U.S. GOVERNMENT PUBLISHING OFFICE

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THE ANNUAL TESTIMONY OF THE SECRETARY 

OF THE TREASURY ON THE STATE 

OF THE INTERNATIONAL FINANCIAL SYSTEM 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JULY 27, 2017 

Printed for the use of the Committee on Financial Services 

Serial No. 115–36 

( 

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HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

STEVE STIVERS, Ohio 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

LEE M. ZELDIN, New York 

DAVID A. TROTT, Michigan 

BARRY LOUDERMILK, Georgia 

ALEXANDER X. MOONEY, West Virginia 

THOMAS MacARTHUR, New Jersey 

WARREN DAVIDSON, Ohio 

TED BUDD, North Carolina 

DAVID KUSTOFF, Tennessee 

CLAUDIA TENNEY, New York 

TREY HOLLINGSWORTH, Indiana 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

VICENTE GONZALEZ, Texas 

CHARLIE CRIST, Florida 

RUBEN KIHUEN, Nevada 

KIRSTEN SUTTON MORK, Staff Director 

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C O N T E N T S 

Page 

Hearing held on: 

July 27, 2017 ..................................................................................................... 1 

Appendix: 

July 27, 2017 ..................................................................................................... 60 

WITNESSES 

THURSDAY, JULY 27, 2017 

Mnuchin, Hon. Steven, Secretary, U.S. Department of the Treasury ................. 6 

APPENDIX 

Prepared statements: 

Mnuchin, Hon. Steven ...................................................................................... 60 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Beatty, Hon. Joyce: 

‘‘Trump Treasury pick Mnuchin misled Senate on foreclosures, Ohio cases 

show,’’ dated January 29, 2017, The Columbus Dispatch ......................... 63 

Ellison, Hon. Keith: 

‘‘Here’s Why Treasury Nominee Steve Mnuchin Has Been Called the 

‘Foreclosure King’,’’ dated January 19, 2017, TIME .................................. 68 

‘‘In its Rush to Foreclose on Homeowners, Steve Mnuchin’s Bank Allegedly Broke the Law,’’ dated January 4, 2017, Think Progress ................. 70 

‘‘Treasury Nominee Steve Mnuchin’s Bank Accused of ‘Widespread Misconduct’ in Leaked Memo,’’ dated January 3, 2017, The Intercept .......... 73 

‘‘Treasury Secretary Steve Mnuchin Denies It, But Victims Describe His 

Bank as a Foreclosure Machine,’’ dated January 19, 2017, The Intercept ................................................................................................................. 81 

Consent Order from The Office of Thrift Supervision on the matter of 

OneWest Bank, FSB ..................................................................................... 84 

Stipulation and Consent to Issuance of a Consent Order from The Office 

of Thrift Supervision on the matter of OneWest Bank, FSB .................... 108 

‘‘Trump’s Treasury Pick Has a $230 Million Blemish on His Record,’’ 

dated December 13, 2016, Bloomberg ......................................................... 113 

‘‘Steve Mnuchin’s Old Company Just Settled for $89 Million for Ripping 

Off the Government on Dodgy Loans,’’ dated May 16, 2017, The Intercept ................................................................................................................. 117 

‘‘After 2-year foreclosure battle, she owns Minneapolis home,’’ dated August 23, 2011, Minneapolis Star Tribune ................................................... 120 

Statement by Colleen Ison-Hodroff ................................................................. 122 

Fact Sheet: CFPB Complaint Data Reveals OneWest’s Track Record 

Against Seniors ............................................................................................. 123 

Heck, Hon. Denny: 

‘‘China’s Technology Transfer Strategy: How Chinese Investments in 

Emerging Technology Enable A Strategic Competitor to Access the 

Crown Jewels of U.S. Innovation,’’ dated February 2017, Defense Innovation Unit Experimental ............................................................................ 130 

Luetkemeyer, Hon. Blaine: 

Chart: Cyber Security ...................................................................................... 178 

Perlmutter, Hon. Ed: 

‘‘The Future of Banking,’’ dated July 23, 2017, LinkedIn, Pulse ................. 179 

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IV 

Mnuchin, Hon. Steven: 

Written responses to questions for the record submitted by Representatives Beatty, Ellison, Emmer, Hill, Hultgren, Kustoff, Loudermilk, 

Ross, Sherman, and Waters ......................................................................... 183 

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THE ANNUAL TESTIMONY OF THE 

SECRETARY OF THE TREASURY 

ON THE STATE OF THE 

INTERNATIONAL FINANCIAL SYSTEM 

Thursday, July 27, 2017 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 10:04 a.m., in room 

2128, Rayburn House Office Building, Hon. Jeb Hensarling [chairman of the committee] presiding. 

Members present: Representatives Hensarling, Royce, Lucas, 

Pearce, Posey, Luetkemeyer, Huizenga, Duffy, Hultgren, Ross, 

Pittenger, Wagner, Barr, Rothfus, Tipton, Williams, Poliquin, Love, 

Hill, Emmer, Zeldin, Trott, Loudermilk, Mooney, MacArthur, Davidson, Budd, Kustoff, Tenney, Waters, Maloney, Velazquez, Sherman, Meeks, Capuano, Clay, Lynch, Scott, Green, Cleaver, Moore, 

Ellison, Perlmutter, Himes, Foster, Kildee, Delaney, Sinema, 

Beatty, Heck, Vargas, Gottheimer, Gonzalez, and Kihuen. 

Chairman HENSARLING. The committee will come to order. 

Without objection, the chair is authorized to declare a recess of 

the committee at any time, and members will have 5 legislative 

days within which to submit extraneous materials to the chair for 

inclusion in the record. The hearing is for the purpose of receiving 

the secretary of Treasury’s annual report on the State of the international finance system. 

But before proceeding to that report, I will give you a report on 

the Hollingsworth family of Indiana. I would like to share with you 

some very good news that Joseph Albert Hollingsworth, IV arrived 

this morning at 1:38 a.m., weighing in at 7 pounds, 15 ounces. 

Mother and baby are doing well. Husband and father is a total 

wreck, but congratulations to our colleague, Trey Hollingsworth. 

We will give him an excused absence from this morning’s hearing. 

The chair now recognizes himself for 3 minutes for an opening 

statement. Again, this morning, the committee welcomes Treasury 

Secretary Steven Mnuchin for his testimony on the state of the 

international financial system. As we all know, it is a system that 

rests heavily upon our U.S. financial system, and that system 

clearly needs improvement. 

Fortunately, President Trump has outlined a bold forward-looking plan to tackle the serious problems facing hard-working Amermcarroll on FSR431 with DISTILLER

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ican families who have seen their paychecks stagnate, their savings 

shrink and their dreams diminish over the last decade. The fact is, 

this economy isn’t close to reaching its potential. Nearly 8 years 

after the last recession ended, Americans remain stuck in the slowest recovery in generations. 

Our economy grew at a measly 1.6 percent last year, when our 

historic norm is twice that. Over 300,000 manufacturing jobs have 

disappeared during the last 8 years. Clearly, 8 years of 

Obamanomics has clearly taken a toll. 

One place it has taken a toll is the competitiveness of our capital 

markets. We simply cannot afford to lose our status as the global 

leader for capital markets. Yet the United States has dropped to 

17th in a recent world ranking of economic freedom, a historic low 

for our Nation. This is based upon levels of business freedom, investment freedom, and financial freedom. 

While U.S. economic freedom has declined, the economic freedom 

of a number of our international competitors has actually grown. 

I have faith in our U.S. capital markets and the spirit of American 

entrepreneurs and businesses to take necessary risk and grow. 

But to do so, the unaccountable Washington bureaucracy must finally be held accountable. We must address the regulatory cost of 

doing business in the U.S. under Dodd-Frank. We must work to 

level the playing field for American companies to prosper, and as 

a result, our economy will grow healthier for all. For these reasons, 

the President’s executive order establishing the core principles for 

regulating the U.S. financial system is vitally important to us all. 

As the report notes, for too long, we have not empowered Americans to make independent financial decisions and informed choices 

in the marketplace, save for retirement, or build individual wealth. 

We have not enabled American companies to be competitive with 

foreign firms in domestic and foreign markets. I could not agree 

more. 

Mr. Secretary, as you know, your first report, issued last month, 

closely mirrors key foundational principles and policies that are 

contained within the House-passed Financial CHOICE Act. From 

helping end bank bailouts, to making the destructive CFPB accountable, to tailoring regulations for our community banks and 

credit unions, your recommendations will clearly help craft a more 

sensible, less burdensome, healthier regulatory system. 

Please know that the actions that you and this administration 

are taking to ensure the competitiveness of the U.S. financial system are a welcome change, and one that I fully support. 

Thank you for being here and the committee looks forward to 

working with you. 

I now yield 4 minutes to the ranking member for an opening 

statement. 

Ms. WATERS. Thank you very much, Mr. Chairman, and welcome, Secretary Mnuchin. 

Mr. Mnuchin, as secretary of the Treasury, you have a wide 

range of responsibilities that are of great importance to our economy and the well-being of the American people. These range from 

safeguarding our financial system to advancing U.S. values internationally. 

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One bureau within the Treasury responsible for safeguarding our 

financial system is the Financial Crimes Enforcement Network, or 

FinCEN, which as you know, collects, analyzes and disseminates financial intelligence, in addition to suspicious activity reports, foreign bank and financial account reports, and other reports. 

FinCEN has numerous information-sharing arrangements with foreign financial intelligence units, making the bureau well-positioned 

to identify and assist law enforcement in curtailing illicit activity. 

It is critical for the American public to learn the extent to which 

President Trump, his immediate family, and his associates colluded 

with Russia to influence the outcome of last year’s election. 

Serious questions have been raised about their suspicious financial arrangements and involvement with Russian government officials, oligarchs, and organized crime leaders. 

As the committee of jurisdiction over Treasury and FinCEN, we, 

too, have our own share of questions. Fortunately, you, as secretary 

of the Treasury, are well-positioned to assist this committee in fulfilling its oversight responsibilities in assessing President Trump’s 

financial entanglements with Russia. 

However, even though you have indicated, I think, on more than 

one occasion, that you do take requests from Members of Congress 

seriously, you did not respond to a May 23rd letter for me and my 

Democratic colleagues requesting copies of all pertinent financial 

records related to President Trump’s financial transactions with 

and business ties to Russia, as well those of his family members 

and associates. 

Now, I understand your staff finally did call yesterday afternoon, 

while we were preparing for this hearing. But I am looking forward 

to hearing directly from you about this matter today. 

There are also other areas where I have serious concerns. Indeed, 

in June, the Treasury released a report with recommendations that 

largely mirrored Chairman Hensarling’s ‘‘Wrong Choice’’ act. You 

recommended gutting the Consumer Financial Protection Bureau 

and rolling back important Dodd-Frank reforms, including rules in 

place to ensure the stability of our financial system, like stress 

tests and living wills. 

These recommendations are deeply harmful and shortsighted, 

given the progress we have made since the financial crisis. 

I also remain very concerned about the practices that took place 

at OneWest under your leadership. Even though OneWest foreclosed over 36,000 families in California and that—it has been the 

subject of numerous investigations, this President has selected numerous OneWest officials, including you, to fill government posts. 

For example, Joseph Otting, a former OneWest executive, has 

been nominated by Trump to lead the Office of the Comptroller of 

the Currency, which regulates the largest banks. 

Committee Democrats are very concerned about the potential for 

conflicts of interest with regard to a recent Department of Justice 

settlement with OneWest and any pending investigations into 

OneWest for wrongdoing that occurred during your tenure. 

So I look forward to hearing from you and what you have to 

share with us today. And, I yield back the balance of my time. 

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Chairman HENSARLING. Gentlelady yields back. The chair now 

recognizes the gentleman from Kentucky, Mr. Barr, chairman of 

our Monetary Policy and Trade Subcommittee, for 2 minutes. 

Mr. BARR. Secretary Mnuchin, thank you for your service and 

welcome to your first hearing on the state of the international financial system. As chairman of the Monetary Policy and Trade 

Subcommittee, which has jurisdiction over international financial 

institutions, sanctions and monetary policy, I think you are off to 

a great start. 

Two days ago, this committee unanimously passed a bill that 

would empower Treasury to encourage much-needed reforms to the 

World Bank’s International Development Association, and reduced 

the IDA18 level by $580 million. 

I thank your staff for having worked with us so effectively on 

this legislation. We are also looking forward to the positive impact 

that you can have at the Financial Stability Oversight Council. 

I would urge you, in your capacity as lead member of FSOC, to 

assess the extent to which unconventional monetary policy and the 

Fed’s $4.5 trillion balance sheet continue to distort economic decisions and constrain American households and businesses from enjoying a faster and more complete recovery. As Dallas Fed President Robert Kaplan recently wrote, ‘‘There is a cost to excessive accommodation, in terms of limiting returns to savers, as well as creating distortions and imbalances in investing, hiring and other 

business decisions. Monetary policy accommodation is not costless.’’ 

Perhaps the greatest threat that we face are the threats from 

terrorism around the world, and I hope to continue to work with 

you on key proposals that would help thwart violent extremism and 

counteract rogue States like North Korea and Iran. 

Finally, I want to applaud your work in the June treasury report 

and its call for much needed regulatory relief for community financial institutions. According to a recent estimate, these reforms that 

you have proposed would allow firms to lend up to an additional 

$2 trillion into the real economy, which would create much-needed 

opportunities for Americans in all walks of life. 

Again, thank you, and I look forward to your testimony. I yield 

back. 

Chairman HENSARLING. Gentleman yields back. 

The chair now recognizes the gentlelady from Wisconsin, Ms. 

Moore, ranking member of the Monetary Policy and Trade Subcommittee, for 1 minute. 

Ms. MOORE. Thank you very much. I know I would feel a lot better, Mr. Secretary, if you support a strong, independent Consumer 

Financial Protection Bureau, especially given your reputation as a 

foreclosure king. 

I am so disappointed that you and the Trump Administration 

supported repeal of the extractive industry disclosures under DoddFrank, 1504, and ironically, Treasury has just fined the agency for 

a crooked deal it did with Russia while now-Secretary of State 

Tillerson was its CEO. 

Finally, I have heard from State, USAID, and Treasury officials 

that section 1502 conflict minerals provisions are working just fine. 

So I am hoping that you will support 1502. I am a very nice, sweet 

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person. I hope to get to know you. But trust me, I am going to fight 

you to the end to keep that in place. 

I look forward to your testimony. 

Chairman HENSARLING. Gentlelady yields back. 

Today, we will welcome the testimony of the Honorable Steven 

Mnuchin. Since this is a new administration and the first time that 

we have had a cabinet-level official testify before our committee, I 

thought it would be prudent to review the committee and House 

rules on decorum. 

Members are required under the rules of the House to observe 

the principles of decorum and courtesy in debate set forth in Rule 

17, and by related provisions in Jefferson’s manual, including by 

speaking and acting respectfully and by refraining from the use of 

disorderly words or unparliamentary language, which includes impugning motives, charging falsehood, or implying a lack of intelligence. 

I would also add that, over the last 2 years, my colleagues on the 

other side of the aisle have expanded upon these principles on the 

record to say that no administration witness should be, quote 

‘‘badgered’’. No administration witness should be subject to, quote 

‘‘I got you politics.’’ The ranking member and other Democrats on 

the committee have also said that no administration witness 

should be, quote ‘‘talked to badly.’’ 

No administration witness should be interrupted. Every administration witness should be, quote ‘‘treated fairly.’’ Every administration witness has, quote ‘‘the right to be able to respond.’’ And finally, my Democratic colleagues have opined that every administration witness should be treated with, quote ‘‘acceptable standards 

of dignity, propriety, courtesy. and decorum.’’ 

So, Steven Terner Mnuchin— 

Ms. WATERS. Mr. Chairman? 

Chairman HENSARLING. For what purpose— 

Ms. WATERS. I have a parliamentary inquiry. 

Chairman HENSARLING. State your inquiry. 

Ms. WATERS. First, I would like to know if this witness will be 

sworn in. 

Chairman HENSARLING. It is not our custom to swear in administration witnesses, and we did not do so with the Obama Administration. It is not the chair’s intent. 

Ms. WATERS. Well, Mr. Chairman, since you took time to talk 

about how we should conduct ourselves today, I would like to remind you and your colleagues how you treated Mr. Cordray. And 

I never heard you take time out to talk about how members should 

conduct themselves. So while we have not done some things in the 

past, and you are doing it now, I would like to make sure I understand that you do not wish to swear in this witness. 

Chairman HENSARLING. I believe, in my tenure, we have sworn 

in exactly one witness, and we have never required Obama Administration officials to be sworn in. It is not my intention to swear in 

this witness. It is simply my intent to profit from the minority’s advice and counsel on decorum. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

Chairman HENSARLING. Today we welcome, again, the testimony 

of the Honorable Steven Mnuchin. Again, this is the first time that 

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he has appeared before our committee. Steven Turner Mnuchin 

was sworn in as the 77th secretary of Treasury on February 13th, 

2017. Secretary Mnuchin was born and raised in New York City 

and holds a bachelor’s degree from Yale University. The secretary 

has several decades of both retail and investment banking experience, which he brings to the office and which he now holds. Without objection, the witness’s written statement will be made part of 

the record. 

Secretary Mnuchin, welcome for your first appearance before our 

committee, and you are now recognized for 5 minutes to give an 

oral presentation of your testimony. 

STATEMENT OF HON. STEVEN MNUCHIN, SECRETARY, U.S. 

DEPARTMENT OF THE TREASURY 

Secretary MNUCHIN. Thank you very much. 

Chairman Hensarling, Ranking Member Waters, and members of 

the committee, I am pleased to be here today and I look forward 

to discussing the important issues to the American people. 

I would like to begin by addressing Treasury’s national advisory 

committee report. Treasury uses its leadership role in international 

financial institutions to help ensure that they are carrying out 

their core mandates effectively and efficiently. 

As the Federal Government is streamlining, Treasury is focused 

on keeping the international financial institutions as cost-effective 

as possible. We have pressed the IMF to increase its focus on the 

need to address global economic imbalances. This will help to improve prospects for U.S. jobs and exports, while holding the IMF’s 

administrative budget largely flat in real terms. 

In addition, U.S.-supported reforms to how the multilateral development banks employ their balance sheets have made it possible 

for us to substantially increase the assistance that they can provide 

to the world’s poorest countries, while reducing U.S. budgetary contributions. 

Where it makes sense, we will preserve these investments and 

remain a top donor and shareholder, while also balancing priorities 

across other parts of the government. In doing so, we will continue 

to promote access to economic opportunities, to eliminate poverty 

and to build shared prosperity. When the world is prosperous and 

stable, America reaps the benefits. 

I would like to now highlight our domestic reform agenda. Let 

me begin by congratulating the committee on its passage of the 

CHOICE act. The administration supported house passage of this 

legislation, and we will work with Congress to reform the financial 

regulatory system. 

Years have passed since the financial crisis, and this has given 

us time to see what has worked and what has not. The administration is committed to robust financial system with the free flow of 

credit that fuels the engine of American growth. This means allowing community financial institutions to lend, and small businesses 

access to borrowing. It means giving Americans the opportunity to 

make independent financial decisions, such as buying a home and 

saving for retirement. This also means preventing taxpayer bailouts. In February, the President issued an executive order that dimcarroll on FSR431 with DISTILLER

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rected the Department of Treasury to report on whether financial 

regulations were in line with important core financial principles. 

In June, Treasury released the first in a series of reports in response to this executive order. Our first report dealt with banks 

and credit unions. The treasury report provides a road map to better align the financial system to serve consumers and businesses 

and to drive economic growth. 

While the report focused heavily on regulatory actions that can 

be taken by the executive branch, it also included a number of legislative recommendations to more appropriately align the laws governing depository institutions with the President’s core financial 

principles. 

One of these is properly tailoring capital requirements for small, 

mid-size, and regional banks that pose little or no risk to the financial system. It included that is the endorsement of a regulatory offramp for highly capitalized institutions. 

Another recommendation is structural reform to provide a mechanism to identify a single lead regulator, to ensure that there is not 

unneeded regulatory overlap or duplicated efforts. 

A third is a legislative remedy to the overly complex Volcker 

rule. 

A fourth is statutory changes to make the Consumer Financial 

Protection Bureau more accountable. Working together, we can implement both regulatory reforms and legislative remedies, particularly for the benefit of community banks and mid-size institutions. 

Housing finance reform is also a priority of the Treasury and the 

administration. The current system, in which GSEs remain in perpetual Federal Housing Finance Agency conservatorship is not sustainable, and leaves taxpayers at risk. 

Our housing finance policy should be clear and should be designed to provide financing for homeowners and owners of multifamily units. Additionally, such policies should increase private-sector participation and protect taxpayers. 

The other critical component is comprehensive tax reform. We 

have gone too long without addressing our tax system. Our business rate is one of the highest and most complicated in the world. 

It makes our businesses less competitive, and we are committed to 

changing that. Lowering the rate and bringing back trillions of dollars that are sitting overseas will allow business to invest in this 

country, spurring economic growth. 

Another important component of strong and robust international 

financial system is stopping bad actors and those who finance 

them. I would like to acknowledge this committees effort to combat 

terrorism and illicit finance with the creation of its newest subcommittee. As our enemies change, so too must our weapons that 

combat them. Stopping the flow of funds is one more tool in our 

arsenal to disrupt their capabilities. Our Office of Terrorism and 

Financial Intelligence is ready to work with this committee, and I 

am personally looking forward to working with Chairman Pearce 

and Ranking Member Perlmutter on these critical issues. 

We have a chance to create historic opportunities for American 

people, and I look forward to working with you. Thank you. 

[The prepared statement of Secretary Mnuchin can be found on 

page 60 of the appendix] 

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Chairman HENSARLING. Chair now yields himself 5 minutes for 

questions. 

Mr. Secretary, you are probably familiar with the Federal Reserve report of December 2016, dealing with the Volcker rule, that 

concluded, quote ‘‘The illiquidity of stress bonds has increased after 

the Volcker rule’’. 

You may know that the director of the IMF’s monetary and capital markets department provided another critique of the Volcker 

rule, saying that it can impact the ability of institutions to supply 

credit. 

We have a recent study, conducted by the Bank of England, saying, in their stress simulation, material increase in spreads and the 

corporate bond market, and in the extreme, corporate bond market 

dislocation can threaten the stability of financial markets. 

So, particularly as head of FSOC, what are your current concerns 

on the state of bond market liquidity in general? And what are 

your views on the Volcker rule in specific? 

Secretary MNUCHIN. Chairman Hensarling, thank you very much 

for that question. And first, let me just acknowledge—I see you 

have the debt clock up here today. Hopefully, I will get out of here 

before it goes to $20 trillion. 

In any event, as it relates to your question about the Volcker 

rule, this is something that—I do share your concerns. I think the 

biggest problem with the Volcker rule is its complexity and regulatory overlap. And even if it is our intent not to have proprietary 

trading within banks, we need to make sure that banks understand 

how the regulation works. 

Recently, I was at a G20 meeting where we had some economists 

that came and talked to us, and they said that every trading desk 

needs a psychiatrist and a lawyer to determine how to apply the 

Volcker role. 

In any event, as my role of chair of FSOC, this is one of the 

issues that I am working on. I am pleased to report that we have 

already done preliminary work on it. The regulators also share 

these concerns, and we have it on our agenda tomorrow for the 

meeting and will be addressing how we can deal with the regulatory overlap. 

Also, Mr. Chairman, as you do know, in our report on the executive order to the President, we have also made certain suggestions 

for legislative changes to that. Thank you. 

Chairman HENSARLING. Mr. Secretary, particularly those on this 

side of the aisle, we very much deplore what is happening to our 

community banks and credit unions. I know there are some on the 

other side of the aisle who have opined that there is no regulatory 

problem there. In your report and, frankly, in your testimony 

today, you mentioned the term ‘‘tailoring.’’ 

Can you expound upon your views and what are you considering 

that one can—that you can do in the administration to better tailor 

rules to our community banks and credit unions? 

Secretary MNUCHIN. Mr. Chairman, thank you for that question. 

And let me first say, we are very focused in making sure that community and regional banks can properly grow. 

Our financial system here, the top eight banks account for approximately 50 percent of the assets in the American financial marmcarroll on FSR431 with DISTILLER

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kets. And that is quite problematic. What we want to do is make 

sure that there is robust lending, particularly in community banks. 

I have met with many, many people—these are not Republicans 

or Democrats. These are hard-working businesspeople, particularly 

in agricultural communities, particularly in small manufacturing 

communities, that constantly complain that the community banks 

are not able to lend because they are overburdened by regulatory 

issues. And I firmly believe that community banks know how to 

make loans. 

Let me just say they should be properly regulated, whether they 

are regulated by the State or the Federal Government. I do believe 

in proper regulation, but overly burdensome regulations, so that 

community banks cannot strive is not something that is good for 

any of us or the American economy. 

So we are very focused on raising the regulatory burden, and we 

look forward to working with this committee on it. 

Chairman HENSARLING. Speaking of the regulatory burden on— 

perhaps on our regional banks, the Treasury report recommended 

raising the asset threshold for the application of enhanced prudential standards to a bank holding company—raising it from its current $50 billion threshold to an unspecified amount. 

It appears that changes can be accomplished without legislation. 

So what do you believe the threshold should be increased to? And 

do we have your commitment that you can—that you will implement these changes administratively? 

Secretary MNUCHIN. Sure. Mr. Chairman, let me first say, my 

understanding is that there had been bipartisan discussions on 

raising this limit in the previous administration. So I would hope 

that those conversations continue, and that this is something that 

we could accomplish quickly. I think that it should be raised substantially, at least to $250 bil- lion or $300 billion. And I would go further, saying that simple, 

uncomplex banks, the regulators should be able to exempt above 

that. 

And again, that doesn’t mean that those banks shouldn’t be regulated. Those banks will be regulated. They will be regulated by the 

primary regulator. And they will be regulated properly. 

Chairman HENSARLING. My time has expired. 

I now yield 5 minutes to the ranking member. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

Secretary Mnuchin, I want to make sure that we all are operating here with the same understanding. Even though you are not 

sworn in, do you realize you are under oath? 

Secretary MNUCHIN. I do, thank you. 

Ms. WATERS. Thank you very much. Are you familiar with the 

May 23rd letter I sent to you, along with several of my Democratic 

colleagues on this committee? 

Secretary MNUCHIN. Yes, I am. 

Ms. WATERS. Do you understand that this committee not only 

has jurisdiction, but a responsibility to oversee the activities of the 

Financial Crimes Enforcement Network? 

Secretary MNUCHIN. Yes. 

Ms. WATERS. Given that the Treasury maintains these types of 

records, and given your department’s statements that the agency 

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takes responsiveness to congressional requests very seriously and 

is committed to providing useful and appropriate responses to requests from congressional members, is there some reason why I did 

not get a response to the letter that I sent May 23rd? 

Secretary MNUCHIN. So, Ranking Member Waters, first of all, let 

me thank you for your service to California. Being a resident of 

California, I appreciate everything that you have done— 

Ms. WATERS. Thank you very much— 

Secretary MNUCHIN —For the community there— 

Ms. WATERS. I don’t want to take my time up with how great I 

am. 

Secretary MNUCHIN. I also have appreciated the opportunity— 

Ms. WATERS. Reclaiming my time. 

Secretary MNUCHIN —To meet with you several times— 

Ms. WATERS. Reclaiming my time. 

Secretary MNUCHIN —When we were doing our— 

Ms. WATERS. Reclaiming my time. 

Chairman HENSARLING. The time belongs to the gentlelady from 

California. 

Ms. WATERS. Let me just say to you, thank you for your compliments about how great I am, but I don’t want to waste my time 

on me. 

I want to know about the May 23rd letter. You know about it, 

why did you not respond to me and my colleagues? 

Secretary MNUCHIN. I was going to answer that— 

Ms. WATERS. Just, please, go straight to the answer. 

Secretary MNUCHIN. Mr. Chairman, I thought, when you read 

the rules, you acknowledged that I shouldn’t be interrupted, and 

that I would have— 

Ms. WATERS. Reclaiming my time. 

Secretary MNUCHIN —The opportunity— 

Ms. WATERS. What he failed to tell you was, when you are on my 

time, I can reclaim it. He left that out. So I am reclaiming my time. 

Please, will you respond to the question of why I did not get a 

response—me and my colleagues—to the May 23rd letter? 

Secretary MNUCHIN. Well, I was going to tell you my response. 

Ms. WATERS. Just tell me. 

Secretary MNUCHIN. So first of all—let me just say that the Department of Treasury has cooperated extensively with the Senate 

Intel Committee, with the House— 

Ms. WATERS. Reclaiming my time. 

Secretary MNUCHIN —Intel Committee— 

Ms. WATERS. Reclaiming my time. 

Secretary MNUCHIN —With the Senate Judiciary Committee— 

Ms. WATERS. Reclaiming my time. 

Secretary MNUCHIN. OMatter of fact— 

Ms. WATERS. Reclaiming my time. Reclaiming my time. 

Chairman HENSARLING. Mr. Secretary, the time belongs to the 

gentlelady from California. 

Secretary MNUCHIN. Perhaps, Mr. Chairman, I don’t understand 

the rules— 

Ms. WATERS. Reclaiming my time. 

Secretary MNUCHIN —Because I thought I was allowed to answer 

questions. 

mcarroll on FSR431 with DISTILLER

11 

Ms. WATERS. Reclaiming my time. Would you please explain the 

rules, and do not take that away from my time. 

Chairman HENSARLING. We will give the gentlelady adequate 

time. 

So what I read, Mr. Secretary, were statements of the ranking 

member and Democratic colleagues on how administration witnesses should be treated, not necessarily the way they will be 

treated. 

So the time belongs to the gentlelady from California, but, I assure you, majority members will allow you to answer the question 

when it is our time. 

Secretary MNUCHIN. So what I was saying is that we have provided substantial information. We believe there is significant overlap, and, matter of fact, I would say that we spoke to your chief 

oversight counsel yesterday. We have been responsive, and we are 

trying to coordinate with you the response, and we have suggested 

that you get the information through the other committees. 

But I would like to emphasize we believe we have been very responsive— 

Ms. WATERS. Reclaiming my time. 

Secretary MNUCHIN —And will continue to do so. 

Ms. WATERS. Thank you very much. You left a message yesterday—or someone on staff left a message. 

Secretary MNUCHIN. No, we didn’t leave a message. 

Ms. WATERS. Reclaiming my time. 

Secretary MNUCHIN. We spoke to the chief oversight counsel. 

Ms. WATERS. Reclaiming my own time. Reclaiming my time. 

You did not respond. You left a message. Let us keep going. 

If a bank identifies suspicious activity related to potential money 

laundering or sanctions violations by The Trump Organization involving Russian persons, would such a bank have a legal obligation 

to report it to FinCEN? 

Secretary MNUCHIN. Can you repeat your question, please? 

Ms. WATERS. If a bank identifies suspicious activity related to potential money laundering or sanctions violations by the Trump organization involving Russian persons, would such a bank have a 

legal obligation to report it to FinCEN? 

Secretary MNUCHIN. Yes. If a U.S. institution had any suspicious 

activity they would be required to file a SAR, which would go to 

FinCEN. 

Ms. WATERS. Thank you. If FinCEN received reports of suspicious activity involving potential violations of money laundering 

or sanctions involving President Trump, his immediate family and 

associates, would FinCEN immediately share it with the Justice 

Department, Special Counsel Mueller, or other interested law enforcement officials? Or would you generally wait until you received 

a request from law enforcement for this type of information? 

Secretary MNUCHIN. Let me just comment that I can’t comment 

on any specific actions of FinCEN, because they are confidential, 

but I can assure you that FinCEN would respond to any issues revolving the Trumps no different than they would respond to anybody else. 

Ms. WATERS. And so the question is whether or not you would— 

FinCEN would immediately share it with the Justice Department, 

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Special Counsel Mueller, and other interested law enforcement officials, or, again, would you generally wait until you received a request from law enforcement for this type of information? 

Secretary MNUCHIN. Again, what I would assure you is that 

FinCEN would respond to those situations no different than anybody else. And FinCEN and Treasury have cooperated extensively 

with, as I said before, the three other committees. 

Ms. WATERS. If it was widely reported in the press that a close 

adviser of the President was being investigated for money laundering using anonymous shell companies and bank accounts located in Cyprus, would your department proactively seek to obtain 

relevant information from foreign financial intelligence units where 

such activity reportedly took place? Or would you wait until a specific law enforcement request came in? 

Secretary MNUCHIN. Again, I am not going to comment on hypothetical situations. FinCEN would handle these situations no different than any other situation. 

Ms. WATERS. Mr. Chairman, I respectfully request, pursuant to 

our memorandum, to ask for additional 5 minutes. 

Chairman HENSARLING. Gentlelady is granted an additional 5 

minutes. 

Ms. WATERS. Thank you. And I am not asking for specificity. I 

am asking for, generally, the way you would handle these questions 

that I have presented to you. 

Let me continue. Have any Treasury Department employees expressed concerns to you, or are you aware of concern among Treasury staff, about the relationship between President Trump and 

Russia? 

Secretary MNUCHIN. No. Nobody has expressed those concerns to 

me. 

Ms. WATERS. Given that you were finance chair of the Trump 

campaign, which is accused of soliciting illegal, in-kind contributions from a foreign country, have you recused yourself from any 

work related to Russia or other foreign countries? 

Secretary MNUCHIN. I am not aware of those accusations that the 

campaign has taken those types of contributions, nor have I 

recused myself from anything at this moment, since I believe I 

have no conflicts. 

Ms. WATERS. Thank you. 

Trump’s ‘‘red line’’ on investigations of his personal finances—in 

a recent review, President Trump made it clear that he considered 

any investigation by Robert Mueller into the President’s personal 

finances a red line that shouldn’t be crossed. 

Secretary Mnuchin, have you had any conversations with the 

President or any official at the White House in which it was directly stated or implied that supporting any investigation into 

Trump’s finances would in some way be crossing a line? 

Secretary MNUCHIN. I am sorry, can you repeat the last part? I 

heard the first part. Just the last part of it. 

Ms. WATERS. In a recent review, President Trump made it clear 

that he considered any investigation by Robert Mueller into the 

President’s personal finances a red line that shouldn’t be crossed. 

Secretary Mnuchin, have you had any conversations with the 

President or any official at the White House in which it was dimcarroll on FSR431 with DISTILLER

13 

rectly stated or implied that supporting any investigation into 

Trump’s finances would in some way be crossing a line? 

Secretary MNUCHIN. No. I have had no conversations along those 

lines. Quite the contrary. 

Ms. WATERS. As secretary of the Treasury, you chair the interagency Committee on Foreign Investment in the United States, 

known as CFIUS— 

Secretary MNUCHIN. Yes, I do. 

Ms. WATERS —Which evaluates the sale of U.S. businesses to foreign entities to determine whether such sales undermine our national security. 

Given the significant pressure President Trump has exerted over 

government officials with key oversight responsibilities, from Sally 

Yates, to James Comey, to Robert Mueller, to Jeff Sessions, how 

can we be sure that you, in your own oversight role, will appropriately review the sale of assets or property to foreign entities by 

top administration officials? 

This includes, for example, reviews involving the sale of assets 

by the White House communications director, Anthony Scaramucci, 

and the President’s son-in-law and adviser, Jared Kushner. 

Can you assure us that you would recommend blocking such a 

sale in the event it indicates the foreign entity may seek to unduly 

influence U.S. policy, even if doing so may jeopardize your position 

as secretary? 

Secretary MNUCHIN. Well, let me assure you, I take my position 

at CFIUS very seriously. I have not had anybody in any way try 

to influence me in that position, nor would I let them. And I would 

use my judgment, as I have, to take the seriousness of the CFIUS 

responsibility. 

Ms. WATERS. And, as I understand it, you have such a matter 

under consideration, relative to Mr. Scaramucci and the sale of a 

huge property to a Chinese interest. Is that correct? 

Secretary MNUCHIN. Ranking Member Waters, I think, as you 

are aware, all actions at CFIUS are highly confidential, and it 

would be inappropriate for me to comment one way or another on 

any potential transaction and even acknowledge whether any 

transaction is being reviewed in this public format. 

Ms. WATERS. Is it true that Mr. Scaramucci was considered for 

a position in the administration, but because of this questionable 

sale, that he could not go forward, for fear of not being confirmed, 

but yet he is now in the administration? And does this in any way 

influence your decision that you have to make about that sale? 

Secretary MNUCHIN. Again, I want to acknowledge that I am not 

making any comment about any potential decision that I may make 

about a confidential item. But I will say I have not been aware that 

he was ever considered for a position that required confirmation 

within the administration. 

Ms. WATERS. Thank you very much, and I yield back the balance 

of my time. 

Chairman HENSARLING. Gentlelady yields back. 

The chair now recognizes the gentleman from Kentucky, Mr. 

Barr, chairman of the Monetary Policy and Trade Subcommittee, 

for 5 minutes. 

Mr. BARR. Thank you, Mr. Chairman. 

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14 

Again, Secretary Mnuchin, welcome to our committee. 

Over 20 of my colleagues and I sent you a letter last week, prior 

to the—with the ongoing Comprehensive Economic Dialogue with 

China, to ask you to address market access issues for U.S. financial 

firms, particularly, lifting the equity caps that are currently in 

place. 

And as you know, U.S. banks and insurance companies face significant barriers and restrictions in China, while Chinese banks 

and insurance companies have little, if any, barriers in the United 

States. 

I want to thank you for your response to this letter and your 

commitment to, quote ‘‘continue to press for the removal of these 

and other restrictions that unfairly disadvantage American firms.’’ 

What are the next steps that you plan to take to help lift these 

foreign equity caps that harm American companies operating in 

China? 

Secretary MNUCHIN. So, let me just first comment that I have 

had the opportunity to meet with President Trump and President 

Xi two times, once in Mar-a-Lago, and the other in Hamburg. I also 

had the opportunity—we just finished our Comprehensive Economic Dialogue. 

So, first, I think as you are aware, President Trump is very focused on having a more balanced economic relationship with 

China, and has made it very clear that the current trade balance 

is unacceptable. And I think you may have seen in our press release from the comprehensive economic dialog last week that China 

acknowledged that it is a shared goal to fix the trade deficit. 

I think, as you know, the United States has a significant competitive advantage in financial services, services in general. It is 

one of the areas where we actually have a trade surplus with 

China. And I assure you, I think it is extremely unfair that Chinese companies, subject to security reviews, can buy 100 percent of 

any company in the United States, yet, as you have said, our companies in China are limited to minority partners. 

We have seen, most recently, Apple has been forced to share 

their iCloud business, one of the key parts of their business, with 

a Chinese joint venture partner. That is not fair, it doesn’t make 

sense, and this administration is fully committed to making sure 

that American companies and American workers are on a level 

playing field. 

Mr. BARR. Thank you, Mr. Secretary. 

And for the second time—I will move onto my second question, 

but I appreciate your commitment and the administration’s commitment to working with Congress to address that inequity in our 

relations with China. 

With respect to Iran Air and the efforts that Treasury is engaged 

in in the implementation of the JCPOA, as you know, the Obama 

Treasury Department allowed U.S. banks to lend to Iran in order 

to finance aircraft sales, despite the fact that the associated services in the aircraft section of the JCPOA only spell out warranty, 

maintenance and repair services, and safety-related inspections. 

So the Treasury Department, as we understand it, currently authorizes U.S. banks to finance the sale of aircraft to Iran Air. Well, 

in a committee hearing in April, in this committee, we learned that 

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this airline, Iran Air, flew 114 flights from Iran to Syria between 

the JCPOA’s implementation day in January 2016 and March 30, 

2017, likely as an airlift in support of the Syrian regime’s atrocities. 

Mr. Secretary, can you certify to us today that Iran Air has 

ceased all sanctionable activities? And if not, will the department 

re-designate this airline, an action that Treasury has admitted is 

allowed under the JCPOA? 

Secretary MNUCHIN. So thank you very much for your question 

on that. First let me say, specifically on Iran Air, in this public format, I don’t want to comment on them specifically. We do have intelligence information that I would be prepared to share with you 

in a private setting. 

But what I would say is that OFAC is responsible for granting 

licenses for aircrafts, as you have mentioned. Both the Boeing sale, 

as well as the Airbus sales will require additional OFAC licenses. 

And that is an issue that is under review and is part of the national security review of the JCPOA. 

Mr. BARR. Finally, Mr. Secretary, I asked your predecessor if he 

thought that regulations, particularly Volcker, risk retention, and 

the layers of capital liquidity requirements could contribute to 

illiquidity and actually undermine our financial system—destabilize our financial system. He always denied that. He said that it 

was a market structure issue. 

Do you agree or disagree with your predecessor? 

Secretary MNUCHIN. Well, nothing against my predecessor, who 

I have a lot of respect for. But as you know, I do have firsthand 

experience in the trading and investment markets, and I absolutely 

agree with you that the Volcker rule, in particular, has eliminated 

liquidity that, in the times of crisis, we need market makers to provide liquidity—not proprietary trading, but liquidity for market 

making. And that is something we are very focused on fixing. 

Mr. BARR. Thank you, I yield back. 

Chairman HENSARLING. Time of the gentleman has expired. 

According to the earlier-referenced memorandum of understanding, the chair will recognize two Republicans in a row. 

The chair now recognizes the gentleman from New Mexico, Mr. 

Pearce, chairman of our Terrorism and Illicit Finance Subcommittee. 

Mr. PEARCE. Thank you, Mr. Chairman. 

Mr. Secretary, thank you for being here today. 

Before getting into my observations from you, I would point out 

that my friend from California, and I do consider her to be a friend, 

her questions were edging toward things that would be a violation 

of the BSA. 

FinCEN works for national security. Everything that FinCEN 

has is available to any law enforcement agency, and to release that 

publicly not only reveals the process, which is extraordinarily sensitive, again, it looks to be very close to a violation of the actual 

law itself. 

So I appreciate your willingness to hold a position there, because 

it is a very delicate balance. 

Now, I—we all know that AML and CFT—those are real threats 

to the Nation. Mr. Secretary, what I really appreciate about your 

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16 

report is that you don’t—even with these major threats coming into 

the Nation, you don’t lose sight of the mission, and that is on page 

2, where you talk about the robust financial system, free flow of 

credit, that fuels the engine of America—businesses—small businesses getting access to credit. 

At the end of the day, that is what you are here for and that is 

what we are here for. And so I appreciate the threats and that you 

are monitoring those, but you are not losing sight of what makes 

this country work. So thank you for that attention to detail as you 

approach your job. 

Mr. PEARCE. Now, OFAC is—they work with Congress, the President. They work with the military to just see that the world’s bad 

actors don’t operate. Their major activity is shutting off funds to 

them, and we can see, in the estimates of North Korea and Iran, 

that we have very significantly affected that. 

But also the Financial Activities Task Force—they have evaluated that, as soon as you find a way to stop one action, then another action steps up. So my question is how do we modernize, how 

we update our AML, CFT standards? 

Myself, I see technology as having to be on a constant, robust 

movement. But tell me a little bit from your perspective, on that 

aspect of how we keep moving ahead of the threats. 

Secretary MNUCHIN. So, first of all, I do acknowledge your concerns in this area. My number-one focus is on economic growth, 

and we are very focused on tax reform as part of that. But my 

number-two focus—probably spending 50 percent of my time on 

sanctions-related and terrorist-financing-related issues. 

And, as you have mentioned, using technology to stay ahead of 

these things is very important. We will continue to use all the tools 

in the toolbox and new tools. That is why we want to set up a terrorist financing unit with Saudi Arabia in the Gulf, where we have 

people there firsthand, working with them and working with our 

Arab partners. 

I firmly believe that cutting off the money works. It worked with 

Iran. It brought them to the table. It works in stopping terrorist 

activity. I constantly work with Secretary Tillerson, Secretary 

Mattis, Director Pompeo, General McMaster on a unified approach 

to stopping terrorism. 

Mr. PEARCE. What can we do more here? In other words—be our 

subcommittee that contemplates your mission in that. Tell me 

what we need. If we need resources in a specific area, please share 

that with me, if you can. 

Secretary MNUCHIN. Will do. We need more money for our Terrorist Financing Center in Saudi Arabia, but we will talk about 

that later. 

Mr. PEARCE. The—Mr. Secretary, you had wanted to make responses earlier to some of the questions. I would yield the rest my 

time to you to make those answers right now, if you would like to 

go into depth where you weren’t allowed to before. 

Secretary MNUCHIN. Oh, I was really going to just thank the 

ranking member for her activity in support of regional banking in 

California, and that I had the opportunity to meet with her many 

times, and appreciated her work in California. That is really the 

extent of what I was saying in my opening remarks. 

mcarroll on FSR431 with DISTILLER

17 

Mr. PEARCE. Well, again, I think, from my perspective, if you can 

get the tax reform that you have mentioned, if you can keep the 

focus on the small businesses, they are the engine of the economy 

of the U.S. Getting access to credit—those are the major things, 

and then we fight the—AML, fight the financing of terrorism. 

I think that we have got a big job, and I believe you are up to 

it. Thank you for being here today. 

Secretary MNUCHIN. Thank you. I appreciate that. Thank you 

very much. 

Chairman HENSARLING. Time of the gentleman has expired. 

The chair now recognizes the gentlelady from New York, Mrs. 

Maloney, Ranking Member of our Capital Markets Subcommittee. 

Mrs. MALONEY. Thank you, Mr. Chairman. 

And welcome, Mr. Secretary. 

I am deeply concerned about terrorism financing, and during 

your confirmation hearing, you stated, and I quote ‘‘I agree that 

law enforcement’s anti-money-laundering efforts face serious challenges if they are unable to determine the beneficial ownership of 

the various companies and entities that utilize the U.S. financial 

system. 

‘‘It can be a real vulnerability that various bad actors, including 

terrorists and criminals, can exploit,’’ end quote. And then you 

later stated that, if confirmed, you would, and I quote ‘‘be willing 

to work with Congress and the various equities impacted by beneficial ownership due-diligence requirements to address this challenge.’’ 

We have, on this committee, introduced a bipartisan bill, called 

the Corporate Transparency Act, that would require companies to 

disclose their true beneficial owners at the time the company is 

formed. And this information would only be available to law enforcement and financial institutions that are required to know their 

customers, with those customers’ consent. 

Our bill says that States can collect this information, but if they 

do not, then it would be Treasury’s responsibility to collect it as a 

backup. So my question is, do you support requiring companies to 

disclose their true beneficial owners at the time the company is 

formed, and Treasury’s role in our suggested legislation? 

Secretary MNUCHIN. Let me just first say thank you very much 

for that. And I now understand this issue much better than I did, 

and when I have—my initial confirmation. And I spent a lot of time 

looking at this internally. It is also a concern at the G7. I can tell 

you, this is not only a—just a U.S. issue, but our European partners are concerned as they make progress in this area and we 

don’t. So let me first say, I am very much looking forward to working with you and the committee on a solution to this. I hopefully 

think this can be a bipartisan solution. 

It is a complicated issue. We need not only the information when 

companies are set up, but we need to figure out a way of how that 

is maintained overall. Obviously, if we just capture the information 

on day 1 and it is literally the ownership is moved 1 hour later, 

then it is not very effective. 

And I am somewhat concerned about Treasury, perhaps, being 

the ultimate depository, because I think the States aren’t going to 

mcarroll on FSR431 with DISTILLER

18 

want this responsibility. But we look forward to working with you 

on a solution. 

Mrs. MALONEY. Well, I think it is critical. We have numerous 

LLCs that no one knows who owns them. This issue came to us 

from law enforcement, saying they keep hitting a wall in trying to 

know. 

And we certainly—if we know who owns things in our country, 

it is a tremendous step toward combating terrorism financing, 

which is a huge concern to the city of New York and our entire 

country. 

I would also like to ask about the debt ceiling, which will need 

to be raised soon, and I hope it can be done without the usual political drama. But the markets seem to be worried that the ceiling 

might not be raised in time, and it has already substantially raised 

the cost of short-term borrowing in Treasury. 

And Treasury is also expected to have to reduce its issuance of 

short-term treasuries this fall, in order to stay below the debt limit, 

and at a time when the supply of short-term treasuries is already 

low because of the shifts toward government money market funds. 

So my question is, do you agree that the uncertainty over when 

and whether the debt limit will be raised is causing distortions in 

the market and is impacting Treasury’s ability to borrow at the 

lowest possible rate? 

Secretary MNUCHIN. Well, let me say that I assure you I am very 

focused on the debt limit. As I have said before, I urged Congress 

to work on this before anybody leaves. I said yesterday in my testimony, and I will be alerting Congress, that my previous letter on 

special powers will be extended through September— 

Mrs. MALONEY. Mr. Secretary, my time is almost up, and I want 

to know, if Treasury were to breach the debt limit and start 

prioritizing interest payments on the debt over the government obligations, like Social Security, do you think the markets would view 

this as a default? 

Secretary MNUCHIN. I have no intent on prioritizing. I think that 

doesn’t make sense. The government should honor all of its obligations, and the debt limit should be raised. 

Chairman HENSARLING. Time of the gentlelady has expired. The 

chair now recognizes the gentleman from Missouri, Mr. 

Luetkemeyer, chairman of our Financial Institutions Subcommittee. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

And thank you, Mr. Secretary. I am over here. There we go. 

Thank you for being here, and appreciate your comments to date 

here. I will also thank you for the Treasury report that you have 

done. I know it was a tremendous effort, and I think it yielded 

great results. 

I want to followup on my initial question here on what the chairman started—or discussed a little bit with you, with regards to, basically, both banks and non-banks that are systemically important 

financial institutions. 

Your report discusses the problem with the arbitrary nature of 

the process. I am still perplexed, as to somebody who deals both 

with banks and non-banks—as to how one can indicate an insurmcarroll on FSR431 with DISTILLER

19 

ance company as systemically important. But for now, all of my 

discussion will focus on the bank holding company side. 

I recently introduced H.R. 3122, my Systemic Risk Designation Improvement Act. And the bill removes the $50 billion threshold, 

which the chairman discussed with you a moment ago, and goes to 

a well-established set of standards that more accurately reflects 

systemic importance—and goes to, basically, the Fed systemic risk 

indicator score, which—the Fed already does the analysis of this so 

that we can save time, money and effort on everybody’s part and 

use that systemic score. 

So I guess my initial question is, you made the comment a 

minute ago that you want to focus on community and regional 

banks. Some of these regional banks are nothing but big community banks—just big. You better know this than anybody. So, again, 

does it make sense to put an arbitrary figure in there? Or do you 

think we need to go to more risk-based analysis? 

Secretary MNUCHIN. My own preference would be to have the 

higher of both, so that we have a floor where we know it is not subjective, and then above that, as you have mentioned, the Fed would 

have the ability, based upon, as you have suggested, the risk analysis. 

Mr. LUETKEMEYER. There is a—we are going to put a chart up 

here in a minute with regards to cyber security. And— 

Secretary MNUCHIN. I love this chart, I saw it ahead of time. 

Mr. LUETKEMEYER. Well, I am glad you could see it, because it 

reminds of an old Spirograph toy that I had when—it was a long, 

long time ago—as a kid. And it kind of gives you a headache to 

look at. 

But, Mr. Secretary, you addressed this subject, also, in your 

Treasury report, and there is a word that is used when discussing 

this with the different agencies and different banks, when they talk 

about this. It is ‘‘harmonization.’’ We need to harmonize, stop the 

duplicity and stop the overlap of the regulators with regards to all 

of the things that they are having to work with here. 

And so I would just like to give you—ask you to comment on 

whether, as chair of FSOC—that is a great position from which you 

can bring all of the different agencies together to stop some of this 

overlap and duplicity that is going on, and take some of the regulatory nonsense and provide relief for a lot of the banks. 

Would you like to comment on it? 

Secretary MNUCHIN. Yes, well, thank you. It would look like 

modern art if I hadn’t seen it in more detail. And I share your concerns in both my role of chair of FSOC and—as well as FDIC. 

Cybersecurity is a major concern of mine, and we are already working with the regulators on how to consolidate their resources. 

I am all for the different regulators making sure—but cyber security is one of our biggest, biggest risks, and we should make sure 

that they consolidate their resources, but they do it in a way that 

they don’t have to do it four or five times, independently, with 

banks. 

Mr. LUETKEMEYER. Well, I think, you know, some sort of standardization of guidelines and principles, I think, is a good place to 

start, and so when the regulators come in, they are not having one 

group say this, another group say that so the banks get a mixed 

mcarroll on FSR431 with DISTILLER

20 

message and they have to comply with different sets of rules and 

regulations. 

So I think your position as FSOC chair is key to getting that harmonization. 

Secretary MNUCHIN. And I can assure you we are already working on it. Thank you. 

Mr. LUETKEMEYER. Thank you very much. 

One last question, before my time runs out here, deals with Operation Choke Point. This is something we have been dealing with 

for a long, long time. I am sure you are familiar with it. 

Between the DOJ and the FDIC, they began to try and drive legally operating businesses out of the financial system because they, 

for political or own set of values that they believed didn’t match up 

with their own. 

And I am quite concerned, quite frankly, I will be honest with 

you—the FDIC has sort of backed off on this problem for a while, 

but it has continued with the OCC. 

And we want—I would like your commitment to continue to work 

on something with us. And I realize that you are probably going 

to try and do your best to stop the nonsense, and that is great. But 

I am concerned that, should you leave, then there is another new 

administration down the road—4 years, 8 years, 10 years, whatever it is—that we have a set of guidelines in place to prohibit this 

activity from ever being able to be done again. 

Would you help us along those lines, sir? 

Secretary MNUCHIN. Absolutely. Look forward to working with 

you. Thank you. 

Mr. LUETKEMEYER. I yield back the balance of my time. 

Chairman HENSARLING. Time of the gentleman has expired. The 

chair now recognizes the gentlelady from New York, Ms. Velazquez. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

Mr. Secretary, former Secretary Lew was instrumental in passing legislation that provided Puerto Rico the necessary tools to 

comprehensively restructure its debt. 

Prior to his departure, he personally indicated to you that it was 

important to continue monitoring the situation to ensure Puerto 

Rico’s successful recovery. He recognized that, even though the law 

was critical to providing the breathing room necessary for the local 

government, a missing piece of the equation were policy initiatives 

that will jumpstart the economy. 

In fact, in late May of this year, Senator Grassley restated that, 

and I quote ‘‘Extending bankruptcy authority alone could not fix 

the problem.’’ However, since the Trump Administration has taken 

command, there has been little to no conversation stemming from 

the Treasury Department on Puerto Rico. 

What policy tools are your staff considering to assess Puerto 

Rico? 

Secretary MNUCHIN. So, thank you for the question. And first of 

all, I share your concern on the financial situation in Puerto Rico. 

I can assure you I personally spent a lot of time on it. Secretary 

Lew did give me his views on it, and his concerns, before he left. 

We do support the legislation. 

Ms. VELAZQUEZ. I know— 

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21 

Secretary MNUCHIN. And we are using that. And I can assure 

you I have a team that is working on it actively. It is a very complicated issue. I wish there was a simple solution. There is not. 

Ms. VELAZQUEZ —I know—400,000 Puerto Ricans have left the 

island in the last 10 years. We have three doctors leaving the island every day. And so I am happy, in the sense that they are coming to Florida and Ohio. 

Believe me, politically speaking, it is going to be good for Democrats. But I want to give the option to the people of Puerto Rico 

for them to stay in Puerto Rico, if they choose to. 

So Puerto Rico is under the territorial clause. It means it is a colony. We, the U.S. Congress, have a responsibility. So I want for you 

to commit, yourself, that you will guide your staff to look at the 

viable options, including the use of the Exchange Stabilization 

Fund, to help reach Puerto Rico’s immediate needs. 

Secretary MNUCHIN. Well, I am not going to commit to use any 

specific tools, such as the exchange fund. But I can commit to you, 

easily, because I have already done this and will continue to do it— 

we are working very closely with lots of people on this. As I said, 

it is a very complicated issue. So we are trying to balance what a 

solution would be that is appropriate. 

Ms. VELAZQUEZ. So I was a member of the task force on Puerto 

Rico, to promote economic growth in Puerto Rico. So would you assign a—or do you have a staff that have been assigned to monitor 

the situation in Puerto Rico? 

Secretary MNUCHIN. I do, and we are happy to followup with, 

and have them come meet with, you and your staff and get your 

thoughts. 

Ms. VELAZQUEZ. Wonderful, thank you. 

Mr. Secretary, in May, Senator Shaheen and I wrote you a letter 

expressing our concern regarding the administration’s decision to 

eliminate all new program funding for the Treasury Department’s 

CDFI programs for Fiscal Year 2018, and encouraging you and 

President Trump to reconsider this position. 

In June 2017, your own treasury report states that CDFIs are 

often the only source of credit and financial services in low-income 

urban and rural communities. So how do you reconcile the finding 

of your report and the shortsighted decision of eliminating funding 

for the program? 

Secretary MNUCHIN. Well, thank you for asking that. And I had 

the opportunity to talk at the Senate yesterday about the same 

issue. So first let me say I do support the CDFI program. I think 

it has been effective. 

Having said that, we had to make difficult decisions in the context of the President’s budget. The overall agenda was to, one, get 

to a balanced budget and, two, fund military expansion, which is 

much-needed. And this was just a difficult prioritization decision 

that we have made within the department. 

I would also comment that, as part of our financial report, we did 

specifically recommend a review of the Community Reinvestment 

Act and make sure that we meet with consumer advocates, community members, to make sure that that money is being used properly 

in communities, especially as we are forced to reduce other funding. 

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Ms. VELAZQUEZ. I yield back my time. 

Chairman HENSARLING. Time of the gentlelady has expired. 

The chair now recognizes the gentleman from Michigan, Mr. 

Huizenga, chairman of our Capital Markets Subcommittee. 

Mr. HUIZENGA. Secretary Mnuchin, I really appreciate you coming here and being in front of this committee. 

And, as tempting as it is—as you see some others on the other 

side of the aisle want to talk about anything other than the economy, our international standing—and it is tempting for me to talk 

about Samantha Power and Susan Rice illegally unmasking people, 

or Hillary Clinton’s illegal use of her e-mail as Secretary of State, 

or Director Comey illegally releasing classified documents, or 

Ukrainian meddling in our elections, I think it is a waste of time 

in this particular committee. 

So I would like to move on to a couple of other issues and try 

to divide those—that time equally. First and foremost, we just— 

celebrated would not be the right word in my mind—the seventh 

anniversary of Dodd-Frank. And we have seen this be a continual 

stumbling block to our recovery that we have been trying to get 

going here in the United States. 

And I am wondering, what do you view as the most urgent priorities needed to address and restore confidence and create more opportunities in our economy with our capital market system, being 

chairman of the capital markets committee, very interested in that 

and the effects of Dodd-Frank. And then I would like to move on 

quickly to Volcker. 

Secretary MNUCHIN. Sure, so, I mean, I would just say, as part 

of Dodd-Frank, our focus is first, as I mentioned, community and 

regional banks. I think another big focus is around housing and 

housing reform and the qualified mortgage and making sure that 

banks that make good mortgages and they want to keep them on 

their balance sheet—they can. 

And I think you should mention the Volcker Rule as a big concern of ours in that—what it does to liquidity, and that we can 

have proper monitoring of eliminating proprietary trading with 

managing liquidity. 

Mr. HUIZENGA. And I know, in your report, you had laid out various items. And I am curious, is there anything specifically in 

Dodd-Frank that you think we, as a committee, need to address? 

Secretary MNUCHIN. The long list is as we have outlined. But if 

I gave you the number-one thing, it is probably to raise the limit, 

as we have talked about. 

Mr. HUIZENGA. Great. That is helpful. 

As has been expressed by a few others, you know, I believe that 

the Volcker rule is at least partially to blame for the diminished 

liquidity in our markets. And, you know, this is something that is 

900—I believe it is 932 pages, with 29—or just under 300,000 

words. 

This is not an easily digestible, quote-unquote ‘‘rule.’’ That is 

War and Peace, frankly, into this whole thing. It is five separate 

Federal agencies in there. And I know, in your report, and I think 

it was page 132 and 133, you kind of have a chart laying out a 

number of things—19 different things, specifically, that could be 

used for improving the Volcker rule. 

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23 

And, as you had acknowledged earlier, our CHOICE act—we actually repeal Volcker in that. That is certainly my preference. You 

do lay out eight suggestions for Congress. 

But there are 11 regulatory suggestions for providing immediate 

relief. And that is from the Federal Reserve, the FDIC, the OCC, 

the SEC, CFTC—the alphabet soup of all these regulators. 

How quickly can we expect to see some relief coming, without the 

legislation, necessarily, maybe backing that up, but from the regulators themselves? 

Secretary MNUCHIN. Well, I mean, I think, as you have mentioned in your legislation—you have repealing it, and we don’t object to that, if that is what Congress wants to do. I don’t think the 

Volcker rule is what created—or the lack of it—is what created the 

financial crisis. 

We are very focused on how to fix it. And as I said, these—there 

are active discussions at FSOC and with the financial regulators 

about what we can get a consensus to fix. 

Mr. HUIZENGA. Well, we would like to work with you on that and 

encourage you, because, again, as we know, legislative fixes are 

challenging to get to, but these are regulatory agencies that have 

the immediate and sometimes immediate ability to flip a switch. So 

we are hoping to do that. 

I guess, in the last few moments, here, I do want to touch on one 

other thing that Chairman Barr had talked a little bit about: the 

Iranian situation with aircraft exports. 

And I—the former chair of that committee in the last term, am 

curious, have there been any other financial institutions, be it U.S. 

or foreign institutions, that have been in contact with Treasury 

with respect to aircraft exports to Iran? 

Secretary MNUCHIN. Again, I can’t comment on the specifics that 

are confidential, but I can assure you we are on top of this. 

Mr. HUIZENGA. Well my time has expired, but I look forward to 

continuing the conversation. 

Secretary MNUCHIN. Thank you. 

Mr. HUIZENGA. Thank you. 

Chairman HENSARLING. Time of the gentleman has expired. 

The chair now recognizes the gentleman from California, Mr. 

Sherman, for 5 minutes. 

Mr. SHERMAN. Mr. Chairman, I want to get one thing clear for 

the record. Mr. Chairman, you began by quoting people saying that 

we should be nice to witnesses, and I think that it is important 

that the record reflect that no comment about being nice to either 

Democratic or Republican witnesses ever came from me. 

Now, I want to go through a number of things for the witness 

to respond to for the record. 

You talked about the importance of small banks and credit 

unions being able to make business loans to companies in our districts. That is not a reason for us to take the giant banks off the 

hook for prudential regulation. It is their near-collapse that nearly 

collapsed the economy. 

It is the reason for you to deal with the OCC, which is under 

your jurisdiction, and have them, when they audit banks and those 

banks have a prime-plus-four or prime-plus-five loan to a company 

that is just a little shaky, that they have a reserve of just an extra 

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24 

1 or 2 percent, rather than 30 to 50 percent. You, Mr. Secretary, 

could do more than any of us to get small business loans made by 

local banks. 

The debt clock has been behind you. You commented on that. I 

would hope that any tax reform that came out of your department 

or that was supported by your department would not increase that 

debt according to the CBO. 

And we just voted in the House yesterday not to cut the CBO, 

because they are the umpire here in Washington to determine what 

increases and decreases the deficit. 

I would hope you would use your power on FSOC to break up 

the ‘‘too big to fail’’ banks. The debt limit is just over the horizon, 

and I hope that you would use your voice to remind us that it is 

not enough to deal with the debt limit in overtime, after you have 

used extraordinary measures to keep us from defaulting. The harm 

is to our economy now, because investors have to price in the risk 

that America will default on its debt. 

You probably didn’t think you would be dealing with Armenia 

today. We need a U.S.-Armenia tax treaty. Your department needs 

to allocate one tax lawyer for a few weeks. And in making the decision as to whether to allocate a tax lawyer for a few weeks to the 

project, you will be told that we should make the decision based 

upon the size of the business transactions with that country. I hope 

that you would direct your department to add two more criteria. 

The first is whether the other country is willing to use the U.S. 

model treaty. Because if they are willing to sign on our bottom line, 

you don’t have to commit much in the way of resources to negotiating the treaty and you build momentum internationally for other 

countries accepting the U.S. model. 

And second, I hope you would listen to the State Department 

when they testified before my other committee, Foreign Affairs, 

just yesterday that it is important geopolitically that we have this 

treaty. So I will get you the letter from the government of Armenia 

saying they are willing, pretty much, to sign the bottom line that 

the United States has presented. 

Now, I have got some questions. Is China a currency manipulator 

today? 

Secretary MNUCHIN. First of all, on Armenia, we are happy to 

followup on your office. I do stay on top of a lot of issues, but I 

must admit that is not one I am on top of. But we will followup— 

Mr. SHERMAN. That is one you should respond to for the record. 

I look forward to working with you. 

Is China a currency manipulator? 

Secretary MNUCHIN. I think, as you saw in our most recent currency report, we did not label China a currency manipulator at this 

time. However, they have been a currency manipulator in the past. 

Mr. SHERMAN. Since they have been a currency manipulator, are 

you in favor of tariffs or other actions to recoup for America the 

jobs we lost when they were a currency manipulator? Or is it that 

they can—as long as what they did was in the past, we are not 

going to respond? 

Secretary MNUCHIN. I can assure you that the—President Trump 

is very focused on the economic and trade issue with China, and 

nothing in the past is in the past. So— 

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Mr. SHERMAN. Let me squeeze in one more— 

Secretary MNUCHIN —All tools will be on the table. 

Mr. SHERMAN —One more question. And that is, your department fined ExxonMobil for violating our sanctions against Russia. 

Are you confident that your department made the right decision? 

And why aren’t you holding any individuals responsible, since a 

corporation is an inanimate construct? Individual people undermined our sanctions. 

Secretary MNUCHIN. Let me first comment that, obviously, I am 

highly aware of the situation and the decision. It is under litigation, so it would be inappropriate for me to make any specific comments. 

And thank you for being nice on me since I am a California resident. 

Mr. SHERMAN. I will get you next time. 

Chairman HENSARLING. Time. Time of the gentleman has expired. 

The chair now recognizes the gentleman from Wisconsin, Mr. 

Duffy, chairman of our Housing and Insurance Subcommittee. 

Mr. DUFFY. Thank you, Mr. Chairman. 

Thank you, Secretary Mnuchin, for being here. 

I just would like to note that it was not Rex Tillerson who set 

the reset button with Russia. That was actually Hillary Clinton, 

with this stupid little button that she pushed. It was Romney who 

said that Russia was our greatest threat, but it was Barack Obama 

who said the 1980’s want their foreign policy back. 

Ms. MOORE. Mr. Chairman— 

Mr. DUFFY. And it was Bill Clinton— 

Ms. MOORE. Mr. Chairman. 

Mr. DUFFY —Who received a half a million dollars for speaking— 

Chairman HENSARLING. The gentleman will suspend. 

For what purpose does the gentlelady from Wisconsin seek recognition? 

Ms. MOORE. I was just reminding my good friend and colleague 

from Wisconsin about the—he was not here when you recited the 

rules about not— 

Chairman HENSARLING. Does the gentlelady have a parliamentary inquiry? 

Ms. MOORE. Yes, sir. I do have a— 

Chairman HENSARLING. Would you state your inquiry? 

Ms. MOORE. My inquiry is whether or not this particular discourse violates the rules that you articulated earlier when Mr. 

Duffy was unavailable. 

Chairman HENSARLING. The gentlemen’s questioning has violated no House rule or committee rule. The time belongs to the 

gentleman from Wisconsin. 

He may proceed. 

Mr. DUFFY. Thank you, Mr. Chairman. 

I would also note that it wasn’t Melania Trump who received a 

half a million dollars for a speech to an investment company that 

was tied to the Kremlin. 

As you have noted, we have a lot of folks on the other side of 

the aisle who are part of the ‘‘Impeach Trump’’ movement. They 

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were trying to impeach Trump before he was even sworn into office. 

So, as my friends—and I know this is a little off-topic, but, as 

my friends are talking about Russia across the aisle, do you have 

any idea what is being talked about in Wisconsin today? 

Secretary MNUCHIN. Sorry— 

Mr. DUFFY. You do. 

Secretary MNUCHIN —Absolutely—13,000 new jobs and a $10 billion investment from Foxconn to build the most advanced manufacturing plant in the United States and, for the first time in I can’t 

even remember how long, to build T.V. screens and other videos. 

It is just extraordinary, and I was pleased to be at the White 

House yesterday for that announcement. And congratulations to 

Wisconsin. I know it was a very competitive situation with other 

States, and boy, that will be a big deal for that economy. 

Mr. DUFFY. And we are happy it is not going to California, I am 

sorry to say. 

That is right, but we are talking about jobs. We are talking about 

economic growth. We are talking about industries that my friends 

across the aisle—they had written off. They had said, ‘‘These jobs 

will never come back. They are gone forever.’’ 

And, under your boss and my Governor, to your point, a $10 billion investment and 3,000 to 13,000 jobs in the great State of Wisconsin. And that is what people care about. 

Secretary MNUCHIN. That doesn’t include the construction jobs, I 

might add, in the creation of what I think you are calling now 

Wisconn Valley. 

Mr. DUFFY. Wisconn Valley. That is right, that is what we are 

talking about. And maybe that is why my friends across the aisle 

have lost 1,000 seats across government, because they don’t understand that people care about jobs and economy and border security 

and a strong military. And the heart of all that is our financial 

service sector, which is what we are talking about today. 

But I am going to go off topic again and ask you about our tax 

code, because I think, if we are going to have more Foxconns, we 

are going to need a revamp of our tax code. We have heard some 

rumor that some in the administration have said the top rates 

might not be going down, they might be going up. 

Do you want to give us some clarification on your view of taxes 

and where they should go to make America competitive again? 

Secretary MNUCHIN. So we have been working very closely with 

the leadership of the House and the Senate to create a unified 

plan. Our objectives are very simple. On the personal side, we want 

to cut down the number of brackets. We want to simplify taxes— 

95 percent of Americans will be able to do their taxes on a giant 

postcard. That will make my job overseeing the IRS much simpler. 

And on the business side, as you pointed out, we want to transition from a worldwide system, where we allow companies to defer 

and not pay taxes and leave trillions of dollars offshore, to a territorial system that is competitive, with a competitive rate that will 

bring back trillions of jobs—trillions of dollars and huge amounts 

of jobs and capital to this country. 

Mr. DUFFY. And I would just note that I don’t think this is a partisan issue, making—or allowing companies to stay and compete in 

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America, but also bringing other companies, like Foxconn, to the 

United States of America for American jobs. 

Not Republican, not Democrat—these are American issues, making us competitive again. And I would hope that both sides could 

come together and work on tax reform so we don’t have to craft 

bills that have to get through budget reconciliation, which I don’t 

think works very well. 

One harder question for you, though, on point. I do have some 

concern about the U.S.-E.U. covered agreement. The President, 

who I have been supportive of, talked a lot about bad deals being 

negotiated by the prior administration—by stupid people, I think 

that is what he said. 

This deal was announced the week before President Trump was 

sworn into office. I know that we have talked about this, and I appreciate your conversation. I spoke with your staff. We sent you a 

letter, 21 signers. We pointed out seven things that we have concerns about. 

I know you are going to send a letter of your understanding of 

this agreement. You are not going to renegotiate it. I do have a 

concern that we don’t have an exchange of letters that everyone is 

agreeing to, to clarify our understanding of what this agreement 

means. 

My time is expired, but I want to make sure that we get the negotiation prowessness of yourself and Mr. Trump to make sure this 

deal works for American insurers and our State-based model, as 

opposed to an international system that doesn’t work for— 

Chairman HENSARLING. Time of the gentleman has, indeed, expired. 

Mr. DUFFY. I yield back. 

Chairman HENSARLING. The chair now recognizes the gentleman 

from New York, Mr. Meeks. 

Mr. MEEKS. Thank you, Mr. Chairman. 

Mr. Secretary, let me just ask first. When you became the secretary of the Treasury, you had to take an oath of office, correct? 

Secretary MNUCHIN. That is correct. 

Mr. MEEKS. Now I—just so that I am clear, that oath of office 

was to the United States of America and our Constitution? Or was 

the oath of office to the President of the United States? 

Secretary MNUCHIN. It was to uphold the Constitution. 

Mr. MEEKS. And you are aware, because I know we were talking 

about current events, recently—other current events, because I 

want to make sure that you are able to do your job. The current 

event recently is—for example, the President of the United States 

is telling the attorney general that he should be protecting the 

President as opposed to the Constitution. 

Most folks, Democrats and Republicans, believe that maybe— 

that the attorney general did the right thing by recusing himself 

from any investigation that dealt with Russia. 

So my question to you, given that the President is talking about 

that he wants loyalty and protection, because he says that the people—his administration is not protecting him, that in matters that 

are serious to the Department of Treasury, are you going to protect 

the President of the United States? Or are you going to uphold the 

Constitution of the United States? 

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Secretary MNUCHIN. I think, in many cases, in my job, it is one 

and the same. 

Mr. MEEKS. No. You think it is one and the same? 

Secretary MNUCHIN. I said, in many cases. I said it is—many 

cases. 

Mr. MEEKS. So, then, that gives me serious concerns— 

Secretary MNUCHIN. No, what I said is in many cases— 

Mr. MEEKS. Reclaiming my time. 

Secretary MNUCHIN. I will— 

Mr. MEEKS. Reclaiming my time. 

Secretary MNUCHIN —I assure you I will uphold the Constitution. 

Mr. MEEKS. Reclaiming my time. 

Chairman HENSARLING. The time belongs to the gentleman from 

New York. 

Mr. MEEKS. That gives me serious concerns, because there are 

many allegations about conflicts of interest by the President of the 

United States, and there is an ongoing investigations against the 

President of the United States about his involvement in Russia. 

And if there is someone that tells me that you believe that your 

obligations, even if the—because I thought that no person was 

above the law. So the—your oath of office, from what I heard, was 

to the Constitution of the United States of America, not to Donald 

Trump, the President of the United States. So— 

Secretary MNUCHIN. Let me just be clear. My obligation is to uphold the law. We have cooperated with all investigations and we 

will absolutely do that. 

Mr. MEEKS. Let me—let me reclaim some time, because, you 

know, that—the U.S. Congress has some huge responsibilities, also. 

So now I am concerned, because—U.S. Congress, what they have 

done, bipartisan—we have—we were about to implement a sanctions bill against Russia. 

And in that sanctions bill, there is some authority that OFAC 

has to enforce certain protections. So maybe I should ask you this 

question first. Do you believe, Mr. Secretary, that there is corruption in Russia? Yes or no? 

Secretary MNUCHIN. Yes, I am sure there is corruption in Russia. 

Mr. MEEKS. Now, if you believe that there is corruption in Russia, and—have you read or understand the sanctions bill that we 

are doing in a bipartisan way in the U.S. Congress, both the House 

and the Senate? Have you familiarized yourself with that bill at 

all, sir? 

Secretary MNUCHIN. Of course I have. 

Mr. MEEKS. And so you know what your responsibilities are 

under OFAC? 

Secretary MNUCHIN. Of course I do. 

Mr. MEEKS. So let—then, have you also made some plans on how 

you will implement the sanctions bill, or how the Treasury Department will utilize the sanctions bill in regards to Russia, sir? 

Secretary MNUCHIN. We have looked at it. 

Mr. MEEKS. But have you thought about how you would do some 

planning to go against what you admit, the corruption that is taking place in Russia; how the Treasury Department would protect 

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29 

the people of the United States, the Constitution, not the President? 

Have you thought about how you would implement that? Or can 

you do that on your own? Or must you go back and get some clearance from someone else? Because— 

Secretary MNUCHIN. I don’t need to get clearance from anybody 

else, and I assure you, we will work with Congress. 

I do have certain concerns that we may have— 

Mr. MEEKS. Let me—reclaiming my time, because I am just concerned—I have got 45 seconds left—because I am concerned that, 

when I see others in the administration trying to do their jobs, the 

President then Tweets something and—there have been inconsistencies. 

For example, just quickly about the debt ceiling, you have said, 

at one point, that the debt ceiling should be clean. Others in the 

administration have said the debt ceiling to be a—you should be 

able to include some increases, or change it. 

So what is your position now? Should there be a clean debt ceiling when we pass it? Or should there be other things added to it? 

Secretary MNUCHIN. The President has been very clear that I am 

responsible for the debt ceiling, and my position has been that I believe there should be a clean debt ceiling. 

Mr. MEEKS. So, you are not for, as others in the department have 

talked about, in regards to that there should be additions to the 

debt ceiling, or add-ons to the debt ceiling? 

Secretary MNUCHIN. Again, Director Mulvaney and I are on the 

same page that I am representing the administration on this. 

Chairman HENSARLING. Time of the gentleman has expired. 

The chair now recognizes the gentlelady from Missouri, Mrs. 

Wagner, chairman of our Oversight and Investigations Subcommittee. 

Mrs. WAGNER. Thank you, Mr. Chairman. 

Over here, Secretary. Welcome, and thank you for appearing before this committee today. 

I dearly and sorely want to get back to the purpose of this hearing today, which is to talk about Treasury and the state of the 

international financial system. 

I first want to commend you regarding the Treasury report you 

recently released, focusing on regulatory burdens for financial institutions. And I was honored to be present in the Oval Office with 

the President of the United States on February 3rd when he signed 

the Executive Order directing you to conduct said report. 

Many of the proposals in the report will go a long way toward 

alleviating regulatory overburden, especially—especially for community financial institutions, so that lending and economic growth 

can continue. 

Another thing that I am particularly concerned about, Mr. Secretary, particularly with my role on the—also on the Capital Markets Subcommittee, is that we now have about half as many public 

companies in the United States as we did 20 years ago. 

Additionally, there has been a decline in IPOs, or initial public 

offerings, during the same time without a corresponding decline in 

the number of business startups. I understand that Treasury is expecting to issue a capital markets report later this year. Will that 

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30 

report focus on the issue of the declining number of public companies and IPOs? 

Secretary MNUCHIN. We are happy that will be one of the issues 

we will consider. Thank you. 

Mrs. WAGNER. And why should we care about this trend? 

Secretary MNUCHIN. I think, as you said, we care about creation 

of businesses. We want to make sure that there is not too much 

consolidation in certain industries, that there is proper competition 

and that there is job creation. 

Mrs. WAGNER. And what are some of the regulatory and other 

impediments that are chilling the IPO market, or negatively affecting company decisions to access capital in the public market? 

Secretary MNUCHIN. Well, I think, as you know, there are a lot 

of issues, and we will address those in the report and look forward 

to working with you. 

Mrs. WAGNER. And why is reversing this trend important for 

both, I think, the broader economy and for individual investors? 

Secretary MNUCHIN. Well, I am—I am more focused on broadening the economy than, necessarily, individual investors but it is 

important for individual investors, for their retirement, and be able 

to invest in things. 

I would say, in broadening the economy—again, it all gets back 

to jobs. We are very focused on how we get to 3 percent GDP, 

which we think is critical. The difference between 2 percent and 3 

percent is trillions of dollars— 

Mrs. WAGNER. And we haven’t been there, Mr. Secretary, for a 

long time. 

Secretary MNUCHIN. We haven’t, but we have, over a long period 

of time. Thank you. 

Mrs. WAGNER. And does a healthy public market impact small 

company growth and what impacts does it have on job creation? 

Secretary MNUCHIN. Limiting capital to industries limits job creation and investment. 

Mrs. WAGNER. I thank you. And I will yield the remainder of my 

time to the chairman, if he so chooses. 

Chairman HENSARLING. Well, I thank the gentlelady for yielding. 

Another question, Mr. Secretary—so, in the Treasury report, it 

proposes a regulatory off-ramp, much like the off-ramp that we 

have in the CHOICE act, and I think you are familiar with. In the 

CHOICE Act, a banking organization that maintains a simple leverage ratio, non-risk-weighted, of 10 percent essentially has a 

Dodd-Frank off-ramp. 

So can you talk to us about how this kind of a regulatory burdencapital tradeoff could help spur economic growth? 

Secretary MNUCHIN. Well, Mr. Chairman, we do share your view 

that the off-ramp is one of multiple solutions. It is not the only solution. But, again, going back to what we said earlier, our numberone objective is to make sure that the top eight banks don’t go from 

50 to 70 percent market share or 100 percent market share, and 

that we have a robust banking system with community and regional banks that can grow the economy. 

Chairman HENSARLING. Time of the gentlelady has expired. 

The chair now recognizes the gentleman from Georgia, Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

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I am over here. I want to ask you two points, two questions. Let 

me get the first one out of the way first. 

We have had some discussion about the debt limit, and I just 

want to remind you that your predecessors, Jack Lew especially, 

would send us estimates, would say and give us a running account 

of when that possible time would come. 

But when—your responses to that have been—you said Congress 

should act. And then you said—and you keep providing us with a 

nebulous deadline of sometime after September. 

Now, Mr. Mnuchin, you and I both know that the market’s worst 

enemy is uncertainty, not to mention uncertainty around the debt 

limit, which also plays a role in what the Fed does. And keeping 

that sterling credit rating, AAA, all around the world is what sustains us. It is the backbone of what keeps our country the numberone financial system. 

So let me just ask you can you commit to this committee today 

that, within a week, you could follow the example of your predecessor and send to us your best estimate as to when we will reach 

the debt limit? Can you do that? 

Secretary MNUCHIN. Again, first of all, thank you for that question. And I am very familiar with financial markets, which I have 

been involved in for the last 35 years. So I do understand this issue 

very well. I have been very clear on it publicly. I can tell you today 

the answer to that question. 

Mr. SCOTT. What is that? 

Secretary MNUCHIN. That it is—I have said that I am comfortable that we can fund the government through the end of September, that based upon my information at this time—which is 

subject to change, given big moves—but my best judgment right 

now is through the end of September. I have said that— 

Mr. SCOTT. OK— 

Secretary MNUCHIN —Publicly. This is not the first time. And I 

will also— 

Mr. SCOTT —Thank you. I have got your answer. 

Secretary MNUCHIN. Thank you. 

Mr. SCOTT. I only have a few minutes. And I got to get to this 

other question. Now, I want you to know that this effort and concern, on this committee, with President Trump and the Russian 

connection—there was a movie called the French Connection, also. 

But I want you to know that what Ms. Waters’s bill and her efforts 

in this is not a Democratic-alone position. 

I work with both Democrats and Republicans. I have friends on 

both sides of the aisle. And it is a growing consensus among Republican Members of Congress that we owe it to the American people to come clean on this. President Trump is not bigger than 

America. This isn’t about him. It is about the American people. 

And I love this country. I was born in the middle of a tobacco 

field in Aynor, South Carolina. But I made it all the way up to the 

Wharton school of finance. And not only that—to serve on the executive board of directors of the best school of business and finance, 

at the University of Pennsylvania, in the world. And I did it with 

just helping hands, because I come from a poor family. 

So I want you to know, and I want this Nation to know, that we 

deserve to know what it is that President Trump is hiding, that he 

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is willing to turn the Federal Government, the Justice Department, 

upside down and inside out. 

It ain’t about him no more. It is about coming to a sense of confidence and truth that we can restore the respect, the power, and 

authority of our Nation, first to the American people, and to the 

world. 

Chairman HENSARLING. Time of the gentleman has expired. The 

chair now recognizes the gentleman from California, Mr. Royce, 

chairman of the House Foreign Affairs Committee. 

Mr. ROYCE. Well, thank you, Mr. Chairman. 

Again, Mr. Secretary, good to see you. 

And, just following up on the questioning of Mr. Barr, I would 

like to thank you for your commitment to leveling the trade and 

regulatory playing field for our job creators here in the United 

States. 

And on this front, unlike at least one of my colleagues, I was 

very pleased to see that the U.S.-E.U. covered agreement on insurance and reinsurance moved across the finish line, because that is 

going to mean billions of dollars in savings for U.S. firms, which 

can be reinvested in our economy, and that is going to be passed 

on to the consumers. 

And I also appreciate your commitment to raising the equity caps 

for U.S. financial services in China—raising that issue. And I was 

hoping you could update us on your most recent conversations and 

how the Chinese side reacts when we push them on that issue of 

caps. 

Do you think we could get a win on this front? 

Secretary MNUCHIN. Again, I am going to withhold how they 

react. But what I will say is—this is a yes-no answer. We expect 

them to be increased. We have told them to do that. I don’t care 

how they react. What I care about is when they tell us that there 

is no cap. So I am not interested in them going from 49 to 52 percent. I want no cap. 

Mr. ROYCE. I think that is absolutely— 

Secretary MNUCHIN. I hope you don’t mind— 

Mr. ROYCE —The right attitude. 

Secretary MNUCHIN —I hope you don’t mind me using just 5 seconds of your time, because I do want to acknowledge Mr. Scott, and 

I too share this great love for this country, and it is extraordinary, 

your accomplishments, so thank you. 

Mr. ROYCE. And let me also say, on the topic of housing finance 

reform, you have made it very clear that perpetual conservatorship 

is unsustainable, and you would prefer we deal with Fannie and 

Freddie through legislation. But as we work toward reform in this 

committee and in the Senate, we can’t lose sight of the benefits afforded the GSEs by previous Congresses. This is one of the problems. There are benefits no other company has. 

And they are benefits that help create the duopoly and broken 

system of private gains and public losses. And among those obvious 

benefits are tax-exempt status from State and local jurisdictions; 

the ability to issue special SEC-exempted TBA, or ‘‘to be announced,’’ securities; the ability for the Fed to purchase GSE securities through their monetary policy operations; a perpetual line of 

credit directly to Treasury beyond the 2008 bailout authority; and 

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above all else, the implicit government guarantee that comes with 

the charter which gave them the ability to borrow at below-market 

rates and ignited the duopoly. 

And, you know, as someone who was concerned about, basically, 

the moral hazard in this equation, in 2004 and 2005, I tried to 

have them regulate it for systemic risk. 

I think, Secretary Mnuchin, you understand this. Can you eliminate any of these benefits without legislation? And would you agree 

that reconstituting Fannie and Freddie as private companies with 

these congressionally mandated benefits should be avoided at all 

costs? 

Secretary MNUCHIN. I do. And, first, let me say I look forward 

to working with you on this. 

As I have said, we need a solution that creates liquidity for the 

housing market and doesn’t put taxpayers at risk. And if there are 

any guarantees from the government going forward, they should be 

explicit and paid for and done so in a way that doesn’t put taxpayers at risk. 

And we are determined to find a solution, because this is a huge 

part of the economy, and leaving them in conservatorship for the 

next 4 years makes no sense. 

Mr. ROYCE. Well, let me make sure that I understand, as this 

issue is as important, probably, as anything that is going to come 

up today. 

Given our past experience of what happened with the collapse of 

the GSEs, do you agree, or not, that Fannie Mae and Freddie Mac 

should not under any circumstances, be re-privatized as privately 

owned, implicitly government-backed institutions? 

Secretary MNUCHIN. So, what was the last part of it? Implicitly? 

Mr. ROYCE. Implicitly government-backed institutions. In other 

words—under any circumstances be re-privatized as privately 

owned, implicitly government-backed institutions. 

Secretary MNUCHIN. I agree. There shouldn’t be implicit. If there 

is something, it should be explicit and paid for. Otherwise—it 

should be very clear. There is no implicit government backing. 

Mr. ROYCE. Thank you—thank you, Mr. Secretary. 

Chairman HENSARLING. Time of the gentleman has expired. 

The chair now recognizes the gentleman with the dashing pink 

suit from Missouri. 

Mr. Cleaver, the ranking member of the Housing and Insurance 

Subcommittee. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Mr. Secretary, thank you for being here. 

I do think that, in a democracy, once the commonly accepted 

rules of politeness are breached, it will be painfully difficult for 

them to be reversed. And maybe, we are there now, in that regard, 

the ranking member had talked to you about the letter that was 

sent. 

I am simply hoping that, as we move along, that you would respond to letters, communication from her. I personally believe it is 

impractical for you to respond to every letter that we send you, as, 

you know, each member of the Democratic side would send you— 

or Republican side, for that matter. 

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So I am just hoping that, in the future, that the letters are responded—that you would respond to the letters in some kind of a 

timely fashion. 

Now, let me, again, unless you want to respond to that, I will 

move to my question. 

Secretary MNUCHIN. Yes, so, I mean, first of all, as you can see, 

we have over 50 letters that we have responded to. I can assure 

you, and I can assure the ranking member, that we will cooperate 

with you. We have fully cooperated with three committees. 

To the extent you are asking for the same information that other 

people—I would merely ask for you to coordinate with information 

we have already received. But we fully intend to cooperate with the 

committee and be responsive, as we think we have done. 

Mr. CLEAVER. I could argue with that, but I am more interested 

in something else at the present time. I was here during the whole 

Dodd-Frank debate, and the development of that legislation. And 

it was a turbulent time, as you well know. 

And I will admit that there was a destabilizing component in 

that legislation, as it relates to small banks—community banks: 22 

percent of them, 22 percent of the small banks—community 

banks—have declined, have evaporated over time, and 25 percent— 

this was very troublesome to me—25 percent of them say they are 

anticipating merging with another bank. So what we are going to 

end up having are the larger banks getting even—even larger. 

I think they were helped a little bit because they were exempt 

from the Durbin amendment. However, I am asking you, what do 

you—what advice would you give us on how we can quickly remove 

the burden from small banks? 

And understand this, in case you don’t understand it, I don’t 

know anybody on this side, or the other side, for that matter, who 

believes that we ought to continue to allow this burden to hit small 

and community banks. So, if everybody agrees on it, what do you 

think we can do and do quickly to remove that burden? 

Secretary MNUCHIN. Well, again, thank you, and we look forward 

to working with you, and I would hope that we could do this on 

a bipartisan basis, as it relates to things that impact community 

banks and regional banks. 

So I think we delivered a very balanced report, and many of the 

regulators have agreed with us. So we have a long list of recommendations, and we would be more than happy to followup with 

your office and go through the specific legislative ones for community banks. 

Mr. CLEAVER. So you would sit down with the chair and the 

ranking member and work on and work out recommendations to 

provide that relief? 

Secretary MNUCHIN. To the extent they both want to sit down 

with us, we would be more than happy to do that and support that, 

yes. 

Mr. CLEAVER. Well, I am hoping that will happen. And, like 

every other member, I have community banks and small banks 

who are struggling. And it is a little frustrating to me that all we 

have to do is change it—is change the legislation, and we don’t do 

it. 

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Secretary MNUCHIN. I share your frustration, and I think this is 

the biggest single issue, since community banks know how to lend 

and will drive the engine of growth. 

Mr. CLEAVER. All right. And by the way, I am wearing this pink 

so my friends can find me quickly. 

Secretary MNUCHIN. I was going to say, definitely, best male 

dressed in the room. 

Chairman HENSARLING. Time of the gentleman has expired. 

The chair now recognizes the gentleman from Oklahoma, Mr. 

Lucas. 

Mr. LUCAS. Thank you, Mr. Chairman. 

Secretary Mnuchin, thank you for being here today. 

As you may know, I serve on the Ag Committee, in addition to 

this committee, and thus I care a lot about the use of derivatives 

and similar instruments that can help my constituents manage 

risk. As such, I would like to visit with you about margin requirements for a moment. 

First, I was very pleased to see that your department’s recent report suggested excluding margin from centrally cleared derivatives 

from the supplemental leverage ratio. And I thank you for coming 

to that conclusion, as the regulation reduces the number of clearing 

options available to customers. I really hope that gets reviewed and 

remedied soon—soon. 

And second, I would want to ask you about margin for inter-affiliate swaps. While the CFTC’s rules have distinguished internal 

transactions within the same company, when setting margin requirements, the banking regulators have not. 

And this raises some concerns for me, not only because it creates 

a patchwork effect of regulations in the U.S., but the approach of 

the banking regulators is inconsistent with that of the Asian and 

European regulators. 

So, having said that, do you have any comments about whether 

an approach more like the CFTC from banking regulators would 

level the playing field and unleash significant amounts of capital 

into the market, Mr. Secretary? 

Secretary MNUCHIN. Well, we look forward to working with you, 

and yes. On the first issue, we think, where there is central clearing, that should be accounted for. And on the inter-affiliates, we 

look forward to working with you, and that will be one of the issues 

addressed in our subsequent reports. 

Mr. LUCAS. And that is very important, because to tie up capital 

that should not be otherwise tied up, to reduce the options that my, 

for instance, ag and energy people have in being able to manage 

the risk in both selling their commodities and securing the resources to do their work, it just, I think—in the environment we 

are in right now, the approach taken by CFTC and the initial report from your people would tend to think that we will be in a position to address that, so to speak. 

In the remaining time, I would like to commend your department 

for suggesting in its report that the recent leveraged lending guidance be reworked. 

As I told Chair Yellen earlier this month, much of the energy industry is considered distressed, which means it is harder for them 

to obtain capital under the leveraged lending guidance. 

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Could you briefly tell the committee why your department suggested withdrawing the guidance, and what you think would happen if the guidance were done in a better fashion? 

Secretary MNUCHIN. We think it would help lending significantly. 

And again, that doesn’t mean that banks shouldn’t properly underwrite loans, they should. But that we don’t support a blanket 

across the board approach that cuts off leveraged lending. 

Mr. LUCAS. Absolutely. Allowing bankers to be bankers. And in 

the case of the energy industry people, in my State, where they 

have proven barrels, they have proven MCF in the ground, they 

have the proven ability to deliver, the proven ability to continue in 

their business. 

Creating a situation where, in effect, we push them over the 

edge, arbitrarily, just seems counterproductive and literally destructive. So, I appreciate that. 

And with that, Mr. Chairman, I yield back the balance of my 

time. 

Chairman HENSARLING. Gentlemen yields back. 

Chair now recognizes gentlelady from Wisconsin, Ms. Moore, 

ranking member of the Monetary Policy and Trade subcommittee. 

Ms. MOORE. Thank you so much, Mr. Chairman. 

I lost 5 seconds. OK. Thank you so much. And welcome again, 

Mr. Secretary. Mr. Secretary, I was really relieved to hear you say, 

on a number of occasions this morning, that you are going to be 

very vigilant on anti-money laundering and counterterrorist financing compliance. 

And so, given that, I just want a few—put a few things on the 

record and find out whether or not you think that certain kinds of 

investment activity raise concern and warrant heightened scrutiny 

from regulators and law enforcement, and that, of course, our 

President and his family have engaged in. Investments with parties who have admitted to or have been accused of or convicted of 

crimes, do you think that is problematic? Yes or no? 

Secretary MNUCHIN. It sounds that way— 

Ms. MOORE. OK. 

Secretary MNUCHIN. But it depends on the specifics. 

Ms. MOORE. Oh. Well I can be specific. How about Felix Sater 

who helped build the SoHo projects? He is— 

Secretary MNUCHIN. I am not aware of any of the specifics— 

Ms. MOORE. Well, OK— 

Secretary MNUCHIN —Nor would it be appropriate for me to comment, that is not part of my job. 

Ms. MOORE. You are the treasury secretary. Investments where 

apparent enterprise lacks a significant or economic basis, do think 

that is problematic? In mirror trades? 

Secretary MNUCHIN. What was the last part? 

Ms. MOORE. Mirror. Like in a mirror trade. 

Secretary MNUCHIN. I don’t know what your—I don’t—I am not 

connecting this to the terrorist financing issues. 

Ms. MOORE —And investments with politically explicit parties. 

Well, I could consume all my time, but I would just bring to your 

attention that there have been—these are not secret things. 

They are exposed, they are in the news for everybody to read 

about the partnerships that the Trump family has with people who 

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have been convicted of crimes, who have been associated with Russian mob activity. And I was just wondering, for the record, if you 

thought that that was problematic? 

Secretary MNUCHIN. Again, it is really not part of my job to comment one way or another on that. My job is focused on terrorist— 

Ms. MOORE. Well you are the secretary of the treasury. You are 

part—you know, you—the SEC, the Foreign Corrupt Practices Act. 

These are all things that you have jurisdiction over. 

Secretary MNUCHIN. No, the SEC, I have no jurisdiction over. 

Ms. MOORE. All right. Let me ask you some more questions. I 

mentioned in my opening statement, I talked about conflict minerals, and I talked about the disclosures for extractive industries, 

which you supported. 

What were the judgments you relied upon to support eliminating 

disclosures for extractive industries? And for, in the Choice Act, 

eliminating conflict minerals? And so, since you seem to need examples, I will give you examples. ExxonMobil, as you know, the 

Treasury just fined them for corrupt dealings with Russia. And 

conflict minerals, you are familiar with the horrific civil war that 

has ravaged the Democratic Republic of Congo and how armed 

groups took control of the mines, used the proceeds to fund armed 

conflict, and those minerals ended up in the U.S. consumer market. 

And thereby, we, as U.S. citizens, have inadvertently funded the 

killing, rape, and destruction in the DRC. So, upon what judgment 

did you rely to decide that we don’t need these provisions? 

Secretary MNUCHIN. First of all, I just want to comment on the 

Exxon. It was not on corrupt dealings, it was on an OFAC violation. In regards to the mineral issue—and again, we think there is 

a lot of problems as you pointed out, and I would be more than 

happy to followup with your office and talk more about this issue. 

Ms. MOORE. I would like to yield the last minute to the ranking 

member. 

Ms. WATERS. Thank you very much. I would like to thank you, 

Ms. Moore, for delving into some of the many issues that we are 

so very concerned about. 

What Ms. Moore walked through was, relationships. The President of the United States has relationships with those who have 

been jailed, who have known to have mob contacts, who have been 

involved in criminal activity. 

And, as the treasurer, she was asking you, you know, what do 

you think about that? And the real question and in all of this is 

whether or not you see your responsibility to make sure that you 

are protecting the people of this country, respecting the Constitution of the United States, or as it appears, that this President is 

demanding of those in his cabinet and others that they spend their 

time protecting him. 

Basically, that is the question. 

Chairman HENSARLING. Time—time of the gentlelady has expired. 

The chair recognizes the gentleman from Florida, Mr. Posey. 

Mr. POSEY. Thank you very much, Mr. Chairman. 

Secretary Mnuchin, I appreciate you being here today. For more 

than 6 years, 6 long, torturous years, I have been fighting for a 

group of heroes that were once held captive. On February 13th, 

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2003, four Americans, who were Department of Defense contractors 

on a U.S. Government counter narcotics flight mission in Columbia, 

were shot down by the Revolutionary Armed Forces of Colombia, 

or FARC as they are commonly known, a designated terrorist organization that controls more than 95 percent of the world’s cocaine 

business. 

The pilot, Tom Janice, a retired member of the U.S. Army’s Delta 

force, was executed on the spot and three Floridians, Keith 

Stansell, Marc Gonsalves, and Tom Howes, who happens to be my 

constituent, were captured, held hostage in the jungle, and severely 

tortured for more than 5–1/2 years until they were rescued by the 

Colombian army. 

These Americans and the Janice family, obtained a Federal judgment, in 2010, under the Anti-Terrorism Act for damages against 

FARC to compensate them for FARC’s acts of terrorism during 

their captivity, and the execution of one American. 

However, there are no FARC assets in the United States except 

for drug moneys of FARC agents—the traffickers and money 

launderers—and these assets are frozen under the Foreign Narcotics Kingpin designation Act. Under current law, victims cannot 

access frozen assets under the Kingpin Act. 

I believe the victims of the foreign terrorist organizations—which 

profit and fuel their activity with drug money—should be compensated from the drug money that we have secured. In the 114th 

congress, I introduced legislation, titled the ‘‘Clarifying Amendment 

to Provide Terrorism Victims Equity Act,’’ or CAPTIVE Act, is the 

acronym, to change that law. 

My bill passed the House by unanimous consent last year, but 

was stalled in the Senate, when the Office of Foreign Assets Control raised concerns about the bill that they never mentioned to us 

in the House. I introduced the legislation, this Congress, and I am 

hoping to bring the bill to the floor soon. 

The situation, right now, is that the former hostages have been 

waiting 14 years for justice, and so far they have received absolutely zilch help, from the U.S. Government that they served so heroically because of the Office of Foreign Assets Control. 

I would like to get a committment from you to work with me, to 

find a solution to make these brave Americans whole again. Do you 

think we can work together in that regard? 

Secretary MNUCHIN. Absolutely. Let me first comment on, it 

sounds like it was a horrible situation, and I am not familiar with 

any of the details of what OFAC’s concerns are, but I am more 

than happy to work with you in your office on the legislation and 

understand it. 

Mr. POSEY. Yes, your predecessor gave us all kinds of song and 

dance, but he seemed relatively unconcerned, but I appreciate your 

concern and look forward working you— 

Secretary MNUCHIN. We will followup with you. 

Mr. POSEY. Thank you very much. I yield back. 

Chairman HENSARLING. The gentleman yields back. Chair now 

recognizes the gentleman from Minnesota, Mr. Ellison. 

Mr. ELLISON. We thank the chair and the ranking member. 

Secretary Mnuchin, one of the worst moments I experienced in 

my service in Congress is the financial—foreclosure collapse that 

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occurred in 2008. I don’t ever want to see it again. I am sure you 

agree with me about that. And so, I am concerned about your approach to supervising the mortgage market, and making sure that 

banks that are engaged in issuing mortgages are upholding high 

standards of ethics. 

So, to that degree, could you explain to me how, OneWest, of 

which you were the CEO, was able to—engage in 5,600 violations 

of foreclosure sale auctions, including backdating, in nearly all of 

the 35,000 foreclosures of homes, that you all engaged in? 

Secretary MNUCHIN. First of all, let me assure you, that I did not 

make one mortgage, during or prior, to the mortgage crisis. I took 

over three banks from the FDIC, one of which was the worst originator in the entire world. I am very proud of the fact that we started loan modifications at IndyMac under the FDIC’s control, which 

we then did. So, I take great offense to anybody who calls me the 

foreclosure king. Whatever issues— 

Mr. ELLISON. I am claiming my time, you know how that goes. 

Secretary MNUCHIN. Whatever issues are— 

Mr. ELLISON. Sir, I allowed you to answer and I am reclaiming 

my time. 

Chairman HENSARLING. Mr. Secretary, the time belongs to the 

gentleman from Minnesota. 

Mr. ELLISON. Look, I don’t have a problem with you answering, 

but you did answer so, I am not going to let you filibuster. That 

is what I won’t do. 

Secretary MNUCHIN. I am not filibustering—I was just responding to your comment. 

Mr. ELLISON. No—no—no—there is no question before the Secretary. 

Secretary MNUCHIN. Wasn’t there a rule— 

Mr. ELLISON. There is no question before the Secretary, at this 

point. So, Vice President Erica Johnson-Seck robo-signed 6,000 

foreclosure related paperwork documents per week. Was she under 

your supervision? 

Secretary MNUCHIN. Not directly. 

Mr. ELLISON. Was she under—when you were the CEO, was she 

employed under you? 

Secretary MNUCHIN. She was employed at the bank. 

Mr. ELLISON. She said in testimony that she robo-signed as many 

as 6,000 foreclosure related documents a week. She—do you—what 

is your position on robo-signing? 

Secretary MNUCHIN. You know, I have answered this extensively— 

Mr. ELLISON. You have to answer it now, sir. 

Secretary MNUCHIN. I am going to, and you have to listen to me. 

Mr. ELLISON. No, I don’t, no, I don’t have to listen you. 

Secretary MNUCHIN. Well— 

Mr. ELLISON. I asked you a direct question, I would like an answer, which would be— 

Secretary MNUCHIN. If you are not going to listen to me— 

Mr. ELLISON. Are you willing to answer the question, or not? 

Secretary MNUCHIN. Repeat your question. 

Mr. ELLISON. What is your position on robo-signing? 

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Secretary MNUCHIN. Again, I don’t even think you know the definition of robo-signing is. 

Mr. ELLISON. You don’t know what I know. 

Secretary MNUCHIN. There is not a legal definition of robo-signing. 

Mr. ELLISON. How about this? Do you deny that under your supervision robo-signing occurred at the firm that you were the CEO 

of? 

Ms. WATERS. Mr. Chairman— 

Secretary MNUCHIN. I have reported before— 

Mr. ELLISON. And are you— 

Secretary MNUCHIN —There was not robo-signing, and I have 

said this on the record. 

Mr. ELLISON. So, you deny it for the record, thank you. 

Secretary MNUCHIN. For the record, I have denied it before. 

Mr. ELLISON. Yes, right. And you are denying that—well, also for 

the record and under direct testimony a person under your supervision admitted to it. 

And for people watching, I will just let you know, robo-signing 

is when you have a foreclosure—when you are signing documents 

to get a loan to purchase a home, and you have to review the documents, you have an obligation to review them. And to just sign 

them as you are going through, without reviewing them, is not 

proper, and is illegal, because you are swearing that you have reviewed those documents. 

And, under the Secretary’s supervision, which he claims I don’t 

know anything about robo-signing, that happened to a very severe 

degree while he was the CEO of OneWest. 

Here is another question for you, sir. OneWest was nine times 

as likely to foreclose on a homeowner living in a community of 

color, as originating a mortgage to a borrower living in other communities. 

Are you concerned about the disproportionate number of people 

who found themselves in foreclosure, at the hands of your company, who were persons of color? Where are you at on making sure 

that there is an equal administration of justice for companies as 

they engage in foreclosure? 

Secretary MNUCHIN. Let me assure you that we upheld, to the 

strictest amount, the rules and regulations, as was reviewed by the 

OCC, the Fed, and the Consumer Protection Bureau, and we did 

not and would not, discriminate in any way. 

Mr. ELLISON. We will see. 

Chairman HENSARLING. Time for the gentleman has expired. The 

chairman now— 

Ms. WATERS. Parliamentary inquiry. 

Chairman HENSARLING. For what purpose does the ranking— 

state your inquiry. 

Ms. WATERS. Mr. Chairman, would you like—thank you—would 

you like to give the Secretary an opportunity to apologize to Mr. 

Ellison for— 

Chairman HENSARLING. That is not a proper parliamentary inquire. 

Ms. WATERS —Asserting that he is too stupid to know what 

robocalls are? Would you like to give him that opportunity? 

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Chairman HENSARLING. The time now belongs to the gentleman 

from Illinois. 

Mr. Hultgren is recognized for 5 minutes. 

Mr. HULTGREN. Thank you, Mr. Secretary. 

Secretary MNUCHIN. But perhaps, could I borrow 10 seconds? 

Mr. HULTGREN. Yes, absolutely, I was going to offer—you can do 

more than that. I would like you to have a chance— 

Secretary MNUCHIN. I would like the record to state that 

OneWest Bank was the only bank that concluded the independent 

foreclosure review, and every single loan was reviewed and was 

properly compensated. We were also the only bank to have done all 

those loan modifications, and I take great offense in that anybody 

who calls me a foreclosure king or anything else. 

And, ranking member, I have had the opportunity to talk about 

this with you, many times before, and this is nothing new, and I 

am very proud of OneWest’s record, and I am not apologizing to 

anybody, because robo-signing is not a legal term, and I was being 

harassed. 

Ms. WATERS. You are under oath. 

Mr. HULTGREN. Thank you. 

Chairman HENSARLING. The time does not belong to the ranking 

member, the time belongs to the gentleman from Illinois. 

Mr. HULTGREN. Thank you. 

Chairman HENSARLING. The time belongs to the gentleman from 

Illinois, he may proceed. 

Mr. HULTGREN. Thanks, Mr. Chairman, thank you, Mr. Secretary, for being here. The Treasury Department’s June 12th report 

makes a number of recommendations regarding the harmonization 

of our cybersecurity framework. 

Specifically, the report recommends further coordination on two 

fronts; one, financial regulatory agencies should work together to 

harmonize regulations including a common lexicon; two, financial 

regulators should work to harmonize interpretations and implementation of specific rules and guidance around cyber security 

framework. 

I believe both of these are very important goals. 

I wondered if you could just talk briefly on how the Treasury Department plans to facilitate these efforts and is there anything we 

in Congress can do to help support this work. 

Secretary MNUCHIN. Yes, we look forward to working with you. 

It is very critical. Cybersecurity is a very, very important issue and 

we are working closely with all the regulators on us. 

Mr. HULTGREN. Please let us know, again, how we can provide 

assistance— 

Secretary MNUCHIN. Thank you. 

Mr. HULTGREN. We just know so much—the importance of confidence of consumers— 

Secretary MNUCHIN. Thank you. 

Mr. HULTGREN —And securities. So thank you. 

I know you have touched on a little bit the Volcker rule, I want 

to go in a little bit more on that. 

As you know, venture capital funds and startup companies in 

which they invest are the innovation and job creation engines of 

our Nation. Page 77 of the Treasury Department’s June 12th report 

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recommends changes to the Volcker rule as covered funds provisions to assist in the formation of venture and other capital that 

is critical to fund economic growth opportunities. 

I wondered, Mr. Secretary, have you discussed this specific provision of the Volcker rule with the agencies that have authority to 

make amendments? If so, what feedback have you received? And 

then, followup on that, how does the Treasury Department plan to 

pursue amendments to the Volcker rule that could conform to existing laws. 

In other words, how would you encourage the regulators with 

rulemaking authority to undertake this important work? 

Secretary MNUCHIN. Well, again, there is a two part process we 

are going through. One part is working with the regulators where 

we can clarify the regulatory issues, make clear definitions. So, 

again, people can follow the Volcker rule, but follow it appropriately and understand it. 

And then, also, we would be more than happy to work with you 

and Congress on certain legislative changes to further help that. 

Mr. HULTGREN. Good. Thank you. I believe it is important and 

we want to help. 

The June 12th, again, report states significant adjustments that 

should be made to the calculation of the supplementary leverage 

ratio. And, particularly, deductions from the leverage exposure denominator should be made, including for cash or deposit with central banks. 

I certainly agree with this recommendation and I have worked 

closely with members of this committee such as Keith Rothfus and 

Bill Foster to get some regulators to help understand our concerns. 

I wondered, how do you plan to work with the Fed, FDIC, and 

OCC to amend the supplementary leverage ratio? If possible, could 

you share a timeline for when these concerns might be addressed? 

Secretary MNUCHIN. Well, I don’t have a specific timeline but we 

are working very closely with them and, again, we are hopeful that 

we can make progress on that. Thank you. 

Mr. HULTGREN. I hope so as well, and we would love to be helpful there. 

Last minute, maybe one more question, I understand the administration has been putting together some ideas on comprehensive 

tax reform. I absolutely agree that we need a more efficient tax 

code and it would greatly contribute to economic growth. 

Outside the work on this committee I am also very focused on 

fighting for tax exempt financing for States and local government. 

Specifically for preserving the tax exempt status of municipal 

bonds. I believe this local decision, making process for investing in 

infrastructure is working. It is ensuring that we build the roads, 

schools, bridges, and police stations that our communities really 

need and some 160 members of the House of Representatives 

agreed with that by signing a letter that myself and Congressman 

Ruppersberger passed around. 

I wondered, have you considered how this existing piece of the 

tax code fits in with the administration’s plan for comprehensive 

tax reform? If not, I would love to followup with you a little bit 

more on the importance of municipal finance and, specifically, the 

current tax treatment of municipal bonds. 

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Secretary MNUCHIN. Yes, so, again, we very much appreciate the 

importance of municipal finance. We want to make sure that State 

and local entities can continue to access that market in an efficient 

way and we look forward to working with you. 

Mr. HULTGREN. Thanks Mr. Secretary, thanks for your service, 

and I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The chair now recognizes the gentleman from Colorado, Mr. 

Perlmutter. 

Mr. PERLMUTTER. Hi, Mr. Secretary, thank you for being here 

today. 

Secretary MNUCHIN. Thank you. 

Mr. PERLMUTTER. Thanks for your testimony today. Let’s start 

with you being a Californian and me being a Coloradan, OK? And 

I want to talk about marijuana and banking, just for a second. Because we now are 28 States plus the District of Columbia have 

some level of marijuana use and then if you add all of the States 

that allow for cannabis oil to try to deal with seizures, that is another 16 States. 

And so, mostly it is a statement to you sir that I would like to 

make and California, Colorado having fully legalized marijuana, 

that it is important that the Treasury Department and the Justice 

Department really continue to focus on this because in Colorado— 

unless we have banking services, the amount of cash just becomes 

a huge magnet for crime. And it is very important that we allow 

businesses that are legal in their States to be able to have checking 

accounts and credit card accounts and payroll accounts. 

And I would just impress on you, sir, we need to get this handled. And I don’t know exactly where you are—I am not going to 

ask you on the record but I just want to make sure you understand 

this is now way more than half the States of the country, and I 

would suggest to you that you talk to Mr. Mulvaney and the administration to try to come up with some ideas so we can have baking for legitimate businesses in those States that have some level 

of marijuana use. 

Secretary MNUCHIN. Yes, well, let me just comment. When I was 

a banker I was familiar with this issue and we were very concerned for the regulatory issues of banking, those types of clients, 

despite the fact that it was legal. 

So I don’t have a view but we are happy—I do understand the 

issue—we are happy to work with you, and we do think we need 

to figure out the regulatory solution. 

Mr. PERLMUTTER. And I thank you for that and if you would 

work with me and Mr. Heck and— 

Secretary MNUCHIN. Be more than happy to. 

Mr. PERLMUTTER —I know we have Mr. Coffman from Colorado, 

Republican and a number of Republicans—we would really like to 

work with you and the department to get this ironed out. 

Secretary MNUCHIN. Thank you. 

Mr. PERLMUTTER. Thank you. Second question—or second statement I guess is, you used the words cutting off the money earlier 

on about sanctions and the way that that can work, and I think 

you were directing that toward Iran, but it also applies to North 

Korea and it applies to Russia, would you not agree? 

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Secretary MNUCHIN. Yes, and it applies to Venezuela where we 

just launched sanctions yesterday to 13 people and will continue to 

do more. 

Mr. PERLMUTTER. And I appreciate that, and I thank you for 

that. So I guess where I am coming from is again with respect to 

sanctions, we have, because of aggressive actions taken by the Russians in Ukraine and elsewhere, that the department continue to 

apply those, where appropriate, where lawful, and where necessary. 

So one of the things—I serve on the terrorism and illicit finance 

with Mr. Pearce, and we—it is a really good committee and we appreciate your department working with us. One of the places where 

it is very important is on cryptocurrencies, and it appears that the 

Russians are very adept at making opaque a lot of transactions and 

we would ask you and your department to continue to work with 

us to make sure we are able to pierce those cryptocurrencies so 

that they aren’t using block chain or whatever other kinds of 

things. Would you agree to work with us? 

Secretary MNUCHIN. I would and I would also tell you I share 

your concerns about bitcoin and others and them being used for illicit activity. And matter of fact, I believe this morning we just announced a major action against a bitcoin operator. So I share your 

concerns and this is going to be a big priority of ours. 

Mr. PERLMUTTER. All right, last thing I would like to talk about 

and then I will yield some time to my friend Mr. Ellison is, on 23 

of July, there is an article called The Future Of Banking by Piyush 

Gupta, which really talks about the technological changes that are 

occurring within the banking world. And just to give you—well I 

don’t have much time. What do you see happening in—with respect 

to banks, given all the technological changes that are occurring? 

Secretary MNUCHIN. It is no question banking has changed substantially. Most people don’t go into banks anymore and we need 

to address that as we think of changes in technology and regulation. 

Mr. PERLMUTTER. If I could, I like introduce this in the record. 

Chairman HENSARLING. Without objection. Time of the gentleman has expired; the chair now recognizes the gentleman from 

Florida, Mr. Ross for 5 minutes. 

Mr. ROSS. Thank you, Mr. Chairman. Mr. Secretary, thank you 

for being here. In reading and listening to your opening comments, 

I laud you on one of your priorities and when you say the other 

central component to our agenda for growth is a package—is a passage of comprehensive tax reform. 

And we have talked about this before; you have expressed how 

important it is for us to have tax reform if we are going to grow 

our economy. Now we are the No. 1 in the OECD with the highest 

tax rate. I think, in fact, I believe that at 39.08 percent, we have 

the highest corporate tax rate of any developed nation. At the same 

time, our effective tax rate is—hovers around 20 percent and we 

are 21st in terms of tax revenue as a share of GDP. 

Businesses make decisions to avoid suffering under the full burden of our tax system, and in my opinion I think that what we 

have to look at is what impact this has had on our economy. In 

other words, if we can lower the corporate tax rate just alone, we 

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can change the equation for how American businesses benefit the 

American economy. 

And what I mean by that is, we need to look at how they shelter 

their income, are they paying 35 percent up here but the effective 

rate is 21 down here, what is happening is that 14 percent? Are 

they putting their money overseas in order to take advantage of 

shelters? Are they looking at choice of form of where they want to 

be able to locate their businesses so they don’t have to have tax implications in the United States? Are they looking at what type of 

entity are they going to have? are they looking even at who they 

are going to hire because of our corporate tax structure? 

So, I guess my question to you, is would you agree that—because 

we are having a little bit of issue here in Congress trying to do 

comprehensive stuff right now, whether it be health care or anything else. 

And if we come back here in September and we talk tax reform, 

if we are only able to do corporate tax reduction, would you not 

agree that just lowering the tax revenue—and you take into consideration how businesses affect their tax planning by tax shelters by 

where they want to locate physically. 

Whether in the United States or not, that that lowering of the 

taxes would more than make up for what any anticipated loss of 

revenues that the CDO may access from going from 35 percent to 

15 percent. 

Secretary MNUCHIN. Yes, I agree with you completely. This is not 

just about lowering the rate, this is about comprehensive tax reform, about changing from a worldwide system to a territorial system. 

Mr. ROSS. And we are the only ones in a worldwide system. 

Secretary MNUCHIN. We are broadening the base. 

Mr. ROSS. Correct. 

Secretary MNUCHIN. And as you have pointed out, although our 

stated rate is 35 percent, most international companies pay significantly less, because they can defer income and sometimes not even 

pay any tax on it. 

Mr. ROSS. And as a matter of fact, as we lower the rate, we 

broaden the base? 

Secretary MNUCHIN. We do indeed. 

Mr. ROSS. And raise our revenues. Do you agree or disagree, with 

those who say that we will never be able to achieve real GDP 

growth above the anemic 1 to 2 percent we have seen since the 

years following the recession? 

Secretary MNUCHIN. I disagree with that. I am very committed 

that we can get to 3 percent GDP and we will. 

Mr. ROSS. Thank you. 

And as an insurance person, I have to ask you in FIO, look I am 

a strong supporter of our State-based regulation systems in terms 

of insurance. McCarran-Ferguson has been, I think, a very good 

thing for consumers. 

It is been a very good thing for insurance companies for solvency 

and protections for consumers. My concern with FIO is, while I understand its role to be a facilitator, especially in international negotiations, do you feel there is any need for it ever to be a regulator? 

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Secretary MNUCHIN. Again, what I would say is we fundamentally believe in the State-based system and we support that, so the 

intent is not for it to be a regulator. I don’t know if at any, at some 

points, there may be certain issues that they need to deal with, but 

we are not looking for Federal regulation of insurance. 

Mr. ROSS. Thank you, that is somewhat comforting. 

I yield back the balance of my time. 

Chairman HENSARLING. Gentleman yields back. 

Chair now recognizes the gentleman from Connecticut, Mr. 

Himes. 

Mr. HIMES. Thank you, Mr. Chairman. 

And thank you, Mr. Secretary, for being here. 

Like my colleague on the Republican side, I want to deviate a little bit from the jurisdictional area of this committee because I 

agree with him that we are presented with a really terrific opportunity for comprehensive tax reform. And I really want to make 

one point and then ask you a question. 

Appearances to the contrary, there is actually strong bipartisan 

agreement on the need for comprehensive tax reform. There are 

elements of that that are very, very important to this side of the 

aisle. 

Those elements amongst others include maintaining distributional equity in the code. It may surprise you to know that it includes for a lot of us a sense of revenue neutrality, both inside and 

outside the budget window. 

Something that is not revenue neutral, of course, poses a threat 

to programs like Medicare and Social Security. But really, and I 

guess, point to my question here, what is really important to us is 

a process that is regular order and that starts in a bipartisan fashion. And I can draw sort of a dramatic contrast with the way 

healthcare was brought forward just in the last 6 months. It was 

a process using reconciliation, designed to exclude Democrats, particularly in the Senate. And in fact, the Senate majority leader 

noted that the failure would mean having to work with the Democrats. 

So, I really do think process is important here. Hearings, inviting 

this side of the aisle in early rather than at the end. 

So, my question to you is, is the White House and is the Treasury prepared to really push that this process be designed for bipartisanship and all of the possible durability associated with that? Or 

are we going to sadly see something more akin to what we have 

seen in the healthcare realm? 

Secretary MNUCHIN. Well, again, I would like to hope that it is 

bipartisan, because you point out, many of these aspects, I think 

we have shared values, and objectives, and goals. And I personally 

sat down with many Democrats already to solicit views and get 

feedback. And I look forward to continuing to do that. 

Mr. HIMES. I think a lot of the debate right now is on the Republican side of the aisle over big issues around revenue neutrality, 

around border adjustment tax, deductibility of interest. I think 

your and Mr. Coons voice will be very strong here on those issues. 

And I just—you know, I see the President in his tweets sort of 

occur—blaming the Democrats in the Senate for being obstrucmcarroll on FSR431 with DISTILLER

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tionist when the process at least on healthcare was designed to exclude them. 

And I know your previous career. I know the President’s previous 

career. You haven’t been in town that long. 

Really, our signals and processes that you can set up that will 

set the stage for bipartisanship in the way it wasn’t done the 

healthcare issue. So, I just hope—again, I think we all recognize 

that durability relies to some extent on bipartisan cooperation. We 

have certainly seen that in the healthcare realm. 

And I would note—you were probably following at the time. 

Sometimes, the Democrats, under Obama, were accused of having, 

you know, a process that excluded the Republicans in 2009. That 

was simply not true. 

There were months and months of efforts, hearing after hearing 

after hearing, efforts to attract a number of Republican Senators 

that ultimately did not bear fruit. But I would just note that those 

attempts were made. And I think the country could really benefit 

if the White House would commit itself, particularly for something 

as important as the tax code, to a process that starts out in bipartisan fashion. 

Secretary MNUCHIN. Thank you. 

Mr. HIMES. Thank you. Mr. Chairman, I will yield back the balance of my time. 

Chairman HENSARLING. Gentleman yields back. The chair now 

recognizes the gentleman from North Carolina, Mr. Pittenger, for 

5 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman. Good to see you, Mr. 

Secretary. 

Secretary MNUCHIN. Nice to see you, too. Thank you. 

Mr. PITTENGER. Great to have you here. 

Mr. Secretary, I want to thank you for your understanding of the 

role and importance of community banks. I did serve on a community bank board from the time we chartered to the time we sold 

it, it was very successful. And yet, in North Carolina today, I can 

tell you that we have lost 50 percent of our banks since 2010. 

I serve eight counties, several of which are rural. It has had a 

devastating impact on access to capital credit. So, appreciate your 

efforts there. 

Mr. Secretary, as you know, I am currently working on a CFIUS 

reform bill with Senator Cornyn. We have hoped to introduce it 

sometime this fall. 

One of our primary goals is recognizing the alarming transfer of 

our new and emerging military applicable technologies that have 

gone from the United States to the Chinese. And we want to see 

greater oversight with that. Chinese investments here in the 

United States have grown by 350 percent from 2015 to 2016, and 

we believe that CFIUS of course needs greater teeth and greater 

reforms. 

The Defense Department has spoken out on this, that our military technological superiority is at risk due to this well-coordinated 

effort by the Chinese. And a number of officials have spoken out, 

including the secretary of Defense, the director of National Intelligence, director of the CIA, the director of the NSA, commander 

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of the U.S. Cyber Command, and the chairman of the Joint Chiefs 

of Staff. 

I would like to have your clarity on this issue and understanding 

and really what you believe is necessary in reference to an update 

in reforms of CFIUS. 

Secretary MNUCHIN. Well thank you, and as you know I take my 

role very seriously there and I look forward to working with you 

and others again. I hope this is something we can definitely do on 

a bipartisan basis. There are some obvious changes we need to 

make to CFIUS. One of which is CFIUS doesn’t cover joint ventures. But as we have had the opportunity to talk about, and we 

look forward to working with you and others—there is a laundry 

list of changes that we look forward to making with you. 

Mr. PITTENGER. Thank you, sir. Reference to terrorism finance— 

which I do serve on that committee—I have some real concerns 

today regarding Qatar—I have had several meetings with the Emir 

and with the Ambassador regarding concerns that I have. I have 

yet to receive any reports of anyone that they prosecuted for terrorism finance related issues. 

They have certainly been involved in financiers, who reside there 

and work there. Hamas works there with impunity—they have 

been known to pay significant amounts of ransoms out on the market. And even the Emir said to be that in his efforts depose Assad, 

that he worked very closely and supportive with al Qaida. In that 

regard he said, I will take care of al Qaida later. I would really like 

to get your input regarding—the concerns relative to—Qatar. Have 

they been complicit, and what is the best way to work with them? 

Secretary MNUCHIN. So—we have worked very closely with them. 

I can tell you that they are cooperating with us and that they take 

this very seriously. They most recently signed a memorandum of 

understanding and making certain commitments, and we are committed to working with them and making sure that there is not terrorist financing. 

Mr. PITTENGER. Yes sir, I appreciate your diligence on that. This 

now I would like to ask you—one other matter that I am giving a 

significant amount of effort to and that is relative to the section 

314 of the Patriot Act. I would like to know your assessment of the 

current process. 

We have had a number of meetings with the major banks relative to the transfer of data, the sharing of data, between financial 

institutions, and with our government, and regarding the SAR’s reports, and what can be done to enable the financial institutions to 

have closer access to data that allow from the government—that 

allow them to really hone in on those—concerns we really have— 

apart from looking at the broad spectrum of SAR’s reports—this it 

seems to me would directly help our concerns regarding privacy 

and matters for American people and the data the financial institutions have on them. So, I would like to get your perspective on this 

particular bill and what can be done. 

Secretary MNUCHIN. Well we look forward to working with you 

on the bill. I will tell you when I was a banker and we filed SARs 

we always thought they just went into a big black hole. And wondered if anything actually happened with them, and I can assure 

you the first thing I did when I got here, is I asked that question. 

mcarroll on FSR431 with DISTILLER

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And we do use the SAR’s very effectively, but we look forward to 

working with you. 

Chairman HENSARLING. Time, the time of the gentlemen has expired. The chair recognizes now the gentlemen from Illinois, Mr. 

Foster. 

Mr. FOSTER. Thank you, Secretary Mnuchin for coming here 

today. I would like to focus on one of the sparse areas of potential 

bipartisan agreement—namely the need for forceful and effective 

national response to any future currency manipulation by our trading partners. 

As a manufacturing businessman and someone who has co-founded in our basement a company that now manufactures most of the 

theater lighting equipment in the U.S. and exports a good fraction 

of what it manufactures, I have been long concerned about the currency manipulation by foreign nations that creates an unlevel playing field favoring their domestic manufacturers. 

As you are aware, Treasury has been charged by Congress with 

making periodic reports on currency manipulation. To that end, 

Treasury has developed an objective, quantitative three part test 

which I strongly support and believe was done very well. In your 

most recent report, I believe you correctly concluded that six countries, including China, should be put on the watch list for violating 

two out of the three criteria but that, at present, no country satisfies all three criteria. 

The difficulty, of course, is that if in the future any country is 

designated a currency manipulator the only mandatory response 

could be charitably described as toothless jawboning. 

There is an alternative, which is for the United States to unilaterally declare, as a matter of national policy, that whenever any 

country is designated a currency manipulator we would engage in 

countervailing currency manipulation. 

Simply put, if one of our trading partners intervened in currency 

markets to depress the value of their currency for competitive advantage, the U.S. would engage in an equal and opposite currency 

intervention to cancel this effect. 

Dr. Fred Bergsten of the Peterson Institute has long advocated 

for the countervailing currency intervention approach as a response 

to foreign manipulation. 

He recently published a book on this with Dr. Joseph Gagnon 

with very specific proposals for this. And, while there is some authority under current law to respond in this manner against a designated currency manipulator it could obviously be strengthened 

with legislation. 

So, my question is, what specific actions are you considering 

against possible future currency manipulation if it occurs and 

would you be open to considering countervailing currency intervention or other approaches in a response? 

Secretary MNUCHIN. Well, thank you, and we look forward to 

working with you on this, and I can tell you we have recently studied this internally as it relates to NAFTA where we are going to 

be going through a renegotiation process, this is one of the issues 

we are going to look at adding into the agreement, and I think this 

sounds like— 

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Mr. FOSTER. Excuse me, but in the case of NAFTA I believe—you 

know, in North America currency intervention, manipulation has 

not been a major issue. 

Secretary MNUCHIN. I understand that, I am just saying it has 

only come up because of the legislation and us looking at what we 

use going forward in trade agreements. So we are focused, I do 

agree with you. If someone is a currency manipulator and labeled 

and determined as such, there should be an impact of what that 

means and not just talk. 

The idea that you have cited may be one of many. I surely 

wouldn’t want to be required to have to do that because the countervailing size and scale may be quite large. But we do need to 

have an impact. If someone does manipulate their currency and impacts American companies and American workers, there needs to 

be an impact and a result. 

Mr. FOSTER. Yes, well the advantage of an equal and opposite 

intervention, if they go intervene in the market and buy x dollars— 

we intervene and buy x dollars of their currency. And so, equal and 

opposite is a well defined and appropriate response to nullify this. 

Second, I would like to ask you what your reaction is to the idea 

of a permanent—permanently repealing the debt limit? You know, 

there was a very interesting Wall Street Journal editorial by a very 

prominent—Jason Fuhrman and Rohit Kumar, very prominent 

members of both parties advocating for this. 

Among other points they made was that Democrats are currently 

using the debt limit as leverage to increase spending, which is not 

normally something Republicans would be enthusiastic about. So I 

was wondering what your reaction would be and what the reaction 

of the administration would be to the idea of just saying, let’s have 

an appropriate budget process instead of arguing about whether or 

not we should pay for our meal after we have eaten it? 

Secretary MNUCHIN. Well, I think we have got to look at this and 

I agree that there should be a change going forward. We are obviously not going to address this now but we have a debt limit, we 

have a budget process and we have an appropriations process. I am 

all for—there should be very strict controls of spending money. But 

once we have agreed to spend the money, we should make sure 

that the government can pay for it. 

Mr. FOSTER. Right, so the idea of the debt limit as a mechanism 

is not something you are enthusiastic about? 

Secretary MNUCHIN. I am not. 

Mr. FOSTER. All right. Thank you. Well I look forward to working 

with you on this. 

Secretary MNUCHIN. Thank you. 

Chairman HENSARLING. Time of the gentleman has expired. The 

chair wishes to advise all members that the chair currently anticipates clearing four more members before excusing the witness at 

the agreed upon departure time at one o’clock. I anticipate clearing 

Mr. Rothfus, Mr. Delaney, Mr. Tipton and Mr. Heck at this time. 

The gentleman from Pennsylvania, Mr. Rothfus, is recognized for 

5 minutes. 

Mr. ROTHFUS. Thank you Mr. Chairman. Secretary Mnuchin 

what—over here—here you go. 

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One of my priorities is to make certain that the regulations that 

banking agencies implement are tailored to the risks that they address. An area of particular concern is the regulatory treatment of 

custody banks and I want to join my colleague from Illinois, Mr. 

Hultgren, in highlighting this issue. 

I applaud the conclusion of the Treasury report that calls for exempting cash deposits at central banks from the denominator of 

the supplementary leveraged ratio or SLR. As you know, this is 

particularly important for custody banks, due to their role as a safe 

haven for cash in times of financial market stress. My concern is 

that the unique aspects of the custody banking sector have not 

been fully considered in previous rulemakings, particularly as it relates to the SLR. 

In addition to the treasury report, Chair Yellen, Governor Powell, and Former Governor Tarullo have all recognized that the SLR 

disproportionately affects custody banks and should be revised but, 

so far, no action has been taken. 

I have introduced a bill, H.R. 2121, the Pension Endowment and 

Mutual Fund Access to Banking Act which has 14 bipartisan cosponsors, many of whom who serve on this committee, to address 

the issue. 

I say all this to emphasize the broad based chorus out there to 

address this issue, and I ask that you keep the committee informed 

of progress. 

Can you say whether we can expect action prior to the upcoming 

January 1, 2018 effective date for the SLR? 

Secretary MNUCHIN. I can’t commit whether there will be action 

or not but I can tell you it is something we are very focused on, 

and I agree with you, particularly as it relates to custody banks but 

the thought that banks could turn away cash in a financial crisis 

doesn’t seem to make sense. 

Mr. ROTHFUS. Thank you. As you are aware, a number of us on 

this committee have expressed concerns about the U.S./E.U.-covered agreement which Chairman Duffy mentioned earlier in the 

process for negotiating future covered agreements. 

Covered agreements can be a useful mechanism for achieving 

mutual equivalency with foreign jurisdictions but we need to make 

sure that we accommodate elements of the U.S. insurance system 

that help to foster a robust insurance marketplace, namely the 

State-based system of regulation. 

What are some ways that covered agreement negotiations can be 

improved and made more transparent? 

Secretary MNUCHIN. So, again, we spent a lot of time looking at 

the cover agreement. We did negotiate a side letter which we are 

comfortable with and is going to be adhered to and we look forward 

to working with you further on these issues. 

Mr. ROTHFUS. We have heard, in a number of hearings and meeting with bankers—I want to touch on the SAR—the SARs that you 

mentioned—and we have heard that term black hole before. With 

respect to SAR filing requirements, that they are more often focused on checking boxes rather than providing useful targeted data 

to FinCEN and law enforcement. They also worry that they ultimately drown out the signal with too much noise. Should the SAR 

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52 

process be reformed to make compliance easier and increase the 

value of information conveyed in reports? 

Secretary MNUCHIN. Well, I think it should be looked at. I mean 

I don’t know whether it should be reformed or it shouldn’t be, but 

it should be looked at. And again, I can assure you as you know 

it is very useful getting these reports, but it is one of the things 

that we will continue to look at. 

Mr. ROTHFUS. Thank you. My colleague Representative Moore of 

Wisconsin and I have introduced bipartisan legislation that would 

fix the unintended consequences of an SEC rule that went into effect last October that destroyed stable value money market funds 

as a source of low-cost variable-rate borrowing for businesses and 

State and local governments. 

The effect has been to limit investment options, reduce shortterm liquidity, and significantly increase the cost of business and 

infrastructure investment. Our bill, H.R. 2319, would restore stable 

funds—stable value funds, reversing many of these negative effects. 

I think this is very much in keeping with the President’s executive order on core principles for regulating the financial system. It 

would empower Americans to make independent financial decisions, prevent taxpayer-funded bailouts, promote American competitiveness both at home and abroad, and make regulation efficient, effective, and appropriately tailored. 

I understand that the treasury department will be issuing additional reports on the executive order to the President and the Congress in the coming months; I would ask that you give appropriate 

consideration to our proposal as part of those efforts. 

Secretary MNUCHIN. Will do. 

Mr. ROTHFUS. Thank you. With that, I yield to the chairman if 

he has any— 

Chairman HENSARLING. I thank the gentleman for yielding. 

Some ground that Mr. Secretary, I don’t think we have plowed yet, 

the treasury report recommends the frequency of section 165, resolution plan submissions to 2-year cycles. I think that both Federal 

Reserve Governor Powell and FDIC Chair Gruenberg have testified 

they supported it, or are at least considering a 2-year cycle. I think 

this is again, something that can be accomplished administratively. 

Is that something that you anticipate? 

Secretary MNUCHIN. It is something we are working on and 

something we think makes sense. 

Chairman HENSARLING. Well I am glad to hear that, and it certainly makes sense to a lot of us on this committee, and I would 

encourage you to do that, Mr. Secretary. 

Time of the gentleman has now expired; the chair now recognizes 

the gentleman from Maryland, Mr. Delaney. 

Mr. DELANEY. Thank you, Mr. Secretary. I want to go back to tax 

reform for minute. Obviously you are working hard I am sure, on 

comprehensive tax reform which will involve adjusting rates, adjusting deductions, hopefully doing it in a way that is pro-growth, 

more simple, and doesn’t affect negatively the long-term trajectory 

of the country. 

Let’s assume for the purposes of my question that you are ultimately not successful in getting that done, which I know you won’t 

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53 

want to acknowledge today, but for purposes of my assumption, 

let’s assume you are not. Would you then consider an approach 

whereby you pursued international-only tax reform and paired that 

with the kind of long promised infrastructure program? 

Because that approach, which I quite frankly think would in 

many ways be more beneficial to the U.S. economy than just tax 

reform by itself without any infrastructure, but that approach has 

had very significant bipartisan support in the Congress. At least 40 

members on each side of the aisle have supported a specific proposal on—I won’t ask you on the specific proposal—to do that, but 

it involves changing the international tax system, eliminating deferral, lowering the rates so that it is more competitive on a go forward basis; also lowering the rates on all the cash that is over 

there now and creating a way for that to repatriate back to the 

country. 

And as most people know, and I am sure you do, that approach 

would generate revenues for the treasury, for your department and 

what we propose to do is allocate that to pay for large-scale infrastructure program. So assuming your comprehensive tax reform is 

ultimately not successful for any of the hundred reasons people 

think it may not be successful—and we all hope it is by the way. 

Because God knows we need to do something on a bipartisan basis. 

But if it is not would you consider that approach as kind of your 

plan B? 

Secretary MNUCHIN. I wouldn’t—I mean I think that infrastructure is very important and I think we are already working on infrastructure and the ideas to come out with an infrastructure plan 

shortly. I think as you know the President is very focused on a trillion dollars of infrastructure spending between the Federal Government and the States. 

But my own opinion is putting things together only makes the 

issues more complicated, but in any event, we look forward to 

working with you on tax reform and infrastructure. 

Mr. DELANEY. So how are you thinking about paying for infrastructure in the plan that you are working on? 

Secretary MNUCHIN. Again, we have allocated infrastructure 

spending in the President’s budget as it is. I mean, at the end of 

the day—all these things have to balance, you can move the money 

around but we have to look at the cost of it in its entirety. 

Mr. DELANEY. But if you do it sequentially—which is what you 

are proposing—and tax reform—lets assume now—switching to a 

hypothetical—let’s assume tax reform is completed. It is successful— 

Secretary MNUCHIN. Thank you. I like that assumption. 

Mr. DELANEY. Are you envisioning setting aside money, to pay 

for infrastructure spending as part of that tax reform? 

Secretary MNUCHIN. Well it is— 

Mr. DELANEY. But I guess my question is, how do you propose 

to pay for it, if you don’t do it as part of tax reform? 

Secretary MNUCHIN. Well again, if we can get the economy to 3 

percent growth—there is an additional 2 trillion dollars of revenues. And that pays for a lot of things, so— 

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Mr. DELANEY. Right, but we won’t know obviously—let’s assume 

tax reform were to get done. Are you proposing to wait 5, 6, 7 years 

to see that 3 percent growth before you do infrastructure? 

Secretary MNUCHIN. No, not at all. I don’t think it will take 3— 

I don’t think it will take 5 years, and I think—we should pass infrastructure spending, which will be spent over time. 

Mr. DELANEY. So, when do you envision passing infrastructure 

spending? 

Secretary MNUCHIN. I hope that is something that we consider 

later this year. 

Mr. DELANEY. So, if your tax reform gets done and then you teeup infrastructure spending, and you have a proposal in the Congress at the end of this year, how do you propose in that specific 

proposal for infrastructure to pay for it—assuming that Congress 

is not supportive of—approving unpaid for spending. How would 

you propose to do that? 

Secretary MNUCHIN. I think it has to be paid for through growth 

that people buy into. 

Mr. DELANEY. But growth doesn’t work in the models we run 

here, right? We pay as we go. 

Secretary MNUCHIN. Yes it does. The joint taxes uses growths in 

their assumptions. 

Mr. DELANEY. Do they use growth for spending programs, or just 

tax reforming the way it is used—the current rule in the house is 

just tax reform— 

Secretary MNUCHIN. Correct. 

Mr. DELANEY. So then assuming you are operating under the 

current rules of the house which is what we operate—how would 

you pay for it, because you can’t use growth. 

Secretary MNUCHIN. Well, at the end of day you have to look at 

all these things in the context of the overall budget, I guess that 

is the answer. 

Mr. DELANEY. So if tax reform failed and there was bipartisan 

support in the Congress to do international tax and infrastructure—you would not support that? 

Secretary MNUCHIN. I—again I am not making hypothetical’s, 

again, I am happy to work with Congress and everything else. 

Again, I am hopeful we get tax reform and infrastructure both 

done. They are both incredibly important to the economy. 

Mr. DELANEY. It just feels like with your approach, you are not 

going to have any money left for infrastructure. But I yield back. 

Secretary MNUCHIN. Thank you. 

Chairman HENSARLING. The time with has gentlemen is expired, 

the chair now recognizes the gentlemen from Colorado, Mr. Tipton. 

Mr. TIPTON. Thank you Mr. Chairman, thank you secretary for 

taking the time to be able to be here. I represent rural Colorado. 

And one of the issues that we are really seeing in our State is a 

tale of two economies. 

Where our metropolitan areas are doing reasonably well—some 

of our resort areas—but as we move out into the rural areas, we 

are not seeing the recovery happening. And one of the challenges 

that we are hearing from our community banks, throughout the 

West slope of Colorado over to Pueblo, Colorado—is the ability to 

be able to make loans. 

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And one of the concerns that we have had expressed, and was 

actually addressed in the Treasury report when we were looking at 

the objectives, in terms of making sure that the interests of the 

United States are not undercut by outsourcing or regulatory requirements to the global community. Could you maybe speak a little bit in terms of what you are looking at for the community 

banks, when we were looking at some capital regimes for community banks, in regards to say, Basel III? 

How to be able to address that so our local banks can make those 

loans? 

Secretary MNUCHIN. Yes—I don’t—I am not concerned that community banks are going to be limited by Basel III. I mean, obviously Basel III hasn’t passed, and we are generally supportive of 

reaching resolutions. And a lot of Basel III is about bringing European capital standards closer to ours, so that, there is a level playing field between international banks and ours. 

But, I am—I am not overly concerned about the impact of that 

on community banks. I am more focused on our own regulatory 

issues. 

Mr. TIPTON. Great. And when we are talking about those regulatory issues, in our concerns, we just like that some of the outcomes, in rural Colorado, we are a good example of this. The lowest 

labor participation rate in decades. More small businesses that are 

shutting down than new business startups. 

And we have had testimony that has come in regularly, in regards to where banks are not able to make loans that they would 

like to be able to make. 

Secretary MNUCHIN. That is true. 

Mr. TIPTON. What do you see as a solution to that? 

Secretary MNUCHIN. Again, I firmly believe in proper regulation, 

but in many cases, particularly for community and regional banks, 

we have over-regulation, and we are addressing that. 

Mr. TIPTON. And I think that is going to be important. We had 

the opportunity to have Chair Yellen in, as well. And I am glad to 

see the focus coming out of the FSOC for those community banks. 

Simply because we have heard about the trickle down effect, the 

best practices, and how that is impacting those local communities 

and their ability to actually be able to make those loans, and to be 

able to get the economy moving at the local level. 

Would you maybe speak a little bit—we have had several questions in regards to BSA, AML, SARS reports that are going on. Do 

you see those needing to be tailored, as well, for small community 

banks? 

Secretary MNUCHIN. You know, again, I think the BSA AML 

process should be reviewed. But whatever we ultimately do, I think 

it should be the same standards on small banks as big banks, because if people are money laundering, whether they are going 

through a small bank or a big bank, there should be the same 

standards. 

Mr. TIPTON. Thank you, sir. And I would like to be able to yield 

a little bit of my time to my colleague, Mr. Williams, out of Texas. 

Mr. WILLIAMS. Thank you, Congressman. And I will just be brief. 

I am a small business owner from Texas, been in business 45 

years, family business for almost 80 years. Tax reform is a big deal 

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56 

to me, we have got to get our tax rates down. And I just want to 

say this, when I came to Congress, I heard terms I have never 

heard of before. 

One was revenue neutral, never heard that in the private sector. 

Pay fors, I never heard of in the private sector. I think that a lot 

of people are not believing in Main Street America enough. Main 

Street America is just ready to have a huge impact on this economy, if they can get regulations and burdens off of them. 

And I would just reinforce a lot of what you said, is that the economic growth that will happen with true tax reform, some of the 

things we have all been talking about, I think, is going to be unbelievable, and that is going to be your pay for. And I just want to 

reiterate the fact that I appreciate the path that you are on, and 

not be confused with terms that are not ever used in the private 

sector, that nobody had ever heard of until they got to Washington. 

So, I thank you for your service, and I appreciate you being here 

today, and I yield back. 

Secretary MNUCHIN. Thank you back. 

Mr. TIPTON. Thank you, Mr. Chairman. Unless you have an additional question, I yield back. 

Chairman HENSARLING. Quickly—Mr. Secretary, in the Treasury 

report, you indicated that the CFPB is the source of—has an unaccountable structure, unduly broad regulatory powers that have led 

to predictable regulatory abuses. Are there any changes that you 

foresee in the bureau that could happen without congressional approval at this time? 

Secretary MNUCHIN. I think that is mostly going to require congressional approval. 

Chairman HENSARLING. Time of the gentleman has just expired. 

The chair now recognizes the gentleman from Washington, Mr. 

Heck, for 5 minutes. 

Mr. HECK. Thank you, Mr. Chairman. Mr. Secretary, thanks for 

being here. My colleague from North Carolina, Mr. Pittenger, mentioned the Committee on Foreign Investment in the U.S., CFIUS 

as we call it. I have also read the Department of Defense report 

that he alluded to, which discusses how our strategic competitors 

are seeking to access critical resources in technology. And with the 

chair’s permission, I would like to enter it into the record, if I may? 

Chairman HENSARLING. Without objection. 

Mr. HECK. As is common with government reports, Mr. Secretary, the authors evaluate a no-action alternative, or what happens if we do nothing, but they note the cost of doing nothing is 

extraordinarily high—citing estimates of $300 billion in intellectual 

property stolen every year and $300 billion in sales to U.S. companies lost as a result of IP theft, economic activity that could have 

supported approximately 2.1 million jobs every single year. 

So, Mr. Secretary, here are my questions. Do you think we can 

afford to do nothing? 

Secretary MNUCHIN. No. 

Mr. HECK. Will you, and your staff, commit to work with Congressman Pittenger and myself, and other Members of Congress 

who share an interest in this issue, to act on the recommendations 

of the DOD report? 

Secretary MNUCHIN. Yes. 

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Mr. HECK. Do you agree with us and our strongly held belief that 

this issue is pressing? 

Secretary MNUCHIN. Yes. 

Mr. HECK. I understand that there have already been some proposals shared between our staffs and yours. If we keep at this 

through the recess, do you believe that we can have a bill ready 

that you can support before Congress comes back in September? 

Secretary MNUCHIN. That sounds aggressive by congressional 

time, so I want to be careful not to go out on a limb on that, but 

we will be fully available, we are not going away. 

Mr. HECK. It is not a question of Congress being aggressive, it 

is a question of the Department of Treasury being aggressive— 

Secretary MNUCHIN. We are happy to work with you and others, 

we have given our views on various proposals. 

Mr. HECK. Thank you, sir. Last, I would like to associate myself 

with the remarks of my friend from Colorado, Mr. Perlmutter, with 

respect to the regulatory framework for access to banking services 

in States that have legally allowed marijuana consumption. My 

State is also one of those. And if there is anything that you take 

away from today’s hearing, I hope you will write this down—this 

name, down thank you, sir. 

Secretary MNUCHIN. Let me get a pen. 

Mr. HECK. Travis Mason. Mr. Secretary, Travis Mason was a 23 

year old Marine veteran, served his country honorably. He was a 

husband and a father of three small children, set of twins in there. 

He was studying to be a law enforcment officer and helping pay his 

way through that, by acting as a security guard at a marijuana retail establishment in Colorado. 

Criminals entered the establishment, understandably concluding 

that it was all cash because of our broken regulatory framework, 

and Travis Mason lost his life that day and left his wife a widow, 

and his three children without a father. That is on us, there was 

no need for that. 

The regulatory framework has failed. This is first and foremost 

a public safety issue and Travis Mason is exhibit A in that regard. 

We are not going to turn back the clock, despite what some people 

may be saying. Despite what trial balloons some people are floating 

with respect to the legalization of marijuana. First medical use, 

then adult recreational use, also the use of oils for other kinds of 

medical ailments. It has been an unrelenting march forward, from 

the standpoint of the liberalization of laws. We are not going back. 

What we need is your help, sir, to make sure that there isn’t another Travis Mason. 

The Cole memorandum, first from DOJ, and the FinCEN parallel 

memorandum, sets forth critical fundamental principles here, that 

we proceed, if and only if, we do not provide access to minors, and 

that we do not allow cash to get into the hands of gangs and cartels, and then several other conditions, but those first and foremost. 

That is what we do in States—like mine, Washington State, 

where we have a well-regulated marijuana market. It is the safest 

thing to do, to enable those businesses where now hundreds of millions—hundreds of millions of dollars, in my State alone, have been 

invested in these businesses. We need your help, sir. We ask for 

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your help. Travis Mason. With that I yield back my time, Mr. 

Chair. 

Chairman HENSARLING. Gentleman yields back. I wish to thank 

the Secretary for his testimony today. Without objection, all members will have 5 legislative days, within which to submit additional 

written questions for the witness to the chair, which will be forwarded to the witness for his response. I ask that our witness 

would please respond as promptly as you are able. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

This hearing stands adjourned. 

[Whereupon, at 1:02 p.m., the committee was adjourned.] 

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mcarroll on FSR431 with DISTILLERInsert offset folio 117 here 29455.117
177 


mcarroll on FSR431 with DISTILLERInsert offset folio 118 here 29455.118
178 


mcarroll on FSR431 with DISTILLERInsert offset folio 119 here 29455.119
179 


mcarroll on FSR431 with DISTILLERInsert offset folio 120 here 29455.120
180 


mcarroll on FSR431 with DISTILLERInsert offset folio 121 here 29455.121
181 


mcarroll on FSR431 with DISTILLERInsert offset folio 122 here 29455.122
182 


mcarroll on FSR431 with DISTILLERInsert offset folio 123 here 29455.123
183 


mcarroll on FSR431 with DISTILLERInsert offset folio 124 here 29455.124
184 


mcarroll on FSR431 with DISTILLERInsert offset folio 125 here 29455.125
185 


mcarroll on FSR431 with DISTILLERInsert offset folio 126 here 29455.126
186 


mcarroll on FSR431 with DISTILLERInsert offset folio 127 here 29455.127
187 


mcarroll on FSR431 with DISTILLERInsert offset folio 128 here 29455.128
188 


mcarroll on FSR431 with DISTILLERInsert offset folio 129 here 29455.129
189 


mcarroll on FSR431 with DISTILLERInsert offset folio 130 here 29455.130
190 


mcarroll on FSR431 with DISTILLERInsert offset folio 131 here 29455.131
191 


mcarroll on FSR431 with DISTILLERInsert offset folio 132 here 29455.132
192 


mcarroll on FSR431 with DISTILLERInsert offset folio 133 here 29455.133
193 


mcarroll on FSR431 with DISTILLERInsert offset folio 134 here 29455.134
194 


mcarroll on FSR431 with DISTILLERInsert offset folio 135 here 29455.135
195 


mcarroll on FSR431 with DISTILLERInsert offset folio 136 here 29455.136
196 


mcarroll on FSR431 with DISTILLERInsert offset folio 137 here 29455.137
197 


mcarroll on FSR431 with DISTILLERInsert offset folio 138 here 29455.138
198 


mcarroll on FSR431 with DISTILLERInsert offset folio 139 here 29455.139
199 


mcarroll on FSR431 with DISTILLERInsert offset folio 140 here 29455.140
200 


mcarroll on FSR431 with DISTILLERInsert offset folio 141 here 29455.141
201 


mcarroll on FSR431 with DISTILLERInsert offset folio 142 here 29455.142
202 


mcarroll on FSR431 with DISTILLERInsert offset folio 143 here 29455.143
203 


mcarroll on FSR431 with DISTILLERInsert offset folio 144 here 29455.144
204 


mcarroll on FSR431 with DISTILLERInsert offset folio 145 here 29455.145
205 


mcarroll on FSR431 with DISTILLERInsert offset folio 146 here 29455.146
206 


mcarroll on FSR431 with DISTILLERInsert offset folio 147 here 29455.147
207 


mcarroll on FSR431 with DISTILLERInsert offset folio 148 here 29455.148
208 


mcarroll on FSR431 with DISTILLERInsert offset folio 149 here 29455.149
209 


mcarroll on FSR431 with DISTILLERInsert offset folio 150 here 29455.150
210 


mcarroll on FSR431 with DISTILLERInsert offset folio 151 here 29455.151
211 


mcarroll on FSR431 with DISTILLERInsert offset folio 152 here 29455.152
212 


mcarroll on FSR431 with DISTILLERInsert offset folio 153 here 29455.153
213 


mcarroll on FSR431 with DISTILLERInsert offset folio 154 here 29455.154
214 


mcarroll on FSR431 with DISTILLERInsert offset folio 155 here 29455.155
215 


mcarroll on FSR431 with DISTILLERInsert offset folio 156 here 29455.156
216 


mcarroll on FSR431 with DISTILLERInsert offset folio 157 here 29455.157
217 


mcarroll on FSR431 with DISTILLERInsert offset folio 158 here 29455.158
218 


mcarroll on FSR431 with DISTILLERInsert offset folio 159 here 29455.159
219 


mcarroll on FSR431 with DISTILLERInsert offset folio 160 here 29455.160
220 


mcarroll on FSR431 with DISTILLERInsert offset folio 161 here 29455.161
221 


mcarroll on FSR431 with DISTILLERInsert offset folio 162 here 29455.162
222 


mcarroll on FSR431 with DISTILLERInsert offset folio 163 here 29455.163
223 


mcarroll on FSR431 with DISTILLERInsert offset folio 164 here 29455.164
224 


mcarroll on FSR431 with DISTILLERInsert offset folio 165 here 29455.165
225 


mcarroll on FSR431 with DISTILLERInsert offset folio 166 here 29455.166
226 


mcarroll on FSR431 with DISTILLERInsert offset folio 167 here 29455.167
227 


mcarroll on FSR431 with DISTILLERInsert offset folio 168 here 29455.168
228 


mcarroll on FSR431 with DISTILLERInsert offset folio 169 here 29455.169
229 


mcarroll on FSR431 with DISTILLERInsert offset folio 170 here 29455.170
230 


mcarroll on FSR431 with DISTILLERInsert offset folio 171 here 29455.171
231 


mcarroll on FSR431 with DISTILLERInsert offset folio 172 here 29455.172
232 


mcarroll on FSR431 with DISTILLERInsert offset folio 173 here 29455.173