a question for you on currency issues. Coming from the auto sector and coming from communities that were so much a part of the development of the Automotive Industry currency manipulation particularly by japan and other countries results in us exporting our demand. When we export demand we export jobs. My hometown of flint has gone from a high of 79,000 people working in the Auto Industry to about 10,000 now and thats over just a period of a few decades which kind of relates to the incredible problems that we face in trying to reset our markets. But i read something recently that i was concerned about, and i wanted to ask if you could comment. There is a New York Times piece that quoted and i guess well see if it was accurately quoting you as saying quote we remain concerned that an enforcible provision im talking about the context of ttp that the enforcible provision of currency could have an impact on our ability to protect American Workers and firms and set back our international efforts, unquote. I guess im concerned about from our perspective the perspective i represent, trade is not the problem, trade deficits are the problem. And i see currency manipulation currency management by our competitors is being not just an important concern but the central issue when it comes to competing in the auto sector. I wonder if you could comment, because it would seem to me that getting a deal shouldnt come at the sacrifice of what i would think is a central ailment of a deal, and that is the ability to deal with currency manipulation. Could you comment . Congressman, i think we agree that countries that engage in unfair practices to gain unfair advantages need to be pushed back. We do that through the multilateral channels that we have at the g7 and the g20, the imf. We do it aggressively on a bilateral basis. I think if you look at a trade agreement and whether it should be an enforcible discipline in a trade agreement is a different question. There are legitimate monetary policies. I think qe in the United States and other countries has been a legitimate domestic tool for a domestic purpose for there to be the kind of Economic Activity that could promote a recovery. I dont think those policies should be subject to trade review the way other issues are. I do think i dont think any of us believe it, i dont think you believe that qe is tantamount to currency manipulation for trade purposes the way weve seen other countries that purchase other assets from other nations in order to do the same thing. I dont but i know that there are other countries that believed it was at the time. There are other countries that believed it was the United States gaining unfair advantage. But even under existing standards, it wouldnt pass the test, so somebody might claim that. I guess my point is is that you dont get the write the standards on your own, and the challenge is in a world where there are standards frankly, we dont write them on our own, but we wouldnt sign an agreement that didnt have standards we thought protected our practice. The time with the gentleman has expired. The chair now recognizes the man gentleman from indiana mr. Spitsman. You said that its necessary to achieve our international votes. It has been extremism and that if International Terrorists had jobs they would drop their weapons. A quick news search and what weve seen on the news is that terrorists are actually highly educated men and women from some of the most advanced economies from around the world. So i question this jobs theory, and i believe we should focus on shutting down terrorist Financial Resources by whatever necessary. I do agree with your former undersecretary for terrorism and financial intelligence, david cohen, when he told this Committee Last year your goal was to financially isolate the Islamic State. In your opinion, have we been successful . I think we have made a lot of progress. As i was saying earlier the challenges, they have internal sources of funding that are substantial. Were getting a lot of cooperation from our allies in europe and in the region. We have more work to do. There are sources of funding within the areas they control that appear at the moment to be able to meet more of their needs than we would like. I think we need to continue to try to find ways as david said to isolate them, but not just isolate them, cut off the funding they need to pursue what is really an evil agenda. How many i seeslamic state accounts have been frozen . I would have to check. There are not a lot of Islamic State accounts, so thats not the question. The question is how many parties weve stopped that are doing business with them. Do we know how many parties weve stopped . I know if you look at the funding available to isil, theyre not in the last year. Thats why im focusing on the fact its complicated. We have tried to cut down the regulation of oil through a combination of working with countries that have the ability to stop the transactions but also through military action thats disrupted a lot of the activity. Im not saying its 100 . They obviously have resources to continue. But if you look at where the sources are, a lot of it is coming from internally. Banks that are in the areas where they control and they go in and loot the vault. Do we have any idea, have any assets been frozen or seized or anything like that . I would have to get back to you, but i would be happy to. If you could get that information, that would be great. I understand that treasuries deploy new strategies to combat the United States new funding model, as you mentioned, oilselling artifacts. Which of the new strategies have been most successful . I think if you look at the external sources of funding they have not grown, theyre not getting the kinds of contradictions contributions that other radical and terrorist groups have gotten externally. Its not zero, but theres still more work to do. I think if you look at where theyre exploiting the oil source, its a less significant source than it was. I think the challenge is they control large swaths of territory and their tax system is not sending people letters. But do we know do you have any metrics to measure how were doing . They need money, obviously to fight this war against us. We do and we had a sense of what their budgetary and revenue situation is and i would be happy to what is that, any idea . I would need to do it in a different setting. How high of a priority is this for you . Very high priority. Obviously, the ability for isil to function is a question of do they have the resources. Youre not doing to dial down the resources as long as theyre on the ground there. To the extent theyre controlling internal resources. If you take a town and seize the vault, its empty. They dont gain territory, they dont gain a new vault. The part thats potentially kind of a continuing source of support is extracting money from people who live in the area, usually potentially with force. Thats something that is its something we do have a real concern about. But thats not something we can do outside of the area. Thank you. If you could get us that information, i would appreciate it. The time with the gentleman is expired. The chair now recognizes the gentlewoman from ohio. Thank you, gentlemen. Im on your left over here. Thank you, mr. Lew for coming here today. The good and bad about being at the end of the line is many of the questions have already been asked and answered. But as i was listening to you, you said protect National Security. And that reminded me a couple weeks ago, i had several of the bankers in my district come in from small districts to talk about one of the many questions talked about here today. One of their common themes they talked about was to empower cybersecurity and data breach protection efforts. And they wanted to make sure that congress and members of congress adopt the National Standard for protecting sensitive consumer data. And i support this. As i recall when you were here before, you also talked about the imf being a popular promoter of National Security. When you think of what were going through in this 21st century, cybersecurity is closely linked with National Security. I dont think well get an argument from anyone on that. Can you tell me what efforts or things that your office is doing in conjunction with the imf and other foreign counterparts. Well, we had a lot to do first on our own in the u. S. With both public and publicprivate coordination before we even get to the international question. Were putting in a substantial effort into working in the Financial Services sector where the sector lead on cybersecurity and treasury in making sure that we that the best practices are put in place i believe that the National Institute of standards and protocols are best practices. What we have found is that there is a real need to collect and share information. Weve done as much as we can administratively to promote that information sharing. There is legislation pending that we think would be very beneficial to getting us to the next level of being equipped to deal with what i believe is a very profound threat in the area of cybersecurity. I dont know the ceo of a Financial Firm that doesnt spend a part of every day worrying about it. I dont go a day without worrying about it. It is a reality Going Forward that we have to put the effort in both to doing what we can individually do but collectively in a sector sharing information so that we can find and remediate problems and prevent others from being hit if one has been hit. On an international basis i think that we look forward to sharing best practices. It is something that is a bit challenging because each of us individually are developing our own domestic best practices in realtime. Ive had conversations with some of my International Colleagues about it and theyre doing in their systems in one way or another what were doing in ours. I think if we could raise it up a level and cooperate more internationally, it would be a good thing. Let me i have a minute left. We also touched on the export industry. Im from the great state of ohio and we have the ninth largest export industry in 2014 and in the previous year, that industry allowed us to employ some 259,000 employees. My district also had about 10 or 5. 7 billion of the 52 billion worth of goods in the state of ohio. You stated that when foreign economics falter, they import less from the United States businesses and they invest less in the United States. Can you give me some idea of what the delay on us having export import would do or how it would affect the imf . So let me separate the questions. You know, there have been a lot of questions today that have suggested that the imf shouldnt have intervened when europes economy was in a state of crisis. Europe is the largest trading partner. If europe doesnt recover, their demand doesnt recover. If their demand doesnt recover, they dont buy u. S. Goods which means we dont export. So we have a very direct interest in making sure the countries who import from us have a functioning economy to maintain demand. So i think we benefit quite directly from that. The export back is kind of the other side of the legislature. Its a question of whether our companies can compete on a level Playing Field. I just dont think where other companies are offering subsidies for exports, u. S. Companies should be asked to legally disarm. The time of the gentlelady has expired. The chair now recognizes the gentleman from south carolina, mr. Mulvaney. Thank you mr. Chairman. Just very briefly, i want to follow up on a question that the gentlelady from ohio asked you. You said not a day goes by that you dont worry about cybersecurity. Was that the case when you were at the state department . I will yes or no. Did you worry about cybersecurity at the state . Then ill go on. I wasnt secretary of finance until i was at treasury. So you didnt worry about cybersecurity when you were at state . I didnt say i didnt worry about cybersecurity. Thats my point. Well move on. Heres a question i want to ask you today because you sent a letter last week about the debt ceiling, something we havent had a chance to discuss much, a little bit here today. You closed with a typical letter saying you were beginning to use extraordinary measures, that the debt ceiling technically had been reached and you closed the letter by saying that the creditworthiness of the United States is not a bargaining chip and i again urge congress to address this matter without controversy or brinksmanship. I happened to share that sentiment, so i thought i would give you the opportunity now to try to walk back some of the brinksmanship and take this opportunity to ensure in the Financial Markets that interest will be paid on the sovereign debt of the United States. Look in the camera and tell people we have enough money to pay the interest on our debts and you have the technical ability to make those Interest Payments on the debts. And call the Financial Markets that might otherwise be royaled by concern over nonpayment of debt. Congressman, i hope were not going to have another debate like weve had in the past where the world is hanging on whether or not the United States i hope the same thing, mr. Lew. You have the ability now to say we have enough money to pay the debt and we have the ability to pay the debt. The only thing that keeps us from paying interest on our debts is whether or not the president chooses to do so. Isnt that true . What ive said many times and remains the case is if we hit the debt limit and congress does not act, extends it as only congress can do we do not have the ability to meet all the obligations of the United States, and it would be the first time in history we couldnt pay the bills. Youre asking for one set of bills, and ive acknowledged to this committee that technically we could make Interest Payments. We do not know the consequences of trying to make some payments and not others. You and i have discussed this before, this is not new for either one of us, and i had the chance to ask you the last time you were here a question. Previously you had testified to the senate that you didnt have the technical ability to prioritize payments, and then you wrote a letter to us right before your last hearing in front of this committee and said you did have the technical ability to do that, and i asked you a question. I said, when did you know that they in this reference thats the new york vet were technically able to make the payments . You said i cant say they can make the payments. I interrupted you and said thats not my question. You said you would have to check. Have you done that . You told this committee you would check on when that knowledge was available to you . Did you do that since the last time you were here . What i asked the Senate Committee you told me you would check on that knowledge of when the information was made available to you. Did you do it . I did it but can i tell you the date now . I cant tell you the date. You didnt know last time you were here, then you knew and youve forgotten again. We dont have the technical ability to go through all the bills the United States pays and say were going to pay this one and not that one. The technical question of can we pay interest . Yes, we can. But what about benefits to Social Security . What about veterans . What about vendors . What about electric bills . Weve had that conversation, mr. Lew. What about the money for giving swedish massages to bunny rabbits. Wee do that. What about money for studying whether or not sea monkeys synchronize when they swim . Are those payments just as important as the debt . I believe we pay our bills. We make commitments to veterans, we pay. We dont have the ability to make the kind of decisions why wont you take steps to satisfy and calm the Financial Markets in this country and around the world to let everybody know who holds u. S. Debt that their interest will be paid . Why wont you do that . Did the word all payments come out of my mouth . I have 30 seconds. Heres my point, mr. Lew. You want the brinksmanship. You need the brinksmanship. You need financial turmoil in order to accomplish what you need to accomplish politically. All im asking is to do your job and say interest has been paid. My job is to make sure we pay all the bills of the United States. And we pay the interest. Do we have enough money to pay the interest . I cant believe, mr. Chairman, i have the secretary of the treasury of the United States here who has the opportunity to satisfy our debtors both nationally and internationally that we will pay our debts on time and he refuses to do so. It is a der likzeliction of duty. Administration as opposed to these efforts in may 2013 you personally signed a letter expressing opposition to several bills, then under consideration this committee, technical changes to title 7 of the doddfrank act. One of those bills to exempt commercial dnch title 7 passed the house by a vote of 411 to 12 12. Another swap related information with foreign regulators passed the vote by entered into by nonfinancial end users with affiliated entities passed the house by voice vote a unanimous vote. The administrations unwillingness to support even these modest changes to doddfrank each of which commands virtually unanimous support from republicans and democrats suggest that nothing we send the president will be deemed fit for his signature. The administrations insistence on defending the doddfrank brand at all costs is made all the more mystifying by the fact that the primary author of the law, our former colleague barney frank has identified a number of provisions that he believes should be revisited. Whats more, then fed chairman bernanke in his last hearing with us listed multiple bipartisan legislative reforms that policymakers could unite around to improve our financial regulatory system. They both recognize that a law that runs 2300 pages and imposes at least 400 mandates cannot possibly be perfect. And that changes are therefore warranted. Put another way, we shouldnt treat doddfrank as the ten commandments, in demanding our complete devotion. So my first question for you secretary lew is what reforms could we pursue that you would not label as unraveling doddfrank . For example, in an appearance before the Committee Last july chairman frank labeled as arbitrary doddfranks 50 billion threshold for automatically designated banks as systemically important. Would the administration consider modifying doddfranks threshold, yes or no . Congressman, as i said earlier, we treat 50 billion institutions different from trillion dollar institutions both in the law and in the regulations, and theres substantial regulatory flexibility which i believe should be used to address the difference circumstances would you support changes in doddfrank that would recognize those differences . I, i, i am im not of the view that it requires legislation right now until we know that the that the the administrative flexibility is inadequate. I think some of the earlier cases that you cited were pieces of legislation that were being passed while the rules implementing the original law were still being drafted. I dont disagree that a complicated piece of law is not wholly writ. On the other hand, i think if we look back over the last four years, there has been serious effort to repeal doddfrank and to undermine some of its core protections that have made our financial the thing i wanted to point out in that with those passages where they were passed in a bipartisan nature unanimous some of them. So to say that this shouldnt have happened or was premature. I think the vast majority of people up her on capitol hill disagree with you. And i also think Financial Markets disagree with you that this is necessary. In the same testimony chairman frank talked about exepting banks from the volcker rule. Several others have expressed similar sentiments. Would the administration consider a small bank exception from the volcker rule . Just to be clear the only small banks that are affected are those that engage in proprietary trading. And the starts for compliance for small firms reflect the differences between small firms and large firms. I think the challenge is to make sure that all of our Financial Institutions are as safe and sound as i see the challenge as getting the administration to work on some of this and stop protecting a law that its author said needed some changes. Its passed in bipartisan ways over and over and over again. Of commonsense reform any legislation that passes out of here can be improved. And absolutely this is a law that could be improved. It would be very helpful if the administration would join with us in trying to make some of those improvements. My time is expired. I yield back. Chair now recognizes the gentleman from florida, mr. Ross. Thank you, mr. Chairman. Mr. Secretary, thank you for being here. Read nothing into the fact that im on your extreme right here today. I do want to talk to you about something that i think if we have some bipartisan support to address and recently just last month, fsoc came back with regulations dealing with transparency with regard to Financial Institutions and while i think its a step in the right direction im concerned that it didnt go far enough. They did not address concerns about how to mitigate systemic risk. Did not create a process that would reduce potential threats to the Financial System by allowing a companys primary regulator to identify risks before designation. For example todays law as it exists today a nonbank Financial Institution that is being considered as a doesnt have any guidance to be made aware that they need to be in this particular situation. They dont have any mechanism to to that fsoc can provide them with about their profile to help them get out of it. Weve got no notice. And my concern is that while transparency is very important weve got to make sure that if our ultimate goal is to remove them from a sifi designation they have the opportunity by way of notice, by way of guidance in ort to get out of there. So i have some proposed legislation that has bipartisan support that i would will be filing here shortly. But it addresses the method and manner by which fsoc would deal with systemically important Financial Institutions specifically not bank ones. Wouldnt you agree their primary focus should be to identify and ensure systemic risks are addressed rather than simply delivering a nonbank entity to the Federal Reserve for yet another undefined regulation . Congressman, i think that if you look at the new procedures that we adopted they were very much designed to engage with firms earlier, and would you not agree that codifying these rules may be in a good position . Because your successor may take a different position. And obviously this seems to be the step in the right direction. I think if you look at the evolution i mean fsoc is a 5yearold organization. It had a good initial set of rules. It now has a refined approach. There was a lot of communication going on. But even before the new rules changes, so its not as hard of a change as but i guess you would agree that the rule change i dont think theres any going back. I think these things move forward. To a great he degree of transparency and procedure, would you not agree . Weve tried since ive been share of f sok on multiple occasions to expand the transparency. To increase the communication. And we will continue to look for opportunities to do that. But returning them to the fed for regulation when it may not be their primary regulator that might not be the best way to address this . The process of designation is one where the responsibility on fsoc is to determine whether or not theres a systemic risk. Correct. The remedy is prescribed in the statute that the fed supervises, if that determination is made. And with regard to International Standards weve got fsoc dealing with the global systemic Financial Institutions. And i think that theres been some concerns, for example the independent Insurance Expert on fsoc said that different types of Nonbank Financial Companies may be receiving disparate treatment both in the counsels analysis and processes. Is this something that you would agree we might need nor aggressive representation on behalf of the Insurance Industry in dealing with these Global Capital standards involving Insurance Companies . I think that our representatives have been advancing the interests of the u. S. In this process effectively. Theres been a lot of communication between federal and state officials between private secretary but understanding the impact that it can have on our domestic Insurance Market if were having to impose upon them International Standards which we had a chance to preempt had we had a little bit more aggressive representation . I think that the representation is appropriate. The consultation is appropriate. Theres obviously a lot of interest and a lot of consultation. Lastly i want to address one thing with regard to Asset Managers. You know that the American Action forum did a study in 2014 and found that Additional Capital requirements on Asset Managers could cost american retirees at least 100,000 in potential savings accumulation. And they get this because they say that now with these increased capital standards which is as much as 8 and most of the people who invest in these funds are saving for retirement, saving for college funds, this has a Significant Impact on mom and dad and grandma and grandpa that are trying to set aside for the future. Does fsoc take into consideration the impact that this has on the bottom line of these individual savers . The way fsoc goes through the process of determining whether or not a firm presents the kind of Financial Stability concerns is by going through an analysis of what the firm and they should take that into consideration. Thats the principle we want to protect the consumers. But just to be clear an asset manager as we went through the process, and came to realize that there were more concerns about specific activities than necessarily the firms that were being looked at, we also took a step back and shifted the focus to look primarily at activities that may need attention. I think that shows the openness of the process time as we go through. Time of the gentleman has expired. For the benefit of the witness, and remaining members, it would be the chairs intention to clear the present queue allow no other members in the queue. Votes are expected on the floor sometime within the next 15 or 30 minutes. We will attempt to clear the queue prior to votes. Gentleman from North Carolina mr. Pittenger is now recognized. Thank you, mr. Chairman. Mr. Secretary, my question relates to terror financing. Id like to ask two questions and i hope to get some precise answers. First question involves information sharing between United States government and financing terror financing. Mr. Secretary, the Financial Crimes Enforcement Network has two responsibilities as i understand it. Oversight of Financial Institutions to prevent Money Laundering as well as information sharing among the agencies. With that in mind, its my understanding that u. S. Law enforcement, including u. S. Customs, and border patrol, have access to fncen data but only can access the data base in the case of specific situations, and they must request that. But theres no information sharing agreement. Between treasury and customs. This seems to me to be very illogical and would impede our ability to be effective. Particularly in view of the Enormous Growth and trade base Money Laundering. I would really appreciate a very precise response on the explanation of when this would be corrected, and if this can be done without any further legislation. Congressman, id be happy to get back to you on the specific question about what the agreement for data sharing between fncen and the border Customs Border patrol is. In general there is cooperation with Law Enforcement entities, but obviously its within boundaries to protect the fact that we have access to information that shouldnt be shared broadly. Id have to check on the specific documentation. Mr. Secretary, these are two Government Agencies that are dealing with terrorism. And trying to avert that. You have been ahead of operations of the state department certainly understand the importance of agencies working to the. Has it occurred to you to maybe sit down with secretary johnson and try to hammer out an agreement . Well, i do sit down with secretary johnson on issues that are brought to my attention that require us to meet. I have to look in to this question can you suggest to me any reservation that you have or why we would not have an agreement a working agreement between customs and between the treasury . I started out with a strong bias that we ought to work as one government. We ought to cooperate and collaborate and ive spent most of my career trying to take some of the boundaries and barriers down. So i start out sympathetic. Mr. Secretary, youve said earlier in your testimony that we have very aggressive, and effective laws for the banks. You said that we have systems in place for the banks. This seems to be a very prudent system to have in place to be able to identify important data for tracking terrorism financing. Yeah, so congressman im happy to get back to you. It has not been brought to my attention that there has been an issue between treasury and cpb. Would you agree with me that there should be an agreement, an information sharing agreement between the two agencies . I agree there should be cooperation to the maximum extent we can to do our jobs, because theres sensitive personal information involved here, obviously there are limits. I cant tell you without looking into it okay ive got one other question. Mr. Secretary, of course as you know, the terrorists are receiving other ways for their financing, their cyber crime clearly is a major growth industry for them. We continue to identify the hackers. However they live in jurisdictions like the former soviet states that we have no extradition treaties. Im thinking of ukraine in particular. But id like the precise discussion of how we can on with cyber crime extradition there similar to other countries. Well, obviously, we have taken actions, some of which have limits because of extradition. We cannot compel extradition where there arent extradition treaties. What we what we can do is look at what other tools we have where we see evidence of cyber crimes and are looking to see what other tools we have available. Regarding the current concerns we have today, is it on your agenda to try to work out these extradition agreements . Obviously extradition is not my but you see the problem. Do you believe that this is something that should be on the agenda agenda . It is on my agenda to look at what we can do. If we dont succeed with extradition. I leave to the Justice Department the question of extradition. Could you get back with me on this information sharing agreement . Sure. The time has expired. The chair recognizes the gentleman from connecticut. Thank you, mr. Secretary, for being here for your patient and your evenhanded focus on our International Organizations and obligations. I want to ask a question which is related but tangential to International Policy specifically with respect to the upcoming potential trade agreements. As you know we are having a vibrant discussion on our side of the aisle about these trade agreements. One of the concerns and criticisms leveled at tpp in particular would be that the investor dispute resolution mechanism could open an and extrajudicial path to the alteration of our financial regulatory structure resulting in elements of dodd frank being changed or eliminated. That is probably greeted with joy on the other side of the room but concerns us quite substantially. I wanted to just give you a couple of minutes to give us your perspective on whether we should be concerned that investor dispute resolution could, in fact, erode some of the protections that many of us really fought hard for. You know, first i would say if you look at the history on investor state dispute settlement, the United States i dont believe has ever lost a case. So our track regard is strong. Theres a reason for that. We have a system of law. We have an evenhanded way of administering law. Our system, i think, will continue to be durable even if there were challenges. When when you look at why it is an important issue, when american businesses are doing business abroad, there are concerns about things that could amount to ask appropriation or blocking the ability to take allow. The history of investor state disputes has been to give companies the ability, individual investors the ability to defend their interest. Its not meant to undermine organic laws that are legitimately in place. To the extent there have been concerns that there has been some overly aggressive use of investor state disputes, i know that that is something that negotiators are looking at dealing with in the context of this negotiation. The facts as i have heard them is that the United States has been subject to 16 actions and investor dispute areas all of which we have won. Let me push you a little bit here. I heard you say doddfrank and other statutes would be durable. Im not sure thats good enough for some of us. You said its not meant to undermine our regulatory structure. Im hoping you can paint a slightly more granular picture of that. We would be quite concerned if all of a sudden you know after the work of this body i agree. We find ourselves, doddfrank being amended because i totally agree. I dont think we face the risk. I mean if you look at you know one of the issues foreign banks being subject to doddfrank, thats well based in u. S. Law. Theres not thats not at risk of being, you know reversed in an investor state dispute. Its really meant to deal with kinds of policies that are not based in the kind of Legal Foundation that a law like doddfrank is. So you dont regard this based on what you know, and you probably know more than most of us about the negotiations around tpp in particular you dont believe that there is a meaningful risk that a trade agreement would essentially undo the work of this body . No. Ill tell you moving from tpp to ttip we have resisted bringing prudential regulation into the scope of a trade agreement because we agree 100 that prudential regulatory standards are not something that should be overturned by some trade review. I dont believe that isds gives you the ability to do that. We certainly have resisted in the context of ttip doing it through the front door. And i agree 100 that we ought not to put our provincial regulations up for review in a trade context. Thank you. Mr. Secretary. Mr. Chairman, i yield back the balance of my time. Chair recognizes gentleman from pennsylvania, mr. Rothfus. Thank you mr. Chairman. And thank you, mr. Secretary for being with us today. Its past 1 00 already. In 2014 the socalled brics countries, brazil russia, and south africa agreed to fund a new Development Bank. The countries contributed 50 billion for initial capital for the bank and its expected the bank will start financing projects by the end of this calendar year. Many see this as a challenge to the imf and the world bank because they have more recent memories of the lack of electricity in their own countries and they continue to build out their grid. The brics countries have a very different view on fossil energy than the imf, the world bank and the president of the United States. While we unfortunately continue to pursue policies that are squarely in to killing coal and coal related projects, the brics countries continue to give strong support to their Coal Industries and leverage them to drive Economic Growth through reduced Energy Prices through exports. Experts agree that the new Development Bank will play a significant role in the financing of new coal fired power plants around the world, particularly in developing countries that are desperate for affordable and reliable energy. While this is certainly good news for these countries, it also negates the policies of this administration, the imf and the world bank to prevent this coal projects from being financed. Given what the new Development Bank is doing why does the administration continue to pursue its misguided anticoal policies . Congressman, our objective is to promote Sustainable Energy resources to be developed. Wont that objective result in just funneling developing countries to the doorsteps of russia and china . To the extent that you were talking about very poor countries a very poor countries that dont have an alternative to coal, our policies provide assuming the appropriate technology is used, for financing those projects. Those policies consistent with what the new Development Bank part of the challenge is none of us know the policies of these new International Institutions. Well the policies is theyre going to fund these projects. And my question is wont this actually do more harm to the environment because it will just result in many more cole projects being built using chinese and other Foreign Technology that is not as advanced and clean as ours . Frankly i think the challenge we have is for the u. S. To continue to show its leadership in the international Financial Institutions weve helped build. Its one of the reasons that imf reform being ratified is so important. Our ability to keep action in the organizations that have high standards is critical to our leadership. I think that its not an accident that emerging economies are looking other places because theyre frustrated that frankly the United States has called a very modest and reasonable set of reforms in the imf. We will maybe i would suggest that theyre going to go to the new Development Bank because they know they can get their coal project financed and they cant do it through the imf or the world bank because of this administrations policies. I know that there are other countries who are joining those institutions that are also concerned about environmental standards, and i think that those issues are going to have to be worked out as the new banks develop their rules. What were responsible for is what we do directly and what we do through the institutions that we are playing a leadership role in. Right. I wanted to ask you a quick question. Because i saw this in your written testimony. You didnt bring it up in your oral testimony. You said when it comes to global challenges such as the environment, Food Insecurity and gender imbalances, the world continues to rely on multilateral institutions and strong u. S. Leadership within them to help developing countries make concrete investments to meet these challenges. Its tangential but there is a huge gender imbalance in asia. There are 15 million to 20 million missing little girls because of the course of onechild policy that china has. And the disproportionate impact thats had on little girls, its safer to be an unborn little boy than an unborn little girl in china. Can you point to anything that this administration has done to address that gender imbalance . Congressman, i think that there are a lot of things in china that they need to take a hard look at. Obviously this is a policy that theyre continuing to review and i certainly hope that they have a change well i would suggest it might be helpful if the president can rescind the mexico city policy. Tell me something when youre deputy secretary at the department of state in 2009 and 2010, did you ever send an email did you ever send an email from a nonstate Department Email account to secretary clinton or other or any other state employee . I, i, i thats quite awhile ago congressman. I generally used my government email. So youre saying it is possible you would have used a nonstate Department Email address to send something to secretary clinton . Congressman i, i used my official email for email did you ever receive an email from secretary clinton through a nonstate Department Email account . I drns i would have to go back. What about when you were white house chief of staff . Time. Its a long time ago congressman. I dont recall. Time of the gentleman has expired. Chair recognizes gentleman from colorado mr. Tipton. Thank you, mr. Chairman. Mr. Secretary, thank you for taking the time to be here. In your Opening Statement you talked about the american recovery. Thats going on right now. But i did note that you did not speak to the point that we have the lowest Labor Participation rate in 37 years. That were seeing for the first time more Small Businesses shut down than there are new business startups in this country. One of the important issues we have particularly in rural areas is access to capital from more Community Banks thats going on. Recently senator warren stated that the Financial Performance shows that congress and the regulators have done a good job of tailoring the rules to be able to protect Community Banks. Do you agree with that . Ive said in response to several questions that i think both the law and the regulations implementing the law take into account of the differences between small, medium and large size institutions. There may be additional flexibilities that need to be used. But i generally agree that there has been a lot of attention paid to to not treating all Financial Institutions the same. Let me give you an example in my district. Just met with a small Community Bank in delta colorado. Colorado First National bank. They said the burdensome Capital Requirements and excessive regulations required the money to be able to spend money on just complying with regulations as opposed to being able to grow the bank and be able to have access availability and capital through loans for that local Community Bank, and they said the bottom line is, they really feel that they no longer run their bank but its being run by the federal government and by regulations. What do you tell that small bank . Look i know that there are a lot of pressures on Financial Institutions of all size. What i would tell that bank is that we have designed rules and the regulators have designed rules, to try and take account of the differences in terms of the level of reporting, and whats required. And it would really depend what the specific issues were. Youve spent a fair amount of time being concerned about small Community Banks, and addressing that in your meetings . Yes. Yeah. You know it was interesting, because we did a review of the minutes of the 40 fsoc meetings conducted from 2010 to 2014, and yielded not a single reference not a single reference to Community Banks or the effect that Regulatory Burdens are having on their viability. When did you talk about it. I mean many of these issues are not fsoc issues writ large. Individual regulators but under section 112 of the doddfrank act that is your responsibility. We we i i have over the last two years since ive been chairman of fsoc taken seriously the coordination responsibility, particularly in areas that involve some of the the the housing issues. And there have been conversations, but its not in the context of an fsoc meeting, its in the jurisdiction of the individual regulators. And that theres no mention of dealing with the small banks, and you havent dealt with that in those meetings. I want to be able to drive home the point that we have not ruled out doing a more formal review but weve been in the implementation stage where agencies had the first round of implementing doddfrank on their plates and thats really what weve been engaged in. Id like to go back actually to the chairmans first line of questioning in regards to the fssb because im not really sure i heard an answer. To that question. When the fsb tells members that they expect full, consistent and prompt implementation on agreed reforms on International Finance systems, is he assuming that you will obey . I think that its well known that the decisions on Decision Making in each country are made by the National Authorities in that country. Weve always been clear that we retain control of when does the fsb, i think it was metlife when did they determine that they were going to be i would have to go back and check the date. But we made an independent determination in fsoc how long after the fsb review and the fsoc review were entirely separate. Are decisions made by the fsb do you believe those to be binding on treasury . I believe that the f what the fsb process does is it permits us as a country with the highest standards to drive the Global Standards to a higher level which makes it safer Financial System and a more level Playing Field for the United States. But in each case countries ultimately retain their own National Authority over their regulatory activities. So again, im sorry. Im just not really hearing the answer truly to that question. Once the fsb makes it do you view that as being binding . That was kind of the original agreement . I dont think theres anything about participation in the fsb that relieves National Authorities from the ultimate responsibility for making their own policy. The time of the gentleman has expired. The chair recognizes the gentleman from texas mr. Mr. Williams. Thank you mr. Chairman. Thank you mr. Secretary for being here. Ill be somewhat brief here. Im a Small Business owner. Im a main street guy. I employ a lot of people. A job creator and auto dealer. I would say this quickly. I heard you say earlier that before we could address the 50 billion or under banks we need to get doddfrank completed first. I would ask you, dont wait that long. It is the worst legislation i think we have seen in a long time. You cant wait that long. If you wait that long youre going to lose Small Businesses, youre going to lose banks, were going to lose jobs. So i just humbly ask you to think about addressing that before you totally ramp out the complete level that doddfrank because i can tell you from a bankers standpoint people are actually theyll tell you theyre hiring more regulatory officers than they are loan officers. Thats a real problem. That being said, let me say this, you said the u. S. Economy looks like a welloiled machine when compared to foreign markets. I would say to with an 18 trillion debt thats not a welloiled machine. And that statement bothers me. The longterm outlook i believe for the u. S. Economy is not that great. It could be considered bleak. Just last week the Congressional Budget Office issued a report that estimated that president obamas budget would add nearly 6 trillion to the deficit over ten years. Let me repeat that. 6 trillion added to the deficit we have now. Thats debt held by the american public, its projected to grow rapidly as the share of the economy grows in the years ahead, rising from 74 today to 106 in 2039. Now, the rising cost of debt will have a significant consequence as we all know on the economy and the federal budget. So let me ask you this, you stated that every week we roll over approximately 100 billion in u. S. Bills. And if u. S. Bond holders decide that they wanted to be repaid, rather than continuing to roll over their investments, we could unexpectedly dissipate our entire balance. Now with that being said do you think its healthy for the treasury to be forced to rely on reissuing securities to make principal payments on securities coming due. And how is that any difference from taking out cash advances on a credit card to pay bills on another credit card . Congressman, we have the deepest treasury market in the world. I think that if you look at the progress weve made on fiscal policy in the last seven years, six years, its been enormous. We had a deficit that was just about 10 of gdp. Its now coming below 3 of gdp, and the ten year budget window we stay that way. If you look at the challenges we have in the nearterm for this country its that we do the things we need to keep our economy growing and that means investing in people and education, it means investing in infrastructure. And frankly, it means investing in defense. One of the problems i have with the budget thats being unveiled today is that its short funds, the critical things we need to defend our country and to build a Strong Foundation for the future. What we need is a bipartisan conversation about how to maintain a responsible fiscal path. But with all respect, fiscal position today versus when this Administration Took Office is vastly improved. And i think weve done a lot of hard work to get there. I know in the past you and i have discussed you have never really been in the private sector. Ive only been in the private sector. Im going to tell you, the economy is not that good. When you have high unemployment weve got, the people on food stamps, we can get into that. Its not that good. But you didnt really answer my question. When you said that if the bond holders decided they wanted to be repaid, could we do it . The the, the challenge that we have is making sure that we remain able to fund all of our needs. That means funding new debt it means rolling over old debt. If you look at the way our trajectory looks youre going to 2039 the budget for the next ten years for the period immediately beyond that, we stay in the sustainable level of both deficit and debt as a percent of gdp. Theres a lot of work we still need to do Going Forward on a bipartisan basis. But weve made enormous progress. Let me ask you one other question. Cbo projects interest on the National Debt will make up 90 of the deficit in 2023. Thats a huge figure. How can we expect to see balanced budgets if future Interest Payments on debt will continue to force deficit spending for decades when we say an 18 trillion deficit is a welloiled machine . Congressman the, the goal of reaching whats called primary balance is to not have anything but debt payments that are the reason for deficit. So it will become a larger and larger percentage of the deficit as we approach primary balance. Thats what that statistic reflects. If you look at the interNational Standard, primary balance is the goal that most countries look at and the International Institutions look at for sustainability. I yield back mr. Chairman. Thank you. The time of the gentleman has expired. The chair wishes to advise all members there are votes pending on the floor, 8 minutes 55 seconds left. Apologies to mr. Schweikert paula quinn and ms. Wagner the chair intends to clear one more member. The gentleman from arkansas, mr. Hill. To accommodate the florida schedule and the secretarys schedule then we will adjourn the hearing. Gentleman from arkansas is recognized. Thank you, mr. Chairman. Thank you mr. Secretary. Its certainly a pleasure in my career to have four years working at the treasury for one of your predecessors and i enjoyed those years. Following up on mr. Lucas mr. Stivers mr. Tip. I want to talk a little bit about this Community Bank approach, as well. Section 112 of the resolving leg raer to conflicts and looking at burdensome regulation really does give the fsoc a lot of power. And i think that is the purpose of the fsoc. And i agree with mr. Williams that i encourage you to take that mantle that all of us in government do which is you can do more than one thing at a time. Which is that management and responsibility, in addition to trying to implement doddfrank. Congressman as i indicated earlier weve not ruled out using it and im happy to take a look at whether its the appropriate time. Good. Well id like you to consider the use of cost benefit analysis at the fsoc level in looking across the regulatory system generally. What would be your thought about that . The cost benefit analysis has many different meanings. If you look at the broad cost to the u. S. Economy in the financial crisis of 2008 it was enormous. It wouldnt have shown up in any cost benefit analysis. It was done before the crisis itself. So we have to find a way of looking both at the impact on the firm, when you ask the question of cost benefit analysis, but also the entire economy. And i think balancing those considerations is part of what the whole doddfrank law making and rule making process has been about. To try to make it more costly to do things that are risky, internalize those costs and to protect the general economy, the general public. Youve had two positions now that i think have the prudential response of the omb and at treasury and these are important places to look out for that economy generally and not get down in the weeds of an individual regulator. But there are regulations that while well intentioned have caused to exceed their benefits. Just this week i got a letter from a banker that looking at the ability to repay rules under doddfrank, va looked back and they used to have an 85 approval ratio for their one to four family mortgages and now its under 40 because of the burden of those rules. And so one way to use a cost benefit analysis when youre looking at Residential Lending is to look at all the rules. Not just doddfrank rules but the qualified mortgage rule, the effect of appraisal rights et cetera. So i encourage you to do that. And i encourage you like mr. Stivers to put on the agenda of fsoc the burden of regulatory institutions as an official agenda item. Copy of the fannie mae and freddie mac conservatorship agreements. Ive asked for that for over a month. And i have yet to get a document. Could that be put on the list and have that sent to me, please . I have the preferred stock arkments with those two companies but i need the conservatorship. Ill look into it. Have you on this email issue, i think American People are really frustrated by it. And i urge everybody in administration to be focused on this. The irs example, on losing emails, all of us in the private sector would be excoriated by our regulator were we to lose our emails. Have you changed the policy of the treasury since the irs matter came up in terms of tracking and managing and overseeing them . Well the treasury policy is that we do our business on official email, and that at least for the the main treasury that theres preservation. The irs system is a little bit different. And i know that every effort is being made both to recover what was lost. Ill have to get back to you on the please do. Because its a double standard that frustrates american taxpayers and business owners. Like for regulated broker dealers. The rule is all electronic mail and texts has to be retained in a nonrewritable, nonerasable format and subject to daily review by a regulator or management. And a threeyear retention. I mean it doesnt strike me that thats the standard at the in the executive branch. Is that a good standard that finra standard sir . Well obviously it, it, it, it is a standard that keeps email available for regulators to see. And thats a good so if regulators should be able to see the emails within a broker dealer shouldnt we be able to see all the emails of an executive Branch Agency . Well there are obviously are, are differences but im happy to take a look at it and get back to you. Thank you, very much. I yield back. Gentleman yields back. Members are advised there are less than four minutes left on the vote on the floor. No more members will be recognized for questioning. I wish to thank the witness for his testimony today. Without objection all members will have five legislative days within which to submit additional written questions for the witness to the chair, which will be forwarded to the witness for his response. We ask the secretary to please respond as promptly as you are able, without objection all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. This hearing stands adjourned. With live coverage of the u. S. House on cspan, and the senate on cspan2 here on cspan3 we complement that coverage by showing you the most relevant congressional hearings and Public Affairs events. And then on weekends, cspan3 is the home to American History tv with programs that tell our nations story. Including six unique series. The civil wars 150th anniversary. Visiting battlefields and key events. American artifacts touring museums and Historic Sites to discover what artifacts reveal about americas past. History bookshelf. With the best known history writers. The presidency looking at the policies and legacies of our nations commanders in chief. Lectures in history with top college professers delving into americas past and our new series real america featuring archival government and educational films from the 1930s through the 70s. Cspan3. Created by the cable tv industry, and funded by your local cable or satellite provider. Watch us in hd like us on facebook, and follow us on twitter. Tonight as part of our road to the white house coverage, well take you to davenport, iowa, to hear from former Maryland Governor martin omalley. Hes speaking at the Scott County Democratic Party dinner in davenport. Cspan will have live coverage tonight beginning at 9 00 eastern. Secret Service Director Joseph Clancy was on capitol hill tuesday to testify about the budget for the Homeland Security department. During questioning from members of the House Appropriations subcommittee he faced heavy criticism regarding a string of security lapses and misconduct by agents. Including an incident last week in which two secret Service Agents allegedly drove into a white house barricade. During an active bomb investigation. Frustrated, im very frustrated that we didnt know about this. I didnt know about this till monday. Im frustrated that i cant act until we get all the facts. Because i know that our workforce is waiting, whats your action going to be. But i just dont want to act improperly too soon. There let me just say this. The president , the first family theyre safe. We moved these individuals to nonsupervisory positions. Rather than administrative leave where theyre getting paid for no work. We can still get work out of them. But in a different capacity. Theyre still getting paid. Yes, sir. No reduction in pay. No penalties financial or otherwise . Right . No financial penalties. Sir, i would say that theyre im sure theyre paying a penalty right now. Well, unfortunately, this is the last in a long line of episodes somewhat similar, drinking carousing on and off duty that this agency has suffered these last few years. Its not working right. Mr. Director. Yes sir. Weve got to have some changes. And you got to be the one that makes those changes. And i dont sense at this moment that you have the determination to make that happen. Am i wrong . Sir, i would disagree with you with that with all respect. I will say that there is an element within our agency, there san element within our agency, that does cope with the stresses that many of you have mentioned today, by using alcohol. Theres no question we have that element. We also have other elements in our agency that go to a different route. Some go to exercise. Some go to religion. Some go to their family to cope with these stresses. But we do have an element that goes to alcohol. Three, four weeks ago we kicked off an initiative, a work Life Initiative to look at these stresses that our people are under. They are considerable. Theres no excuse for the actions. There has to be selfdiscipline. Selfaccountability. But, weve got to find a way to help some of these people that are going towards alcohol to solve their as a coping mechanism. Well im concerned about their health, as well. But im more concerned about the health of the president of the United States, and whos protecting him from harm. Yes mr. Chairman. And if weve got special agents on the grounds, at night, in the white house, ramming a barricade, drunk it seems to me that the only discipline that you could exert would be caused by the ability of you and your staff to terminate as punishment, so that every other agent knows, boy i dont want to go there. That directors going to fire me. Thats thats what makes the mind work. What do you think about that . No, i agree with you. I think deep down within our agency as in others, people want to see discipline. People want to be disciplined. They want to have people held accountable. I just want to respect the due process. As frustrating as that is. And let my actions speak for how were going to move forward in this agency. Well be watching. Yes sir. And waiting. Yes, mr. Chairman. See this hearing in its entirety sunday morning at 10 30 eastern on our companion network cspan. Both the house and senate have wrapped up legislative business for the week. They will be back to capitol hill monday. Both bodies plan to take up their different federal budget plans next week. The senate bill has an 89 billion special war funding account which the house bill does not. But war funding still can be brought up as an amendment. See live coverage of the house on cspan and of course the senate on cspan2. This weekend the cspan cities tour has partnered with mediacom to learn about the history and literary life of columbus, georgia. Right here inside the museum is remains of a confederate ironclad the css jackson and this is an ironclad built here in columbus during the war. Those oval shapes that you see are actually the gun ports of the jackson. And the jackson is armed with six brook rifles. The particular brook rifle that were firing today is one of the guns built specifically for the jackson. It was cast at the selma naval works in selma, alabama. And completed in january of 1865. The real claim to fame is directly connected to the fact that there are only four ironclads from the civil war that we can study right now. And the jackson is right here and this is why this facility is here. Its first and foremost to tell the story of this particular ironclad. And to show people that there are more than just one or two ironclads, there were many. Watch all of our events from columbus, saturday at noon eastern on cspan2s book tv. And sunday afternoon at 2 00 on American History tv on cspan3. Interior secretary sally jewell talked this week about her Departments Energy priorities and reform agenda in a speech before the center for strategic and International Studies, she discussed the impact of Climate Change, Energy Development in the arctic and the role of the federal government in protecting the environment. This is about an hour. Thank you, charlie. Thank you very much. Bennett, where are you out there . There you are. Bennett and i worked together on the Second Century Commission of the national parks, and it was a wonderful experience, so its great to see you here. And youre even more green than i am. Thanks charlie for that introduction and thanks to the center for strategic and International Studies for inviting me to be with you here today. I appreciate everything that this organization does to advance the bipartisan dialogue around some of the most pressing issues of our time. And thanks to those in the audience for being here today. Its great to see theres really no better way than to celebrate st. Paddys day than talking about energy policy. So, welcome. Welcome to the best party this afternoon. So weve had a breakthrough year for the u. S. Economy. As president obama reminded us in his state of the union address, companies are creating jobs faster than at any time since 1999. Wages are climbing. Deficits are shrinking. Graduation rates are at record levels. Our economy has emerged from a session with a stronger more Stable Foundation and its no coincidence that our economic recovery has been accompanied by the Biggest Energy transformation of our lifetimes. The Energy Revolution we experienced in these last six years helped spur the recovery. But its also been accelerated by the policies our country put in place. So since 2008, American Oil Production has surged from 5 million to 9 Million Barrels a day. And our dependence on foreign oil has fallen to its lowest level in more than 30 years. The amount of solar energy has increased tenfold and wind energy has tripled since 2008. Thats been helped by more than 340 billion of private Sector Investment and a tax policy that helped move these investments off the sidelines. Families are driving farther than ever on a tank of gas. And with lower gas prices the average household will have an extra 750 in their pockets in 2015. These shifts in the u. S. Energy markets arent marginal or temporary, they are tectonic shifts. And from a business perspective, these changes are going to present both challenges risks, and opportunities. For industry. I can promise you that every ceo of an Energy Business out there is reassessing the plans they have on the books a year ago. Theyre asking, especially today, how do falling oil and gas prices affect us. Do we have the right projects in the pipeline . Or do we need to diversify . Can we capitalize on consumers growing demand for smarter homes, and cleaner cars . The tectonic shifts are forcing governments at every level to face questions of the same magnitude. Can we adapt in this fastchanging environment . Not the fastest places government, you know, coming from the private sector. Its tough. How do we modernize our Energy Programs to anticipate the new Energy Future . Are we doing whats needed for the u. S. To lead the world in energy . This is a speech about energy. But you cant talk about Energy Without talking about Climate Change. And thats good. Its one of the reasons i left the private sector for this job. Was not just to talk about Climate Change and to do what you could do within the bounds of the country, but to do something about it on a much bigger scale. And i am proud to work for a president who is taking historic, meaningful steps to cut dangerous carbon pollution. So as a person entrusted with americas biggest Land Management portfolio, i also ought to ask myself questions like what are we doing to achieve a low carbon future . Are we striking the right balance between conservation and development . What measures do we need in place for our land, our water, and our climate today to protect the families of tomorrow . So as ceo of r. E. I. , and its not a public company. R. E. I. Members out there . Probably a few. So you own the company. Number one cooperative. But i needed to Pay Attention to the current years earnings but i also needed to make longterm decisions. To make sure that our business would be relevant and profitable, 10, 20 30 years down the line. And i was just chatting with frank and charlie about how my colleagues at r. E. I. , and i did a study on whats impacting us over the longterm, then i saw the study just a couple of years later and they were almost completely aligned. You do as a business have to think longterm. Thats the same balance that i have to have as secretary of the interior. Managing our resources to help drive our nations economy without taking our eye off the america we want to hand to our children. The fact is i know we all share a desire for a cleaner and more secure Energy Future. But getting there is a complex task. And many thoughtful people will disagree over the right path forward. Right, charlie . Thats why today i want to talk about the path were forging at the department of the interior. Because put simply our task by the end of this administration is to put in place commonsense reforms that promote good government, help define the rules of the road for americas Energy Future on our public lands. These reforms should help businesses produce energy more safely, and with more certainly. They should encourage technological innovation. Should ensure american taxpayers are getting maximum benefits from their resources. And they should apply our values and our science to better protect and sustain our planet for future generations. After all as my colleague secretary kerry said just last week, there is no planet b. That was clever, too. Thats good. Over the past six over the past six years, the Obama Administration launched the most ambitious reform agenda in the department of the interiors history. We saw and inherited how a drill everywhere plan doesnt work very well if nearly half of the lease sales are challenged or later overturned in court. So we put in place on shore leasing reforms to front load engagement with the public about where it does or doesnt make sense to develop. Through smarter planning, were seeing reduced conflict in litigation and more certainty for industry. In 2009, the Renewable Energy industry was knocking on our door to permit wind and solar projects. But there was no clear path forward. So my predecessor, ken salazar, stood up a strike team to get the most promising projects across the finish line and to establish an enduring Renewable Energy program at the department. And he did a great job. That legacy is the gift that keeps on giving. So in the span of six years, we have now approved 52 commercial scale projects on public lands across the west. Together, thats 14,000 megawatts of Renewable Energy that when built would produce enough electricity to power over 4 million american homes. So let me put that in perspective. How many of you have visited the hoover dam . Quite a few of you. 14,000 megawatts is equivalent to the clean hydro power, the bureau of reclamation produces through 53 facilities built over the course of 100 years, including grand cooley, hoover dam, grand canyon dam and the other 50 dams we have in the reclamation portfolio. This is not minor. This is huge. Off shore. We also made sweeping reforms, for safe and responsible development in the wake of the devastating deep Water Horizon Oil spill. Interior strengthened drilling and Emergency Response standards for oil and guess companies. We have raised the bar through new standards for well design, production systems, blowout prevention and well control equipment. And we overhauled federal oversight by restructuring ourselves to provide independent regulatory agencies that have clear missions, and are better resourced to carry out their work while keeping pace with the rapidly evolving industry. But our work is not done. There is still areas where we need to change how we do business. So the United States can better compete and lead the world when it comes to energy and Climate Change. A reform agenda over the next two years has three goals. Safe and responsible Energy Development, good government, and encouraging innovation. Ill start with safe and responsible Energy Development. It is pretty simple. We dont have the right measures in place to protect the communities we live in, the air we breathe, and the water we drink, we all lose. I quote, the Critical Path to sustained and expanded Resource Development in north america includes effective regulation and a commitment of industry and regulators, industry and regulators, to Continuous Improvement in practices to eliminate or minimize environmental risk. Sounds like the interior department, right . But it wasnt. It was the National Petroleum council, largely made up of industry. Thats because many an industry get the effective regulations and independent oversight of Energy Development not only help minimize risk, but are absolutely critical to building the Public Confidence necessary to sustain our Energy Revolution. Many of the regulations on the books havent kept pace with the advances in technology. Theyre the same ones that were in place when i was working on drilling and fracking operations in oklahoma more than 30 years ago. 30yearold regulations. Its why in the coming days we will release a final rule related to hydraulic fracturing or fracking on public lands. The rule will include measures to protect our nations ground water, requiring operators to construct sound wells, to disclose the chemicals they use and to safely recover and handle fluids used in the process. Some have already labeled these baseline proven standards as overly burdensome to industry. But i think most americans would call them common sense. Standards only apply to activity on public and tribal lands, where as a matter of geology, listening to my friends, about 25 of americas Unconventional Oil and gas sits. So you can all do the math. It means that threequarters of the resources are found on state and private lands. So the responsibility for developing this energy safely must now be taken up in state capitals, in engineering labs, in board rooms all across the country. We owe it to our kids to get this right. If we do, we can continue to grow our economy just as we work to protect our water, our air and our communities. Interior will continue do its part in the coming months. Well also propose standards to cut methane emissions and wasted gas. Or leaky pipes like they had in this building apparently it smelled like natural gas in here a few hours ago. Methane is the Third Largest source of Greenhouse Gas emissions. It traps more than 20 times as much heat as Carbon Dioxide over the course of a century. But this powerful Greenhouse Gas is routinely released during Energy Development. In fact, above northern new mexico, where there is more than 40,000 gas wells, satellite images show a methane plume the size of delaware. So well be updating our decades old standards to encourage the kind of technology that companies i met with have demonstrated can reduce harmful emissions and capture the natural gases as a source of energy and revenue for the American People. And when i was last up at the balkan statoil, showing me a device they were about to use to recover some of that natural gas right after a well had been completed, they just skid mounted it, hasnt worked yet, i gather it is not only working but they ordered a couple more. Thats a great illustration of industry doing its part to innovate. Further addressing the impacts of Energy Development were also moving forward with a proposal to modernize the way coal Mining Operations protect Community Water sources and make sure that companies restore streams and forests to a healthy condition. In the gulf of mexico, exploration and Development Activity is booming, driven by new discoveries in deep waters and the expansion of existing fields. In the next two years, 13 fields are expected to start up. An offshore production is to steadily increase reaching 1. 6 Million Barrels a day in 2016. As we continue to make vast areas available for offshore oil and gas, tomorrow im heading to new orleans where were offering 41 million acres in the gulf of mexico. Safety remains our top priority. Cant forget the lessons of the deep water horizon tragedy. Building on the sweeping reforms that i mentioned earlier will propose a rule in the coming weeks that raises the bar on a blowout preventer and well control measures based on Technological Progress advanced by the industry. Operators will be required to use best practices to protect against and respond to any loss of well control. And in the arctic, we just released a proposal to make sure that any oil and Gas Exploration off shore alaska is subject to strong standards and specifically tailored to the regions challenging and unforgiving conditions. We know the arctic is a sensitive environment that has sustained alaska natives and their culture for thousands of years and we cant afford to get it wrong. When it comes to reforms, i recognize there will be pushback from various corners. No surprise. I also appreciate the importance of the oil and gas sector and im committed to its ongoing success. But i strongly believe that theyre not only achievable with modern technology and science, but absolutely critical to upholding public trust to responsibly develop our Natural Resources. We have got to update these regs. Second, when it comes to reforms, we need to improve the way we do business as a federal government, plain and simple. Part of that means ensuring the american taxpayer is getting a fair return for the use of Natural Resources on their public lands. I think most americans would be surprised to know that Coal Companies can make a winning bid for about 1 a ton to mine taxpayer owned coal. Coal is going to continue to be an important part of our Nations Energy mix in the future. The Government Accountability office, ur own Inspector General agree that the federal coal Program Needs reform. So we need to ask ourselves, are taxpayers and local communities getting a fair return from the resources . How can we make the program more transparent and more competitive . How do we manage the program in a way that is consistent with our Climate Change objectives . These are hard questions. But it is time for an honest and open conversation about modernizing the federal coal program. And we welcome that. In the coming weeks thanks. In the coming weeks, well take Public Comment on a proposal to give the flexibility to adjust royalty rates on the oil and Gas Resources that belong to all of us. This is important, especially given the dramatic growth of Oil Production on public and tribal lands. Production has increased in each of the past six years, and overall combined production from public and tribal land was up 81 in 2014 compared to 2008. Not just about royalty rates. Need smarter management too. In 2015, incredibly, were still processing a majority of our oil and gas permits by paper. And we got about 150 inspectors out in the blm who are responsible for inspecting 100,000 oil and gas wells spread across millions of acres of public and tribal lands. Thats a lot of territory and it means were not able to do our job effectively. To carry out our mission, and to be a better partner to industry,