▶ 0:00:00under your leadership and only received a couple of cursory replies from your staff. Why don't you respond? I guess you don't know why you didn't respond. Secretary Benson, you worked in finance before, right? You will find bipartisan support on this committee for small businesses and the institutions that finance them.
▶ 0:00:24I worked with the Trump with Trump's first Treasury Secretary to pass 12 billion in support for community development, financial institutions, and minority banks and credit uh unions. So, I was surprised when Trump first tried to eliminate the CDFIs, but it caught you by surprise also. You said that the CDFI fund plays an important role in expanding financial access. Unfortunately, you were not very persuasive last week.
▶ 0:00:54Trump proposed to basically cut all CDFI uh funding. Now, let's discuss your job before coming secretary. Your hedge fund had a secret sauce for how you would make money for investors, a proprietary trading strategy. As CEO, you guarded that strategy. You never allowed unrelated persons to access your firm's computer records, data, personnel files, and algorithms, right?
▶ 0:01:24And I'm sure you wouldn't have allowed just anyone unfettered access to copy, change, or to use those records, right? I suspect not. And that makes good sense. What doesn't make good sense is why as Treasury Secretary and acting CFPB director you would allow Doge unfettered access to the government system that handles trillions of dollars in payments to the proprietary business records of entities
▶ 0:01:55regulated by the CFPB or most alarmingly to the tax records of hundreds of millions of Americans. But you still threw the up the gates of our finance system open to Elon Musk and his band of 22 year olds. Yes or no?
▶ 0:02:14Do you know the level, type or nature of the clearances and security training required for individuals to access the information held in the computers of Treasury, IRS or CFPB? Uh, yes I do. And I think we would have a disagreement over the definition of the word unfettered. Mr.
▶ 0:02:36Secretary, did all the individuals working with Doge who were given access to Treasuries and CFPB's computer databases receive all of the required clearances and security training before they were granted access? Again, they were granted read only access at Treasury. Uh there were two. So let me just say two employees. You can't filibuster here. This is not the filibuster playground.
▶ 0:03:04And so what you did was you let these strangers into our treasury with access to all of the data, all of the personnel information, and you just opened the door. Why'd you do that? Uh no, ma'am. The they were Treasury employees.
▶ 0:03:20Oh, are you saying today in front of this committee that all of them were Treasury employees that the 25-year-old who's being identified who worked for Elon Musk was not allowed was allowed into the treasury was that person there? That he was a Treasury employee as was Tom Krauss the senior person on the Doge team. There were only two people. There were Doge employees also. Sorry. Do you know?
▶ 0:03:49Were you aware that there were Doge employees coming into our treasury getting all of our personal information? Well, ma'am, there is no such thing as a Doge employee. There were Treasury employees. I I I tend to disagree with you based on the information I have. Has information any information been downloaded by anyone working with Doge from any of Treasury's or CFPB's computers? Answer, yes or no? Not to my knowledge. You better learn. Gentlewoman yields back.
▶ 0:04:18The gentleman from Michigan, the vice chairman of our committee, Mr. Heisman, recognized for five minutes. Thank you, Mr. Secretary, for being here. And I I I just have to note that it's ironic that this has been declared a no filibuster zone by the same people who walked out of a hearing yesterday in filibuster.
▶ 0:04:34So, uh, and and just to give you one quick brief moment, uh, are you saying that there was no unauthorized or unsanctioned persons that had access to the systems that you are in control of? Again, uh, there were two employees. Y, uh, there were very strict guard rails and they were there for an ERP function. Yeah. So, they were authorized and they were sanctioned. Yes.
▶ 0:05:05So, not unknown and and Elon Musk wasn't one of those two people. Uh, no. To my knowledge, Mr. Musk has never been in the Treasury building. Okay. All right. I I have to hit on uh Burma and a little crypto and if we have time, China. Um, so I I want to thank you for your actions that Treasury took this past Monday regarding Burma. Uh the KNA, the Karan National Army has become a haven for transnational criminal organizations that run illicit operations such as human trafficking and smuggling.
▶ 0:05:34Uh the group has strong ties to the Burmese Army, which has targeted religious and ethnic minorities such as the Rohhinga since the civil war broke out in 2021. Um while the US and our allies continue to impose sanctions against the military huta, unfortunately, the atrocities continue. Uh my district, the fourth district of Michigan, is home to approximately 5,000 of these ethnic Burmese.
▶ 0:06:00And uh I'm just asking you, we need to do more to protect the people of Burma and to stop the genocide. Yesterday, I reintroduced the Brave Burma Act, a bipartisan piece of legislation that would require the president to determine on an annual basis whether to impose stronger blocking sanctions against the Minma Oil and Gas Enterprise, the Minema uh economic bank and foreign persons operating in the jet fuel sector of the Burmese economy, which has been a tremendous amount of their revenue.
▶ 0:06:30Um and it further further limits uh the HUTA's ability to borrow at the IMF which I think is uh one of the issues that uh the chairman was touching on. So these actions would uh target the heart of the military ha's uh revenue. So can I get your commitment that you're going to continue to work with my staff and us on a bipartisan basis uh as we try to address these issues in Burma?
▶ 0:06:54Congressman, we're happy to work with your staff on this legislation and thank you for your leadership on this issue. Uh I share your concern about imposing consequences on persons who threaten the peace, security, and stability of Burma. Treasury has the tools to continue to take action for the people of Burma and working with you, we will continue to do so. That's great.
▶ 0:07:18And and what's frustrating is while some of these sanctions have been put in place, a sanctions only as good as the willingness to enforce it. And um we have seen uh them receiving financial support, the HUTA from around the world, especially frankly as they ramped up production during the last administration. And so I'll note it's not just Burma, it's places like Iran that uh that this illicit uh activity that has gone around the sanctions has been allowed.
▶ 0:07:46Uh in some cases, Treasury has granted these licenses. I sit on the foreign affairs committee as well and and uh we we see this all the time. Um I want to touch on crypto. Yesterday as as I had mentioned the committee uh held a a hearing with uh house agriculture or attempted to hold a hearing with the house agriculture committee uh turned into a very important roundt as well uh regarding digital asset market structure reform.
▶ 0:08:12So can you quickly explain uh how important it is to uh it is for uh America to take the lead here especially as we see China leaping ahead. Uh yes sir.
▶ 0:08:25that the uh we believe that the United States should be the pre premier destination for digital assets and as members of this committee the and the Senate are attempting to do create good market structure the around that the so that US best practices are used around the world and that and that's really the point right is having American US best practices to sort of set the pace
▶ 0:08:55for others to follow rather than us trying to fill in the holes that uh that others uh that may be created by as others set that pace. Uh yes sir. And also the digital assets are an important source of innovation that will drive the that can drive uh usage of the US dollar around the world as with stable coin legislation.
▶ 0:09:22There is speculation that there may be up to $2 trillion dollar of demand over the next few years for US government securities from digital assets. My time has expired, but I'll send you my question regarding uh Chinese death uh a debt trap diplomacy. So with that, I yield back. Gentleman yields back. The gentleman from New York, ranking member of the small business committee, Mr. Velasquez, is recognized for five minutes. Uh Mr. Chairman, I want to raise a point of order. Yes, ma'am.
▶ 0:09:50Um, but I don't want the clock to be eating my time. Um, I would like for the witness to be swearing in before I ask my questions. Chair doesn't see a need for that. You may ask your question. Your time can start. Start the gentleoman's time over five minutes.
▶ 0:10:15Bessent, you were on CN on CNBC earlier this week making claims saying we are very close and maybe we will see some deals this week on tariffs. So tell us, tell the American people, tell small businesses and consumers, tell retirees specifically, which countries are you close to striking deals with?
▶ 0:10:43I I'm sorry, Congresswoman, but that would not benefit the United States. No, no, no. I'm asking you a question based on the statement that you made on CNBC and I I am telling you that it would be detrimental to the interest of the United States for me to answer that question. Why would that be detrimental?
▶ 0:11:06Because the as the negotiations may still be in process as we speak as we are not at the end of the week yet. I am sure that you you through your question would not want to compromise US negotiations. Reclaiming my time would you?
▶ 0:11:21Uh Secretary Ben the president goes into a press conference and claims that there are negotiations going on and then the next day there's no negotiations going on. So why you would you not answer my question and that would be considered detrimental to the American people to the American economy? I do not understand your claim.
▶ 0:11:50I'm happy to say there are negotiations going on. I'm not going to reveal the details. No. No filibuster. So how long do you think those negotiations uh will take before they are concluded?
▶ 0:12:06uh and the there are numerous countries as I have said if you saw my CNBC interview which you referenced that there are 18 important trading partners and we are moving forward at all deliberate speed with those. Do you consider these negotiations advanced negotiations? Uh some of them are quite advanced. So you expect this deal to be more than memorandums of understanding.
▶ 0:12:35Do you expect them to be full negotiated trade deals? Uh I I the believe that they will be the agreements in principle and then we will paper them over in the coming months. But once we reach an agreement then I am sure that the other c countries will live up to. Okay.
▶ 0:12:57In in in congressional testimony yesterday, you said the US has not t not started negotiating with China on tariff reductions. Does that continue to be your position? Yes or no? As you may have read, yes or no, sir? As you may have read in the press, I will be going to Switzerland and the negotiations will begin on Saturday. Okay. So the president told you that that will be your answer today.
▶ 0:13:37So can you tell who from the Trump administration is engaged in those Which discussions? With China. Trade discussions. Pardon? I I I'm sorry. trade discussions. Yes, sir. Well, the the trade negotiations will be led by myself and Ambassador Jameson Greer and USR. And uh what about Pete Navaro?
▶ 0:14:06Sorry, Peter Navaro. He will not he will not be joining us in Geneva. Thank God for that. Are those negotiations considered advanced? Pardon? Are those negotiations considered advanced? As I said, on Saturday we will begin, which I believe is the opposite of advance.
▶ 0:14:33Secretary Benson, as Treasury Secretary and a senior member of President Trump's economic team, has President Trump given you the authority to finalize any trade agreement with China or any other trading partner? As President Trump has stated, uh he will have the final decision on any trade agreement.
▶ 0:14:57So, you're telling me all um of this increased prices, the stock market losses, the production delays are all based on the whims of Donald Trump that you could strike the best deal with Canada, Mexico, or even China that is completely in our favor, giving us everything that gentleoman's time is expired. And if President Trump decides at any certain moment, gentleoman's time is for whatever reason not to take the deal, that will be it. I yield back.
▶ 0:15:27The gentleman from Oklahoma, Mr. Lucas, who is chair of our task force on monetary policy, is recognized for five minutes. Thank you, Mr. Chairman. Mr. Secretary, as the dust has continued to settle after last month's episode of Treasury market volatility, can you give an updated assessment of those events and how would you characterize the functioning of the market during that period? uh bring the dust up in treasury the markets how how the market was very well functioning.
▶ 0:15:57It was volatile but the underlying infrastructure worked quite smoothly. Sir, does the Treasury Department have the tools necessary to address market volatility? You've you've said you may increase the use of the buyback program. Are these or other authorities that are there other authorities that might be helpful to address the challenges of the market? Uh yes sir.
▶ 0:16:20We have a very large toolkit that we can deploy as does the Federal Uh taking a step back, Mr. Secretary, can you provide us with a sense of what regulations the administration is working on to bolster resilience in the Treasury market and the timelines when you would expect those changes to be announced? This is a core issue on the task force. I and a number of my colleagues are working on.
▶ 0:16:45Uh sir, the auction sizes uh the current issuance sizes leave us well position to address potential changes in borrowing needs. I can tell you that investor participation in auctions. There's been broad investor support. Our weighted average maturity uh is about 61.2 months which is quite wholesome. and we have implemented a buyback program with two with two objectives liquidity support and cash management.
▶ 0:17:15One last question along that line. Uh I've long said that the administration should look at reforming regulations like the supplemental leverage ratio to relieve some of the constraints that market participants are facing in the treasury market. I hope you'll consider looking at that. Uh sir, Treasury does not look at that, but I believe that it is a high priority for the three regulators, the OC, the FDIC, and the Federal Reserve. Thank you.
▶ 0:17:44And as the SEC continues to implement their clearing rule, a number of firms, including those outside the United States, are looking to provide clearing services for US treasuries and their How are you working with the SEC and the CFTC to ensure the integrity of the treasury markets as these firms look to intermediate?
▶ 0:18:06Uh certain the treasury market is a global market and we uh welcome new participants and we want to make sure that best practices uh employed in the US are also employed globally. And the reason I asked that is, and if you could specifically comment on the clearing of US sovereign debt outside of the United States, what ro risk could that potentially present?
▶ 0:18:38And I come at that from the perspective if there's a challenge in the market, if it's a US-based entity, then the regulators who would make the difficult decisions are here. If it's outside of the United States, uh, they might have a different perspective. We we are constantly studying that sir. Uh as of now we do not believe that it presents a risk but I will as we continue our studies I will have my staff interact with your team. Absolutely Mr.
▶ 0:19:08Secretary and one final question. Primary dealerships ships has become an expensive proposition for firms which in in one explanation for participants leaving the market. It's one of the many explanations. Should we be looking at ways to make the environment friendlier to investors wanting to become primary dealers?
▶ 0:19:30Sir, we saw at the recent auctions very low participation by the primary dealers, which tells me that there may be a the regulatory function there that is pre preventing them from using their balance sheet for the benefit of the US Treasury. So clearly the task force that Chairman Hill was kind enough to set up and uh and yourself, we have work to do. Thank you, Mr. Secretary. Would you?
▶ 0:19:59Uh I would yield to the gentleman from Michigan. Thank you. And I can get my China question in. So I appreciate my colleague doing that. Um I I want to talk a little bit about the international financial institutions, the ifies such as IMF, World Bank, and and they're falling short of addressing key challenges. Uh so China whether it's in Africa or Burma has really engaged in a debt trade death debt trap diplomacy.
▶ 0:20:23Um how should the IMF uh really help borrow borrowers take the funds advice when it keeps giving China a free pass? Uh well, Congressman, as I said in a public interview after one of my IMF speeches, it is time for China to graduate from developing countries status. It is the second largest economy in the world.
▶ 0:20:51Uh they are a large important economy and they should no longer the be granted the status of a developing economy. I'd like to invite you, Mr. secretary to continue that answer in writing and I thank the vice chairman and Mr. Lucas. Yes. Uh let me call on the gentleman from California, the ranking member for our capital market subcommittee, Mr. Sherman. First a parliamentary inquiry since the last speaker had an extra 30 seconds. Can I have an extra 30 seconds? Right.
▶ 0:21:27I'd be I would be happy to do that. Mr. Chairman, I agree with you that special drawing rights should be increased only with congressional input and I agree with Mr. Heisinga that we have to focus on Burma Myanmar. I ask unanimous consent to put in the record a chart showing how the value of the dollar compared to other currencies has declined precipitously since Trump's so-called liberation date.
▶ 0:21:50and to also put into the record a CBO report issued just an hour ago that shows that Republican proposals to change Medicaid would in one case take one and a half million people uh would lose their Medicaid uh benefits and in another proposal would cost 3.9 million Americans their Medicaid benefits.
▶ 0:22:11Without objection, I also ask unanimous consent to put in the record a letter I sent to the secretary responded to by his assistant secretary uh dealing with direct file which means you don't have to pay Turboax because the IRS has the software. And the response that I got, an absurd response was basically, well, as long as you know, we just want to make sure Turboax makes a lot of money, so we're not going to do that. Wait just a second.
▶ 0:22:37And um I would point out that the IRS could send every American for their voluntary use a proposed first draft of the tax return since you already have the W2, you have already have the 1099, and you don't have all the input errors that come from people doing their own returns. But that is something that your that uh your administration is stopping. Um I would ask you, Mr. Without objection. Yes. I ask you, Mr.
▶ 0:23:04secretary to provide for the record within one week your best estimate of when the US will hit the debt ceiling and exhaust our borrowing capacity. Can I count on you to provide that for the record? Uh sir, the so-called X date is a moving target. I'd like your best shot. The as I stated yesterday, we are moving on to the warning track and we don't want to be on the warning track. I I would ask you to provide the be the Congress the best information you can, but I'm going to go on to another question.
▶ 0:23:34I represent uh one of the two areas devastated by the Los Angeles fires. I spoke directly and on camera to President Trump and asked him to exempt building materials uh from these tariffs. the American uh the national home the National Association of Homebuilders says that these tariffs will add $11,000 to the cost of these fire v victims rebuilding their homes.
▶ 0:24:01Can you assure us that in a country where we have a devastating housing shortage in general, but we have thousands of people in Los Angeles have to rebuild their homes in particular that these fire victims are not going to face uh this additional cost to rebuild their home? I I will look into the into that matter and I was that is exactly what the president said in January. I was in Los Angeles this weekend and I toured the devastation. Thank you.
▶ 0:24:28I hope you saw the devastation of the Palisades and I hope you won't be imposing another $11,000 cost on every home builder. Now, as to uh capital markets, where I devote most of my time, all of us on the subcommittee agree that we're trying to get people to invest in American stocks. uh and build the American economy. Um and in fact, our tax code has hundreds of billions of dollars of incentives to get people to invest in America.
▶ 0:24:55China also has uh incentives to get the Chinese people to invest in Chinese stocks. But there's a difference. China only provides those incentives if you to Chinese people if they invest in Chinese stocks. American billionaires like investing in China. making tens and hundreds of of millions of dollars in profit.
▶ 0:25:21Can you think of a reason why the American tax code should provide enormous tax benefits like the capital gains allowance to American billionaires who invest in Chinese stocks? Why is that in our national interest? Uh sir, it's not just available to billionaires. If you were to buy, right? So why do we want to encourage buy a Chinese ETF? A very why would we be neutral on whether I buy an American ETF or a China ETF?
▶ 0:25:50Don't we prefer American capital to be invested in America or are we just fine with encouraging Americans to invest abroad? Well sir, we don't want to close the capital account and we do want investors to be okay. So to maximize their judgment where they should invest. Let me go on to one more thing. I I have said I wouldn't bet against the US but please next question. Next question.
▶ 0:26:15Um Abu Dhabi uh and United Air Maragements just announced that they were going to give $2 billion to a stable coin um uh put forward by World Liberty Financial. This stable coin pays no interest. So you and I are both finance people. Just want to check my math. Assuming a 4% rate of return, is this interest free loan of $2 billion worth $80 million every year to World Liberty Financial and its Trump owners? Uh, sir, I I haven't seen that.
▶ 0:26:45I don't know the expense ratio. And as far as I know, no stable coins pay interest. So, the New York Times is wrong. Please read the article. I yield back. Gentleman yields back. The uh gentleman from Texas, Mr. Sessions is recognized for five minutes. Mr. Chairman, thank you very much. Secretary, welcome. We're delighted that you're here.
▶ 0:27:08Part of the challenge against you this morning and I'm sure some days is the explanation of the tariff matter that President Trump has initiated and sticking by. I'd like to provide just my input on that if I could that I think that President Trump sees the relationship with China uh by what it really is and that is an unfair relationship one in which needs to be not only looked at but really something done
▶ 0:27:38about it and I know that while we have PNTR it should mean that we treat them the same way they treat us but that is not happening. President Trump uh as part of these changes has changed the dimminimous rule and that dimminimous rule was the amount of money that a package when it comes into our country under this circumstance whether it was looked at or not whether a tariff was paid upon it.
▶ 0:28:06And I believe that there were Chinese companies taking advantage of that. Some four million packages a day were coming to the United States. and I say were coming because I do not believe that that rate is still occurring. As a result of that, what happened is it contributed to the fentanel issue that we had because we did not look at these packages with the same viewpoint that others did.
▶ 0:28:31My point in bringing this up is is that I believe that with the new numbers of 177,000 net new American jobs being created in the private sector that there's an understanding by people who want to invest in America.
▶ 0:28:47that this president is finally taking on the Chinese who undermined not just intellectual property but undermined with their government, the Chinese undercutting the price and manufacture of many products that were Americanmade. Many of them or some of them might be power tools. And of course we know Craftsman is an Americanmade product.
▶ 0:29:13But it is not uncommon was not uncommon for their tools to be on the internet at $400 or $500 and for a Chinese product to be brought in for$4 or $50. that undermined not just our intellectual property but actually undermine the manufacturing that takes place in this country. And I'm delighted that you and the president are engaged in balancing that out.
▶ 0:29:42And I think that's what this 177,000 new American jobs net provided for us because it's people who want to invest in the United States knowing that finally we have a president that will protect that onslaught of Chinese goods undercutting American not just jobs and intellectual property but the events that take place therein. And I think this president has done a great job.
▶ 0:30:11And I want to offer my support for that because I think that part of what the president has done is set a new challenge and mark for Americans now to pick up that that part that was before challenged by China. Mr. Secretary, Russia still earns over $700 million a day in fossil fuel revenue that helps its war against Ukraine.
▶ 0:30:37And I think that most of us here would like to see Russia held accountable. Can you talk to me about sanction or sanctions that are or are being considered against Russia energy firms as it relates to selling their their uh products to China? Uh yes sir.
▶ 0:30:56And I I will tell you that the Biden administration exercised with regards to Russia the a and Ukraine support a big dichotomy. On one hand they were the giving aid to government of Ukraine.
▶ 0:31:17On the other hand, their sanctions against the Russian Federation were very very weak against the sanctions were just against some of the lower level oil companies. There was a price cap that has never worked.
▶ 0:31:35the on his way out the door in a fit of bravery, the national security adviser Jake Sullivan raised the sanctions because the Biden administration had been worried about upsetting the oil price, pushing up oil prices during an election year. Uh the Trump administration through our energy abundance and signaling to the energy markets, uh crude oil is down about 20% thus far this year.
▶ 0:32:02And I read with great interest this morning that Russian Federation revenues were down 12% last month, which will put a dent in the Russian war machine. Sir, Mr. Secretary, I hope that you'll find today valuable for us and yourself, and I hope you'll know that we won't. Gentleman from Thank you very much, Mr. Chairman. Gentleman from New York, Mr. Meeks, is recognized for five minutes. Thank you, Mr. Chairman. Mr. Basset, uh, let me, you know, I'm just a plain simple man.
▶ 0:32:30the average everyday American is looking at this hearing today. So, can you tell me first does trade deficits constitute a national The hollowing out of the US man yes or no class the yes or no. Yes or no national emergency sir? It does. It does trade depth.
▶ 0:32:59You're telling me trade deficits equals a national persistent and prolonged. Yes, sir. And do you know also, sir, that for the last four decades, we've had trade deficits in the United States of America. And nobody said it was an emergency. Democratic and Republican presidents.
▶ 0:33:25You know what that says to That is not an emergency because it hasn't been for four decades. It says to me that we should bring tariffs back to the United States Congress so that we can make that determination as the Constitution has said and not try to go around Congress. That's just unbelievable to me. Let me ask this question.
▶ 0:33:57I'm missed it. Who was the president and who has been the president since January 20th, 2025? Donald J. Trump. Okay. And who was the president in 2024? The one believes President Biden. one believes. Are you one of those non-believers that the election the American people didn't vote?
▶ 0:34:27Uh I I um I am not. You're not? You said one Do you believe in the Constitution of the United States and it should be? I believe in the Constitution of the United States. So you believe in it without any second thought. You don't have to think about it. You believe in it and you would abide by it. Is that correct? I have and I do, sir. Okay.
▶ 0:34:54But do you know that a president has said he may or may not he don't know? Let me ask question. I can't I I I couldn't believe my ears. Sunday during NBC's Meet the Press, President Trump credited himself for the strong economy in 2024 when Joe
▶ 0:35:24Biden was president. But then he blamed President Biden for a weak economy in 2025 when he was president. Now, now I'm not so sure how the American people puts that together. In 2024, strong economy, he tries to take the credit. In 2025, when he's the president, he blames Joe Biden.
▶ 0:35:53That doesn't make sense to me. I don't think it makes sense to most Americans. And I hope, Mr. Secretary, you're a businessman. It doesn't make sense to you either. It can't possibly make sense to you. Let me ask this question.
▶ 0:36:13If a government say look Argentina I remember when I came here and Argentina kept failing to pay its debt not once or twice or three and we were all upset about it and we said that they needed a ho somebody need to take over their uh their government, you know, somebody should help the president of Argentina.
▶ 0:36:40Ina, if the United States or didn't pay his debt or something that we'd be very upset about that and we couldn't pay our debt. I mean, that's one of our focus. Is that not correct? Uh, sir, the United States will always meet his debt obligations. Always. Well, let me ask this. Donald Trump, the dealmaker, and you didn't answer Miss Velasquez questions. no deals.
▶ 0:37:08Even though he said three weeks ago that there would be deals, but Trump, not once, not twice, not three times, not four times, not five times, but six times, failed to pay his debts and his business and went bankrupt. And you're going to call that a good businessman? The gentleman's invest in that company? The gentleman's time is expired.
▶ 0:37:34The gentle woman from Missouri, Miss Wagner, the chair of our subcommittee on capital markets is recognized for five minutes. I thank you, Mr. Chairman, and I will try to keep my tone down. And I thank Secretary Bessant for your testimony.
▶ 0:37:52I sir am going to try to stick to the actual title and of this hearing and why we're supposed to be here today which is the state of the international financial system. So here we go. Mr.
▶ 0:38:07Secretary, under the Biden admin administration, Congress required Treasury to determine whether any Chinese financial institutions were engaged in oil purchases from Iran. No matter how small um or how large the transaction, this determination would subject these Chinese entities to secondary sanctions, sir.
▶ 0:38:36And just last week, the president himself ordered such sanctions for any purchase of Iranian oil, which helps obviously the Ayatollah finance terrorism around the world. Mr. Secretary, can you describe how well I think we all know how Iran uses oil sales to fund its proxies, including Hamas, Hezbollah, the Houthis, and Yemen to the extent that there's any Yemen left.
▶ 0:39:01Um, Treasury is now over half a year late with its statutory determination on Chinese buyers of Iranian oil and I have three questions sir uh related to missing this deadline. The first is why has it not been submitted to Congress? Had the previous administration done anything to prepare um this determination? And third, when can Congress expect to receive it?
▶ 0:39:32Uh, to all three of those, I will have my staff get back to you on that. And the Representative Wagner, what I will tell you is that since I become Treasury Secretary, the Treasury has repeatedly sanctioned so-called Chinese teapot refiners, who are very large buyers of Iranian oil. These are independent refiners away from the stateowned enterprise enterprises.
▶ 0:39:59We have begun that program over the past few weeks and we will continue as needed. Good. Well, and I I know that you're in negotiations with I'll say that 18th country uh which is China. We are thrilled uh to hear of your trip uh there and I hope that this is something that you will um discuss with them in terms of their purchasing of Iranian oil that does nothing but lift up a regime that is is funding terrorism
▶ 0:40:30throughout our our our world. I'll say um what actions has Treasury taken to combat cooperation between Iran and China on illicit finance and money laundering? Well, again, uh the the secondary sanctions on these teapot refiners has been a very wholesome effort and we will continue that.
▶ 0:40:55When President Trump left office, Iranian oil exports were between 100 and 300,000 barrels per day. Now they are 1.6 million barrels per day, which allows the regime to finance its terror proxies, not just in the middle Middle East, but all around the world. Correct. Yes.
▶ 0:41:16And um and we've seen it and we've lived it and it has has caused unbelievable death, devastation uh and and grief and resources and loss of life throughout our world. And I am proud that the president himself endorsed sanctions just last week for any purchase any purchase not just from China of Iranian oil.
▶ 0:41:40Um, so I I hope that that these we can get a report on on what's been happening with with um with uh China. Switching gears, in February, several members of this committee and the Senate, including myself and the chairman and the Senate Banking Committee, sent you a letter voicing concerns about the Europe European Union's uh corporate sustainability due diligence directive or CSD.
▶ 0:42:07This directive, which was finalized by the EU last year, will require many American companies to evaluate their supply chains and end certain business activities not based on US law, but due to UN principles, this directive not only hurts our economic impetus, but also undermines our jurisdictional It would be it would force both public and private companies to comply with regulations that have not been approved by Congress while also exposing them to increased litigation
▶ 0:42:37and risk in the EU. I am running out of time, Mr. Chairman, but this is something I feel very strongly about. It is in with the international realm here and I have two questions regarding this. Gentlewoman Scott, I will submit for the record. Thank you. It will be submitted for the record. Recognized Mr. Scott, the gentleman from Georgia for 5 minutes. Thank you, Chairman. Secretary Benson, let me ask you this.
▶ 0:43:04Do you agree that the FDIC plays a very essential role in safeguarding our depositors, ensuring prudent bank supervisors, and maintaining the safety and soundness of our financial system? Congressman, I agree that a well functioning FDIC is essential to the US financial system.
▶ 0:43:28And on Monday, you said this, and I quote, you said this, that the president tasked you with helping him choose the leader of the financial regulators so that we are all aligned, all regulators to be safe, sound, and smart.
▶ 0:43:51And you went on to list the key positions that you've done that, including a new vice chairman for supervision of the Fed, a new head of OC, and Paul Atkins of the Securities Exchange Commission, and a new CFTC commission.
▶ 0:44:13But as of this morning, we have no chairman fulltime. It is now under temporary leadership of an acting chair named Travis Hill with the president having no plans to either formally nominate him or find a replacement.
▶ 0:44:43The nation is watching us. Why we don't have the head of the FDIC? So my question is, have you not helped President Trump in selecting a chairman to lead the FDIC?
▶ 0:45:08Uh, Congressman, I would point out that under the previous administration, there was only an acting chair of the OC for five years. Five years that Mr. Hill is the acting and as a matter of fact, the head of the OC, the the head of the CFTC have not been confirmed. So, those are in fact acting. Also, uh, Mr. Hill is a very capable regulator having been on the board of the FDIC.
▶ 0:45:37Yeah, I'm not your fellow here. We We are pursuing I'm not questioning with all deliberate speed. Have you been instructed by President Trump to refrain from offering a list of viable candidates to lead the FDIC? No sir. I am constantly reviewing the list and thinking who is best to lead that important institution.
▶ 0:46:06Well, I want you to know that I wrote a letter to the Trump administration. Here it is. Expressing grave concern with the erosion of financial regulatory agency independence. And Mr. Chairman, I'd like to submit this for the record without objection.
▶ 0:46:30And uh we remain highly alarmed by this growing perception that our financial regulators have acquies to political pressure from this administration perhaps even from the president of the United States.
▶ 0:46:55If I were president, I wouldn't have this vacancy at a time when we're running terrorists all over the country, when our economy is in these kinds of difficulties. The nation is watching us.
▶ 0:47:15Russia is operating us as the president is going around the country dealing with upsetting Canada places around the world. Uh so I just want to know that where are we going? When are we going to have a chairman? Are we going to have it?
▶ 0:47:44and answer me truthfully. Has President Trump asked you to delay this appointment? And if so, why? Sir, that statement is uh incorrect. He has not asked me to delay that appointment. And I believe that your question is when are we going to have an FDIC nominee? And we have OC nominees.
▶ 0:48:14We have a CFTC nominee. We have a vice chairman's time nominee. Mr. Chairman, I'm I would ask you to urge us Senate colleagues to on the Democratic side to vote for them. Thank Scott, your times are expired. All right. Thank you. Thank you. Excellent discussion. Thank you. I recognize the distinguished chair of our financial institutions subcommittee, Mr. Bar of Kentucky, for five minutes.
▶ 0:48:40Secretary Besson, thank you and President Trump for in February issuing the national security memorandum entitled America First Investment Policy directing federal agencies to address outbound investments in China. Uh in March, as you know, Senator Cornin and I reintroduced my bill uh to restrict uh outbound investment into China uh specifically into Chinese militaryindustrial complex entities uh ma primarily through OFAC sanctions.
▶ 0:49:10Uh tell me, Mr. Secretary, what what do you think about that legislation in the context of the president's national security memorandum? Good. Uh Congressman, I want to thank you for your leadership on this matter. My team and I appreciate the your input and molding this important issue, one of the most important financial issues of our time.
▶ 0:49:34uh you know it is a new national security tool that we restrict the PRC from exploiting the benefits and we appreciate that Congress the wants to move forward legislation that is important and helpful and we would like a bit more time for our process including the work mandated by the president to inform the legislation so that it it is durable because of the importance of this.
▶ 0:49:59Well, thank you and I look forward to working with you and pre the president to align our legislation with uh the president's policy on this. And I want to give uh you and President Trump another tool of economic statecraftraft uh to increase President Trump's leverage in his negotiations with General Secretary Shei.
▶ 0:50:20Uh this is a very important issue and uh as you probably noticed there was recently a $75 million venture investment into a Chinese artificial intelligence firm Manis. Uh is Manis AI on the CMIC Treasury uh entity list. I I will have my staff get back to you on that, sir. And I think the I think the answer is no.
▶ 0:50:42And that's why we need this legislation uh so that our outbound restrictions look not just at entities but also uh technologies of national security concern like um militarized artificial intelligence that this uh entity manis AI is is doing.
▶ 0:51:00I would also note that the waiver authority that I embed in this legislation with Senator Cornin would give you as Treasury Secretary the ability to authorize Black Rockck or other US firms to invest in Panama to displace the Chinese. So uh uh thank you for your collaboration with us on that. Uh Secretary, you've said that with President Trump, we're going to reprivatize the American economy. That is music to my ears. That's music to the American people's ears.
▶ 0:51:28Um when federal bank regulators are uh talking about reproposing the Basel 3 endgame proposal um they have been saying now for a long time we should do it in a capitaleneutral way abandoning uh former vice chair Bar's approach of a a huge gold plating of uh bank capital.
▶ 0:51:47Um since the Federal Reserve started to use the term capital neutrality in 2019 however capital has increased by 10 to 20% making the concept of capital neutrality uh really arbitrary. Large banks are now subject to stress test GIB search charge uh and a number of liquidity and resolution requirements. When looking at uh our uh bank capital regulations in the context of an America first agenda, Mr.
▶ 0:52:16Secretary, should we be aiming for capital neutrality or should we be instead looking at capital levels that actually promote American Uh, Congressman, uh, as you you know, I've been very concerned uh about the our community banks or small banks or small regional banks and the growth of private credit outside the regulated system tells me that the many many of the
▶ 0:52:46regulations may be too tight and that the business is pulled into the so-called shadow market. I think we want to safely and soundly expand the reg the regulated financial system and get them on equal footing and I think that these capital levels that are predictable are very important for that. Last question about China investment in Venezuela.
▶ 0:53:12Um last week uh Venezuelan Vice President Rodriguez asked Chinese officials to increase oil purchases as the country is feeling the squeeze on its energy sales. Um, tell me what you think about OFAC licenses for US uh, companies operating in Venezuela when those American firms could displace China to enhance American energy dominance.
▶ 0:53:35Uh it it is a very uh acute balancing act there between uh displacing China but US entities providing hard currency for the Maduro regime and we are constinguished gentleman from Massachusetts our ranking member of the digital assets financial technology and artificial intelligence subcommittee Mr. Lynch for five minutes. Thank you Mr.
▶ 0:54:04Chairman, Mr. Secretary, thank you for coming before this committee and helping us with our work. Mr. Secretary, between March 11th and March 15th, uh, 2025, uh, you and more than a dozen senior officials, including of the Trump administration, including Secretary uh, Director of National Intelligence, Telsey Gabbard, uh, National Security Advisor Mike Walls, used a commercially available non-governmental
▶ 0:54:34encrypted, nonsecure app to discuss and coordinate imminent US military strikes. stikes in Yemen in a group chat entitled Hoody PC group. Particularly uh Defense Secretary Hegsith uh shared actionable intelligence including sensitive and classified details of an imminent military operation against Houthi rebels um and other military plans.
▶ 0:55:04These included precise launch times for US jet fighter assets, uh, targeting locations for those Hoody rebels who were, by the way, equipped with anti-aircraft systems. Mr.
▶ 0:55:21Heg has shared the targeting sequency sequencing against uh, Hoodi rebels and uh, describe the weapon systems, the US weapon systems uh national security council has confirmed that this uh this chat signal chat was on that deck and uh and that you had participated. You realize that for you Mr.
▶ 0:55:49secretary because of the responsibilities you have even outside the the the principles committee that group uh you you have you know you have a target on your back from our adversaries uh China, North Korea uh Russia and others.
▶ 0:56:09Um, can I can I ask you, have you been briefed on the on the proper protocols for for discussing uh information such as such as active military plans? Uh, I I have uh by my general counsel and if if you will look my I got a bunch of questions.
▶ 0:56:30So I I'm just I'm just trying to narrow this down because this is really really a concern just reclaiming my time to that was let me let me ask you my chief of his name which was widely available. Let me let me ask the questions and you provide the answers. Okay. How about that? Waiting for the question. Are you preserving records Mr. Secretary of of these communications as required by the public records act? Yes sir. My general counsel has voted.
▶ 0:56:55Are you still discussing sensitive military uh intelligence on a nonsecure line? Uh I have never done that. Okay. The National Security Council says you were on a chat that discussed those details. Are you saying that wasn't the case? I have said that I have never discussed them. Someone discussed it with you. You were on that you were on a insecure a nonsecure line for a meeting with other with other uh secretaries, right? those those people I just mentioned, you weren't on that chat.
▶ 0:57:26I was, but you're okay. That's that's what I'm talking about. So, you could have you could have intervened. You could have brought it up. You could have said, "This is an insecure line. We shouldn't be doing this. We're putting our sons and daughters in uniform at risk pre-attack. You could have done all that. Mr. Hgset, this is not involving you, but Mr. except afterwards did the same thing with a with a family chat.
▶ 0:57:56His wife, his brother, his sister, uh, family attorney. You you do understand the the troublesome nature of that, right? Are you are you dismissing that and calling this a a roaring success as others have done, as the White House has done? This is troubling.
▶ 0:58:14And I I I just want the reassurances for this committee and for other members of Congress, other committees, and and for most importantly for for the families of Americans who send their sons and daughters, you know, into harm's way that put on that uniform. I just want the reassurances that we're not doing, you know, this this buffoonery has to stop right at some point.
▶ 0:58:43There are serious consequences to not not complying with with security protocols. Mr. Secretary, you're a smart guy. You're a smart guy. You didn't create this situation. You were drawn into it. I'm just trying to reassure the committee that that this stuff is not happening anymore. Gentleman's time is expired. Allow the gentleman to answer. uh be a yes or no.
▶ 0:59:14I think the gentleman's time is expired. Well, Congressman, I'm happy to say that because of my age, I I pick up the phone and call people. You gone. Gentleman's time is expired. The gentleman from Georgia, the vice chairman of our financial institution, subsequently, Mr. Loudermelt, recognized for five minutes. So, thank you, Mr. Chairman. Uh, Secretary, thank you for being here. Um I think you and I are both aware of the paradox of the US uh reserve currency status.
▶ 0:59:39The so-called Triffin dilemma says that to maintain the benefits of a global reserve currency status, we may always run a concurrent account deficit which in turn r in turn risks undermining global confidence in the dollar. The US enjoys an exorbitant privilege from the dollar's reserve status. This means that among other benefits, there is a high demand for dollar dominated assets worldwide, substantially lowering borrowing costs.
▶ 1:00:07It also allows us to run sustained trade deficits and drives capital investment into the United States. So my first question is, how is our current reserve status different from what it was under the Brentton Woods system when the dollar was convertible to a fixed amount of gold rather than floating? Uh well sir it it's now based on the the full faith and credit of the United States rather than backed by gold. Okay.
▶ 1:00:32Does the demand for dollars and the US debt worldwide and the reduced borrowing costs that come with it contribute in a meaningful way to some of our failings as fiscal stewards? Well, I I would say that the unfettered ability to borrow has made us more prolificate as there is very little potential for market discipline to date.
▶ 1:00:56But there is the potential that the market may discipline the United States government one day and I I am along with the administration, President Trump trying to set the country on a path to avoid that. And we appreciate that. Um, I've long said that I don't feel that there is the political will will within Congress anymore to uh restrict spending and balance the budget. And so I appreciate the work that that you're doing there.
▶ 1:01:24Um, is there a world where we can have our cake and eat it too? In other words, is there a policy configuration where the US can maintain the best elements of it of its exorbitant privilege while also having a balanced export economy? Uh yes sir, there is and you I would point out that the exorbitant privilege as I believe it was a French politician called it uh does not always result in the lowest interest rates. Japan's interest rates are lower than ours.
▶ 1:01:54China's interest rates are lower than ours. Most of the EU interest rates are lower than ours. Okay, I want to shift gears just Um, for several years I've called for Finins to raise the threshold for currency transaction reports from 10,000 uh to some higher value. Working on legislation, have been for the last several years and I do have read legislation again this year on that.
▶ 1:02:21If adjusted for inflation from the 1970s, this threshold would be somewhere between 74 and $80,000. But we haven't. We're still stuck at that $10,000 uh limit. In your opinion, what threshold value best balances privacy and compliance cost against the utility that these reports have for law enforcement? Congressman, I am not sure what the equilibrium level is.
▶ 1:02:47Uh what we have discovered uh so you were talking about the threshold for a suspicious activity report or the concerns currency transaction report which is in so uh we we are now examining that and we are finding uh that sometimes uh higher is better sometimes lower is better.
▶ 1:03:09We have discovered that there are approximately four 40 counties on the US Mexico border that account for a substantial amount of uh nefarious behavior by the cartels. So we have lowered that to $200 and we are finding great efficacy there in pushing the cartels back into Mexico and not allowing them to deal in the United States. So I would say sir it's a moving target. Okay.
▶ 1:03:38and and I can I can understand and appreciate that one of the the issues that we have from a nationwide status is the compliance cost that goes to small financial institutions and even from law enforcement. Uh the complaint is trying to find elicit financing currently is like looking for a needle in the haststack because the pure volume of reports that are being made.
▶ 1:04:04And so my argument has been from in a nationwide status and and I'm sure we can work on something to make exemptions during uh times like you're talking about now in locations but is not uh to increase the size of the haystack but reduce the hay stack so it becomes more prevalent um the illicit financing.
▶ 1:04:28Um, and look, Congressman, uh, I I am the hyper sensitive to the needs of the small and community banks and the undue burden that much compliance is placing on them and we are working across a variety of ways to lower that cost. All right, look forward to working with you on these things. The gentleman yields back. The ranking member on the oversight investigation subcommittee, the gentleman from Texas, Mr. Green, is recognized. Thank you, Mr. Chairman. Thank the ranking member, and I thank the witness for appearing.
▶ 1:04:57Uh Mr. Treasurer, uh when you testified before the Senate, you indicated that the CDFI fund uh is a very important program is very important to us. Is this correct? Uh I did, sir. And uh is it true that you would not agree that it is a woke program?
▶ 1:05:22it has cultural Marxism associated with it and that it is an that it is abused. You wouldn't agree with that, would you? Sorry. I I think the CDF uh I fund is performing its statutory functions as required. So you would not agree then that it's woke. Is it statutory function to be woke? I've never seen that in the statute, sir. Okay. What about mar Marxism? Is that associated with it in the statute? against her. I've never seen that. Okay.
▶ 1:05:52Now, given that the president desires to cut into this program, you're the secretary of the treasury, what are you going to do about it to protect it? Uh sir, the uh the the skinny budget does propose a new hundred million award program that'll provide access to affordable financing. Does that does that take care of the many billions that we put in, $12 billion to support the CDFIs? That's a lot. It's uh quite a distance from the 12 billion. Sir, what are you going to do about it?
▶ 1:06:21Uh, look, I I understand. Do you advise the president? Sorry. Do you advise the president? I advise the president on a wide range of matters. Is this considered a part of a wide range of matters? Would you advise the president that he shouldn't cut these funds? Uh, I look forward to working with you and the committee to ensure these programs operate efficiently for taxpayers. What about efficiently for taxpayers and efficiently as a result of them being in place to do so? If you don't have the money, they can't be efficient.
▶ 1:06:52They can't serve taxpayers if you don't have the money. 61% of these uh programs are in Republican districts. Is there a question? Yes, it is a question in the sense that uh I'm asking you to suggest to the president that this is important and that should not cut it. So the the skinny as I said a h 100red million is quite a distance from 12 billion.
▶ 1:07:20Well that's not the annual appropriate 12 billion is not the annual appropriation. No, but 12 billion is what we, a bipartisan group of folk um put into the CDF files as well as into the minority depository institutions. We don't want to see that cut. Let's go to another area.
▶ 1:07:41Um do you agree that when a tariff is imposed upon a product that's coming into this country that the tariff is collected uh at the border? Yes, sir. And do you agree that that money that's collected goes into the treasury's coffer? Yes, sir.
▶ 1:07:58And do you agree also that if the person that is importing this product is of the opinion that it is something that his clientele, his customers desire, that he will pay that tariff? Yes, sir. And do you agree that when he pays that tariff, he's likely to pass it on to his customers, his consumers? Uh certain laws of economics would say that they're very elasticity. I understand. But do you agree that he is likely to do that?
▶ 1:08:27Uh do you agree that he does it sometime? Do you agree that he does it sometime? Uh again, it Do you agree that he ever do does he ever do it? Sure. So your position is as as the great treasurer you are that this is not passed on to the taxpayers. Uh it could be the consumers. It could be. Well, is it ever? Uh, it's hard to say yes, isn't it? It really is. It's not. Don't listen, sir. You don't You don't have to fear. Don't listen.
▶ 1:08:55Don't fear Don't fear the president, sir. Is it Is it ever passed on? Have you ever heard of this tax money being collected and passed on to the consumer to pay? Have you ever heard of that? Well, the the most recent studies from Okay, let's go on to this point. I I have a better point to make. Excuse me. I'm reclaiming my time. I have a better point. Listen just a second. I only have a little bit of time.
▶ 1:09:18And when it goes into the coffers, that money is then going to be a part of the tax dollars that can be accorded to persons in terms of a tax cut. Is this It's part of the overall Yes, it is true.
▶ 1:09:34Which means that the consumer, the person who pays that tax, this tariff tax when he makes that purchase, is going to put his money in your coffer, our coffer, and then the president later on can say, "You got a tax cut, but it's really the money that the consumer has put into your coffer." That is true. I yield back. The gentleman yields back. The gentleman from Ohio, the chair of the National Security, Elicit Finance, and International Financial Institutions Subcommittee, Mr. Davidson is recognized for 5 minutes.
▶ 1:10:04Uh, thank you, Chairman. Mr. Secretary, I applaud your eloquent message at the Milickin Institute clarifying the Trump administration's coherent and effective strategy, and thank you for helping lead that. My committee on national security, elicit finance and international fin institutions aligns completely with your efforts on elicit finance on trade with the pending reauthorization of the defense production act, the national interest with outbound investment u laws and uh clarity and on focused international financial institutions.
▶ 1:10:34I remain highly concerned about the future of money uh and frankly probably the most important policy debate we're having. I'll save that part for future hearings. But on elicit finance, I applaud your Fininsson final interim rule, removing beneficial ownership reporting requirements for US companies and citizens. The prior approach was collecting information on millions of Americans and companies, even homeowners associations under the guise of elicit finance. Lots of noise and very little signal.
▶ 1:11:02By narrowing the scope of the rule, you are focusing on the signal. Given the shift in focus, millions of Americans have shared sensitive personally identifiable information. Mr. Secretary, as the committee moves forward clarifying the rule and would you commit to supporting the deletion of data already collected under the previous rule? Uh sir, my staff is working on what will happen to that data and we will get back to you on that. Appreciate it.
▶ 1:11:29We work with you and uh certainly hope you safeguard it always, but it'd be uh especially safe if it was deleted. Uh, speaking of legislation, my bill, the Chinese Currency Accountability Act of 2025, it would require the Secretary, you in this case, to instruct the United States Governor of U, the United States Executive Director at the IMF to use the voice and vote of the United States to oppose any increase in the weight of the Chinese R&B in the basket of currencies used to determine the value of special
▶ 1:11:59drawing rights. This bill has passed the House uh on a bipartisan basis, most recently in February, and it still awaits Senate action. Mr. Secretary, far more effective than await awaiting for the Senate is your leadership on this issue. Will you advocate for opposing an increase in the R&B until China straightens itself out? Uh, look, I I'm look forward to working with Congress on this issue on whether additional legislation is needed to address the Chinese practices or whether it could be done through trade negotiation.
▶ 1:12:29wish you great success in your uh pending negotiations and certainly if you look at the IFIs things like uh Argentina's recent restructuring under the IMF basically bailed out the belt and road they never really have to worry about default at the belt and road they're using their influence in uh in the international finance institutions like like uh the IMF and the World Bank to frankly cover risk at the Belt and Road. So hopefully that'll that'll be restructured.
▶ 1:12:57um you've already covered uh outbound and I really appreciate the dialogue on that, but I'd like to I'd like to turn to the Defense Production Act. I mean, when you look at how you've organized uh and and communicated the president's approach there and the administration's approach, um national security is of course paramount to that.
▶ 1:13:18uh as we organize and update and reauthorize the defense production act, of course it deals with the department of defense uh it deals with commerce who does a lot of those things, but it's been structured under the authority of the uh Department of Treasury. Would you commit to working with our committee on national security and finance to gather the input and get a final reauthorization across the finish line this year? Uh I think that is an important important piece of legislation. and we look forward to working with you on that. Uh thank you, Mr. Secretary.
▶ 1:13:48And then lastly, you've spoken eloquently about the kind of mission creep that comes in to some of our interstate international financial institutions. Um and as you know, the IMF set up a climate fund in 2022 known known as the Resilience and Sustainability Trust. Given concerns about IMF mission creep, will you work with uh to eliminate RST so that the IMF can get back to its core mission?
▶ 1:14:13Uh, Congressman, at at my speech during IMF week, I stressed the need to get back to basics at all of the multilateral development banks, especially the IMF. Yeah, thank you. And I mean, the World Bank's spending a massive amount on that. And as as uh Chairman Hill and I met with the Interamerican Development Bank, they highlighted things that they were doing to deal with natural disasters that are important for tourism for them.
▶ 1:14:37So, some of this is characterizing things that are really infrastructure for those countries as climate change, maybe to appease the previous administration. I'm confident you'll get it right to the extent we can be helpful in that as we reauthorize these programs and we consider doing it. I thank you for your clarity talking about American leadership there so that America's interests are focused um with the use of Americans resources. I thank you for your uh steadfast work and your testimony today and I yield back. The gentleman yields back.
▶ 1:15:06The gentleman from Illinois, the ranking member on the financial institutions subcommittee, Dr. Foster, is recognized for five minutes. Well, thank you, Mr. Chairman, and and Secretary Vessent for your appearance here today as well as your uh very nice courtesy call where we will were able to identify areas of common interest like digital citizenship. I'd like to speak today about the strength of the US dollar and the decline of US manufacturing, which as you know, I'm very concerned about.
▶ 1:15:33I you know I started this company back when I was 19 years old uh that now provides over 1500 manufacturing jobs in the Midwest and um it's not been easy. We live we started our our country our company in the in the beginning of the um the Reagan inflation. Uh then we had to live through uh you know the all of the Bush policies and the China shock that that occurred on his watch. We live through just all the ups and downs of this.
▶ 1:16:02And it's um it's not an easy thing. And now in terms of the strength of the dollar, it's affected by many things. It's including central bank policies, interest rates, tariffs, and and the balance of trade. But in the long long run, I believe that the strength of the dollar reflects the world's confidence in the US economy, in the competence of US leadership, in in the value of products made by American workers and our reputation as a fair place to do business and the rule of law in America.
▶ 1:16:30Now, uh, Secretary Besson, earlier this week, you ran an op-ed in the Wall Street Journal echoing many of the of the points you made in your testimony. And in that oped you promised interalia more jobs, more manufacturing, more deregulation, lower taxes, less national debt, all while maintaining a strong dollar.
▶ 1:16:49On the other hand, Steven Mirren, uh, Trump's choice for the chair of the Council of Economic Adviserss, wrote a paper last year arguing for weakening the dollar through something he called the Mara Lago accords, which you've reportedly been placed in charge of negotiating. The president himself has just been all over the map on almost a daily basis on whether a strong dollar or a weak dollar will make America great again. So my question is what is it you know does the administration support a strong dollar or a weak dollar?
▶ 1:17:18uh sir uh I'll work a little backwards is um see had my uh paper was when he was in the private sector and I think it related to a u a range of outcomes uh two um that I believe that the conditions for a strong dollar they are important for international competence and again when we think of strong
▶ 1:17:48dollar. What is a strong dollar? Is it the composite on the Bloomberg of all currencies? Is it a trade weighted dollar? And then we can also look at bilateral relationships because much of that could be not so much the a strong dollar but other countries manipulating and suppressing their currencies which would we live through that in the Bush administration and and his nonreaction to what China was doing. I know all about that. But but I think it's interesting to look at the historical record here.
▶ 1:18:19And I think, you know, I have uh behind me, you know, a plot of of the strength of the US dollar under recent dem under recent presidents. And I believe your staff has a copy of a onepage handout that um could be given to you if you if it's easier to read. And and what it says is remarkable that it says that um under every president, every Republican president, Reagan, Bush, Bush Jr., Trump one or or now Trump two, the dollar has weakened.
▶ 1:18:44under every Democratic president without exception Clinton, Obama, Biden, the dollar has gone up significantly. Um, and and I don't think that's an accident. I think it's because of all the factors, including predominantly the confidence that the US will maintain a well- reggulated and um and well-governed economy and and a fair place to do business.
▶ 1:19:04Um now and also on that handout which I think has that actually been given do you have the copy of the handout with the the graphs on it double double-sided single page we can get you another copy if you want you it also has you know the the argument in favor of a weak dollar it should make manufacturing easier in the United States make our you know that's one of the the arguments um for it but if you look at the historical record here if you just look at for example change in manufacturing ing employment
▶ 1:19:34under Democratic and Republican presidents. It's remarkable. For longer than you or I have been alive, uh, Democratic presidents have increased manufacturing employment and Republican presidents have decreased manufacturing employment. You know, from FDR, Truman, Kennedy Johnson, Carter, Clinton, Obama, and Biden all increased manufacturing employment. Eisenhower, Nixon, Ford, Reagan, Bush, Bush 2, it all dropped. Okay, I don't think this is an accident.
▶ 1:20:00But the the thing I want to ask you about is how did the Republicans manner manage to weaken the dollar and weaken manufacturing employment at the same time? Because it seems like that's completely crossways to the narrative that that we're hearing from this administration. Uh well sir the the gentleman's time the gentleman's time is expired. The secretary can answer in writing. Uh the gentleman from Tennessee, the vice chairman on oversight investigation subcommittee uh Mr. Rose is recognized for five minutes. Thank you chairman style.
▶ 1:20:29And I want to thank Chairman Hill and Ranking Member Waters for holding this important hearing. And Secretary Bessant, thank you for being here with us today and uh answering our questions. Secretary Bessant, given that the mint, the US Mint's own fiscal year 24 report shows that the nickel the the US nickel now cost 13.78 cents to produce.
▶ 1:20:53And that experience in other countries suggests that that our nickel production or demand would double, triple, maybe even multiple times beyond that if we eliminate the penny. Is Treasury analyzing the risk that stopping penny production alone could actually worsen our coinage losses or senior losses by pushing annual nickel losses well past $200 million.
▶ 1:21:18uh Congressman Rose that we have looked at this and we believe that it is possible by changing the composition of the nickel to bring down the cost to 5 cents or less. AB: Absolutely. That was going to be my next follow-up question to you. So, I will point out that the dime is very profitable. Yes.
▶ 1:21:39And uh and you know, it'll sound like a little self-interest, but a Tennessee company is one of the folks that could could lower the cost of the nickel and has made a proposal that I know you're we we're investigating that with them and are very intent on maintaining those jobs, sir. And I and I would just say from from my deep dive into both penny and nickel production, uh it seems to me that there are significant savings beyond just saving uh on composition of the nickel.
▶ 1:22:07So I would encourage Treasury and the mint to take a look at uh refocusing how we produce those coins to make them actually positive for balance uh in terms of producing senior for the for the United States. So I'm glad to hear that you're moving in that direction. Secretary Bessant, the president has recently made budget requests that propose significant cuts to the community development financial institutions or CDFIs or the CDFI fund and suggest to end core CDFI programs.
▶ 1:22:37I know you've recently made public comments about the statutory basis for the CDFI programs. What is your position on the future of the CDFI fund and do you believe it should continue to play a role in supporting access to capital in underserved communities across the country?
▶ 1:22:54Well, the congressman, as I told the congressman on the other side of the aisle that we are creating a new 100 billion uh award program that would provide access to affordable financing and this will be mostly in rural America. Excellent.
▶ 1:23:11that I'm glad to hear that and and I you know I understand there we always need to be addressing how these programs work and whether they're efficient and cost-effective and produce the outcomes we want but uh I I I I am glad to hear that you're making moves in that direction and I just want to pause at this point and say broadly it is uh refreshing to have uh competent aggressive uh energetic leadership and so I commend you for that and and uh am very excited about the things that you're doing uh at Treasury.
▶ 1:23:40Uh, Secretary, can you discuss the significance of confirming President Trump's regulatory appointees in advancing uh his America first agenda? Specifically, how do these appointments impact the implementation of these important policies to move America forward? Uh, yes sir. I I I believe that we need to get them appointed as soon as possible.
▶ 1:24:04We have some very good the chairs or directors of these. But the the sooner we can do it, the sooner we can get down to the business of making these institutions work better for the American people and um making sure that Main Street can prosper because I've been very concerned.
▶ 1:24:29As I've mentioned today, I've met I think the personal meetings with over 50 community bankers. I spoke to more than 300 and I think it's very important to get these regulators in place so that community banks, small banks, small regional banks can make sure that Main Street participates with the rest of the country. Thank you. I I completely agree and that's what we're hearing what's I'm hearing from the regulated entities uh in my district and across Tennessee.
▶ 1:25:00Uh, Secretary, given the IMF's limited success in pushing China on transparency and debt restructuring, how can Treasury justify supporting the IMF's current leadership? Uh, we are in constant discussions. Uh, it is leadership that I inherited.
▶ 1:25:19Thus far, they seem very open to the Trump agenda, America first, and advancing the issues that most affect the United States and working Americans. So, we will keep pushing them on that. Thank you, Mr. Secretary. Mr. Chairman, I yield back. The gentleman yields back. The gentleoman from Ohio, the ranking member on the national security elicit finance and international institutions subcommittee, Miss Batty is recognized for five minutes.
▶ 1:25:49Thank you, Mr. Chairman and ranking member. And to you, Secretary Besson. Uh the Trump administration has alleged that detecting and detering transnational criminal organizations such as Iranian uh Iranian terrorist groups and their proxies is a priority for national security.
▶ 1:26:08But on March 2nd of 2025, your department announced that it would not enforce any penalties or fines associated with the BOI reporting rule. Nor will it enforce the CTA uh against US citizens, domestic reporting companies, or their beneficial owners. So I'm I'm a little confused of how you uh square those two things.
▶ 1:26:36So my question is, can you explain to or would you explain to the American public how you undermine the bipartisan CTA and expect law enforcement and national security agencies to quickly and effectively know the true owners behind shell companies registered in the United States.
▶ 1:26:58now that foreigners, including a drug cartel, gang members, could register a company in the United States with no state or any federal ownership reporting uh requirements. And I remind you in in your testimony, uh you talked about uh illicit actors. Well, these are some of our our illicit actors.
▶ 1:27:23the Congresswoman, an overwhelming majority the of the domestic entities that you're describing are hardworking Americans with small businesses. We bifurcated the bill and any foreign entities must still file. So are you you saying to me it's not true that they they must file and do the foreign entities must file the BOI?
▶ 1:27:51Uh yes, we we bifurcated we bifurcated the CTA program that domestics do not have to. So are so maybe I'm asking it the wrong way. So it appears that they are doing it registering to avoid PL the transparency of who the companies are. I'm not sure what your question is.
▶ 1:28:20I'd be happy to answer it. So I I guess I'm looking at it as and if you're saying it is not true and that they now are complying and completing the BOI. So let's take it one step at a time. So you're saying everybody is completing the BOI. You're enforcing it. Uh no ma'am. I I am saying that we have bifurcated it that US nationals uh do not have to file and that foreign nationals do. Okay.
▶ 1:28:50So I I guess when we look at this I if we're limiting enforcements of the rule just to the foreign in entities that creates a giant loophole whereby any foreign entity can register in the United States and evade or or not do the BOI reporting requirements. Well, they would al they would be subject to all they would have to come through a US financial institution.
▶ 1:29:18So they would be subject to all US institutions including the BOI the a including the BOI uh including the BOI yes or no because the answer is no. I mean you can say it however you want to but the answer is no. And and this makes it easier and this is what I want the American folks to know.
▶ 1:29:39It makes it easier for human and drug traffickers, uh, cartels, terrorists organizations, and other criminals to do business in the United States. And when you're limiting the enforcement just to foreign entities, it exempts 99% of the entities that Congress intended the law to cover when it was passed into law. So, I think I do have my answer. We're just not agreeing on it, and we know why. So, let me go to my second.
▶ 1:30:10It's my time. Let me go to my second question. The clock is running. It's my time. It is my time. You will not do this on my Now, I'm going to ask for a few more seconds since he refused to comply with my time, not his time. In 2016, former Secretary Jack Lou announced that Harriet Tugman was to be the new face of the $20 bill. Can you tell me what's the current status of this project? Uh, no ma'am.
▶ 1:30:39I I can't, but my staff will get back to you. No, I want you to get back to me because see, there seems to be an issue when it comes to things that affect people of color or people who live in poverty, whether it is what you're doing with social security, what you are doing with restricting. The gentleoman's time, the gentleoman's time is the gentleoman's time to the gentleman from Mr. Chairman. I need to answer if he will.
▶ 1:31:05I'm not the gentle woman can submit for the record have his staff report Mr. Chairman I'm addressing it to you to ask the gentleoman's time Mr. Chairman gentleoman's time has expired. I need him to address time. No, I'm not going to gentleoman's time to stop until you gentleoman's time to me as a member of Congress. The gentleoman's time has expired. The gentleoman has offered that she can submit questions for the record of order to you.
▶ 1:31:35I will not stop. I will not be silent. The gentleoman is not offering an appropriate parliamentary inquiry. Is does the gentleoman have a parliamentary inquiry? I do. Please state the parliamentary inquiry. As a member of the United States Congress addressing the secretary, I am asking you to rule on asking this hostile witness to direct his response to me versus having him tell me that his staff will rem respond to me.
▶ 1:32:04My staff person didn't ask him the question. I did. The the gentleoman does not state a a parliamentary inquiry. So, let me ask the point of privilege to you, Mr. chairman because I'm not going to stop this this morning until you respond to me. Then if you will direct the secretary to respond to me as a member of Congress or let me ask it is not a point of privilege. The gentleoman's time the gentleoman's time is expired.
▶ 1:32:28The gentle woman will suspend the gentle the gentleoman will the gentleoman will suspend. The gentleoman will suspend if he gentleoman will suspend. If he responds gentleoman will suspend will respond. and a woman makes a legitimate request. She a personal privilege. You can simply ask him to respond. Personal privilege. Just asked him to respond if he'll respond to a member of Congress versus saying a staffer. It's simple as that.
▶ 1:32:56I ask that members keep decorum and remain cordial during today's hearing. I am being the gentleoman will suspend. The chair has the time. Mr. Chairman, the chair has the time. The gentleoman will suspend. The gentle woman will request. I ask that members keep decorum and remain cordial during today's meeting. I am being cordial. I I resent your statement to imply that I am not. I am a member of the US Congress. I am asking this secretary. The gentleoman may submit QFRs for the record which will be responded to by the secretary.
▶ 1:33:26Thank you. The gentleoman's time has expired. The gentleman from Texas, the chairman of the Small Business Committee, Mr. Williams, is recognized for five minutes. Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being here. This may be a little easier on you here. I'll try to move it fast forward. Uh the Chinese Communist Party has enabled their economy to serve as a central hub for moneyaundering, human trafficking, and the export of chemicals used to manufacture fentanyl.
▶ 1:33:50Increasingly, Chinese nationals and financial works have informed operational alliances with Mexican drug cartels, providing laundering services, digital payment platforms, and chemical shipments that fuel the trafficking of fentanyl across our southern border. Uh these criminal partnerships exploit the international financial system and pose a direct threat to US national security, public health and financial integrity. So my question, Mr.
▶ 1:34:15Secretary, is can you elaborate on the steps Treasury is taking to disrupt the flow of illicit financing, money laundering, and drug trafficking between Chinese entities and Mexican drug cartels? Uh thank you, Congressman, for that very important question. And note that they they are interlin that the Chinese provide precursor drugs that are then converted into fentanyl the by the Mexican carells.
▶ 1:34:42And just today uh we I signed an order that will be made public within the next few days identifying Chinese entities who are engaged in the fentanyl trade. Great. Far too long, China has taken advantage of the international financial system and has become the world's largest creditor. The IMF and World Bank's focus on climate and social initiatives has result in a lack of accountability for the Chinese unreliable economic data.
▶ 1:35:12Currency manipulation and opaque predatory lending practices. In addition to the lack of accountability, this shift in focus to climate has forced many developing countries to turn into Chinese to turn to Chinese financing. The United States must leverage its leadership of the world stage to counter China's growing influence as a global lender and put an end to the deceptive economic practices. So, Secretary, how is Treasury working to prevent IMF and the World Bank resources from indirectly legitimizing China's debt trap diplomacy and economic oppression?
▶ 1:35:43Uh well, Congressman, in various ways. uh one as you would have noticed I will have said that when this horrible Russia Ukraine conflict ends that the no one who f no country or person who financed the Russian war machine will be eligible for any rebuild in Ukraine especially that financed by the world bank the or any of the alt other multi-ateral development
▶ 1:36:13banks also we are working with the OECD especially to look at and the IMF and the World Bank to look at the true debt levels for these countries.
▶ 1:36:28Uh everyone agrees or the everyone save one country agrees that this is a problem that there are rapacious mineral deals that there are tolling arrangements and it is impossible to know uh and assist a country that has experienced economic hardship when we don't know the true levels or if there is an undisclosed priority payment to another creditor. Let me try to get to my last question.
▶ 1:36:57I was encouraged to hear that you are taking a fresh look at the bank regulatory framework to better reflect actual risk and ensure a level playing field across the financial system. And as part of that review, I hope you'll consider where US regulations may be putting banks and financial institutions at a disadvantage compared to our foreign competitors. In particular, I urge you to weigh the combined impact of proposals like Basel 3 endgame, the GSIB searchcharge and leverage requirements, especially whether these changes could limit banks ability to support the economy and complete globally.
▶ 1:37:27So, uh, in your work so far, are there any specific areas where you plan to address these concerns about regulatory putting US institutions at a disadvantage such as in the reproposal of the Basel 3-game rule by amending the GSIB searchcharge regulation? Uh, Congressman, we we are looking uh across uh all all areas and know that this is at the top of our agenda that most countries have very concentrated banking systems.
▶ 1:37:56In many cases, the banking systems are larger than the GDP of the countries. So, they have very different needs than the United States. The strength of the United States lending and capital markets and economy is the breadth and depth of our financial institutions and we will continue to advocate for them both at home and abroad. Thank you for your service. I think you're doing a great job. I yield back. The gentleman yields back.
▶ 1:38:25The gentleman from California, the ranking member on the task force on monetary policy, Mr. Vargas, is recognized for five minutes. Thank you very much, Mr. Chair and ranking member for holding this hearing. Mr. Secretary, welcome. It's great to have you here. Um, you I want to thank my colleague and friend from Texas for asking the question about Russia. Do you consider Vladimir Putin a war Yes. Would you negotiate with a war criminal?
▶ 1:38:53I think that's the nature of diplomacy. One one must the one must negotiate with both sides, sir. So, you will be negotiating then with the war criminal? Uh, I I I believe that negotiation that was needed with the Japanese after World War II. Okay. Thank you for that answer. Are you familiar with what President Trump has called his one big beautiful bill? Yes, sir. Could you describe the basics of that bill?
▶ 1:39:23It it is a combination. The core of that bill is to make the 2017 tax cuts and jobs acts permanent. If this what he quotes a big beautiful bill passes, will the deficit go up or will the deficit go down? I I believe over time the deficit to GDP which is the important number even secretary Yellen agrees with that the will stabilize and go down.
▶ 1:39:52So next year will it go down? Sir. Yes. Uh I I believe yes. You say so if the pass if the big beautiful bill passes you believe the deficit will go down next year. The deficit to GDP will because again the what is important is that we grow the economy faster than I understand that I I understand that of course but you say that in the long term I'm asking the short term will the deficit go down?
▶ 1:40:22I believe the deficit I believe the debt to GDP can go down but what about the deficit itself? uh the amount of money the amount of money that comes in as opposed to goes out. Will the deficit go down next year? Will it go down from 2024 and 2025? I believe it will because these are extraordinary. What about the debt? Will it go up or down if this big beautiful bill passes?
▶ 1:40:52Uh again, sir, it's the while while the absolute I I think the reason you're having a hard time answer I'm not having a hard time answering because what is important isn't the absolute level of debt. It is as Secretary Yellen said the debt to GDP. So that if our GDP were 100, everyone is talking about the $ 37 billion. Is it going to go up or down? Sir, yes. Is it going to go up or down? Uh it will likely go up. But if the GDP goes up faster, I think that's the interesting thing.
▶ 1:41:22My colleagues on the other side always talk about reducing the debt and reducing the deficit. And yet the hypocrisy of trying to pass the big beautiful bill that will cause both of them to go up. Uh, no, sorry, I did not say the deficit. No, I I know you didn't say you're trying not to say it, but that's exactly what's going to happen. I actually said it would not go up. I know you did. And and ju just to be clear, you said the number would go up. Just to be clear, last year 6.7% deficit to GDP. No, no. I'm asking the number. No, no, no.
▶ 1:41:51Not I'm asking the actual number. No, we're looking at previous administration. We're asking about numbers here. When we were not in a recession and not I'm not going to let you get away with that one because it's very clear what's going to happen if they pass their bill. the deficit's going to go up and the debt's going to go up and we're going to see the hypocrisy of them always saying cut the budget so the deficit's going to go down and the debt's going to go down. It's not. It's going to go up.
▶ 1:42:22Now, I do want to ask you about the independence of the Fed. Yes, sir. You have kind of been on both sides of the fence on this. You seem to say that we need a independent Fed but at the same time you said there should have been a shadow Fed. Uh sir since taking office I have refrain from commenting on Fed monetary policy and I have said that monetary policy is a jewelbox that must be preserved. Great.
▶ 1:42:49And lastly I do want to ask this because a number of my colleagues have brought it up about elite the coastal elites. Where did you go to school? Sorry. Uh I grew up in Little River, South Carolina. What you know did you graduate? 500 500 you you graduated from Yale. You were part of Wolfheads society. Congressman, one of the big three congressman I worked three jobs to put myself. Believe me, I grew up just as poor as you did. I understand that too.
▶ 1:43:15But the thing that I always get is the funny part is you always talk about the coastal elite. You're a billionaire that went to Yale. I don't hold that against you. Vice, I just find it interesting that my colleagues are always talking about the coastal elites and yet the president and yourself are both coastal elites and I made all my own money. Sir, the gentleman yields back. I recognize myself for five minutes for the purpose of asking a question. Secretary, thank you for being here. Earlier today, you referenced the electric slide.
▶ 1:43:43I'll share my concerns that during four years of the Biden administration, we were sliding behind foreign competition in particular in the digital asset space from the Bahamas to China. And I want to ask you what would happen if we put our heads in the sand if we object if we walk out of that type of leadership role, which I think is so essential to make sure that the United States continues to lead the way in web 3 as we did in web two.
▶ 1:44:08And in particular, how does the leadership in digital assets play into President Trump's broader agenda? And specifically, how do dollar do denominated stable coins impact dollar dominance uh in treasury markets? Congressman, thank you for that very important question.
▶ 1:44:25Our goal is to encourage firms to reshore reshore bring back to the United States best practices their digital asset innovation and experimentation here in the United States without scaling back their ambition to influence the global industry. Uh the administration's efforts to promote clear regulatory frameworks for digital assets will contribute to this goal. So so will ongoing efforts promote fair access interoperability of payment technologies across all borders.
▶ 1:44:53Uh we will continue to support private sector solutions and discover discourage public sector solutions that distort markets and stifle competition. Let me let me jump in. Let me let me jump in because I I think that's that's spot on. And then let's talk about what happens if we fail to act. Yesterday some members objected walked out of a hearing to discuss market structure and digital assets and absolutely essential leadership role the United States to United States has to play.
▶ 1:45:19What happens uh if we walk out on our responsibility uh to lead in the digital asset space and what would occur if web 3 center of gravity shifts away from the United States uh to countries like China or other locations? Well, uh, numerous things could occur, sir.
▶ 1:45:38uh a as we saw under the previous administration uh an entire ecosystem the unregulated and renegade springs up outside the US and illicit actors abused the value of these transfer systems and there is a technological loss here in in can you walk us through or share any of your impressions from the conversations you've had with your counterparts abroad uh as it relates to their experience with regulating in the digital asset space
▶ 1:46:08they they believe it it's very important and I believe that they are a little worried that the US is willing to restore its leadership here and as I said earlier there is a chance that digital assets can provide a substantial source of demand for the US dollar in my bill the the stable act which regulates um dollar denominated denominated stable coins um we give the treasury the authority to identify which
▶ 1:46:38foreign stable coin regul regulatory regimes are comparable to ours. Uh what are the key aspects of comparable regime and are there lessons or criteria that we can draw from other similar areas in the financial services space? Uh, Congressman, I I think the we have the blueprint with the bank regulation and adherence to anti- moneying money laundering laws around the world of financial stability.
▶ 1:47:04Uh, and that I I would guess that 70% of the countries would be very easy to judge yes no and then there will be another group. That's why I believe that the some of the bills encourage phasing this in and a lot of stable coin, a lot of digital asset uh space needs uh reliable banking services.
▶ 1:47:31Uh could you comment briefly on how the Treasury is working with bank regulators to ensure that financial institutions can safely uh participate in this emerging industry? Uh we we have recently delivered a report to the president the on on this. So we have safe and sound best practices. Uh and um we want to work with the financial industry with new companies and entrepreneurs as well as incumbents.
▶ 1:48:00The the banks there is a solution to banks to participate in this business whether it's through custody or their own coins. Um let me shift gears really quickly in my final 30 seconds. President Trump issued an executive order on modernizing payments uh to and from Americans bank accounts. The executive order noted that the treasury checks are 16 times more likely to be reported uh lost or stolen or returned uh as compared to electric transfer funds. Uh do you think we're making real progress in this space?
▶ 1:48:30Uh we we are working the all all speed ahead. Congresswoman from Staten Island, the told me of numerous losses of checks the in the postal system and we it is both cost cutting and good practice. Sir, thank you very much. Thanks for being here today. I now recognize the gentleman from Texas, Mr. Gonzalez, for five minutes. Mr. Secretary, thank you for joining us this morning.
▶ 1:48:54Um, according to the Wall Street Journal, oil and gas companies have lost over $280 billion in market value in April of this year alone, more than any other sector. This decline is attributed to a combination of factors, but mostly attributed to the tariffs.
▶ 1:49:14At a recent Dallas Federal Reserve meeting, a veteran CEO Energy CEO said, quote, "I have never felt more uncertainty about our business in my entire 40 years in the industry, and this turmoil is no accident. It's a direct result of Mr. Trump's vandalism." yesterday, Diamondback uh Diamondback Energy, one of the largest Perian producers, told shareholders that tariffs are adding significant costs of drilling activity.
▶ 1:49:44That's mostly due to the tariffs to our neighbors to the north and the south. Mr. Secretary, the chaos in the energy sector has eclipsed any gains from President's Trump's industryfriendly regulatory roll backs that there were so much looking forward to. Stable energy prices depend on policy. The Trump administration pledged to support American energy sector. However, this decline demonstrates the opposite.
▶ 1:50:11Given these outcomes, how do you reconcile the administration's stated support for energy sector with policies that appear to have directly undermined its stability and global competitiveness? Uh sir, I would take issue with the idea that it was tariffs. Uh we have seen one of the largest decreases in the underlying price of crude in history. That's right. So that 100% there's not a single energy CEO in America right now that would agree would agree with you.
▶ 1:50:39They are all attributing their downfall right now and the troubles that they're having to tariffs and they need some relief. What is the what's the administration going to do? The congressman, you and I must speak to different energy executives because I speak to them quite often. Spoke to API today. the you know I I will note that OPEC has done a substantial substantial supply increase and the history of substantial OPEC supply increase and the tariffs are just making it worse.
▶ 1:51:06China is no longer buying our LG neither is a lot of other countries around the world. So uh and you know I think we've seen uh the Harold Ham the head of Continental Resources has said that he is reshoring his supply chain and he believes that over time he did not save any money any money by outsourcing the equipment. Secretary our energy industry is hurting and they need your help.
▶ 1:51:33And I know you're a smart man and you're one of the most stable people at the in this administration. You need to talk to the president about this. This is hurting the industry and it's hurting the American people and and more needs to be done. Uh I have another question that I want to talk to you about that's hopefully a little easier and it has to do with our shrimping and and fishing industry.
▶ 1:51:53As you may know, our domestic uh shrimping and fishing continue to experience economic hardships caused by an increase of foreign imports, high fuel prices, labor shortage, immigration regulation. Uh all to make matters worse. Plus uh we have flooded the domestic seafood markets with foreign farm-raised shrimps, many which are subsidized by foreign uh by American federal dollars in the international financial institutions. We need to put an end to this.
▶ 1:52:21What are we doing in terms of tariffs to helping this industry that is hurting? I know I mean if we want to talk tariffs there are some that work and I think this is certainly an industry that needs a lot of help. It's been ignored. It's on the verge of collapse. If we continue down this path, we will rely on on imported seafood and certainly imported shrimp, which is hurting the worst within the seafood industry.
▶ 1:52:43And I don't know uh what your familiar how familiar you are with this industry, but but um I'm curious to hear your opinions and what can be done to improve this. Well, well, sir, as I mentioned earlier, this coastal elite grew up in a fishing village that when I was young was 500 people. So, I'm very attuned to that. And you know again on one hand that you're saying you don't like tariffs on the other no I don't like tariffs uh on our energy sector. Yeah we do need tariffs in certain industries.
▶ 1:53:13This is this is one of them that I think would make sense and and you know I I agree and I'd be happy to work with you the on this. We've worked with the Alaska delegation extensively on what's happening the with Russian illegal fishing and illegal uh or sales to China that's then trans shship back to the US. So we'd be happy to work with you on that. I'd love that. Okay, I'll be in touch with you. Thank you so much. And I yield back. Thank you. Gentleman yields back. The gentleman from South Carolina, Mr.
▶ 1:53:42Timmons, is recognized for five minutes. Thank you, Mr. Chairman. Uh Secretary Bessant, thank you for being here with us today. Uh you are respected by the president, his economic team, leaders on Wall Street, and the broader international financial community. Your steady leadership is appreciated on both sides of the aisle. And after an abysmal four years, it is encouraging to see thoughtful and serious leadership guiding this discussion once again. And I would like to add a personal note. Both of us proudly call South Carolina home. And my family, like yours, also came to Charleston in the 1600s.
▶ 1:54:12Um, I know you understand the economic landscape of South Carolina deeply and that perspective is invaluable in the position that you hold. Um, let me start with a question about the textile industry. South Carolina and especially my district in the upstate has a long history in textiles. For over a hundred years, it was more than just an e economic sector. It was part of the cultural and social fabric in our communities. But there was a dra drastic shift in the 70s and the 80s.
▶ 1:54:37well-intentioned regulations from Washington related to labor and the environment made the US economy no longer competitive. And while I agree with the policies that we should not dump dyes and chemicals into the rivers and we should not have 120 degrees in, you know, factories and people should only work 40 hours um a week. We need to focus on being competitive. And those regulations, all they did was push all of our textile jobs to China or most of our textile jobs to China.
▶ 1:55:05Um China took advantage of it and they incentivized um and subsidized textile manufacturing capturing an enormous amount of the market share. Hundreds of thousands of jobs were lost in the south. Um recently you made a comment suggesting we do not need to bring the booming textile industry that once defined the region where we both grew up back and that statement stirred some concern from some of the textile companies that survived in the district.
▶ 1:55:30And I I agree with your broader point um that we should not return to producing lowquality goods just for the sake of manufacturing in the United States. I I I do want to ask do you agree that we should prioritize support for the American textile industry that are still here and uh particularly uh leaders that are in innovation and high-tech manufacturing and people that are producing barry amendment products for uh our war fighters.
▶ 1:55:55Uh, Congressman, I what I mean and meant was the survivors in this industry, they have done it through innovation and they will continue to innovate and they are high-end textile manufacturers. I remember going to China in the 1990s and 2000s and seeing everything that had been outsourced there in the textile industry. Sock City, you know, they would sock city, um, underwear city.
▶ 1:56:26And, uh, those are the jobs you and I grew up with many people, our family, friends involved with. And I think that we, you know, through through good tariff policy, we can make sure that these existing businesses can grow and thrive, especially in the high-end. And again, anyone who has survived has done it through innovation. hard work and that's what I told them.
▶ 1:56:52I told them that um you we still support them and we are going to make sure that they continue. Absolutely. Absolutely. So I want to turn to the automotive industry and specifically BMW which operates its largest plant in the world in Spartanberg, South Carolina. That facility which opened in 1994 has helped make our state the top auto exporter in the US.
▶ 1:57:11and employees either directly or uh through a nearby supply network indirectly almost 80,000 of my constituents almost one in 10 of them and foreign automakers like BMW are continuing to invest heavily in US manufacturing incredibly they have invested an additional $4 billion in the last three years and that investment has real lasting benefits for American workers exports and innovation um it is President Trump's it's is President Trump's promise to the American people to renew the US economy's in
▶ 1:57:41the global economy and this is a effort long overdue. My question is this as as President Trump renegotiates our trade relationships with the world. Is it fair to say that BMW uh the type of investment that BMW has made, a generational investment is what we're hoping to incentivize? Uh yes, Congressman and I regularly see the at the Port of Charleston, the BMW X series sitting uh there for export.
▶ 1:58:09And I think that the president recently met with the heads of the three German auto companies and is working toward a solution for more American content and more made in the US rather than just as assemblers. There would be more jobs in your district. And that message was heard loud and clear and they're going to continue to invest.
▶ 1:58:30They've been a a very good partner and I'm just excited because interest rates coming down, energy costs going down, regulatory relief, uh a more fair trade deal. U we are going to be the best place to start to grow to build a business and I appreciate your leadership in that regard. Thank you, sir. Yield back. Gentleman yields back. Gentleman who's the vice ranking member of the full committee, Mr. Castton is recognized for five minutes. Thank you, Mr. Chair.
▶ 1:58:58Uh, Secretary Basant, I'm uh starting my seventh year in Congress. Um, and in those seven years, I have never received more phone calls from my constituents on any issue than the hack into the Treasury payment system uh earlier this year. Um, as you know well, this is the system that manages over $5 trillion a year of federal payments. Payments to taxpayers, payers to social security beneficiaries, payers to embedded foreign assets who are overseas and undercover, and it has their personal information and their routing information. This is a purple district.
▶ 1:59:28People were nervous. We sent a letter to your office along with 150 colleagues asking 20 questions. Your response that we just received was non-responsive on all 20. Mr. Chairman, I'd like unanimous consent to enter those those two letters into the record. Without objection. Um, I want to get through a lot of those questions right now, Secretary Bessant, and I would ask you to be as brief as you were in your response, but I would very much like a more wholesome answer in writing.
▶ 1:59:52In January, the New York Times reported that you pressured David Leick out of his role overseeing that after he refused to grant that access to people that Elon Musk had imposed. Can you confirm the accuracy of those reports? Uh, that's incorrect, Mr. You met with him on January 30th, put him on administrative leave, and he left the day later. Is that accurate? Uh, I they did not put him on administrative leave, administrative leave. I asked him to take I met with him 90 minutes. So, you're denying the New York Times report.
▶ 2:00:21Uh, I was it your was it your I am adamantly saying that the New York Times is inaccurate. Okay. All right. Fine. That's yes or no. New York Times is inaccurate. Fine. Not placed in admin leave. And he was subsequently resigned after sending numerous. Sir, I'm just asking for yes or no questions. If you want to be voluminous, please write me a letter. Was it your decision to terminate Mr. Lick or were you pressured by others? He resigned. Uh were you who made the decision to put him on administrative leave? You or someone else? Again, sir, he was not put on administrative leave.
▶ 2:00:51That is okay. So, you're denying the New York Times. Fair enough. Tom Krauss, you a fan of him who's now playing that role? Yes. Okay. Um you had uh you'd mentioned earlier he was in that role. Do you agree that that role includes duties that are include managing Treasury's payment system to ensure timely social security payments, overseeing auctions for US Treasury bonds, which determine interest rates, and ensuring the US doesn't breach the debt limit? Would you agree that that's all part of the functions of that job that Mr. Rouse is now holding? Uh, no.
▶ 2:01:21Uh, shocking. Okay. Does uh does Mr. Krauss have any prior experience in government service? Uh, he does not. Neither do I. Uh, does Mr. grass have any prior experience in the financial sector, which of course you do? What's that? Just you can answer them. You don't need to I'm I'm doing this solo. You don't need the people behind you to help you. Does Mr. Krauss have any prior experience in the financial sector? Uh he had in the financial sector, yes, he's put together more than he's No, no, no. Did he Did he work for a bank? Did he work for a hedge fund? Did he work for a private equity firm?
▶ 2:01:49Uh he worked for a private equity firm. He's the CEO of a software company. He's done more than 100red billion of tech deals. He as a he's runs a software company. He's still the CEO of that software company, isn't he? I'm not sure. He is. Do is it your view that that job that he's holding is a part-time job? Uh, I'm not managing managing $5 trillion a year of distributions. That's a part-time job. Or does that require full-time? No, sir. He is not managing five trillion dollars a year of distributions. No, he he is doing a tech upgrade.
▶ 2:02:20An ERP. That's all that m that Mr. Leick was doing was a tech upgrade. Sorry, Mr. Leick. who said, "I'm not going to allow people to hack into this system." He was just doing a tech upgrade where you've downgraded what that job function is. Uh m Mr. Leick was in charge of 1.5 billion payments a year, which one-third did not have a task identification. Sir, come on. Come on. Come on. Come on. We're We're going to move along.
▶ 2:02:44Um you the chairman notably a moment ago did not swear you in, so you are not under oath right now. um February 4th, in your response to a Senate Democrats letter, you said that Mr. Krauss will only have readonly access um a moment ago in response to our chair, you said, and I quote, um they were only granted readonly access at Treasury. You're not under oath right now. You could be, but you're not. Um Mr.
▶ 2:03:13Jueli testified under oath in a recent hearing saying that uh um Mario Alles was given right access to the treasury payment system. Do you wish to correct your remarks to the chair, the ranking member? I I would say that no one was given right access. I I never granted anything other than but Mario was granted right access. I never granted anything other than access.
▶ 2:03:36Um left the Treasury Department in part after it was discovered that he said, "Normalize Indian hate and I just want a eugenic immigration policy." Do you agree with those sentiments? Uh, I do not at all. Do you do you think that someone who has those sentiments should be employed in your department? Uh, I that I had a conversation with the vice president. This is that I admired his grace. He then went to HHS. Gentleman's time is expired. Thank the gentleman from Illinois. The gentleman from Indiana is now recognized.
▶ 2:04:06Mr. Mr. Stzman for 5 minutes. Thank you, Mr. Chairman, and uh Mr. Secretary, thank you for being here. Um and uh frankly, I apologize fact that you're getting a lot of accusations thrown at you and you haven't had much chance to to respond to some of them and that are fair questions that I know that you have good answers for. So, um with respect to the individuals originally referenced by ranking member Waters, uh who may have had access to certain BFS systems and in response to Mr.
▶ 2:04:33Casten, do you want to add any additional information on that matter? I I would say that that is in litigation and I never authorized access. Thank you. Well, I just want to say thank you for your service and for your willingness to come serve in Washington DC at a at a critical time and the fact that you heeded uh President Trump's call and uh it's refreshing honestly.
▶ 2:04:59um you know we see a lot of uh ups and downs you know things are you know happening around the world but here at home uh there's uh a reset that's happening and that does create some volatility but I'll tell you what there's a lot of good news that uh I think the other side is missing and I I find it ironic that this uh chart was handed out earlier and of course you know it tries to show that all the blame is on the Republican repres presidents over the past century
▶ 2:05:29or so. But uh the the one that really Congressman, if I may interrupt, as a former finance professor, that chart, we get an F. Well, I I agree. And you know, it's it's interesting that, you know, this big drop off right here after President Clinton. Uh I live in the he one of the heaviest manufacturing districts in the country. And um you know I know that businesses don't turn on a dime that quickly but that was because of different trade policies.
▶ 2:05:59Something happened uh during the President Clinton era that caused a lot of jobs to leave and that's what President Trump and you are trying to fix. Is that correct? I think that thing was called NAPTA, sir. Exactly. Well, thank you for doing that because we saw jobs growing up in northeast Indiana and the auto industry and you know, agriculture, manufacturing just continue to have this slow decline and um you know, manufacturing is critical to a nation and manufacturing has built America and we've seen jobs leave because of
▶ 2:06:29bad policies over years. But because of President Trump and because of you, sir, we're now seeing headlines that say Rolls-Royce planning to shift production to the United States to avoid Trump's tariffs. We see headlines saying Johnson and Johnson to invest over 55 billion in US in the next four years. Even in in my district, uh GM has announced that they're increasing truck production. I know coming from a manufacturing family that we're seeing opportunities. Is it going to happen overnight? Absolutely not.
▶ 2:06:57But it's at least giving us the opportunity to look forward and say there's an opportunity because you all are setting uh resetting the table to look out for America first. And and so I want to say thank you. And um you know if if you don't and if I've heard you say this before that President Trump has tasked you with uh reducing debt and deficits as well as keeping the economy strong. That's a a huge task, but it's one that has to happen.
▶ 2:07:23And I appreciate what you've been doing because a debt crisis would just flat out limit us to uh to any sort of recovery. It'd be very difficult. I want to ask you real quick about the um the uh Federal Reserve's dual mandate. Um, generally speaking, should the Federal Reserve focus more on fighting inflation or providing maximum employment? And what should the Fed focus on if the economy enters stagflation?
▶ 2:07:47Uh, sir, I will just comment on monetary policy in general rather than the Federal Reserve. I I think the two are inexraably linked and a as we saw the during the terrible inflation during the Biden years.
▶ 2:08:04Uh that employment picked up but that was a slingshot effect as we went came into postcoid recovery that financed the uh by debtfueled government spending and we are trying to end that. Uh so the the Federal Reserve should focus on both and it's at different times.
▶ 2:08:27But look, keeping in inflation down, President Trump won because of I I believe because working real wages for working Americans dropped. No, that that's absolutely right. And we saw the cost of living go up.
▶ 2:08:44the last four years have been the hardest uh on Americans due to um the former administration's um policies and I know that there's a huge recovery and people are still trying to recover and are hopeful and optimistic and my time is about to expire but I just wish you the best and I want to say thank you and working together here in this committee there's plenty of places to uh to work together and try to get us back on track rather than pointing fingers. So gentleman's time has expired.
▶ 2:09:13We now recognize the gentleoman from Massachusetts, Miss Presley, for five minutes. Thank you, Secretary Bessett. You have um heard from Democrats publicly, and I'm certain you've heard privately that this administration's reckless and chaotic tariff policy is wreaking havoc on our economy.
▶ 2:09:35uh rather than delivering stability for our country, uh this uh Trump tariff tantrum has been inconsistent, counterproductive, and disconnected from reality. In my district, the Massachusetts 7th, I'm hearing it from everyone. Small business owners are reeling from the unpredictable on-again, off-again tariffs. They're holding back on expansion, delaying hiring, and bracing for the impact.
▶ 2:10:04Local and state officials are telling me about the effect tariffs will have on our state budget. Simultaneously, Massachusetts will see energy bills increase while revenue from tourism will decrease. But I want to focus on the constituent outreach that I've received from everyday families who are just fighting to make ends meet. Yes or no? Mr. Secretary, do you know what a car seat is?
▶ 2:10:35I have two children. Yes, I figured as much. It's correct. You and your husband have two children. So, I'm sure you know that car seats are absolutely essential for families when traveling with babies and toddlers to uh school to worship to doctor's appointments, just everyday living. But not only are car seats essential, they are the law of the land. It's the law of the land in 50 states. So there there's no getting around that. Mr.
▶ 2:11:02Secretary, what's your estimate of how many babies are born in the United States each year? I would guess 2 to three million. Well, while the number fluctuates, um, there have consistently been more than 3.5 million babies born in the United States. That means millions of families in this country are doing what? Buying a car seat. Because it's essential and it is the law of the land in all 50 states.
▶ 2:11:32But now that cost is going up because Trump has announced up to 145% tariffs on Chinese imported products. Approximately nine out of every 10 car seats in the US come from China. That's a steep cost. Steep cost hike for families all over the country. The price is up in Republican districts and in Democratic districts. And it's not just the car seats that are impacted. We're talking about strollers, cribs, high chairs.
▶ 2:12:01No family is exempt from the harm of these Trump tariffs on essential baby products. But don't just take my word for it. Mr. Child would like to enter into the record a Yahoo Finance article from May 2025 entitled firstear baby expenses already topped $20,000 and tariffs are adding to the bill as China dominates key imports. Without objection.
▶ 2:12:32Look, I support improving manufacturing in America, but that is not going into effect overnight like these tariffs are. There needs to be an exemption to help America's families. Trump has used his power for tariff exemptions on thermoplastics, semiconductors. But what about baby products? Mr. Secretary, do you support an exemption to tariffs on items that parents need to care for their kids? Yes or no? Uh, Congresswoman, what you're referring to are Yes or no?
▶ 2:13:02What you're referring to are I'm reclaiming my time because I don't want to I don't want you to filibuster and give me some macroeconomic answer. families at home are hurting and they so just give me a direct answer. They uh I I am going to agree with you that they So yes, you do support an exemption on tariffs for products are essential for families for their babies. Exemptions on E4 items they which I'm sorry I have to reclaim my time. I'm reclaiming my time. I am Mr. Chair. I am reclaiming my time. Give me my time back. I'm reclaiming my time.
▶ 2:13:31I just want a simple yes or no. Do you support an exemption to tariffs on items that parents need to care for their kids? Because you all claim you're pro- family? I I cannot hear the words you say because I see the things that you do every day. So, clear it up. Yes or no? Do you support an exemption to tariffs on items that parents need to care for their babies? It is under consideration. Right. Good.
▶ 2:14:00I don't know what's stopping an exemption from going into effect today. So do it now. In Donald Trump's America's price is not yesterday's price is not today's price. Costs are going up. Everyone is suffering, especially our families with young children. Mr. Secretary, I'm making an appeal to you on behalf of the people of this country. Please tell Occupant Trump to reverse course and stop hurting America's families.
▶ 2:14:25I yield Gentleoman yields back. Gentleman from Pennsylvania, our chair of our oversight and investigation subcommittee, Mr. Muer, recognized for five minutes. Mr. Secretary, great to be with you. Thank you.
▶ 2:14:41Boy, oh boy, I sure wish we had colleagues that were upset about the Biden 20% inflation and uh lack of wage growth along with that inflation and the high energy costs that were costing families throughout my district all thousands of dollars. I wish we were would have heard a peep about that.
▶ 2:15:00And yet we have just angry angry voices over the potentiality of bringing manufacturing back to the United States that in fact hasn't even got into effect yet. Um it's it's nuts. Mr. Secretary, the ongoing litigation response to the Democrats questions about the Treasury Doge team, is it true that they can find all the information uh find all the available information uh Yes, sir.
▶ 2:15:30Okay, thank you. Also, um, regarding the beneficial ownership rule, which was a disaster for my small businesses, I mean, all of them 100% complained about it. The original intent of the corporate transparency act was to root out bad actors. Uh, the previous administration, however, turned it into a massive data collection with over 50 questions. Originally, there were four that that outraged small business, accountants, attorneys, anybody who had anything to do with it.
▶ 2:15:59Mo uh in fact only 20% of the small businesses were even able to comply by the January 1 deadline. And meanwhile they were threatened with fines up to $500 per day and up to $10,000 small businesses. They were beside themselves. You listened to the small businesses and did something immediately to correct course exempting US companies from reporting. and my small businesses throughout my district, throughout Pennsylvania applaud you for eliminating a needless bureaucratic reporting regime.
▶ 2:16:29So, thank you. And Congressman, I'm just sorry that so many of them had to waste their hard-earned dollars, the either complying or preparing to comply and losing sleep and everything else and some even going out of business because they found it preposterous. Uh, thank you.
▶ 2:16:46Um let's talk about removing the ideological, subjective, even capriccious uh regulators uh uh that um how would you under the B administration bank supervisors focused more on ideological concerns and less on material bright line financial uh rules versus the risks. How will you work with bank regulators to refocus supervision on bright lines rules rather than issue unrelated uh to safety and soundness?
▶ 2:17:16Uh again, Congressman, very important point. We could see that we had three under the previous administration, we had three of the largest bank failures in US history. Two weeks before that, the Financial Stability Oversight Council published a report that said that climate was the biggest threat to the financial system, not the uh deposit volatility, not overleveraged bond portfolios.
▶ 2:17:44So, we are promoting common sense back to basics. Yes. Thank you. uh the efforts related to uh the removal of reputational risk as a basis of supervisory criticism. Can you comment on that? Uh yes sir. Uh many people uh many individuals many organizations were debanked because of their political beliefs.
▶ 2:18:08uh and regulators use that as the elliptus test and that it it is a very capriccious uh category in bank regulation. So we have moved to remove that as a criteria. We believe that financial ratios are much more important than whether you are a Democrat, a Republican or an Uh thank you. Yes.
▶ 2:18:36Well, well, well put and and uh appreciate the fact that you see things that way uh as should be seen. Uh capital requirements Basel 3 endgame of course the GIB search charge and other proposed capital rules might put US banks at an international disadvantage. What do you believe if you got an idea of the right level for capital requirements?
▶ 2:18:59Uh sir, we we are examining that now and we will weigh in heavily the at the the BIS and the other rule making entities. But again, this oneizefits-all and I I believe one of the reasons we've seen the stagnation in many other countries is the regulatory the framework the very tight regulatory framework that they put around their regulated financial institutions. Thank you.
▶ 2:19:29I'm I'm almost out of time. Um I'll I'll uh I'll yield back. Thank you very much, Mr. Secretary. Thank you. I thank the gentleman. The gentleman from New York, Mr. Torres, is recognized for five minutes. Thank you, Mr. Chair. Uh during so-called Liberation Day, Donald Trump imposed tariffs on territories populated not by humans, but by penguins. He imposed tariffs on countries with which the United States runs a trade surplus, not a trade deficit.
▶ 2:19:57He imposed tariffs on products that cannot be produced domestically, which means a higher cost for American consumers without any benefit to manufacturers. He imposed tariffs on impoverished nations like Lisutu, which cannot afford to buy as much from us as we buy from them. If President Joe Biden had put in place these absurd tariffs, every single Republican without exception would have condemned his trade policy as the height of incompetence. And you, Mr.
▶ 2:20:27essent would have joined that chorus of criticism. There's no doubt in my mind. But swap out Biden's name for Trump's and suddenly the moral outrage from Republicans vanishes like magic. I have a simple yes or no question. Do you think excessive taxation undermines the competitiveness of American manufacturing? Yes, sir. Now the Trump tariff regime is a breeding ground for the excessive taxation of manufacturing.
▶ 2:20:56Consider as an example Intel's manufacturing of CPUs. Intel sources foreign components which is subject to the first layer of taxation. It then manufactures the CPUs in the United States before exporting it to China which will face a second layer of taxation. And finally, China will export the CPU back to the United States where it will face a third layer of taxation.
▶ 2:21:21Taxation upon taxation upon taxation of American manufacturing goods. Do you think that kind of compounding taxation of American manufacturing goods like Intel CPU will strengthen or weaken American Sir, I just want to be clear. You're saying that taxes raise cost. I'm sorry. You're sir, you're saying that taxes raise cost. Taxing the intermediate goods that go into a manufactured products raise costs. Yes.
▶ 2:21:50You're saying that taxes are I'm taxes are inflation. Yes. Good. Then we should cut tax in in the context of tariffs. Yes. Then we should cut taxes and you should join the Can you answer my question about the tariffs in the tax bill? Can you answer my questions about the tariffs? I'm not sure I understand. CPUs Intel would face three levels of I'm sorry. Intel CPU would face three levels of taxation.
▶ 2:22:14The taxes on the foreign components, the tax, the US taxes and the chi and the Chinese taxes or the Chinese tariffs. Do you think that that kind of compounded taxation hinders or helps American manufacturing? I I think the strategic American manufacturer is very important like Intel and I think we have to bring that back to the US. Do you think taxing intermediate goods that go inside American manufactured products helps or hinders manufacturing?
▶ 2:22:43Uh I believe that as the intel example you give, we have to bring these strategic industries back to the US. We we're not going to bring every component. A Boeing aircraft 747 has six million components. There is no universe in which we're going to manufacture all six million components in the United States. And so if you impose a tax on those foreign components, you are hindering the manufacturing of Boeing 747 here in the United States.
▶ 2:23:10Do you even acknowledge I I acknowledge that the supply chains they uh are wide, but we've also for the automakers, we have given an exemption. I'm not asking you about the automakers. I'm asking about Boeing for Let me move on. Critical minerals are essential to the military defense of the United States. China controls almost all of the world's rare earth mining and almost all of the world's critical mineral processing and refining.
▶ 2:23:38The Trump administration has chosen to wage a total trade war with China without first building a critical mineral supply chain here at home. Right? Just like it would be foolish to enter a car race without without enough fuel in the tank or enter a weightlifting competition without sufficient strength to lift the weights, it seems equally foolish to wage an all-out trade war on China without a domestic critical mineral supply chain.
▶ 2:24:05Breaking China's strongest chokeold over the United States, the CCP's chokeold on critical minerals and rare earth elements is a precondition for winning the trade war against China. Do you agree with that? Uh I believe that we have to bring the rare earth as you correctly said processing back or not even back to the US.
▶ 2:24:28We have not only processing it's rare earth mining as well and critical mineral processing and refining strategic minerals and the weaponization of critical minerals against the United States is the opposite of making America safe again. Rarest are not that rare. Processing is rare. The mining is rare too. We have no we have a insufficient mining industry here in the United States and you know that good then I'll hope you'll join us in the deregulation of many of these ownorous mining requirements. I think my time is expired.
▶ 2:24:57Appreciate the gentleman from New York. The gentleoman from California, Miss Kim is recognized for five minutes. Thank you, Chairman Hill and Ranking Member Waters for holding this hearing. Secretary Besson, good to see you and thank you so much for coming. um Southern California where I'm from and the district that I represent serves as the primary gateway to Pacific Rim and Asian goods into the United States come through the ports of LA and Long Beach.
▶ 2:25:24But uh we are already starting to see a drop in volume as the ports of LA and Long Beach are expected to see 35% to 30% drop when compared to a year ago. uh cargo volume is one of the largest economic drivers in the region and long-term drop will not just impact families and you know at the glor grocery stores and small businesses bottom line but also result in truckers and duck workers losing their jobs.
▶ 2:25:53So, Secretary Beston, I would like to ask um if you how can you ensure that our tariff policy will not unintentionally harm American small businesses and workers in the long term? Uh well, Congresswoman, we we believe the over the long term that it will drive growth in the economy. And as I've said many times, it is a mistake to look at trade in isolation.
▶ 2:26:22The Trump economic policy is a three-legged stool. Trade, taxes, and deregulation. And we believe that the sum of the parts that the whole is greater than the parts. And as we complete each one of those that the US will see substantial economic growth. Thank you. You know, I know that a lot of my constituents uh share these concerns that we're we raised.
▶ 2:26:49Uh so I'd like to uh continue this discussion on this specific topic with you moving forward because I'm concerned that these longcale tariffs uh if they continue in the long term then American working families and small businesses will suffer under uh price hikes and a lack of certainty.
▶ 2:27:08But uh I want to shift gears and discuss the financial stability oversight council foc uh systematically important financial institution and replaced it with a new framework for assessing the financial risk. And this new framework overlooks the importance of prioritizing an activitybased standard and a costbenefit analysis.
▶ 2:27:38So, Secretary Besson, does uh FSOC intend to reassess the 2023 guidance so that it is more closely aligned with the thoughtful process that was created in 2019. Congresswoman, that is on on our agenda. Thank you. you know, as you finalize that decision, um, I want to emphasize that my support for a return to an activity based standard that more appropriately addresses the risk of non-banks.
▶ 2:28:06Treasur Treasury, you'd be happy to work with your team on that. Thank you. And finally, I'd like to um urge you to continue your support for CDFI. uh CDFI fund programs are statutory as you know and it has been critical in promoting the local economy in Orange County. So do you still agree that the CDFI fund has a critical role to play in uh fostering economic opportunity? I think I know the answer because you stated very clearly uh in public statements.
▶ 2:28:36uh we we believe that the uh if CDF5s follow their statutory obligations and do not digress into more ideological boundaries that they can be important institutions. Thank you. Um as you know last week I attended the financial literacy round table that your team put together and thank you so much for inviting me. I think I think I just missed you.
▶ 2:29:04But uh your team was very well represented and again I want to thank you so much because uh as a co-chair of the financial literacy and wealth creation caucus uh events like that bringing the stakeholders together and having a meaningful dialogue and conversation I think is critically important and we need to continue that. Uh so can you talk about how you can continue to advance financial literacy initiatives uh now that we are past the financial literacy month?
▶ 2:29:32I mean I was able to take the leadership and pass the uh bill that you know claim uh proclaims month of April as the financial literacy month and I hope that we can continue to work in this space together. as you should know that it it is a strong core belief of mine uh that financial literacy is the only path to economic independence and well-being.
▶ 2:29:58So the more Americans that we who can be educated and I think we should probably go stateto state and encourage each state to put in financial literacy standards for their students. gentleoman inspired. The gentleoman from Texas, Miss Garcia, is recognized for five minutes. Thank you, Mr. Chairman, and and thank you to the secretary for being with us today. I want to start first by just clarifying uh your testimony and delivery.
▶ 2:30:28Why did you ask for your witness statement to be embargoed until this morning? Sorry, mate. Pardon me. Your testimony reads right at the very top. embargoed until delivery, which means that we didn't follow the usual practice of this committee of getting the testimony 24 hours in advance so that committee members can review it and prepare for questions. Yours was posted at 10:01. The committee was at 10.
▶ 2:30:59Well, looks like you need I my my staff is just telling me that it's it's standard practice. It's your standard practice. It's not our standard practice as a committee. I'm told that it was standard practice. Okay. You were told by whom, sir? Sir, the my my comm's team and legislative affairs team working with the committee. Well, Mr.
▶ 2:31:25Chairman, I think for the record, I think you should clarify to the uh gentlemen that that is not our standard. And uh I know that at least I didn't know anything about this until I got it here. And I don't think our committee staff on the Democratic side was notified that we would be getting all your testimony late. I just wondered, you know, why you had made that request and clearly at the top embargoed until delivery. Well, embargo to delivery. I think that was mostly meant for the press.
▶ 2:31:56That's we are not presser. We're the we're the members of Congress that have oversight. So, Mr. Chairman, I would hope that that you not condone this kind of late subm mission. It just doesn't help uh frankly for for some of the atmosphere that's created when we all just sit down and we still don't have your your your testimony. Well, then it you know, we just sort of don't feel really good about that. It's it's not our customer. Congresswoman, I I appreciate the importance that you put on my statement. Well, thank you.
▶ 2:32:26Notice it important, sir. Um, do you know what the poverty rate is in our country? I I believe that the poverty level the is a fixed number. No. Do you know the poverty rate in this country? I I I believe it is in the teens. In the teens. Okay. Well, it's about a little over 11%.
▶ 2:32:47And it just strikes me that most of all of your testimony is always about the tax cuts and cutting cutting costs and and it's always about tax cuts and it's always about the rich. But nothing is ever said about poor other than you suggesting that you work yourself. No, no ma'am. No, no tax on tips, no tax on social security, no tax on overtime. Sure. I read your testimony. That's not anywhere in here. Deductility that is not in here. Deductibility.
▶ 2:33:15and referring to your testimony and what I've listened to. I said right up front, I can see you and I can hear you. You've not said one thing about what we're doing to help the poor. In fact, even when we were talking even when we were talking about the the car seats, you know, that that impacts poor people more than anyone else because not only can they usually not even afford a car seat and have to go to a garage sale to find one, now it's going to be even higher.
▶ 2:33:45You know, your your president is suggesting that he wants to give a $5,000 bonus to women to have babies. Uh, and then what? Just leave them out on the cold alone, no car seat, no food, no Medicaid, no medic no Congresswoman, I can tell you the worst and I'm asking you right now, sir. The worst thing for working families will be the expiration of the 20 secretary treasur. It's not just about the inflation rate. It's not just about the GDP.
▶ 2:34:14It's not it's also about making sure that we keep the poverty rate in this country low. There are people who are living in poverty that never have lived in poverty before. You know, you also failed to say here you you say unemployment remains low. I mean that somebody should have read unemployment went up. Uh ma'am it did under the Biden administration administ. We're not talking about Biden's record.
▶ 2:34:40talking about your testimony here today about the current president and his plans because I can tell you I'm from Houston. I'm concerned too about some of the terrorism on on on energy. You know, we we have done a lot to increase trade in Houston, construction, everything after the pandemic and all things were growing. Everything has been growing.
▶ 2:35:04But now that the Trump T uh Trump terrors have have surfaced, it is threatening Houston's economy. I represent the area where almost the entire ship channel uh is in the prochemical companies all are in my district. The port is in my district. Everybody is trying to figure out what we're gonna do. Mr. Chairman. Thank you, member.
▶ 2:35:28I ask unanimous consent to enter into the record the opinion and order by the United States District Court in the Southern District of New York in the matter of New York versus Donald Trump that directly contradicts several responses the secretary gave to me about DOA's access to Treasury payment system. Without objection, I want to thank our witness today. We appreciate Secretary Besson's testimony. Without objection, all members will have five legislative days to submit additional written questions for the witness to the chair.
▶ 2:35:56The questions will be forwarded to our witness for his response. Secretary Besset, please respond no later than June 2nd, 2025. This hearing is