U.S. GOVERNMENT PUBLISHING OFFICE

31–345 PDF WASHINGTON : 2018

THE ANNUAL REPORT OF THE FINANCIAL 

STABILITY OVERSIGHT COUNCIL 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

FEBRUARY 6, 2018 

Printed for the use of the Committee on Financial Services 

Serial No. 115–72 

( 

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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 

SHANNON MCGAHN, Staff Director 

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C O N T E N T S 

Page 

Hearing held on: 

February 6, 2018 .............................................................................................. 1 

Appendix: 

February 6, 2018 .............................................................................................. 55 

WITNESSES 

TUESDAY, FEBRUARY 6, 2018 

Mnuchin, Hon. Steven T., Secretary, U.S. Department of the Treasury ............ 5 

APPENDIX 

Prepared statements: 

Mnuchin, Hon. Steven T. ................................................................................. 56 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Mnuchin, Hon. Steven T.: 

Written responses to questions for the record submitted by Representatives Beatty, Budd, Loudermilk, Pittenger, Sherman, and Waters .......... 60 

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THE ANNUAL REPORT OF THE FINANCIAL 

STABILITY OVERSIGHT COUNCIL 

Tuesday, February 6, 2018 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 10:05 a.m., in room 

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

Present: Representatives Hensarling, Royce, Lucas, Posey, 

Luetkemeyer, Huizenga, Duffy, Stivers, Hultgren, Ross, Pittenger, 

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

Emmer, Zeldin, Trott, Loudermilk, Mooney, MacArthur, Davidson, 

Budd, Kustoff, Tenney, Hollingsworth, Waters, Maloney, Velazquez, Sherman, Meeks, Capuano, Lynch, Scott, Green, Cleaver, 

Moore, Ellison, Perlmutter, Himes, Foster, Kildee, Delaney, 

Sinema, Beatty, Heck, Vargas, Gottheimer, Crist, 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. All members will have 5 legislative 

days within which to submit extraneous materials to the Chair for 

inclusion in the record. 

This hearing is for the purpose of receiving the Secretary of 

Treasury’s annual report on the Financial Stability Oversight 

Council. I now recognize myself for 3–1/2 minutes to give an opening statement. 

Mr. Secretary, this is your first appearance before the House 

after the Tax Cuts and Jobs Act has been signed into law. I want 

to let you know, on behalf of the majority, how grateful we are to 

you and to the President for your leadership and for helping make 

this act signed into law. It is truly, truly historic. 

After 8 years of failed economic policies that led to the slowest, 

weakest recovery in the modern era, the economy is starting to 

take off and wages are finally growing again. Consumer optimism 

abounds. So how ironic but totally predictable that equity markets 

will now swoon over the prospects of higher interest rates and possible inflation associated with a breakout of economic growth. Artificially low interest rates may have benefited some on Wall Street, 

but they haven’t been particularly helpful to Main Street. 

We have always known that the Fed would face significant challenges in unwinding its balance sheet when the economy took off. 

If you are listening, good luck, Chairman Powell, you volunteered 

for the job. 

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But, today, the underlying economy is strong and getting stronger due to the policies of the Trump Administration. Averaging 3 

percent growth again, unemployment remains at a 17-year low. 

Wages just grew at 2.9 percent, the fastest in almost a decade. Two 

million Americans have gone back to work. All of this in President 

Trump’s first year in office, and we are just now on the leading 

edge of the Tax Cuts and Jobs Act. 

Let us take a look at the impact on the financial services industry alone. JPMorgan Chase recently announced it would be making 

a $20 billion, 5-year investment across its business lines. In addition to increasing wages for their employees, they plan to boost 

small business lending by nearly 20 percent. In my hometown of 

Dallas, Comerica announced it is boosting its minimum wage to 

$15 and giving a $1,000 bonus to 4,500 employees. Nationwide is 

giving its employees a $1,000 bonus and increasing its 401(k) 

match. Visa is also increasing its 401(k) eligibility in contributions 

as well. BB&T is raising its minimum wage from $12 to $15 an 

hour and giving its employees a one-time bonus of $1,200. Hardly 

crumbs. 

And these are just a few of the financial services companies that 

have announced benefits due to the Tax Cuts and Jobs Act. 

Again, Mr. Secretary, thank you. And thank you to the President. 

Unfortunately, tax reform alone will not unleash our Nation’s full 

economic potential. Why? Because, for the last 8 years, our economy has been drowning in a sea of complex, onerous, expensive, 

and job-crushing Washington red tape. Fortunately, the Trump Administration has aggressively cut needless red tape like few others, 

but much work remains, including at the Financial Stability Oversight Council. 

FSOC can clearly serve a vital function in promoting financial 

stability by monitoring market developments, facilitating information sharing across regulatory silos, and making policy recommendations to Congress to mitigate risk. 

Unfortunately, FSOC has proven it can also harm our economy 

through its designation of SIFIs (systemically important financial 

institutions). Under the last Administration, FSOC simply eviscerated GE Capital, one of America’s great companies, one that had 

capitalized millions of small and midsize companies, from local 

bakeries to furniture stores. It is just gone. In a dangerous, unlawful, and misguided effort, it attempted to designate MetLife a SIFI, 

an insurance company. Fortunately, the decision was found to be 

arbitrary and capricious, and overturned. 

Mr. Secretary, I am encouraged by much of what I read in 

FSOC’s annual report. Under the new leadership of a new Administration, I look forward to hearing more about it. 

I now recognize the Ranking Member for 4 minutes for an opening statement. 

Ms. WATERS. Thank you, Mr. Chairman. 

And welcome back, Secretary Mnuchin. I am looking forward to 

your testimony today on the annual report of the Financial Stability Oversight Council, or FSOC. 

I am very concerned that the Trump Administration seems to be 

determined to remove all nonbank systemically important financial 

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institutions from FSOC supervision regardless of what threats 

those institutions may pose to our economy. 

As we all know, one such financial institution, AIG, nearly 

brought down the economy in 2008 and had to be bailed out to the 

tune of $182 billion. FSOC plays a key role in ensuring the continuing stability of the United States economy. And it must not be 

weakened or sidelined from dealing with threats posed by risky financial institutions. 

In addition to testimony on FSOC, it is also important today that 

the Secretary address several outstanding inquiries on vital matters with national security implications. 

Mr. Chairman, as a general matter, Secretary Mnuchin’s handling of inquiries from committee Democrats has been completely 

unacceptable. As you know, serious questions have been raised 

about the finances of President Trump, his family members, and 

his associates, and their involvement with Russian government officials and oligarchs. 

As a Ranking Member of the committee with jurisdiction over 

the Treasury Department Financial Crimes Enforcement Network, 

that is FinCEN, I and other Democrats on the committee have requested information from the Secretary on these matters several 

times. 

At the Secretary’s last appearance before this committee, I asked 

about a letter that we had written to him regarding President 

Trump’s financial ties to Russia, as well as those of his family 

members and associates. Secretary Mnuchin did not answer the 

letter, and he was not forthcoming in his testimony. 

Since then, we have seen the Secretary—we have sent the Secretary two additional follow-up letters pertaining to the finances of 

President Trump, his family members, and his associates, as well 

as his own handling of law enforcement and regulatory matters 

that may involve those individuals. 

The reply that my Democratic colleagues and I received from 

Secretary Mnuchin’s staff just a few days ago did not provide answers to our inquiries and, instead, encouraged us to go and get 

the information we requested from other committees with which 

the Treasury had provided documents. 

Despite the fact that the Financial Services Committee has clear 

jurisdiction over these matters, the Secretary seems to think that 

referring us to other committees is a satisfactory answer to our 

questions. It is not. 

Relatedly, I am also very concerned about the Trump Administration’s inaction on the sanctions passed with broad bipartisan 

support by Congress in 2017 to punish Russia by interfering in our 

democracy. 

The Trump Administration has now missed several deadlines related to those sanctions, which is unacceptable. Trump’s inaction in 

these areas serves to advance the interest of Putin, the Kremlin, 

and Russian oligarchs to the detriment of the American people. My 

January 31st letter to Secretary Mnuchin and Secretary Tillerson 

on this matter has gone unanswered as of yet. 

Since Secretary Mnuchin is here today, it is my sincere hope that 

he will provide answers to the questions we have on all of these 

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matters. And so, with that, Mr. Chairman, I will yield back the balance of my time. 

Chairman HENSARLING. The Chair now recognizes the gentlemen 

from Missouri, Mr. Luetkemeyer, the Chairman of the Financial 

Institutions Subcommittee, for 45 seconds. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

And thank you, Mr. Secretary, for being here today. 

In the last year, we have made significant progress on tax and 

regulatory reform. However, we must continue to improve the efficiency of the regulatory regime that has left too many consumers 

and small businesses sitting on the credit sidelines. I am a firm believer in meaningful regulation. At the same time, regulation needs 

to be responsible and tailored. 

With regards to risk, for too many years, we have dealt with a 

Federal Government that tried to purge all risk from the system. 

I remain unconvinced that the result of those actions has done very 

much at all to promote financial stability. 

With regards to FSOC, Mr. Secretary, I urge you to use your authority to re-regulate and promote financial stability through analytical, not arbitrary, processes. FSOC needs to become a more 

thoughtful body. I look forward to your testimony. 

Mr. Chairman, with that, I yield back. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from Michigan, Mr. Kildee, the Vice Ranking Member, for 1 minute. 

Mr. KILDEE. Thank you, Chairman Hensarling and Ranking 

Member Waters. 

And, Secretary Mnuchin, I appreciate you being here. 

We haven’t met. My hometown is Flint, Michigan. And what happened in Flint is an example of what happens when we fail as a 

society to invest in older industrial cities, those towns that are 

struggling to make that transition to the next economy. The water 

crisis in Flint is a tragedy that is, sadly, still ongoing. 

It should be a wake-up call for every American, a wake-up call 

about what happens when we put balance sheets ahead of the interests of people. Yet this Administration, and your Department as 

well, recently have attempted to justify changes in our Tax Code 

that by implication will hurt many of these communities. 

The Republican-passed tax bill, while certainly there are winners 

and losers—and we could litigate that for the entirety of this hearing—one thing we know for sure is that the changes in the Tax 

Code are already being used by the Administration and by this 

Congress to justify cuts to programs that are necessary to the revitalization of these already struggling places. That is not acceptable. 

And there is no way to justify that. 

What we need in this country is a plan to reinvest and reinvigorate those places. People live there. And the implications cannot be 

overlooked. We can’t just focus on the people at the top who are 

winning without recognizing there are people who will suffer as a 

result. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Michigan Mr. 

Huizenga, the Chairman of the Capital Markets Subcommittee, for 

45 seconds. 

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Mr. HUIZENGA. Last week, my fellow Michigander Zack Booker 

was my guest to the State of the Union Address. And Zack is a 

fourth-generation barber, as well as starting and owning a number 

of various small businesses across my district in west Michigan. 

Zack describes himself as young but hungry for success, and continues to strive for growth. And he has said, because of this Tax 

Cuts and Jobs Act, that he is actually, quote, saying: ‘‘Our goals 

can be extended. I am increasing wages. I am trying to hire more 

people. I am trying to broaden our reach to serve more customers. 

We are trying to add more locations. We are trying to buy buildings 

instead of rent buildings.’’ 

Zack’s is a common story. This bill is not just about providing 

crumbs to the American people. It is helping young entrepreneurs 

like Zack grow our economy and achieve the American Dream. So 

we as Congress know that we must work hard to do more to make 

sure that hardworking families in west Michigan and across the 

Nation have the opportunity to save and invest and have a better 

future, like my friend Zack. And Zack also knows, Mr. Secretary, 

that what is happening on Wall Street is a technical correction hitting Wall Street, not a fundamentals correction that is hitting 

Main Street. Far too long we have been ignoring Main Street, and 

it is time that we turn that around. 

So I appreciate you being here today, and I look forward to supporting these young entrepreneurs like Zack. Thanks. 

Chairman HENSARLING. The time of the gentleman has expired. 

Today, we welcome the testimony of the Honorable Steven 

Mnuchin, United States Secretary of Treasury. 

Secretary Mnuchin has previously testified before our committee, 

so I believe he needs no further introduction. 

Without objection, the witness’s written statement will be made 

part of the record. 

The Chair wishes to inform members that, regrettably, we do expect a vote series to interfere with our hearing, midmorning, but 

the Secretary has agreed to stay until 1:30, the customary 3 hours 

for a Secretary. 

Secretary Mnuchin, you are now recognized for 5 minutes to give 

an oral presentation of your testimony. Welcome. 

STATEMENT OF THE HONORABLE STEVEN T. MNUCHIN 

Secretary MNUCHIN. Thank you very much. And it is a pleasure 

to be here. 

Chairman Hensarling, Ranking Member Waters, and members of 

the committee, thank you for inviting me today. 

One of my top priorities as Treasury Secretary is sustained economic growth for the American people. So I am happy to report 

that the growth of the economy over the past year was higher than 

the average of over the prior 20 years and included 2 straight quarters of 3 percent or higher GDP. The President promised robust 

growth, and he is delivering on that promise. 

I am here today to talk about the Financial Stability Oversight 

Council’s 2017 annual report. This is an important vehicle for providing Congress and the public with the Council’s assessment and 

recommendations relating to regulatory developments and potential 

risks in the financial system. The report emphasizes the impornshattuck on FSR297 with DISTILLER

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tance of economic growth to maintaining a resilient financial system. 

Since the financial crisis, we have had time to assess the effectiveness of regulatory reforms and consider their unintended consequences. The report recommends that the Council member agencies address regulatory overlap and duplication, modernize outdated regulations, and tailor regulations based upon the size and 

complexity of financial institutions. The report also discusses a 

number of risks that the Council is monitoring. One that I would 

like to emphasize today is cybersecurity. 

The financial system’s heavy and increasing reliance on technology increases the risk that significant cybersecurity incidents 

could disrupt the financial sector and potentially impact U.S. financial stability. Substantial gains have been made, but I want to emphasize the need for sustained attention to these risks. 

The report makes a number of recommendations, including the 

creation of a private sector council of senior executives in the financial sector to collaborate with regulators in order to mitigate 

cybersecurity risks. 

Turning to our growth policies, the Tax Cut and Jobs Act passed 

last year was our top priority, and this overhaul of the Tax Code 

is already having a positive impact. Because of tax reform, over 3 

million Americans have received special bonuses or other benefits 

and over 300 companies have announced investments in their work 

forces. Companies are announcing higher wages and increased benefits, as well as greater spending on employee training, infrastructure, and research and development. These investments will lead 

to long-term prosperity, as well as companies to bring back cash 

from overseas. Our economy will continue to grow. 

Let me now turn to some specific priorities. I want to commend 

both the House and Congress for their work on financial regulatory 

reform. 

I appreciate the work of this committee and the House of Representatives to advance the cause of reform by passing H.R. 10, the 

Financial Choice Act, and dozens of strongly bipartisan bills. This 

legislation reflects many of Treasury’s recommendations from our 

executive order reports released last year. I encourage the Senate 

and House to work together to move this legislation as quickly as 

possible. 

Last week, I wrote to Congress providing notification of my determination that a debt issuance suspension period would last until 

February 28th. I respectfully urge Congress to act as soon as possible to protect the full faith and credit of the United States by increasing the statutory debt limit as soon as possible. 

The House and Senate have been working toward modernization 

of the Committee on Foreign Investment in the United States, 

CFIUS. I support the Foreign Investment Risk Review Modernization Act, FIRRMA, and applaud Senators Cornyn, Feinstein, and 

Burr and Representatives Pittenger and Heck for their leadership 

on this issue. A modernized CFIUS will enable us to protect our 

national security. I look forward to working with Congress and the 

relevant committees to advance FIRRMA. 

One of Treasury’s core missions is to safeguard the Nation by 

using powerful economic tools. We will continue to take frequent 

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and ongoing actions to combat threats from malicious actors. These 

include terrorist groups, proliferators of weapons of mass destruction, human rights abusers, cybercriminals, and rogue regimes like 

North Korea, Iran, and Venezuela. 

We continue to review intelligence to identify targets with maximum impact, deny them access to the U.S. and international financial system, disrupt their revenue streams, and ultimately pressure for a change in behavior. 

As you are aware, last week, the Treasury Department submitted a series of reports in compliance with sanctions legislation. 

These reports represent another chapter in our efforts to use our 

economic authorities to counter the threats that we face. 

On housing finance, the current situation of indefinite conservatorship for Fannie Mae and Freddie Mac is neither a sustainable nor a lasting solution. The Administration looks forward to 

working with Congress to reform America’s housing finance system 

in a manner that helps consumers obtain the best housing suited 

for their own personal and financial situation, while at the same 

time protecting taxpayers. 

I am proud of what we accomplished so far, and there is more 

to do. Our country’s potential is enormous, which is why Americans 

expect their Government to enact policies that allow them to succeed and prosper. Treasury’s collaboration with Congress is vital to 

that mission, and we look forward to working with you every day 

to make it a reality. 

Thank you, and I look forward to answering your questions. 

[The prepared statement of Secretary Mnuchin can be found on 

page 56 of the Appendix] 

Chairman HENSARLING. Thank you, Mr. Secretary. 

The Chair now yields to himself for 5 minutes. 

Mr. Secretary, on her way out the door, Chair Yellen said that 

equity values are, quote-unquote, ‘‘quite high’’ and that, quote-unquote, ‘‘there are potential dangers there.’’ I don’t disagree with 

her. I just thought it was a little curious that a Fed Chair on her 

way out of the door would say such things. But economists, as you 

well know, have been predicting that, once the economy took off, 

that there would be immense pressures on equity markets. 

Clearly markets have been roiled. We know that, fortunately, 

markets are still up over 20 percent in the Administration. But we 

have had huge volatility over the last few days. Could you give us 

your view on what is going on here? 

Secretary MNUCHIN. Sure. Mr. Chairman, thank you very much 

for that question. 

First, I would say we are very focused on the long-term economic 

growth, and we believe that the policies that we have enacted, including tax reform, are very positive for long-term economic 

growth. We are already beginning to see that in terms of corporate 

investments back into the United States and the impact on corporate earnings. 

I think, as you said, the stock market is up significantly, over 30 

percent since President Trump was elected. We are monitoring the 

stock markets. They are functioning very well, and we continue to 

believe in the long-term impact of the stock market. So thank you. 

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Chairman HENSARLING. Mr. Secretary, on page 6 of the FSOC report, you call on Congress to create a more, quote, ‘‘sustainable 

housing finance system,’’ unquote, for the sake of, quote, ‘‘financial 

stability.’’ We know it has been 10 years since the financial crisis, 

and regrettably, Congress has failed to act. 

If we once again fail to act—and some of us are trying to work 

on bipartisan housing finance reform—but if we fail to act, isn’t it 

true that, roughly a year from now, the President gets to appoint 

a new FHFA (Federal Housing Finance Agency) Director who will 

serve for a 5-year term? Is that correct? 

Secretary MNUCHIN. That is correct. 

Chairman HENSARLING. And isn’t it true that the FHFA Director 

is not just the regulator of the GSEs but also the conservator? Isn’t 

that correct, Mr. Secretary? 

Secretary MNUCHIN. That is correct. 

Chairman HENSARLING. And isn’t it true that, as conservator, the 

FHFA Director has broad sweeping powers? For example, I believe, 

is it not true that if Congress fails to act, the FHFA Director could 

discontinue the GSEs’ (government-sponsored enterprise’s) HARP, 

or Home Affordable Refinance Program, isn’t that true, Mr. Secretary? 

Secretary MNUCHIN. That is correct, Mr. Chairman. 

Chairman HENSARLING. And isn’t it also true that the FHFA Director could suspend all GSE contributions to the housing trust 

fund if they found that they would, quote, ‘‘contribute to the financial instability of Fannie and Freddie’’? Isn’t that true? 

Secretary MNUCHIN. That is correct. 

Chairman HENSARLING. Isn’t it also true, Mr. Secretary, that, 

under 12 U.S.C. 4566, that the FHFA Director can essentially 

choose not to enforce the statutory housing goals of the GSEs if he 

finds that, quote, ‘‘the achievement of the housing goal was or is 

not feasible’’? Isn’t that correct, Mr. Secretary? 

Secretary MNUCHIN. That is correct. 

Chairman HENSARLING. I would hope that all within earshot 

have listened carefully at what might happen if we choose not to 

engage in GSE reform. And, again, we look forward to working 

with you, Mr. Secretary, with the Administration, with my friends 

on the other side of the aisle in hopes that we can find America 

a truly, truly sustainable housing finance system, one that helps 

put people into homes they can actually afford to keep. 

Different question, Mr. Secretary, to date, FSOC has designated 

four nonbank financial companies as SIFIs, but today only Prudential remains designated. As you know, under statute, FSOC is required to reevaluate these designations at least annually. 

Can you tell me the last time Prudential’s designation was last 

reevaluated? 

Secretary MNUCHIN. I believe it will be coming up, but it has not 

been evaluated recently. 

Chairman HENSARLING. Is there a specific timeframe for its reevaluation, Mr. Secretary? 

Secretary MNUCHIN. My expectation is it will be in the near future, this year. 

Chairman HENSARLING. OK. We know that a couple of weeks 

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peal of the MetLife litigation, so essentially they have been 

dedesignated. 

We know that an Article III court found the designation process 

of MetLife to be, quote-unquote, ‘‘fatally flawed.’’ But wasn’t it the 

same fatally flawed process that led to Prudential’s designation? 

Secretary MNUCHIN. Mr. Chairman, I am not going to make the 

comment on Prudential, but I will make the comment on MetLife. 

As you have said, the majority of the members of FSOC recommended to the Justice Department to drop the case, and we will 

be working with the committee on revised guidelines for designations. 

Chairman HENSARLING. I have read where those revised guidelines, I think, will include a cost-benefit analysis to the economy 

and its impact on jobs. I look forward to that. My time has expired. 

The Chair now recognizes the Ranking Member for 5 minutes. 

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

clause d(4) of committee rule 3, I request recognition to question 

the witness for an additional 5 minutes upon the conclusion of the 

time allotted to me under the 5-minute rule. 

Chairman HENSARLING. The Ranking Member is recognized for 

10 minutes. 

Ms. WATERS. Thank you very much. 

I would first like to ask about the subject of my most recent letter, which is your Department’s role in section 231 of the Countering America’s Adversaries Through Sanctions Act. Congress 

passed this law on a broadly bipartisan basis with the clear objective of punishing Russia for its brazen attack on our democracy. 

Mr. Secretary, do you believe our intelligence agencies, as they 

have said to us, that Russia did hack into our DNC and undermined our democracy? Do you believe that to be true? 

Secretary MNUCHIN. Again, I will broadly say, I do believe in the 

intelligence assessment. 

I want to refrain from comments specific that are classified. 

Ms. WATERS. Thank you. 

Secretary MNUCHIN. But, yes, I broadly believe in the assessments. 

Ms. WATERS. Even the findings section of the law explicitly references the intelligence community’s finding that Russian President Vladimir Putin ordered an influence campaign in 2016 aimed 

at the United States Presidential election. 

The findings also recognize the intelligence community’s warning 

that Moscow will apply lessons learned from its Putin-ordered campaign aimed at the U.S. Presidential election to future influence efforts worldwide, including against U.S. allies and their election 

processes. 

Do you believe that to be true? 

Secretary MNUCHIN. I have no reason not to believe it to be true. 

Ms. WATERS. So, given the importance of the law’s very purpose, 

I am wondering why this Administration continues to let key deadlines in the act come and go without taking any action to implement the act and punish Russia for its crimes against the American people. 

Now, one provision of the law, which the Administration has ignored, is section 231 of the act. This section requires that the 

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President sanction persons he has determined to have engaged in 

a significant transaction with Russia’s defense and intelligence sectors on and after January 29, 2018. As you know, the law also allows the President to waive or delay these sanctions. 

However, to date, this committee has received no indication that 

any sanctions have been imposed, waived, or delayed. And, last 

week, when you testified before the Senate Banking Committee, 

you stated that you did not waive or delay sanctions. 

Section 231 of CAATSA (Countering America’s Adversaries 

Through Sanctions Act) is clear, that the President has 6 months 

from a date of enactment to determine which persons are engaged 

in sanctions with the Russian defense and intelligence sectors. 

After 6 months, the President must impose sanctions on such persons or waive or delay imposition of the sanctions. 

Yet, despite the fact that the deadline for action has come and 

gone, no sanctions have been imposed, waived, or delayed pursuant 

to section 231. How can you explain this? 

Secretary MNUCHIN. The section that I believe you are referring 

to has been delegated to the State Department. So I can’t comment 

for Secretary Tillerson on that. I can comment on the portion that 

we were responsible for, which was the oligarch report, that we did 

deliver on time. And as I testified in the Senate, there will be sanctions coming out of that report. And, again, I want to commend the 

work that was done on the Intelligence Committee on the classified 

version. 

Ms. WATERS. Who is responsible for delegating what was passed 

by an overwhelming majority of this House to the State Department? 

Secretary MNUCHIN. The President was. 

Ms. WATERS. So the President decided that, despite the fact that 

in the law that we passed, delegated responsibility to Treasury, 

that he decided that he wanted it to be delegated to the State Department, rather than the Treasury, and this is your excuse for not 

having implemented the law. Is that correct? 

Secretary MNUCHIN. No, it is not my excuse. And, again, I believe, but we would be happy to sit down with you and go through 

the details of this, the President had the authority to delegate 

within that, as he chose fit, again, the portion that you are referring to was delegated to the State Department. The other portion 

was delegated to us. 

Ms. WATERS. But the final conclusion is that nothing has been 

done. There has been no waiver. There has been no delay. There 

has not been anything that has been done. You did not waive or 

delay sanctions. That is the conclusion, whether we are talking 

about Treasury or the State Department. Is that correct? Nothing 

has been done on sanctions? 

Secretary MNUCHIN. Again, there has been, on our side, there 

has been an enormous amount of work done. I want to commend 

the intel community. And there will be sanctions that come out as 

part of that. I can’t comment on the State Department’s part of the 

package. 

Ms. WATERS. Would you describe the enormous amount of work 

that the Treasury Department has done that you just alluded to? 

What have you done? 

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11 

Secretary MNUCHIN. Again, I would encourage you to look at the 

classified report. It is incredibly extensive. It is a work product of 

the intel and the Treasury, and that work product is now being 

used for the basis of developing sanctions. 

Ms. WATERS. Are you telling me that, in your response to the 

overwhelming majority of this Congress, having created law to impose sanctions on Russia that undermined our democracy, that 

your response is classified? Is that what you are telling me? 

Secretary MNUCHIN. Again, what I have said is part of the report 

was unclassified; part of the report was classified. 

I assure you that, as it relates to the work being done at Treasury, there will be sanctions. And, again, there is a lot of ongoing 

work that is being done to develop those sanctions, and we complied with the law on time. 

Ms. WATERS. The Congress of the United States does not know 

what you are doing. The Congress of the United States does not expect that your response to the public policy that was developed by 

us be somehow responded to in a classified way. 

Is there anything that you can tell us that you have done? 

Secretary MNUCHIN. Well, again, the law called for both a classified portion of the report and an unclassified. 

Given that the majority of the work was developed on a classified 

basis, we classified the report. I would encourage you and other 

members to look at it. It is an extensive amount of work. Again, 

that the first phase was to develop the report and deliver it, which 

we did on time, and now we are developing sanctions on it. So I 

assure you, we are very focused on this. 

Ms. WATERS. Well, I would encourage you to encourage the President to declassify any information that should be forthcoming to 

this committee, just as he was able to do in the Nunes memo. He 

used his power of the President to declassify. 

I would suggest to you that if information is declassified, that 

should be available to this Congress, who voted overwhelming for 

sanctions on Russia, who undermined our democracy, those sanctions should be not delayed or waived, and we should have information about it. 

Let me continue. Is it the Treasury Department’s position that 

no persons are engaged in significant transactions with Russia’s defense and intelligence sectors? 

Secretary MNUCHIN. Again, I am not going to comment on that 

because that is not the portion that we are doing the work on. 

Ms. WATERS. Would you tell us again, what are you doing the 

work on? 

Secretary MNUCHIN. Again, we did the work on what was referred to the oligarchs as well as senior government officials. We 

detailed in the report where there was evidence of corruption, family relationships, networks. We complied with a very extensive report that, as I said, there is a classified version and an unclassified 

version. And we will be using the intelligence work, where there 

are indications of corruption, to follow this up with sanctions, 

which are a very effective tool that we intend to use. 

Ms. WATERS. Are you referring to the work that you did on the 

oligarchs as the list of oligarchs that you lifted from the Forbes report? 

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12 

Secretary MNUCHIN. Again, we were very clear that the public 

nonclassified version is the universe that we looked at and was developed on open source, both the oligarchs and the leaders. 

The classified report goes through that list in a very detailed 

manner, as well as other people that weren’t on that list that 

would have fallen below the billion dollar threshold. So, again, I 

would encourage you to review the report. 

I think you would be impressed with the findings. 

Ms. WATERS. But let me just ask you, were there any persons 

identified that were engaged in significant transactions with Russia’s defense and intelligence sectors? You don’t have to give me 

their names, but I want to know, did you identify, did the Treasury 

Department identify any persons? 

Secretary MNUCHIN. Again, that portion of the act is not the 

work that I am familiar with. The portion of the act that I am familiar with is corruption. We did identify people that were involved 

in corruption, and we will be using that to come out with sanctions. 

Ms. WATERS. Let me just continue. Last week, it was reported 

that CIA Director Pompeo met with senior officials in Russia’s intelligence service, one of whom is subject to U.S. sanctions and the 

other of whom is subject to European sanctions. This meeting occurred just prior to the deadline for implementing sanctions on 

those engaged in significant transactions with Russia’s defense and 

intelligence sectors. These are the same sanctions that the President has refused to act on. 

As reported in The Washington Post, current and former U.S. intelligence officials said they could not recall so many heads of Russia’s espionage and security apparatus coming to Washington at 

once and meeting with a top American official. 

Are you at all troubled by the curious timing of a meeting between Russian intelligence and U.S. intelligence just days before 

the President failed to take action to implement sanctions pursuant 

to section 231 of CAATSA? 

Secretary MNUCHIN. No, I am not troubled. I believe that timing 

was just coincidental, and I believe there were various issues that 

the Director wanted to discuss. 

Ms. WATERS. I am sorry. I can’t hear you. 

Secretary MNUCHIN. I said I am not troubled by that. I believe 

that the timing was coincidental and had nothing to do with the 

reports. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Michigan, Mr. 

Huizenga, Chairman of our Capital Markets Subcommittee. 

Mr. HUIZENGA. Thanks, Mr. Secretary. 

I am going to move very quickly through a couple of things, but 

first and foremost, I need to remind my colleagues that we can go 

see classified information and that briefings have been offered by 

the Secretary and by others. I also want to touch a little bit on the 

economic growth that we are seeing. And in my opening statement, 

I talked about Zack Booker, my constituent, and the fundamentals 

of Main Street being solid but seeing technical corrections in Wall 

Street is OK. 

But the interesting thing, this yarn that somehow President 

Trump inherited this great economy is quite amazing. First of all, 

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13 

he had 1.2 percent growth in the first quarter as he came into office. That has grown into a 3-percent growth for the year. Never 

reaching 3 percent growth in a calendar year with the Obama Administration, and so I think we have seen the economy respond. 

FSOC and stability requires broadening of those that participate 

in the marketplace, and that is where I want to go. We have seen 

a number of public companies decline by 50 percent since 2000. 

The average number of IPOs, or initial public offerings, has been 

about 135 per year versus 450. 

In 2016, there were only 112 IPOs. This decline has been very 

troubling to many of us on the committee, both sides of the aisle. 

FCC Chairman Clayton noted, quote: ‘‘The reduction in the number 

of U.S.-listed public companies is a serious issue for our markets 

and the country more generally. To the extent companies are eschewing our public markets, the vast majority of Main Street investors will be unable to participate in their growth. The potential 

lasting effects of such an outcome to the economy and society are, 

in two words, not good.’’ 

You know, Zack isn’t ready to bring his barbershops and his 

other companies public yet, but I am afraid that the Zack Bookers 

of the world aren’t going to be able to do that in the long run. And 

I am curious, in your opinion, what are the three top impediments 

that are chilling this IPO market or discouraging companies from 

accessing capital in the public markets? 

Secretary MNUCHIN. Well, thank you, and I appreciate the work 

you are doing on capital markets. 

In the report we did, the executive order, we go through an extensive review of different things that we think can make it easier 

for companies to access the public markets, particularly smaller 

companies, with proper regulations. So I would encourage you to, 

we can go through the details with you, but there is a long list of 

things we recommended. 

Mr. HUIZENGA. Yes, and I recommend that my colleagues take a 

look at that because I think this is the glide path and the direction 

that we need to go. 

I want to move on to one of those impediments, in my opinion, 

the Volcker Rule, that I am afraid that it has had a chilling effect 

on the liquidity in the markets and the U.S. financial institutions. 

And a couple of quick things: In testimony in March 2017, we 

had a hearing in the Capital Market Subcommittee on the Volcker 

Rule, and Ronald Kruszewski, Chairman and CEO of Stifel, testified that, quote: ‘‘To determine whether an activity was proprietary 

trading or legitimate market-making, compliance expert would also 

need to be a psychiatrist trained in determining to the intent of 

each trade by a trader.’’ 

In an April 7, 2017 speech, New York Fed Reserve Bank President William Dudley, commented, quote, ‘‘the line between marketmaking and proprietary trading is not always clear-cut, which 

makes regulation in this space difficult,’’ and, quote, ‘‘that it may 

be worth considering giving greater discretion to trading desks that 

facilitate client business to intervene when markets are illiquid 

and volatile.’’ 

Do you agree with Mr. Dudley’s assessment? 

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14 

Secretary MNUCHIN. I do. And we are working with the regulators to try to have better definition around the law and the rule 

so that people can interpret it. 

Mr. HUIZENGA. Do you believe it would make sense for one regulator to take the lead to interpret that guidance? 

Secretary MNUCHIN. I do not. 

Mr. HUIZENGA. OK. I do want to highlight one other quick oddity 

in this. We have a Michigan-based energy company that owns an 

industrial bank in Utah, where many of those ILCs, industrial loan 

corporations, are, and because of its ownership interest in the 

bank, an energy company is considered a banking entity under the 

Volcker Rule. And since nonfinancial parents of industrial loan 

companies are being treated as bank-holding companies under the 

Volcker Rule, if an investor breaches a 10-percent holding in ownership in its nonfinancial parent, it is deemed to be controlling a 

bank and is then itself subject to the Volcker Rule. 

If the Volcker Rule did not apply to nonfinancial parents of industrial loan companies, do you believe that it would pose a systemic risk to the financial system? 

Secretary MNUCHIN. No, I do not. 

Mr. HUIZENGA. Thank you very much. I appreciate that. And we 

will continue to work on that and look forward to working with 

you, Mr. Secretary. 

Secretary MNUCHIN. Thank you. 

Mr. HUIZENGA. Thanks. 

I yield back. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Luetkemeyer, Chairman of our Financial Institutions Subcommittee. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

Mr. Secretary, thank you for being here again. I just want to also 

reiterate my support and thanks for working with us on the tax cut 

bill, tax reform bill. 

I have two quick stories for you. I know, when we were discussing the tax bill with some of my folks back home, I had a small 

women’s business roundtable. And at that roundtable, when I got 

done discussing what we were going to try and do, one of the ladies 

there who had a glass shop, 60 employees, said: ‘‘If you cut my 

taxes, Congressman, we will reinvest that money, and we will hire 

some more people and expand our business.’’ 

This past weekend I was back home. I was talking to another 

small business. And in your testimony today, you talk about 3 million people received bonuses; 300 companies announced investments. I am sure this particular company is not in those figures, 

and there are probably thousands and thousands of other folks just 

like them, but they will give a $500 bonus to all their employees. 

And this is a small business. 

So there are lots of people across the country that are receiving 

these bonuses. And when they say it is a ripple effect, I think it 

is more like a tsunami that is starting to go across our country 

from the standpoint of how important this is to the citizens of our 

country. So thank you for that. 

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15 

With regards to your testimony today, and something I am working on myself, one of the things that we are doing in my subcommittee is working on data security, cybersecurity. And in your 

testimony today, you talk about the Council is monitoring the 

cybersecurity risks and has a number of recommendations. And one 

of them is the creation of a private sector council of senior executives. 

Can you elaborate a little bit more on FSOC’s endeavors in 

cybersecurity, data security, and some ideas of things you are 

working on? 

Secretary MNUCHIN. Well, thank you. It is an issue I am very 

much focused on. I think protecting the financial infrastructure is 

of critical concern to ours. And our two priorities are: One, making 

sure that the various different regulators are working together, 

that they are pooling their resources to focus on this issue; and 

two, that we develop the proper public-private partnerships to be 

able to exchange information, best practices. And, also, we have 

been conducting different tabletop exercises in case there is an 

event. 

Mr. LUETKEMEYER. Just two more questions along this line. 

Number one, right now, we have a patchwork of rules and laws 

across the country with regards to the States monitoring and having some input with regards to notification, wondering how will you 

support a streamlining of this, number one and number two, obviously, the Federal Government has a problem with data security as 

well—we have had a number of breaches that are well-known by 

the public of information that is held by the Federal Government— 

and how we would coordinate those as well. 

Secretary MNUCHIN. So the first part, I completely agree with 

you with the idea and the need for streamlining. I think that is 

very important. And I am participating, along with DHS and other 

groups at the National Security Council on cyber to make sure we 

are coordinated across Government because, as you have said, we 

are not immune from these issues ourselves. And making sure that 

what we learn from attacks against us, we are also using to protect 

private industry. 

Mr. LUETKEMEYER. Very good. One of the main objectives of 

FSOC is to designate systemically important financial institutions. 

I know I have a bill that deals with this with regards to some 

of the midsize regional banks that are impacted by this that I 

think they are not part of the problem; they have been roped in as 

part of the solution. And one of my solutions to this problem is 

using the Federal Reserve’s process by which they have a systemically important risk indicator score. 

Does FSOC take into account this Federal Reserve score whenever you are discussing SIFIs? 

Secretary MNUCHIN. I haven’t seen that per se in my experience, 

but we will look into that. And I think that is something that we 

should consider. 

Mr. LUETKEMEYER. And because it seems like we don’t need to 

reinvent the wheel if the Feds are already doing the analytical 

work of looking at what a systemically important financial institution is, and by their score, indicating which ones are and which 

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16 

ones aren’t, it would seem to be a very helpful tool to FSOC to be 

able to utilize that. 

Secretary MNUCHIN. Yes, we use a lot of work from the Fed. 

They are very helpful. And I will look into the scoring issues and 

follow up with your office. Thank you. 

Mr. LUETKEMEYER. I have about 35 seconds left, Mr. Secretary. 

Would you like to respond to any of the questions that were directed to you a moment ago by the Ranking Member? 

Secretary MNUCHIN. No, I am OK for now, but thank you for that 

option. 

Mr. LUETKEMEYER. Mr. Chairman, I will allow the Secretary to 

reserve my 30 seconds. 

With that, I yield back. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentlelady from New York Mrs. 

Maloney, Ranking Member of our Capital Markets Subcommittee. 

Mrs. MALONEY. Thank you. Welcome, Secretary Mnuchin. 

As you know, yesterday, the stock market suffered its worst day 

in 6 years with the S&P down 4.1 percent and the Dow down 4.6 

percent. And it looks like markets are plunging even further today. 

You are the Chair of the Financial Stability Oversight Council. 

And I want to know, are you concerned about this recent market 

rout, this recent market turmoil? 

Secretary MNUCHIN. Well, first off, I would just comment, they 

have been quite volatile today. I normally wouldn’t be looking at 

my iPhone, but given the market moves, I am checking it. It is now 

up 187 points, so we are back up today. 

I am not overly concerned about the market volatility. I think the 

fundamentals are quite strong. I have checked in with market participants this morning before I came to make sure there was orderly market activity, clearance functioning, no systemic issues. 

And I am happy to report that I got the green lights. 

Mrs. MALONEY. Well, do you believe—does this have financial 

stability implications? 

Secretary MNUCHIN. No, I don’t think these types of moves, given 

how much the market has rallied, do have financial stability concerns. 

Mrs. MALONEY. Well, the Administration has claimed credit for 

the markets going up. Are they going to claim credit when the markets go down? 

Secretary MNUCHIN. Again, I think we will still claim credit for 

the fact that it is up over 30 percent since the election. 

Mrs. MALONEY. Well, let’s move on to your testimony on 

cybersecurity, which you called one of the biggest risks to the financial system. And it is a very serious one, and it is a huge problem, particularly for virtual currencies, like bitcoin and ether. Virtual currency exchanges are constantly being hacked. 

A few years ago, the largest bitcoin exchange in the world was 

breached and lost over $450 million worth of bitcoin. And just 2 

weeks ago, another virtual currency exchange in Japan was 

hacked, and they lost $550 million worth of virtual currency, the 

largest heist in history. 

A recent report found that about 14 percent of all of the major 

virtual currencies have been stolen by hackers. And this means 

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17 

that if you hold a major virtual currency, there is a 1 in 7 chance 

that you have had your money stolen, a staggering statistic. But 

right now these virtual currencies, their exchanges aren’t subject to 

any real cybersecurity standards. 

Just last week, FCC (Federal Communications Commission) 

Chairman Clayton said that he thinks some exchanges should be 

regulated by the FCC, which would require them to develop 

cybersecurity standards and prevent fraudulent practices like price 

manipulation. 

So my question is: Given that virtual currency exchanges are collectively holding billions of dollars for U.S. investors, which can 

disappear in the blink of an eye if hackers break in, should these 

virtual currency exchanges be subject to minimum cybersecurity 

standards to protect investors’ money? It is a currency, but it is 

being treated by many people as an investment. So I am very concerned. 

Secretary MNUCHIN. I broadly share your concerns. Last year, I 

set up a subcommittee of FSOC to specifically deal with 

cryptocurrencies. We made a lot of progress on that. You have focused on several issues, which I agree with. The two issues that 

I focused on are: One, we want to make sure that these exchanges 

can’t be used for moving money to bad people. So, in the United 

States, if you are a bitcoin wallet, you are subject to the same antimoney laundering BSA (Bank Secrecy Act) requirements as a bank. 

We brought enforcement actions on that. We are working with the 

G20 to make sure that those rules are followed in other countries 

so that these don’t become like old Swiss numbered bank accounts. 

The other area of grave concern is the concern to the consumer. 

We have recently had futures listed. We have done a lot of work 

with the regulators to make sure that where there is consumer protection, it is appropriate. And I too share your concerns about the 

cyber attacks and having people’s money that is safe. So this is 

something we are actively studying. And we would be happy to follow up with your office on your ideas. 

Mrs. MALONEY. Thank you very much. And I do have a draft bill 

I would like to share with you. 

And, finally, do you think Congress should raise the debt ceiling 

as part of the short-term continuing resolution this week? 

Secretary MNUCHIN. I think that Congress should raise the debt 

ceiling. However they want to do it, I leave it to them. But I would 

encourage Congress to do that. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair wishes to advise members that there is a vote occurring on the floor, and the Chair will attempt to clear two more 

members and then declare a recess. 

The Chair now recognizes the gentleman from Wisconsin, Mr. 

Duffy, Chairman of the Housing and Insurance Subcommittee. 

Mr. DUFFY. Thank you, Mr. Chairman. 

Mr. Secretary, you are in the Financial Services hearing room. 

You are not in the twilight zone. I am not sure if you would know 

where you are at based on the questions that came from the Ranking Member for 10 minutes. 

Here we are at a near 20-year unemployment low, historic lows. 

African-American unemployment is at an all-time low. Hispanic 

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18 

unemployment, all-time low. And a week ago, at the State of the 

Union, the people who say they care about their constituents, when 

Donald Trump brought that up, they all sat down. No applause. 

They sat there as unemployment is at historic lows for their constituents. And then they come in today and say: I don’t want to 

talk about a GDP of 3 percent growth, where it was less than 2 

under Obama. I am not talking about manufacturing jobs coming 

back to America. I am not talking about the great policies over the 

last year. What I am talking about is Russia. I want to talk about 

Russia. 

And by the way, when we talk about the economy, did I have 

friends across the aisle who will say $1,000 or $2,000 is crumbs? 

Give me a break. I don’t know where you guys live, but that is a 

lot of money where I come from. Or if you get a $2,000 extra 

amount of money in your paycheck over here, that is a lot of 

money. To call it crumbs or to call our Tax Code ‘‘Armageddon,’’ 

that is out of touch. 

You want to talk about Russia and collusion? All you have is the 

Hilary Clinton campaign and the DNC, including with Fusion GPS, 

Christopher Steele, and the Russians to take down an American 

President who fairly won an election. 

You want to talk about Russia? You can talk about Uranium One 

and a payout to the Hillary Clinton campaign to get approval—or 

the Clinton Foundation—to get an approval for Uranium One, if 

you want to talk about Russia. 

This is ridiculous, that these are the things that we are talking 

about, Mr. Secretary. And I will ask you actually questions that are 

relevant to, I think, our committee. 

Yesterday, The Wall Street Journal reported that there were 

1,700 banks that have closed in the last 12 months. Did you see 

that article? 

Secretary MNUCHIN. I did. 

Mr. DUFFY. Many of those banks came from rural America, 

places where I come from. 

Secretary MNUCHIN. Yes. 

Mr. DUFFY. What is the root cause of these branch closings, and 

what impact does it have on, now, communities that are in rural 

America that may now not be served by a bank? 

Secretary MNUCHIN. I think a general issue is the cost of regulation for community banks. And that is why we are hopeful to look 

at Dodd-Frank reform that helps community banks. And those 

communities need those banks to lend. 

Mr. DUFFY. Mr. Secretary, I thought all those regulations were 

only for the big banks. Are you saying that Dodd-Frank actually 

imposed regulations on the small community banks that serve 

rural America? 

Secretary MNUCHIN. Yes, indeed. 

Mr. DUFFY. Oh, I am surprised about that. And they are going 

out of business, because they can’t comply. 

Secretary MNUCHIN. Yes. 

Mr. DUFFY. Or they consolidate, right? They consolidate. And 

then when the bank they consolidate with says: Well, that is not 

a profitable branch anymore; we are going to close it. 

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19 

I want to talk about the fundamentals. So we talked about the 

market. Markets are down. A couple bad days in the market. Is 

this in coordination with lack of fundamentals in the economy? Do 

we have problems in the economy with growth or wages or jobs 

that are being reflected in a down market? 

Secretary MNUCHIN. No. The fundamentals are quite strong. 

Mr. DUFFY. How so? So what is the disconnect between a market 

coming down and fundamentals being strong? 

Secretary MNUCHIN. I think you have seen a normal market correction, although large. And I think, again, there is just a disconnect in the short term. Markets move in both directions. 

Mr. KUSTOFF. Could strong fundamentals actually bring down a 

market a little bit, be correct, just because you might be concerned 

about inflation, there might be concern about raising interest 

rates? Could that be a concern for the market? 

Secretary MNUCHIN. It could be, as you suggest. 

Mr. DUFFY. Any concern in the fall yesterday with algorithmic 

trading that could have heightened the losses that took place yesterday? 

Secretary MNUCHIN. It definitely had an impact on market 

moves. 

Mr. DUFFY. Anything we should be considering based on those 

market moves from— 

Secretary MNUCHIN. Nothing that I would recommend at this 

time. 

Mr. DUFFY. OK. And I want to be clear, as my time is about to 

end: When we talk about FSOC and designating financially systemically important institutions, we now have a threshold on size. Is 

it your contention that we should actually look at the activity surrounding the financial institution as opposed to the size? 

Secretary MNUCHIN. It is my recommendation that we should 

definitely raise the level, and we should also look at activity. 

Mr. DUFFY. OK. Listen, I want to thank you for your testimony. 

I am sorry for some of the questions that have come your way, but 

I want to applaud your efforts to actually work with us to lower 

tax rates that have had a huge impact on the American family, 

with the bonuses, with the increase in their paychecks. Though the 

other side should be dancing in the streets, they should be dancing 

in the aisles, they should be applauding; they are not because this 

is not about people, Mr. Secretary. This is about politics. And because they all voted no, they can’t celebrate the win for their communities and for our country. 

And I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair again advises all members a vote is occurring on the 

floor. 

The Chair now recognizes the gentlelady from New York, Ms. 

Velazquez. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

And welcome, Secretary. 

The issue of making sure that our democratic institutions are intact should be the responsibility of everyone. And after all, we all 

voted for the sanctions against Russia. 

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Mr. Secretary, the history between the United States and Puerto 

Rico is one full of legal, political, economic, and social injustices. 

While 5 minutes won’t be enough time to go through the list of 

things where U.S. policy has failed Puerto Rico, allow me to highlight how your administration has managed to further worsen conditions. 

After one of the worst natural disasters, your administration continues to ignore Puerto Rico’s healthcare system, a system that is 

crumbling before our eyes. The difference in Medicaid funding, 

such as lower matching rates, places a much greater burden on 

Puerto Rico than on other States. 

In addition, President Trump fails to see that the new tax law 

you all brag about is actually harming Puerto Rico at a time when 

Puerto Rico needs our help to jump-start its economy. Let us be 

clear: The new tax law discriminates against Puerto Rico, removing 

the special incentives that the island relied on and treating Puerto 

Rico as a foreign country—treating Puerto Rico as a foreign country, a foreign country that has over 100,000 active-duty troops 

ready at any given time, a foreign country that, from 1998 to 2016, 

has paid approximately $74.4 billion in Federal taxes. Tell me, 

which country around the world pays Federal taxes to the U.S. 

Treasury? Puerto Rico does. 

Yet, because of its treatment as a foreign country, the new tax 

law imposes a 12.5-percent tax on the income companies receive 

from intellectual property. What a way to kill the manufacturing 

sector in Puerto Rico. 

Another example of this unequal treatment is the community disaster loans that were included for Puerto Rico in the October supplemental: Loans instead of grants. Another insult. 

Don’t you agree with me that that is outrageous, that it is cruel, 

that when a natural disaster strikes and people ask for disaster relief, a paper towel is an insult? 

So, Mr. Secretary, my question for you is, is it acceptable in 

Treasury’s opinion, to fund and provide disaster relief so slowly 

that it has taken the lives of more than a thousand residents in 

Puerto Rico, that over 270 Puerto Ricans have committed suicide 

on the island after Maria, that almost 30 percent won’t have power 

until this summer, nearly a year after Maria? 

Would this be acceptable in Houston, Louisiana, or Florida? I am 

sure people would be rioting in the streets. 

Do you think the people of Puerto Rico are any less entitled to 

restoration of essential services than any other U.S. citizen? So, 

Mr. Secretary, please tell me if this is acceptable. 

Secretary MNUCHIN. Well, let me first comment that I do share 

your concerns. 

Ms. VELAZQUEZ. I want for you to share my outrage. 

Secretary MNUCHIN. It is, first, that any loss of life is a great 

tragedy. 

As it relates to the various different topics that you have discussed, I am personally not familiar with the healthcare issues, although I will follow up and look into that. 

Ms. VELAZQUEZ. What about the tax bill, treating Puerto Rico as 

a foreign country? 

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Secretary MNUCHIN. As it relates to the tax law—and, again, I 

have had the opportunity to meet with various businesses and 

things—they have a situation where they are collecting their own 

taxes in lieu of Federal taxes. 

And the last part, I would just say, is we are working very closely with the Government to get them funding to deal with the result 

of— 

Ms. VELAZQUEZ. How many more lives have to— 

Chairman HENSARLING. The time of the gentlelady has expired. 

The committee now stands in recess. 

[Recess.] 

Chairman HENSARLING. The committee will come to order. 

The Chair now recognizes the gentlelady from Missouri, Mrs. 

Wagner, the Chairman of the Oversight and Investigations Subcommittee. 

Mrs. WAGNER. Thank you, Mr. Chairman. 

As we sit here today and hear testimony about the continued onslaught regulations have had on Main Street America, it is worth 

noting the positive gains that we have made because of the Tax 

Cuts and Jobs Act. 

Charter Communications, which has a very large presence, Mr. 

Chairman, in Missouri’s Second congressional District, upwards of 

5,000 employees, Mr. Secretary, that represent 5,000 hardworking 

Missouri families, they have recently volunteered to pay every one 

of their employees at least $15 an hour and, in addition, to increase 

the investment in their broadband network. 

This is going to absolutely benefit working families and small 

businesses across my district. These are pro-growth promises that 

we made and have delivered on for our constituents. 

I want to thank you, Secretary Mnuchin, for your fine work in 

making sure that all Americans keep more of their hard-earned 

money and we continue to grow this economy. 

Now, sir, last week the Subcommittee on Oversight and Investigations, which I chair, held a hearing entitled, ‘‘Following the 

Money: How Human Traffickers Exploit U.S. Financial Markets.’’ 

During that hearing we talked a lot about the emergence of 

cryptocurrencies as a financial tool. 

I know you touched on it briefly, but the FSOC annual report 

identifies a need to further study new products and services, such 

as virtual currencies, and to coordinate regulatory approaches. 

How do you believe these new technologies should be regulated? 

And what role should we in Congress have going forward as these 

new innovations are advanced? 

Secretary MNUCHIN. Thank you. 

My main concern in terms of regulation is to make sure that anybody that does business on cryptocurrencies can be monitored from 

a money laundering, a BSA standpoint, and that the institution follows the know your customer rule. So that is our main priority 

now, but we look forward to working with you on potentially other 

regulations. 

Mrs. WAGNER. And what do you see as FSOC’s role in this process, sir? 

Secretary MNUCHIN. FSOC is coordinating the different regulators’ response to it. So it is a coordination function. 

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Mrs. WAGNER. We look very forward to working with you and 

your team in this important area that is emerging. 

Secretary MNUCHIN. Thank you. 

Mrs. WAGNER. Now, Secretary Mnuchin, changing topics here, 

can you discuss your recommendations to address designation criteria, especially when it comes to our nonbank financial companies? The FSOC, Treasury report recommended that the designation process for nonbank financial companies be more transparent, 

including getting input from a company’s primary regulator. 

What are the steps that Treasury plans to take to make the designation process more transparent and ensure the FSOC is held accountable to Congress? 

Secretary MNUCHIN. Thank you. 

As you noted, we did extensive work in our executive order to the 

President on this, making recommendations. We will now be working with the committee on suggestions in terms of changing the criteria. Then I believe we will have to put out a notice of rulemaking 

before we enforce it. But this is something we are very focused on 

for this year. 

Mrs. WAGNER. Last March the subcommittee, again, on Oversight and Investigations, which I chair, held a hearing entitled 

‘‘The Arbitrary and Inconsistent Non-Bank SIFI Designation Process,’’ and the hearing followed up on a committee report that provided examples of inconsistencies and departures from, frankly, 

FSOC’s own rules and guidance when evaluating nonbank financial 

companies. 

I hope this is something that we will look into and be able to coordinate going forward. Do you have any timing on this, sir? 

Secretary MNUCHIN. Absolutely. 

Mrs. WAGNER. Thank you. I appreciate it. 

Mr. Chairman, I yield back the balance of my time, or I shall 

yield to you, if you would like, sir. 

Chairman HENSARLING. I thank the gentlelady. She can yield 

back her time. 

The Chair now recognizes the gentleman from California, Mr. 

Sherman. 

Mr. SHERMAN. Mr. Secretary, you were here in July. Democrats 

and Republicans gave you questions for the record and we got responses to those last week, 6 months. 

Can you commit now that the vast majority, I plan to ask one 

or two really tough ones, but that the vast majority of the questions for record that are asked by Democrats and Republicans 

today will be responded to with real answers within 30 days? 

Secretary MNUCHIN. I can tell you that I told my staff I thought 

our response time was not appropriate. 

Mr. SHERMAN. Can you make the commitment, I ask, or just 

apologize for the past? 

Secretary MNUCHIN. We will do everything we can to make sure 

it is 30 days, but it won’t be as long as it took last time, I can assure you. 

Mr. SHERMAN. OK. Because I have a number of questions for the 

record, I need answers. 

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23 

And the first relates to the FSOC report to base SIFI designations on an activity-based approach. I want to commend you for 

moving in that direction. 

And I am interested in your plans for implementing the recommendation of the Treasury’s asset management and insurance 

report and the report on nonbank SIFI designation process, in particular the recommendation that an activities-based approach be 

used. So I will ask you to respond to that for the record. 

Also, we hear that the International Association of Insurance Supervisors is pushing a global standard that clashes with our system 

for State-based insurance regulation. And I will want to know your 

reaction to that and whether we can ensure that we are going to 

promote our own system in that negotiation. 

Secretary MNUCHIN. I can assure you we will. 

Mr. SHERMAN. Thank you. 

Now, last time you were here I asked you about the Armenia tax 

treaty. I didn’t expect you to know that I would ask—well, I did 

tell your staff in advance. And we have gotten the most absurd response. I am an old tax lawyer, I know it is hard work, but this 

is the easiest job they are ever going to have. 

They responded to Judy Chu, who also raised this, by saying that 

this is a very resource-intensive process. Here is the model treaty. 

We have published it. And the government of Armenia has said 

they just want to sit down and use this as the basis and get the 

treaty done. Twenty-eight Members of Congress have asked you to 

do this. 

Can you commit to investing 28 hours of one tax lawyer, just 28 

hours of that one tax lawyer’s time to start the process? I think he 

or she will finish the process. We are talking about filling in the 

blanks in a document we already have. Can you commit 28 hours 

of one tax lawyer’s time? 

Secretary MNUCHIN. I can commit the 28 hours— 

Mr. SHERMAN. We will get it done, and the benefits will include 

the exchange of information provisions, which will allow the IRS to 

get information about anybody hiding assets in Armenia and thereby enhance our tax collection process. 

When it comes to marijuana, we currently have the FinCEN 

guidance. And if you were to revoke that, then that would really 

make it better for armed robbers in my community because there 

would be huge amounts of cash at the local marijuana dispensary. 

Can I have—well, I hope you would respond for the record what 

you plan to do, and I hope that you would indicate that you are 

interested in keeping our community safe. I don’t want bags of cash 

at a marijuana dispensary down the street from my constituents. 

Can I count on your answer? 

Secretary MNUCHIN. I can commit to you that we are reviewing 

it. But I assure you, we don’t want bags of cash. I want to make 

sure that we can collect our necessary taxes and other things in 

other than cash. 

Mr. SHERMAN. When you were here last time, you assured us 

that although we didn’t designate China as a currency manipulator, even though we have lost a lot of jobs to their admitted past 

currency manipulation, that the Trump Administration was going 

to do something about this. 

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In back of you we have the chart that shows that every month 

that Trump has been in office we have seen an increase in the 

trade deficit with China. Are we just going to talk tough or when 

you come back a year from now are we going to see a different 

chart? 

Secretary MNUCHIN. I think you are going to see a different 

chart. 

Mr. SHERMAN. OK. And if we don’t, can you then designate them 

a currency manipulator? 

Secretary MNUCHIN. No, one has nothing to do with the other. 

One is we are very focused on trade. The currency manipulation 

independent of that will be based upon their actions. 

Mr. SHERMAN. But they have secured markets by their past manipulation of currency. 

And I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Kentucky, Mr. 

Barr, Chairman of our Monetary Policy and Trade Subcommittee. 

Mr. BARR. Secretary Mnuchin, good to see you this morning. And 

I want to thank you and the Administration for the Tax Cuts and 

Jobs Act on behalf of constituents in Kentucky’s Sixth congressional District. 

A couple quick stories. One is Allison. Allison is a bank teller, 

one of the lowest paid bank tellers at a small community bank in 

Berea, Kentucky. And she went to her supervisor after they adjusted their tax withholding and she said, ‘‘I think you made a mistake.’’ 

And he looked at the check and he said to Allison, ‘‘No, I didn’t 

make a mistake.’’ 

And she said, ‘‘Did I get a bonus?’’ 

And he said, ‘‘Actually, I didn’t give you a bonus.’’ The vice president said this to the teller. ‘‘We didn’t give you a bonus, but in effect you got a bonus. You got a raise because of Republican tax 

cuts.’’ 

And then there is Karen. And Karen has been serving me coffee 

at 5:20 a.m. every morning when I go to the airport to get on that 

6 a.m. flight to Washington D.C. And she is a hard-working person, 

and she is working the graveyard shift. And she wanted to know 

what the benefits of the tax cut were. 

So we put her paycheck and all of her information through the 

tax calculator. And when I showed up on Monday morning, yesterday morning, she had a big smile on her face. And she said, ‘‘Congressman, I am going to save $1,410 every year because of the tax 

cuts.’’ 

And so on behalf of Karen and on behalf of Allison, thank you 

and your administration for these tax cuts. You are making life 

easier for working people in Kentucky. 

I do want to talk about the market volatility that we have seen 

over the last few days. Obviously, since election day 2016, the Dow 

Jones industrial average has soared from a little over 18,000 to a 

little over 24,000, and I think it is actually up at this moment 

today. And of course at one point it hit an all-time high of 26,617. 

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25 

That represents an extraordinary bull market, and I would agree 

that in part it reflects renewed investor and business confidence associated with this Administration’s policies. 

But I do want to ask about a factor that gets a little less attention but which explains the adjustment in the equity markets over 

the last few days, and that is monetary policy. 

Obviously, for the better part of the last decade, the Federal Reserve through quantitative easing and low nominal rates has pursued an unprecedented policy of monetary accommodation. And 

while this unconventional policy failed to prevent the slow, weak 

growth produced by the previous Administration’s fiscal policies, it 

did prop up asset prices. 

But as this Administration has reversed the previous Administration’s fiscal policies the economy has taken off, and you have 

noted the statistics of record high business and investor confidence, 

consumer confidence, low unemployment, and the Labor Department report of wages going up last year, average 3 percent GDP 

output, and the Atlanta Fed’s projection that the first quarter we 

might see 5 percent economic growth, in the first quarter of 2018. 

So I would just say it is altogether appropriate that the new 

leadership at the Fed has begun to address the risk of rising inflation and is proceeding with a strategy of monetary normalization. 

My question is this, Secretary. In your capacity as Chairman of 

the Financial Stability Oversight Council, can you comment on how 

monetary normalization and a steady, predictable, well-communicated withdrawal of monetary stimulus at this time might keep 

valuations in line with reality, prevent asset bubbles, and promote 

financial stability? 

Secretary MNUCHIN. Well, thank you. 

I will comment, we have been working with the Fed in following 

their reduction of their portfolio and the impact of the markets. 

As it relates to the overall monetary policy, I will respect the 

independence of the Fed, so I am not going to comment on its impact on the markets. 

Mr. BARR. Thank you. 

And then, Mr. Secretary, as you know, the World Bank’s International Development Association, or IDA, is scheduled for its 18th 

replenishment. This committee has examined disturbing cases of 

management failures at the bank, which has helped bring about 

massive corruption, abuse of project beneficiaries, including sexual 

abuse, and staff incentives that reward pushing money out the door 

rather than having an impact on global poverty. 

In light of these facts, writing a blank check for IDA18 would be 

an insult to the hard-working taxpayers of this country. Last 

month, the House passed our World Bank Accountability Act, 

which would make spending on IDA18 contingent on implementing 

reforms. I want to thank Treasury staff for working closely with us 

on developing tough but achievable reforms. 

To underscore how important this legislation is, this was the first 

time in 40 years, Secretary, that Congress considered a standalone 

IDA bill. And it also happens to be consistent with President 

Trump’s policies. 

As he said in his State of the Union Address, quote, ‘‘I am asking 

Congress to pass legislation to help ensure American foreign policy 

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dollars always serve American interests and only go to friends of 

America, not enemies of America.’’ 

Mr. Secretary, the House World Bank bill delivers on the President’s call of action. Could you just comment briefly on how you 

can work with our friends in the Senate so that they adopt a similar approach to IDA? 

Secretary MNUCHIN. Well, we applaud your work on that and we 

look forward to working with the Senate so that we can get something passed. 

Mr. BARR. Thank you. I yield back. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from New York, Mr. 

Meeks. 

Mr. MEEKS. Thank you, Mr. Chairman. 

Secretary, welcome. 

Let me first just ask a couple of questions because I think that 

I am unclear. First, I think I heard you say that you will be asking 

Congress, particularly many of my colleagues on the Republican 

side who generally sometimes don’t want to raise the debt ceiling, 

to make sure that they raise the dealt ceiling when it expires. Is 

that correct? 

Secretary MNUCHIN. That is correct. 

Mr. MEEKS. OK. Because I don’t know sometimes in listening to 

folks, I just want to get it right, so does debt matter in our economy? 

Secretary MNUCHIN. It does. 

Mr. MEEKS. OK, it does. And what is better for the American 

economy, because I am confused on this one also, because I have 

heard, especially from the Administration, both sides, what is better, a weaker dollar or a stronger dollar? 

Secretary MNUCHIN. I am not going to comment on the dollar. I 

think some of my comments were taken out of context. But I will 

say— 

Mr. MEEKS. That is why I am trying to clear it up. If it was 

taken—it was a comment— 

Secretary MNUCHIN. In the long term, a strong dollar is in the 

best interest of the United States, and that is what I said in my 

comments. 

Mr. MEEKS. OK. Because what I had you quoted as saying is, obviously, a weaker dollar is good for us as it relates to trade and 

opportunities. 

Secretary MNUCHIN. Again, that was just a statement of fact. 

There were three parts to it. The first part was that we fundamentally believe in the free markets. Where the dollar is in the short 

term is not a concern. The second one you quoted was just a fact. 

And the third one was that we fundamentally support a strong dollar in the long term. 

Mr. MEEKS. So you support a strong dollar, that is what you are 

telling us now? 

Secretary MNUCHIN. That is correct. 

Mr. MEEKS. OK. So the other statements we should not consider. 

Now, in time of recession is stimulus important or not? 

Secretary MNUCHIN. It depends. 

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Mr. MEEKS. It depends. Well, in times of crises, because I don’t 

know if you—well, you were not here, but I was here, because I listened to some of my colleagues on the other side. 

In 2007, when we were having the greatest recession since the 

Great Depression—by the way, it was a time that we—right before 

that, in 2006, is when the Republicans controlled the House, the 

Senate, and the Presidency at the same time—we had a Republican 

Treasury Department come over and say we had to do something 

because things were going crazy. 

Would that have been an appropriate time to try to stimulate the 

economy, when you had that kind of recession? 

Secretary MNUCHIN. Again, that would have been one of the 

things to consider. 

Mr. MEEKS. OK. Would you have considered it had you been— 

Secretary MNUCHIN. I would have considered it. 

Mr. MEEKS. By the way, do you recall what the unemployment 

rate was in 2007 and 2008 and 2009? 

Secretary MNUCHIN. I don’t recall the exact number, but it was 

higher than where we are now. 

Mr. MEEKS. In fact, it was at the peak, because of the recession, 

it was at close to 10 percent. Is that not correct? Does that refresh 

your recollection? 

Secretary MNUCHIN. That sounds about right. 

Mr. MEEKS. At the time that President Obama left, it was down 

to about 4.6 percent, I think it was. Does that refresh your recollection? 

Secretary MNUCHIN. Sounds about right. 

Mr. MEEKS. So it went down. And at the time that you came in, 

the unemployment rate at that point was lower than it had been 

for over the last 12 years or since the last time that Bill Clinton 

was President. Is that not correct? 

Secretary MNUCHIN. That is correct. 

Mr. MEEKS. OK. And is it also correct that when you looked at 

the overall economy and the number of jobs that were being created back in 2006 and 2007 and 2008, we were losing jobs every 

month? Is that not correct? 

Secretary MNUCHIN. That is correct. 

Mr. MEEKS. OK. At the time that you came or the President 

came into office, then we were gaining jobs every month, we were 

adding jobs. The Obama—so you didn’t inherit an economy that 

was in recession, that was the lowest employment rate, that was 

going in the right direction. But when you came in, you inherited 

an economy that was moving in the right direction. Unemployment 

was going down. Jobs were increasing every month. 

So the experience that you came in was nowhere near the experience that the Obama Administration had to deal with when they 

came in office. Is that not correct? 

Secretary MNUCHIN. Again, the experience that we came in with 

was very, very low GDP growth. 

Mr. MEEKS. But that is not what I am asking you about. The 

trends in the economy, at that particular time, the trends with reference to unemployment, the trends with reference to jobs, the 

trends with reference to the overall economy, it was not an economy that was in recession. It was an economy that was coming out 

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28 

of recession. That is what you inherited, not what Obama inherited 

when he became President. Is that not correct, sir? 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Texas, Mr. Williams. 

Mr. WILLIAMS. Mr. Secretary, thank you for being here this 

morning. And I am a small business owner for 47 years in Texas, 

still have my business, and I can tell you, it is a great time to be 

on Main Street. And I want to thank you for your hard work on 

behalf of the American people and for your annual report from the 

Financial Stability Oversight Council. 

From overhauling the country’s broken Tax Code to rolling back 

misguided and unnecessary regulations, 2017 proved to be a historic year for the Trump Administration, this Congress, and most 

importantly, the American people. 

During my travels in the district I represent in Texas these past 

months, I have heard countless encouraging stories about what the 

Tax Cuts and Jobs Act means for Texans and business owners. 

While some of my colleagues on the other side of the aisle, and we 

have heard today, have claimed that these bonuses and wages were 

akin to crumbs, in Texas 25th District those crumbs come in the 

form of real dollars back in the pockets of hard-working families. 

It comes in the form of increased wages for employees and new 

capital investment for businesses. 

It is my hope that this past year serves as a steppingstone for 

many and more great things to come. And there is still much more 

work to do, especially from the Dodd-Frank relief to combating the 

destabilizing and hostile activities from Iran. 

Know that I am committed to working with this agenda with you 

and the Trump Administration to ultimately ensure long-term 

prosperity for our great Nation and our citizens. 

First question would be, Mr. Secretary, you previously testified 

before the Ways and Means Committee that the Treasury Department is reviewing aircraft sale licenses following the Iran nuclear 

deal. I am encouraged by this Administration’s focus on the world’s 

leading state sponsor of terror and in your efforts to take a hard 

line on committing its destabilizing behavior. 

To that end, the House passed my bill, the Strengthening Oversight of Iran’s Access to Finance Act, which creates a reporting requirement for the licensing of aircraft sales to Iran in an effort to 

increase congressional oversight and provide transparency for the 

American people. 

So my question, sir, is can you provide any updates on your review of licenses issued for aircraft sales to Iran? And is it your 

opinion that this Congress and the American people should know 

if Iran is using passenger aircraft authorized under the JCPOA for 

terrorist activity? 

Secretary MNUCHIN. Well, I do believe that the American people 

and Congress should know. I don’t want to comment right now because we are reviewing classified information as we consider the licenses for this. So this is undergoing review. 

Mr. WILLIAMS. Thank you. 

Next question would be, we have heard so many great stories in 

the last several weeks about how the tax bill is bringing businesses 

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back to the United States. Yesterday, the United Nations Conference on Trade and Development reported that the tax bill could 

spur the repatriation of $2 trillion. 

Could you speak to the effect that repatriation and new investments will have on the U.S. economy and what Americans can expect to see in the months and years to come as the tax climate becomes friendly and more welcoming to investors and businesses? 

Secretary MNUCHIN. Well, we believe one of the most important 

aspects of the tax bill was to go from a worldwide system with deferral, which encouraged our companies to leave trillions of dollars 

offshore, to a territorial system and a one-time tax to bring them 

home. Apple has announced $350 billion that they will be coming 

back into the U.S. with major investment into jobs and CAPX and 

equipment here, and they are just one of many companies that are 

going to be doing that. 

Mr. WILLIAMS. A lot of good news. 

Next question would be, I am certain that our colleagues from 

the other side of the aisle will highlight the recent volatility—we 

have heard that today in the market—in an attempt to sound an 

irresponsible alarm about the state of the market. They are clearly 

viewing the markets in terms of single day performance and not on 

the long-term performance. 

If they were to do so, they would concede that in the last 15 

months—and you talked about this earlier—the market recorded 

84 record highs. And both the Dow and the S&P are still up by 

double digits during that period. 

So, Mr. Secretary, from both your time in the private sector—I 

am a private sector guy—and now as the head of the Treasury Department, do you believe there to be any cause for alarm? 

Secretary MNUCHIN. I do not. 

Mr. WILLIAMS. OK. Thank you for being here. 

And I would yield my time back to the Chairman. 

Chairman HENSARLING. I thank the gentleman for yielding. 

Mr. Chairman—I am sorry, Mr. Secretary—one of the things I 

think I saw in the Treasury report to FSOC—since you are wearing 

two hats here, I guess you are advising yourself—but the Treasury 

report had advocated to FSOC that basically cost-benefit analysis 

needs to be employed in the SIFI designation process. 

Can you elaborate on whether or not FSOC is accepting this recommendation? And if so, what can we look forward to? 

Secretary MNUCHIN. So, yes. Thank you, Mr. Chairman. That 

was part of our recommendation. As I mentioned, we are now 

working with the committee members to review our recommendations and update guidance. So that is something that I hope will 

be included. 

Chairman HENSARLING. Thank you. 

The Chair now recognizes the gentleman from Georgia, Mr. 

Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Welcome, Secretary. 

You know, when I first opened your report I was very pleased to 

see where you had cybersecurity as your major concern. However, 

yesterday I became very worried with one of your FSOC members, 

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Mr. Mulvaney of the CFPB (Consumer Financial Protection Bureau). 

And I understand that he has pulled back any investigations into 

Equifax, the largest, most significant cybersecurity attack in this 

Nation’s history, 145 million American families having their birth 

dates, their Social Security numbers, all of that vital information 

out in the open. And he has pulled back. 

And I found this out yesterday in reading the report from Reuters. Are you familiar with that, Mr. Mnuchin? 

Secretary MNUCHIN. I am only familiar with what I also read in 

the press. I haven’t spoken to Director Mulvaney about it, but I 

will. 

Mr. SCOTT. Yes, I hope you do because it is very important. You 

are Chairman, as I understand it, of FSOC. You are Chairman. 

And it is FSOC’s duty to keep our financial system secure from 

these kinds of threats. You have the head of the CFPB rolling back 

investigations. 

I not only am asking you to speak with Mr. Mulvaney, but speak 

strongly, let him know how bad this looks and that the American 

people are very upset that this Administration is taking this backward step, back from investigating the most dangerous security 

threat in this Nation’s history. Please do that, Mr. Mnuchin. 

Do you have any reason why Mr. Mulvaney would even do such 

a thing? 

Secretary MNUCHIN. I am not aware of that. But as I said, it is 

something I am to discuss with him and we will take up at FSOC. 

Mr. SCOTT. Yes, because it will look very hypocritical if, on the 

one hand, the Administration is so eager in going after 

cybersecurity and then, on the other hand, having the consumer 

protection agency to back away. 

And, additionally, the CFPB has even shelved plans for the onthe-ground test on how Equifax even protects its data. So we have 

some very, very significant things there. 

In my final minute and a half, I do want to raise up the issue 

of the fintech companies. I am the Democratic Co-chairman of the 

FinTech Caucus. And the fintech industry is going through some 

remarkable challenges. And they are doing some great things, just 

from simply being able to partner with many of our traditional 

banks who will not service the under bank and those that need the 

help the most, but they are partnering with them. And they are 

also breaking away for real great technological improvement. 

But here is the problem. Since OCC (Office of the Comptroller of 

the Currency) has issued or is going to issue a charter for their regulation, you have all of these regulators now, the CFP has their 

group, you have, Treasury, I don’t know if you have your group, but 

each of these regulatory firms is now converging and coming up 

with how to regulate this industry. 

Now we have three or four different regulators out there beginning to pounce. You are going to have overregulation. You are 

going to quite possibly suffocate this new emerging industry. 

So I want to ask you, how do you see that? And is Treasury moving? And as the leader of FSOC, will you take leadership in making 

sure that fintech companies are not suffering? 

Chairman HENSARLING. A very brief answer, Mr. Secretary. 

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I would remind all members to pay attention carefully to the 

clock. 

A brief answer, Mr. Secretary. 

Secretary MNUCHIN. Yes, thank you. We will address that at 

FSOC. We share some of your concerns. 

Mr. SCOTT. Thank you, sir. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Maine, Mr. 

Poliquin. 

Mr. POLIQUIN. Thank you, Mr. Chairman, very much. 

Mr. Mnuchin, thank you so much for being here. We really appreciate the great work you are doing. And I want to in particular 

thank you for your leadership in providing tax relief to American 

families and small businesses. 

A couple of weeks ago, sir, I was at one of our terrific small businesses in Maine, the Dysart’s Truck Stop and Diner, right in central Maine, in Hermon, right off Route 95, next time you go vacation with your family in Maine. And this fellow came up to me and 

said, ‘‘Bruce, thank you very, very much, because I get paid on a 

weekly basis and I got another 27 bucks in my weekly paycheck.’’ 

Now, he did the math for me. He said, ‘‘Bruce, that is about $110 

a month, $27 a week, roughly $110 a month.’’ And he said it is 

about $1,300 per year. He said, ‘‘That is really important to my 

family because it pays for groceries for our family for about 3 to 

4 months out of the year.’’ 

So thank you very much for your leadership on this, sir, and we 

look forward to helping more American families. 

I have been very concerned, along with other people on the committee, Mr. Secretary, about how unfair it is for nonbank financial 

institutions, like mutual funds, to be possibly designated as a SIFI 

by FSOC when they pose no risk to the economy if they get in trouble. 

Now, I think it is widely agreed between our discussions here in 

the committee that we need reforms to the SIFI designation process that takes place over at FSOC. 

Now, I think we can agree that it is a good idea for a business 

that is potentially going to be designated a SIFI to know why. And 

if, in fact, they are designated, to have an off-ramp such that they 

are able to make those adjustments. 

And the reason why this is so important, Mr. Secretary, for small 

savers and small asset managers in Maine is because if you have 

this burden of additional regulations that are really unnecessary 

and costly, it drives up the cost to provide their services and drives 

down the rate of return for someone saving for college, for example. 

So my question to you, Mr. Secretary, is can we agree that the 

best way to deal with this issue is to codify in legislation the reforms we need to the SIFI designation process? 

Secretary MNUCHIN. We think that would be a good idea. And we 

believe in transparency, that, as you said, companies should understand, if they are designated, why and what they would need to do 

to get out. 

Mr. POLIQUIN. Thank you, sir. 

Recently, your own Treasury Department issued an asset manager report that recommends completely eliminating stress testing 

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for nonbank financial institutions, like mutual funds and insurance 

companies. 

Now, in my opinion, I know we have had this discussion, sir, it 

doesn’t make any sense for someone who is managing money for retirement to have the same stress test requirements or any stress 

tests at all as a bank that is insuring deposits for those same individuals. 

I would like to bring to your attention, Mr. Mnuchin, if I can, my 

bill, H.R. 4566, Alleviating Stress Test Burdens to Help Investors 

Act. It passed this committee with wide bipartisan support. And I 

am asking you, sir, do you agree with the Treasury’s own report 

and with this committee that it is a good idea to eliminate the 

stress test requirements for nonbank financial institutions? 

Secretary MNUCHIN. I do agree with, as we put it in the Treasury’s report, yes. 

Mr. POLIQUIN. Thank you, sir. 

Last week the Treasury produced a list of assets held by Russian 

oligarchs. Another bill that I have that has passed out of committee, sir, H.R. 1638, called the Iranian Leadership Asset Transparency Act, roughly does the same thing. 

In other words, it looks at the top 70 or 80 political and military 

leaders in Iran—which I may parenthetically say that we all know 

is the chief sponsor of terrorists in this world. They recruit, they 

train, and they fund these terrorists, and they have American blood 

on their hands. 

I think it is a great idea, as per my bill, to make sure we get 

the information out there to the public into the world how these 

folks have been ripping off their citizens, what they are using those 

assets for, to shed some light on this issue. 

Now, Senator Cotton has also taken an interest in this bill, Mr. 

Mnuchin, and has introduced companion legislation on the other 

side of the chamber. 

Can we agree that this is a good idea to make sure the world 

knows what this money is being used for and how it was accumulated? 

Secretary MNUCHIN. I am not familiar with all the details of the 

bill, but I look forward to sitting down. But, conceptually, I think 

it is the right direction. 

Mr. POLIQUIN. Wonderful, because you are already doing it for 

folks over in Russia. 

Last, sir, if I may. The two reasons why the economy is doing so 

well is the great work in repealing red tape and also the tax cuts 

that have been recently enacted. 

In rural Maine, it is critically important that small community 

banks and credit unions are relieved from additional burdens and 

red tape. 

Can we get a commitment from you, sir, that you will do everything humanly possible to help rural financial institutions? 

Secretary MNUCHIN. Yes. 

Mr. POLIQUIN. Thank you, sir. I appreciate it. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Texas, Mr. Green, 

the Ranking Member of our Oversight and Investigations Subcommittee. 

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Mr. GREEN. Thank you, Mr. Chairman. 

Thank you, Madam Ranking Member. 

And I thank the Secretary for appearing. 

Mr. Secretary, I fear that the Grand Old Party—the party of Lincoln, Gettysburg Address, ‘‘government of the people, by the people, 

for the people shall not perish from the face of the Earth,’’ the 

party of Reagan, ‘‘Mr. Gorbachev, tear down this wall’’—I fear that 

the Grand Old Party has lost its way. I am amazed at the number 

of members of the Grand Old Party who are defending Russian intrusion into a legitimate election for President of the United States 

of America. The party has lost its way. 

And I am concerned about the sanctions that Congress legitimately desires to have imposed. I am concerned as to whether they 

are being imposed, especially as it relates to section 241, which accorded the Secretary of the Treasury, Secretary of State, Director 

of National Intelligence to codify a list of these oligarchs, persons 

who have, by way of corruption, achieved great fortune. 

And this list was to be used so as to identify them and have certain restrictions imposed upon them. It has been reported that the 

list was compiled by the appropriate members of the Government, 

the experts, if you will. But it has also been reported that after 

compilation took place, someone higher up decided that there was 

a better list that ought to be utilized. There is a suspicion that the 

person higher up resides in your office. 

Can you give clarification as to what is going on with the list, 

Mr. Secretary? 

Secretary MNUCHIN. I don’t know what you are implying in any 

way. So, again, let me be perfectly clear, and I talked about this 

in the opening. There is a—again, we fully complied with the law. 

There was an extraordinary amount of work done. I encourage all 

of you, you have access to the classified report— 

Mr. GREEN. Well, Mr. Secretary, if I may just intercede for just 

a moment, if I may. I don’t mean to be rude, crude, and unrefined, 

but I do have to ask this. 

Is it true that there was a list presented and that that list was 

changed in some way by persons other than those who had compiled the initial list? 

Secretary MNUCHIN. It wasn’t changed at all. 

Mr. GREEN. Was it added to? 

Secretary MNUCHIN. Were there people added to the list? 

Mr. GREEN. Yes, to the list. 

Secretary MNUCHIN. The list— 

Mr. GREEN. Were there people added to the list? 

Were there people added to the list? 

Secretary MNUCHIN. Were there people— 

Mr. GREEN. Were there people added to the list? 

Secretary MNUCHIN. The classified list? 

Mr. GREEN. Were there people added to the list? 

Secretary MNUCHIN. By whom? By the intelligence people or by 

us? 

Mr. GREEN. Were there people added to the list by any source? 

You have news reports saying that somebody changed it, and they 

are alleging that you are that person, Mr. Secretary. Were there 

people added to the list? 

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Secretary MNUCHIN. Again, let me be clear, I didn’t add anybody— 

Mr. GREEN. Well, were there—well, you didn’t—were there people added to the list? This is a very succinct, a very clear question. 

It is perspicuously clear. Were there people added to the list? 

Secretary MNUCHIN. Again, let me be clear. I don’t know what 

you are talking about. The list—the list—again— 

Mr. GREEN. I am talking about the 241 list of oligarchs, people 

who, by corruption, obtained fortunes in Russia, people who are to 

be sanctioned, have sanctions imposed— 

Secretary MNUCHIN. Yes, there are people that are on that list 

and that will be sanctioned. 

Mr. GREEN. Were there additional people added to the list? 

Here is the allegation, Mr. Secretary, that additional people were 

added to the list so as to expand the list and cause the oligarchs, 

the criminals, to be associated with persons who legitimately made 

money, thereby solidifying those who have fortunes in Russia, with 

President Putin, thereby preventing what we wanted to see happen, that sanctions imposed against those who were achieving 

power and fame and recognition and money by virtue of corruption. 

Secretary MNUCHIN. Again— 

Mr. GREEN. Were there people added to the list? 

Chairman HENSARLING. The time of the gentleman has expired. 

Mr. GREEN. Let the record reflect I did not get an answer. 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from Arkansas, Mr. Hill, the majority whip. 

Mr. HILL. I thank the Chairman. Thanks for this hearing. 

And thank you, Mr. Secretary, for coming before us today. And 

I want to say, my appreciation to you in your first year working 

with both sides of the Hill on our historic Tax Cuts and Jobs Act. 

Just the other day I got a message from a mom who told me that 

her withholding went down and her pay went up to the tune of 

$51.95 per pay period each month, and she connected it directly 

with paying for her daughter’s biweekly health insurance premium. 

That is exactly what I think the benefit of this tax plan is, is letting families have more of their money in their pocket to do what 

they need to do to help their family and to have their priorities 

met. 

And I got a note Friday afternoon from All-Pro, which is a commercial painting contractor in Benton, Arkansas, in my district, 

that was so supportive of the act, their plans are to buy new equipment and improve the compensation for all 27 of their employees. 

And then, finally, I think that something across Arkansas that 

was very beneficial was 2 weeks ago the Public Service Commission 

announced that for our shareholder-owned utilities, CenterPoint 

and Entergy, that the tax benefits that those utilities are getting 

by reducing the corporate tax rate will be passed through directly 

in lower utility bills for all Arkansans covered by them. 

What a great way to say, here is a real benefit to your household 

that is not just seen directly, but indirectly from the tax bill. 

So thanks for your leadership. I am sure it was a trial by fire 

as you left the private sector and came into Washington. So thank 

you. 

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The other thing I wanted to talk about today from a regulatory 

point of view and FSOC’s responsibility is the complexity since 

Dodd-Frank’s imposition of the so-called Volcker Rule. We have 

had a lot of bipartisan discussion on that over the past years and 

how we can deal with it. 

Chair Yellen described it as too complex to implement. Several 

bank presidents have come to this committee saying that it was too 

complex to implement. Our new Fed Chair, just sworn in, Jay Powell, stated, I thought correctly, that trading desks needed Ouija 

boards to figure out how to comply with the Volcker act. 

So I have a bill called H.R. 4790, which attempts to improve regulatory harmonization and coordination, something that you called 

for in the Treasury report, and also relieves banks under $10 billion from the complexity of the Volcker Rule. Is that something 

that you still personally support and would advocate for? 

Secretary MNUCHIN. Absolutely. Thank you. 

Mr. HILL. I want to remind my colleagues that the Federal Register—this is the Volcker Rule in the tiny print of the Federal Register. And all banks are trying to comply with this, Mr. Secretary, 

and it is just not doable. 

And when you have Federal Reserve Bank presidents in the 

country saying they can’t even administer the rule to tell a bank 

if they are in compliance with it or not, we have a problem. 

So I appreciate your leadership, but it is an FSOC matter that 

we get that harmonization. 

The other thing I want to mention, too, is on the subject of—that 

my colleagues on the other side of the aisle are talking about, and 

give you a chance to respond. Clearly, you talked at length about 

sanctions on North Korea, Venezuela, and Iran. 

I want to compliment you again on Treasury’s work with both 

sides of the Hill to impose not only your economic sanctions you 

have control over at Treasury, but also working with the Hill on 

legislative sanctions here under Chairman Barr’s leadership. 

Do you have a sense of timing on when you might follow through 

with proposed sanctions on the list of Russian inside oligarchs that 

has been so referenced by the other side today? 

Secretary MNUCHIN. Sure. I can assure you that we have resources working on it right now, and it will be on a rolling basis 

over the next couple of months. And, again, these same resources 

are working on, as you said, North Korea, Iran, and Venezuela. 

And there also have been significant Russian sanctions already 

done under our administration. 

Mr. HILL. Well, this is something that I think we have strong bipartisan support on Capitol Hill, that we use the economic power 

of the Treasury, our trade strength as the United States, and our 

bipartisan ability to have legislative sanctions against countries 

and non-state actors that try to hurt this county. So thanks for 

your leadership on the national security front. 

I yield back, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Illinois, Mr. Foster. 

Mr. FOSTER. Thank you, Mr. Chairman. 

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During the Obama recovery the stock market tripled, household 

net worth nearly doubled, unemployment was cut in half, trade 

deficits were reduced, and inflation was kept low. 

Do you expect that your administration will match the Obama 

record? And if not, why not? 

Secretary MNUCHIN. Again, obviously when we were coming out 

of one of the worst recessions we had those numbers move in specific directions. So we are now more focused on sustained GDP 

growth, which was subpar in the last Administration. 

Mr. FOSTER. But you don’t expect, for example, that you will do 

as well in tripling the stock market or similar—or cutting unemployment? 

Secretary MNUCHIN. Again, I am not going to make any specific 

comments about where the stock market is in the future. It has 

been up a lot, again. But I am not going to make any specific comments on the stock market. 

Mr. FOSTER. OK. I would like to talk a little bit about trade in 

Forex markets. 

I have long viewed that the failure of free trade deals to address 

currency manipulation was probably their most significant shortcoming and the major reason I haven’t supported them. Nations 

can and have devalued their currencies opposite the dollar, so that 

even the benefits of reduced tariffs which typically come from trade 

deals and other trade barriers are significantly undermined. 

One of the duties you have is to periodically designate countries 

potentially for currency manipulation. I think largely because the 

dollar has been significantly down in the last year, you have not 

designated any countries as currency manipulators using the objective three-part test that was developed. And so I think that is correct. 

However, there is a real danger that, particularly if things go 

sour in Asia, for example, they may resume currency manipulation. 

And so we have to be prepared to have actions. 

So the question is, what action can we take with and without 

treaty level agreements? 

So one proposal that I have studied that does not require—it is 

something that—any treaty level agreements, things that we could 

just do ourselves, comes from Fred Bergsten and Joseph Gagnon at 

the Peterson Institute. They argue the United States could act unilaterally or multilaterally, if possible, with a partner like the EU 

or the ECB to simply make countervailing purchases of currency 

for any country that was found to be manipulating its currency, according to either our definition or the IMF’s definition, which are 

pretty similar. 

So I was just wondering if you have had time to think about this. 

I raised this issue previously when you were here. And it seems 

like even announcing a policy, that this was a national policy to do 

this on a unilateral basis, would really basically solve this problem. 

It is not something that we have to actually get an international 

agreement to do. And I was wondering if you have any thoughts 

on how you might proceed on this. 

Secretary MNUCHIN. Sure. Well, first of all, I can assure you that 

the President and I are very focused on the trade deficits and are 

very focused on currency manipulation. And to the extent there is 

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37 

currency manipulation going forward, we will absolutely call that 

out. 

Mr. FOSTER. We have been calling it out for decades, all right? 

Calling it out, jawboning doesn’t work. 

Secretary MNUCHIN. Again, I think sometimes in the past we 

didn’t call it out, so that was one of the problems. 

But in any event, we look forward to working with you. I think 

your idea is an interesting idea. It is one of the many tools that 

we can use against currency manipulators. 

Mr. FOSTER. Right. No, I think this is—actually, it really comes 

from the Peterson Institute, the thought behind it. And when I saw 

this, I just thought this is something we can and should do. 

Secretary MNUCHIN. I think it is very interesting. Thank you. 

Mr. FOSTER. OK. I would like to speak a little bit about the debt 

limit. When we talked about this the last time you were here, you 

really said that you did not support the debt limit as a mechanism 

for controlling spending, which is something I agree. And the market has learned to tolerate things like Government shutdown pretty by rolling their eyes and not reacting too strongly. 

But the reaction to a default, a potential default, has been huge. 

During the Tea Party default crisis in 2011 we saw just multitrillion dollars of losses in market value, and I think the average 

American lost more than $10,000 due to the Tea Party default crisis. 

So this I view as a completely separate risk and a very important 

one that we are staring down the barrel of. And so I was just wondering if you have had any thoughts on things like proposals to 

permanently get rid of the debt limit in combination with other 

mechanisms that control spending. 

Secretary MNUCHIN. I have. I have talked to the President about 

that. And I think that that is something that we should consider 

longer term. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Minnesota, Mr. 

Emmer. 

Mr. EMMER. Thank you, Mr. Chairman. 

Thank you, Mr. Secretary, for being here today. 

It is interesting. I want to go back. Just a second ago you said 

our focus has been more on addressing GDP growth as one thing 

that you brought up. I find it interesting because the last Administration on the way out the door was boasting 1.8 percent GDP 

growth, somewhere around December of the year they were leaving 

office. 

It is completely different over the past year. Not only has GDP 

gone over 3 percent, but since election day you have the lowest 

level of unemployment in 17 years, wages are finally rising after 

8 years of stagnation. In fact, 2.9 percent over the past 12 months 

is the largest since June 2009, and it doesn’t even account for the 

bonuses that are due to tax reform. 

Small businesses plan to increase compensation to the highest 

level in nearly 30 years, according to the NFIB. Pay gains during 

Trump’s first year in office are the best since the Great Recession. 

More companies are hiking wages and salaries than at any time 

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over the last 18 years, according to the National Association for 

Business Economics. 

U.S. manufacturing expands near the fastest pace in more than 

13 years, according to the Institute for Supply Management. And 

U.S. jobless claims are nearing a 45-year low, according to our 

Labor Department. 

Back in Minnesota on January 2, U.S. Bancorp, which is based 

in Minnesota, announced a thousand-dollar bonus for nearly 60,000 

employees, a new minimum wage of $15 per hour for all hourly employees, and $150 million contribution to the U.S. Bank Foundation, which is heavily involved in our communities. The company 

also said it would enhance employee health insurance offerings as 

well as focus on improving customers’ mobile and digital experiences. 

This is in great part due to the Tax Cuts and Jobs Act, which 

you deserve to be thanked over and over for the leadership that 

you showed, Mr. Secretary, in making sure that thing got done. 

And we appreciate it. 

Now, this is just one of the success stories that we have in Minnesota, but we are not out of the woods yet. And I think you would 

agree we have a lot of work left to do. We have just begun. 

You have touched on it here today, the FSOC’s 2017 report, with 

some other questions, but I want to go at this quote from your report on the importance of tailoring regulations based on the size 

and complexity of financial institutions. 

To me, it is inane that we just pick a number, whether it is 50 

billion or it is 250 billion, whatever it is, when what we should be 

doing is looking at the institution, looking at the portfolio, what are 

they doing to assess whether they pose risk to our system. 

And I guess if you would just take a little bit of time and explain 

the problems that we encounter, not just the institutions, by failing 

to tailor these evaluations to the institution. 

How does that not only impact the institution’s ability to do business all the way down the financial services food chain, but how 

does it impact the consumer, the mom-and-pop small businesses? 

Secretary MNUCHIN. Well, again, as you point out, just to start 

with on size, a $50 billion bank and a trillion-dollar bank have very 

different risks. But you could have two banks that are the same 

size and one could be a plain vanilla bank that does community 

lending and the other one could be a complex bank with lots of derivatives. So we believe in looking at the complexity of the organization and the risks. 

Mr. EMMER. Mr. Secretary, would you support—and there have 

been efforts in this committee, and things have actually been 

moved out of committee—would you support trying to codify or legislate actual adjustments to how we evaluate, how you evaluate financial institutions? In other words, putting into law, rules that 

would allow that type of evaluation as opposed to an arbitrary 

threshold. 

Secretary MNUCHIN. I would. And I look forward to working with 

you on it. 

Mr. EMMER. Thank you very much. 

I see, Mr. Chair, my time has run out. I will yield back. 

Chairman HENSARLING. The gentleman yields back. 

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The Chair now recognizes the gentleman from Washington, Mr. 

Heck. 

Mr. HECK. Thank you, Mr. Chairman. 

Mr. Secretary, when you were here in July, I asked if you would 

please extend your efforts and that of your Department’s in working with myself and Congressman Pittenger on our efforts to modernize the Committee on Foreign Investment in the U.S., CFIUS. 

You have. You have done so. Not only done so, you have done so 

constructively. And I want to publicly acknowledge that and thank 

you very much for following through on your word. 

Secretary MNUCHIN. Thank you very much. 

Mr. HECK. Now, a key part of making sure that CFIUS keeps us 

safe and functions efficiently is ensuring that it is appropriately 

resourced, that you all have the money to do what you need to do. 

The results of our collaboration, code named FIRRMA, have provisions in it that help with resources. For example, it creates a unified budget request, it grants special hiring authority, and grants 

authority for filing fees. 

But you also personally, as Secretary of the Treasury, have an 

important role to play in this regard. So I would like to ask you, 

sir, if you can and are willing to give us a commitment that you 

will do everything you can, working within Treasury and the Administration and in partnership with Congress, to make sure that 

CFIUS has the necessary resources to do its job, especially if we 

enact CFIUS modernization legislation? 

Secretary MNUCHIN. I will. And I am hopeful that we get this 

passed soon. It is a big priority of ours at Treasury working with 

you. 

Mr. HECK. And you have demonstrated that. Again, thank you. 

Also when you testified last July, you identified joint ventures as 

a particularly concerning gap in existing CFIUS authorities. I 

would like to ask if you could elaborate on why Treasury believes 

it is particularly important for any CFIUS modernization to cover 

joint ventures. 

Secretary MNUCHIN. Sure. Because we think that where there 

are risks that would be done in a purchase, to the extent that a 

company is able to structure a joint venture to get around the 

CFIUS, current CFIUS legislation, that defeats the intent of the 

law. And that is why we have been working with you on FIRRMA 

to fix it. 

Mr. HECK. How do you see expanded CFIUS authorities, especially with respect to joint ventures, interacting with existing areas 

of the law? Obviously, I am referring to export controls. Do you believe these can be integrated and work? 

Secretary MNUCHIN. I do. Yes. 

Mr. HECK. I want to go back to something that you said earlier 

in response to the question about FinCEN guidance on access to 

banking services for marijuana businesses in States that have legally constituted them, either through approval of legislative action 

or by a vote of the people, which is now a majority of States. 

And what you said, Mr. Secretary, is—I am quoting you verbatim 

from just a couple hours ago—‘‘I can assure you we don’t want bags 

of cash.’’ 

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I can conceive of no way in which you can avoid bags of cash if 

you back down on FinCEN guidance. Do you have something in 

mind that would enable us to prevent that very perilous circumstance to public safety of having bags of cash through a route 

other than that which FinCEN has already offered in terms of 

guidance? 

Secretary MNUCHIN. Sure. Well, as I mentioned, we are reviewing the existing guidance. We specifically haven’t taken it down. 

We are looking at what Justice has done, and, again, as I said, we 

are sensitive to the issue of dealing with the public safety issue 

and also making sure that the IRS and others have ways of collecting taxes without taking in cash. 

Mr. HECK. I am interpreting what you just said to effectively implicitly being supportive of the current FinCEN guidance. Would I 

be off in that regard? 

Secretary MNUCHIN. Again, I want to be careful in my wording 

in saying that we are reviewing it, but the intent is not to take it 

down without a replacement that can deal with the current situation. 

Mr. HECK. Very good, sir. 

Last, I cannot help but comment on this issue of Russian sanctions. Mr. Secretary, we will know when sanctions are working 

when Russia stops interfering in Western democracies’ elections. 

We know they did in ours in 2016. We know they did in other 

Western democracies since then: Germany, France, as two examples. And we know they are, as we sit and speak, in the Mexican 

national election, as attested to by none other than the National 

Security Advisor to the President. So, as you proceed to be a party 

to these conversations about whether or not to actually carry 

through on the sanctions that Congress adopted 517 to 5, please 

keep in mind, they haven’t stopped. They are not going to unless 

or until we actually do what Congress asked the Administration to 

do. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Michigan, Mr. 

Trott. 

Mr. TROTT. Thank you, Mr. Chairman. 

Thank you, Mr. Secretary, for your time today. 

The Chairman mentioned earlier the $1,000 bonuses that 

Comerica bank gave to their employees down in Dallas. Before they 

moved to Dallas, they were headquartered in Detroit, and they still 

have thousands of employees in Detroit. And in fact, we hope that 

they move their headquarters back to Detroit. A lot of exciting 

things happening. 

Chairman HENSARLING. Would the gentleman yield on that 

point? 

Mr. TROTT. The gentleman will yield. 

Chairman HENSARLING. I was being facetious. As a Member from 

Dallas, we are very happy where Comerica is located. 

Mr. TROTT. We still have thousands of people in Michigan at 

Comerica, but I want to thank you because the tax reform legislation that you helped get through Congress prompted Fiat Chrysler 

to make a very important decision, headquartered in my district. 

They decided to invest $1 billion in Michigan, create 2,500 jobs, 

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give each employee a $2,000 bonus, and move a plant from Mexico 

back to Michigan. So that is going to make a huge difference for 

people in my district. And I thank you for your efforts in that regard. 

Now, a few minutes ago, my friend from Georgia asked if you 

had heard about the CFPB’s decision not to pursue and investigate 

Equifax. And in other breaking news involving the CFPB, the D.C. 

circuit a few days ago decided en banc to throw out all of the penalties and fines that were imposed against PHH, over $100 million, 

by the prior czar who was acting in an arbitrary fashion when he 

decided to ignore RESPA and statute of limitation laws. 

But with respect to Equifax, is it possible that the CFPB decided 

not to investigate Equifax because they are not authorized to? 

Under Gramm-Leach-Bliley and the Fair Credit Reporting Act, 

isn’t that responsibility entrusted to the FTC, not the CFPB? 

Secretary MNUCHIN. Again, I am not going to speculate on that 

until I have had a chance to talk to Director Mulvaney about his 

thinking on it. 

Mr. TROTT. Well, I don’t think they have the authority, so that 

is perhaps why they made the decision. 

But in any event, I want to congratulate you on a very productive first year. It is making an incredible difference to our economy, 

and it is clear your background and experience has made you well 

qualified to do the work you are doing. 

With that being said, your annual report did not call for the repeal of the orderly liquidation authority. And as a former bankruptcy attorney, I happen to believe that a new subchapter in the 

Bankruptcy Code is a much better way to deal with an insolvent 

financial institution than political-appointed bureaucrats sitting in 

secret in a private room. 

You go to bankruptcy court, you have an experienced judge who 

is going to make a decision based on years of precedent. It is going 

to be open and transparent. And so I would just like your thoughts 

on whether the repeal of OLA in replacing it with a bankruptcy solution is a better outcome in the event we have a financial institution with some troubles down the road? 

Secretary MNUCHIN. Sir, I think, as you know, one of the executive orders that the President signed was for us to review that. And 

we expect we will be coming out within the next month on our report and our recommendation. So, once we do that, I look forward 

to talking to you about it? 

Mr. TROTT. Thank you. And, one of the problems I had with 

FSOC under the prior Administration is it seemed to be largely 

motivated by a guiding principle that was basically, to put it succinctly, that all business is bad, and if you’re a bank making a profit, then you must be in need of additional regulation and/or must 

be taking advantage of consumers. And, therefore, we are going to 

empower bureaucrats to write rules because the Government is so 

much better at solving problems in the private sector than entrepreneurs. 

Can you just briefly outline some of the reforms you are making 

to make sure that corporations have a fair shake at FSOC going 

forward? 

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Secretary MNUCHIN. Sure. Well, in general, I have met with literally hundreds and hundreds of CEOs. Specifically, we do believe 

in proper regulation, but we are being very clear that we want to 

make sure that the banks and other regulated entities do function 

properly. 

Mr. TROTT. Thank you, Mr. Secretary. 

I want to just close by mentioning my friend from Colorado, Mr. 

Tipton, has a great bill, the TAILOR Act, which is aimed at making 

sure regulations are tailored to specific businesses and not onesize-fits-all. 

And, with that, I yield back my time to the Chair. 

Chairman HENSARLING. I thank the gentleman for yielding. 

Mr. Secretary, I want to go back and revisit the Volcker Rule. I 

just want to make sure I understand your views regarding coordination and harmonization of the various agencies. Would you advocate that a single regulator take the lead on rule-writing and interpretation of Volcker as long as the other regulators continue to 

have a role in the examination process? 

Secretary MNUCHIN. Yes. Thank you, Mr. Chairman, for clarifying that. So I would support there being a lead agency—some 

people have suggested that be the Fed—and then have the other 

agencies play a supporting role so that there could be better coordination and better leadership on it. 

Chairman HENSARLING. Thank you, Mr. Secretary. 

The time of the gentleman from Michigan has now expired. 

The Chair recognizes the gentleman from Massachusetts, Mr. 

Lynch. 

Mr. LYNCH. Thank you, Mr. Chairman. 

Thank you, Mr. Secretary, for your indulgence and with the generosity of your time here today. I know you have been here quite 

a while. 

Mr. Secretary, I was just curious. I know that the current Administration has level funding the amount of resources for the Financial Crimes Enforcement Network, FinCEN. They do a lot of 

great work with this committee, especially with our antiterrorism 

financing subcommittee. 

And there is one weakness, one vulnerability that we did encounter on our investigation of some of the countries’ financial systems 

in the Middle East. And that is that we have, on occasion, one 

Treasury attache out of your Department covering five or six countries. And, obviously, countries in that area, in that region, that 

present some level of substantial risk. 

And I am just wondering if you would be willing to look at the 

possibility of increasing our people on the ground to work with our 

embassy personnel to help with the resiliency efforts that we have 

in a number of the Middle Eastern countries where we suspect that 

terrorist financing and illicit financing are intertwined with the legitimate financial systems and banking system in those countries. 

Secretary MNUCHIN. I would. And I agree with you. In my trip 

to the Middle East last summer and in other conversations, the 

Treasury attaches on the ground play a terrific role in working 

with the local governments and the local banks on combating terrorist financing. 

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Mr. LYNCH. Well, you have some very, very good people that are 

doing a wonderful job. My concern, and those of my colleagues on 

the other side of the aisle, as well as the Democrats, was that they 

are stretched pretty thin. And that we think that the result of 

being stretched thin like that will reduce the efficacy of our 

counterterrorism financing efforts. 

One subject that has been a lively subject of debate in this committee is the Export-Import Bank. And I know that the President, 

when he ran for office, he talked about bringing jobs home and supporting manufacturing. One of the most effective tools we have in 

Government in creating manufacturing jobs here in the United 

States has been our Export-Import Bank. And we are up against 

other countries that are expending tremendous resources to give 

their companies a competitive advantage. 

Recently, the President nominated someone with a long record of 

working to hobble and to actually shutdown the Export-Import 

Bank. And I would just like to find out what your approach might 

be or what your attitude might be toward the Export-Import 

Bank’s efforts to promote U.S. competitiveness, especially in a 

manufacturing sector. 

Secretary MNUCHIN. Well, I am indirectly involved in this, but I 

have spoken to the President and others, and he does want to open 

the Export-Import Bank for business. I think we want to make 

sure there are proper reforms there, but we are looking to fill the 

board. 

Mr. LYNCH. OK. Let me jump to this other matter with the 

MetLife dedesignation suit. I understand that you have dropped 

the appeal of the MetLife dedesignation suit. And I am just curious 

if you think that dropping that suit might make any future designation vulnerable to a similar legal challenge. 

Secretary MNUCHIN. Well, again, I think we looked at this purely 

from a legal standpoint, and we decided to drop the appeal. 

MetLife could still be subject to designation in the future or not. 

So the decision was made on a legal basis around certain issues. 

Mr. LYNCH. I guess what I am asking is, are we satisfied with 

the precedent that we might be setting in dropping that appeal? 

Secretary MNUCHIN. I think we are. We consulted with the Department of Justice and with the other agencies, and I think we 

are comfortable with that. 

Mr. LYNCH. Thank you. Mr. Chairman, I yield back. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from California, Mr. 

Royce, Chairman of the House Foreign Affairs Committee. 

Mr. ROYCE. Thank you very much, Mr. Chairman. 

This question, Secretary Mnuchin, this question goes to derisking 

the Federal balance sheet, and specifically, we discussed this the 

last time that you and I spoke when you were before the committee 

and also in conjunction with GSE reform, but I will lay out the case 

here. Earlier this Congress, I introduced legislation requiring that 

the GSEs increase credit risk transfers with the private sector. And 

I am hopeful that the bill will be included in the committee’s comprehensive reform efforts. So we have seen credit risk transfers 

work, not just at Fannie and Freddie, but following last year’s 

storm season. If we think about it, we saw a private reinsurance 

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payout afterwards of $1 billion to the National Flood Insurance 

Program. So analysis has shown that there is far more capacity in 

the financial system, worldwide about $600 billion, for increased 

credit risk transfer. 

So my thought here is, why not look elsewhere in the Federal 

Government? On the housing front, why not replicate risk transfer 

at FHA and at Ginnie Mae, specifically? And I would ask if you 

would support those efforts. 

Secretary MNUCHIN. Well, first of all, let me just say, I look forward to working with you and the Chairman and others on a bipartisan basis for housing reform. I think this is very important. And 

I do say housing reform, because I do think we need to look at FHA 

and not just the GSEs. I want to be very careful that we don’t solve 

the taxpayer issue in one area, only to find out that the marketshared FHA has gone way up and we have taxpayers at risk on the 

Fed balance sheet. 

Mr. ROYCE. Absolutely. So what I plan to do is to introduce legislation to direct the Office of Management and Budget to identify 

other areas of the Federal balance sheet where derisking could be 

used to protect taxpayers. And I hope you could support that effort. 

Also, on export control reform, a point I was going to make is 

that, as we discuss our economic security here moving forward, I 

share the concern of my colleagues that foreign-government-backed 

investments, that it is critical that we look at those investments in 

U.S. technologies that might pose a national security risk. And as 

you mentioned in your opening, the committee is considering legislation to expand CFIUS in a way to address this threat. 

The Foreign Affairs Committee, which I chair, is considering export control reform as an additional way to tackle the problem. So 

would you support new authorities to restrict the export of critical 

technologies to countries that threaten the U.S. national security? 

Secretary MNUCHIN. I absolutely would, thank you. 

Mr. ROYCE. Well, thank you. 

With that, I will yield back, Mr. Chairman. 

Chairman HENSARLING. Do you yield to the Chairman? 

Mr. ROYCE. I yield my time to the Chairman. 

Chairman HENSARLING. I thank the gentleman for yielding. 

I want to go back to the FSOC designation process, Mr. Secretary, just to make sure I am clear. 

In the previous Administration, FSOC seemed to make their designation without taking the input of the institution’s primary regulator because we know the FSOC membership is not really an 

agency; it is a head of an agency. And we certainly know that, 

under the previous Administration, there was little to no interaction with the actual company that was the subject of the designation review. 

As head of FSOC, how has your process changed? Will the primary regulator be involved in this process, and what exactly is the 

dialog or process that will take place with a company that is subject to a potential designation? 

Secretary MNUCHIN. First of all, we absolutely will look to and 

rely upon information for the primary regulator. They are the regulator that understands the company the best. And as I mentioned 

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earlier, we are looking to revise the guidelines so that there is 

more transparency when we designate someone. 

Chairman HENSARLING. Could you go into more detail about 

that, Mr. Secretary, on your transparency initiative? 

Secretary MNUCHIN. Yes. I fundamentally believe that if people 

are designated, they should understand why they are being designated and what they can do to reduce those risks going forward. 

Chairman HENSARLING. Thank you. 

The Chair now recognizes the gentleman from Colorado, Mr. 

Perlmutter. 

Mr. PERLMUTTER. Thanks for being here, Mr. Secretary. And I 

have three areas I want to talk to you about. 

Secretary MNUCHIN. Thank you. 

Mr. PERLMUTTER. Bitcoin, virtual currencies; marijuana and 

banking; and sanctions. 

Secretary MNUCHIN. Three of my favorites. 

Mr. PERLMUTTER. I thought you would enjoy those. And, really, 

we do appreciate your testimony today. You have been going a long 

time. 

So let us just start with the virtual currencies. And we have seen 

tremendous fluctuation in the market, particularly over the last 

year. We have reached some 19,000 bitcoin, for instance, in midDecember. It is down around 6,000 or so today. How are you looking at these virtual currencies, and what do you think needs to be 

done, if anything? 

Secretary MNUCHIN. Well, I share your concerns on it, and as I 

mentioned earlier, there is two major focus. One, we have set up 

a subcommittee of FSOC to make sure that we have the various 

different regulators working together since these are new areas. 

Number one, I want to make sure that anybody who uses bitcoin, 

that we can understand how they are transacting so that they are 

subject to BSA rules, they are subject to money laundering, they 

are subject to know your customers. So, in the United States, we 

have those rules. We are working with the counterparts at the G20. 

I want to be careful that this doesn’t turn into Swiss numbered 

bank accounts, so bad guys can’t use these. 

The second thing is I do share your concern about making sure 

that consumers understand them, and to the extent that they are 

now trading on futures exchanges, that the futures exchanges have 

the proper regulation of the underlying markets so that they can’t 

be manipulated. 

Mr. PERLMUTTER. Thank you. Second question, marijuana and 

banking. When you were here last, you and I had a little conversation. And, obviously, we see this industry growing. We are up to 

46 States that have some level of marijuana use, so whether it is 

cannabis oil for seizures or medical marijuana or commercial. And, 

the Chairman and I joust about this from time to time, but obviously, the banking industry needs to provide some services to all 

these businesses across all these States. And I don’t know if you 

were surprised by the revocation of the Cole memo by the Justice 

Department or whether you had had chances to talk to the Attorney General before that occurred, but the genie is out of the bottle 

on this. And Treasury and Justice and the Congress need to address this. 

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So you said you were going to talk to your friend Mr. Mulvaney 

about some CFPB issue or maybe budget or whatever. I suggest to 

you that you talk to him about the SAFE Act that Mr. Heck and 

I are sponsoring because he was a cosponsor of it. And we hoped 

he would have been the main sponsor but for the fact he was selected to go to the Administration. 

So, obviously, in response to Mr. Heck, you guys are reviewing 

your FinCEN guidances and things like that, but there is no going 

back here. And your Department is square in the middle of so 

many banks and so many businesses either having a safe way and 

an accountable way to manage this, just if you have any comments 

to my comments. 

Secretary MNUCHIN. Well, yes, first of all, I will follow up with 

Director Mulvaney on the SAFE Act, specifically. I did not participate in the Attorney General’s decision and what he did, but we 

are consulting with them now. And, again, we do want to find a 

solution to make sure that businesses that have large access to 

cash have a way to get them into a depository institution for it to 

be safe. 

Mr. PERLMUTTER. Thank you. 

Last question. Sanctions, which you have had an opportunity to 

address a few times already today. But just looking at a story from 

Bloomberg from a couple days ago: ‘‘Treasury Warns of Upheaval 

If U.S. Sanctions Russian Debt.’’ And my guess is you are familiar 

with it. But there is a sentence in here: ‘‘Russian assets climbed 

this week as investors speculated the Treasury wouldn’t recommend sanctions on the country’s sovereign debt.’’ And then further, from a report, says: ‘‘Given the size of Russia’s economy, its 

interconnectedness and prevalence in global asset markets, its likely overcompliance by global firms to U.S. sanctions, the magnitude 

and scope of consequences from expanding sanctions would be problematic.’’ 

Your response? 

Secretary MNUCHIN. I think we are targeted on specific sanctions 

to bad individuals and companies, as opposed to sanctions on the 

debt. 

Mr. PERLMUTTER. Thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Georgia, Mr. 

Loudermilk. 

Mr. LOUDERMILK. Thank you, Mr. Chairman. 

And, Mr. Secretary, good to see you again. And thank you for all 

you are doing. 

Before I get to my questions regarding regulatory review, I want 

to just share with you a little bit of good news. We keep hearing 

this bad news. But 2 years ago, when I went home one weekend, 

I was at several events. A gentleman came up to me and he shared 

with me a story that he did not feel like he could continue on running their small manufacturing business that had been in their 

family for decades. 

In fact, he told me it was so difficult to do business, between regulation, lack of access to capital, customers. It wasn’t just him, but 

even his customers putting pressure on him because of their costs 

going up. He said: ‘‘After decades of running this small business, 

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I am going to retire, and I am going to shut this business down. 

And my children don’t even want to be in the business because it 

is so difficult to do business.’’ 

This weekend, I ran into that same gentleman, who came up to 

me with a big smile on his face. He said: ‘‘I just want to tell you, 

my accountant came to me last week and said, ‘Next year, because 

of the tax reform bill, you are going to save a $100,000 in this business.’’’ 

He said: ‘‘No longer am I shutting it down. I am trying to figure 

out the best way to expand the business right now.’’ 

So that is a true Main Street story of what we— 

Secretary MNUCHIN. Thank you. We like those stories. 

Mr. LOUDERMILK. Oh, I do, too. And, hey, I will tell you, it is a 

whole lot better to go home and hear ‘‘thank you.’’ ‘‘Thank you for 

what you have done.’’ And we are hearing it all over. 

I wanted to discuss an issue that you raised in the Treasury report on banks and credit unions. You discussed the importance of 

retrospective reviews of agencies’ regulations, which many in this 

room, on a bipartisan basis, believe we should have regular reviews 

of regulations, especially those that are antiquated, outdated, or irrelevant. And in the report, you also noted that, before DoddFrank, the banking agencies themselves were responsible for implementing consumer financial protection laws. So these regulations were included in reviews under the Economic Growth and 

Regulatory Paperwork Reduction Act (EGRPRA). However, when 

Dodd-Frank created the CFPB, consumer regulations were no 

longer subject to these reviews. 

Now, just in the last few weeks, we passed a bill out of this committee on a bipartisan basis that I authored that would actually include CFPB in the EGRPRA review process. And my question is, 

can you further explain, why it is important for these regulatory 

agencies to review their rules periodically? 

Secretary MNUCHIN. Again, I think it is very important. I think 

that rules and regulations are very important, but on the other 

hand, they need to be constantly looked at as markets change and 

make sure that we don’t overregulate to the extent we can’t have 

growth. 

Mr. LOUDERMILK. So, being that the changes in Dodd-Frank basically exempted CFPB from reviewing their own regulations, you 

support the idea of returning CFPB just to do the— 

Secretary MNUCHIN. I do completely. I am not sure why they 

were exempted, so I agree with the change. 

Mr. LOUDERMILK. As I said, we have strong bipartisan support 

for this bill, so I hope that we will see that when it comes to the 

floor. And it changed a little bit of the timeframe, instead 10 years 

to 7 years, I think. As things change, that will help American consumers by having more frequent reviews. 

The other area that is very important to me is cybersecurity. 

That has been brought up a few times. I worked in the 

cybersecurity arena before coming to Congress. I had an IT services 

company for many years. And I also worked in the intelligence 

community back in the military, which in both instances, we were 

tasked with protecting the data. And one of the principles we 

worked off of is: You don’t have to protect what you don’t have. 

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What that means is: If you don’t need information, don’t keep the 

information. Otherwise, you become a risk. And from what I have 

seen is that, quite often, the Federal Government, through its regulatory agencies, puts onerous requirements on businesses to not 

only keep data that they normally would not keep or don’t need to 

keep but also report it to the Federal Government, which we have 

seen, as our own Federal Government is by far a higher security 

risk than a lot of businesses. 

Do you agree with those principles and ideas that we should 

have a stringent review on what data we are requiring businesses, 

not only to keep but to report? 

Secretary MNUCHIN. Absolutely. 

Mr. LOUDERMILK. Thank you. 

Mr. Chairman, I will yield the remainder of my time. 

Chairman HENSARLING. I thank the gentleman for yielding. 

Mr. Secretary, CCAR and DFAST, are you convinced that they 

are doing us more good than harm? Or do you worry that this regulation may end up being a little too heavy-handed in its current 

form? 

Secretary MNUCHIN. I think it is a very complicated regulation, 

and I think it could use some reform and clarity. 

Chairman HENSARLING. I appreciate that. 

Six seconds left. I yield back the time. 

The Chair now recognizes the gentlelady from Ohio, Mrs. Beatty. 

Mrs. BEATTY. Thank you, Mr. Chairman and Ranking Member. 

And thank you, Secretary Mnuchin, for being here. 

We have asked you a lot of questions about regulatory issues in 

the Treasury that range from cybersecurity to terrorist financing to 

FSOC and its financial risks, and the list goes on and on. 

But I am going to shift to the people part of it; I am going to 

start by first referencing from your testimony today. On line 3 of 

the first page, you used the words, ‘‘sustained economic growth.’’ 

And on page 4, about three lines from the bottom, you have stated: 

‘‘There is much more work for us to do. Our country’s potential is 

enormous, which is why Americans expect their government to 

enact policies that allow them to succeed and prosper.’’ 

I agree with that. Our Ranking Member has allowed me to sit 

second chair on OMWI (The Office of Minority and Women Inclusion). So, when you were here before the time ran out, and I submitted in writing my request to you, and that was almost a year 

ago, asking you at that time if you had met with your director of 

OMWI. I am appreciative of a response, even though I just got it 

on Friday, after about 7 months, so I assume some good staff person got it to you to prepare you for today. 

So I will now ask you today: Have you met with your OMWI director, or do you know who your OMWI director is? 

Secretary MNUCHIN. Well, first of all, again, let me just say, the 

responses to the questions took way too long, and we apologize to 

the committee. 

And as it relates to the OMWI, I am planning on meeting with 

them. 

Mrs. BEATTY. So is that no and no? No, you don’t know who the 

OMWI director is, and no, you have not met with the OMWI director? And while you are conferring, let me just read to you, Mr. Secnshattuck on FSR297 with DISTILLER

49 

retary, that section 342(b)(3) of the Dodd-Frank Act mandates that 

each OMWI director is to advise the agency administrator for the 

U.S. Treasury, that would be you, on the impact of the policies and 

regulations of the agency on minority-owned and women-owned 

businesses and that, under section 342(g)(2) of the Dodd-Frank Act, 

it defines you as the agency administrator. So maybe that helps refresh your memory. You want to— 

Secretary MNUCHIN. I am going to have to follow up with my 

staff on that and get— 

Mrs. BEATTY. So that means you don’t know who the person is 

and you have not met with the person? 

Secretary MNUCHIN. I don’t who— 

Mrs. BEATTY. I just need a yes or no. 

Secretary MNUCHIN. I don’t know who the person is right now off 

the top of my head, and I want to confirm with my staff. 

Mrs. BEATTY. So that would make you in violation of a direct law 

of something that you are supposed to be doing. I don’t want to belabor this, but, Mr. Secretary, I want to let you know, this is not 

only important to me; this is something that is mandated and required. 

And when we talk about, in your words, of enacting policies that 

allow people to succeed and prosper, it is my belief that we have 

this in the Dodd-Frank Act because there have been people like you 

and others who have not been proponents of OMWI, not followed 

through, so, thus, we put it in law. This is something that I have 

asked every person that has sat in that chair that is required to 

follow section 342. 

So can you tell me how soon you are going to make this happen? 

Because there is no need in me asking you— 

Secretary MNUCHIN. I am going to get back to you tomorrow. You 

have my commitment on that. 

Mrs. BEATTY. OK. I appreciate that. 

Let me move to my second question which relates to GSEs and 

affordable housing. 

In this committee and on this subcommittee—as you know there 

is a Subcommittee on Housing and Insurance—we have held several hearings on the future of our housing finance. 

In your opinion, what role should the future reforms in housing 

finance play with regard to housing and affordable housing? You 

made some reference in your testimony about Fannie Mae and 

Freddie and being in conservatorship. 

So what are some of your reforms? 

Secretary MNUCHIN. Well, again, I start with the premise that, 

on the one extreme, I believe that the 30-year mortgage is very important to the economy and the liquidity of housing. And on the 

other hand, we want to have the taxpayers properly protected. So 

I believe the current situation is not sustainable. 

I also believe that affordable housing is something that is important, and whether there are direct or indirect goals and how it is 

paid for is something that we need to address as part of housing 

reform. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Ohio, Mr. Davidson. 

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Mr. DAVIDSON. Thank you, Mr. Chairman. 

Thank you, Mr. Secretary. And thank you on behalf of Ohio’s 

Eighth congressional District for your critical role in helping us 

pass the Tax Cuts and Jobs Act. 

I have heard story after story about the difference it is making 

in the lives of hardworking families and innovative companies in 

Ohio. 

One such story was highlighted during the President’s State of 

the Union with Staub Manufacturing Solutions. Steve Staub, a 

friend of mine, his sister, and one of their employees, Cory the 

welder, were here talking about their expansion plans. And one of 

the lesser known provisions, I was just talking to the owner of a 

C&C business, very competitive niche, lot of automation there, 

talking about how much automation is moving their industry. And 

he was concerned about his ability to keep up with the investment 

required to stay competitive and did not understand that we had 

moved past section 179 expensing to get full and immediate expensing. 

So he was very excited, was planning to go meet with his accountant to talk about how he could ramp up that investment plan. 

That is going to continue to make a difference for companies in our 

district. And just thank you on behalf of the people of Ohio’s 

Eighth District. 

I also want to highlight the other good things going on in our 

economy related to regulatory reform. There are a number of folks 

that have talked about that. And it would be great to get your support with the Senate, getting action on our reforms to Dodd-Frank 

with the CHOICE Act. So any thoughts on what we can do to advance the cause there with our Senate colleagues? 

Secretary MNUCHIN. I am cautiously optimistic that the Chairman and Senator Crapo and others are going to figure out how we 

can get this done. 

Mr. DAVIDSON. Thank you for that. And the cybersecurity realm, 

there are a number of concerns. They have been highlighted by 

breaches at the SEC, disclosed unfortunately well after the 

breaches occurred. And a lot of data that is vulnerable in our financial markets. We have the Consolidated Audit Trail that is critical 

for trading irregularities off of algorithms and due to be launched 

without a CISO (chief information security officer). Do you have 

specific plans to try to coordinate all the functional areas that you 

provide oversight over to address cybersecurity in this area? 

Secretary MNUCHIN. We do. 

Mr. DAVIDSON. How is that taking shape within the Department 

of Treasury? Is it specific to each subset or is there some macro 

level coordination? 

Secretary MNUCHIN. Well, within Treasury and all of our specific 

bureaus, we have common guidelines. So the OCC, the IRS would 

be picked up on that. As it relates to the other independent agencies, we are coordinating with them to make sure that they are following the Administration’s priorities on cybersecurity. 

Mr. DAVIDSON. Thank you. Do you see any need for Congress to 

pass legislation to allow Government agencies, such as SEC, CFTC, 

FHFA, to oversee third-party service providers, particularly information technology service providers? Is there a gap in the regunshattuck on FSR297 with DISTILLER

51 

latory framework to hold folks accountable? And I bring this up because of the Consolidated Audit Trail and the work Thesys has 

done there; it is taking a long time to get to implementation. There 

are some remaining cybersecurity concerns, including: What is the 

code written to? How do the people that need to interface, interface 

with the system? And there is still no CISO in place. 

Is there a regulatory approach, or is that something that you feel 

is firmly able to be done by the Department? 

Secretary MNUCHIN. I think it should be able to, but we look forward to—I will follow up with you and your staff. But I share your 

concern on it. 

Mr. DAVIDSON. Thank you. And then, going back to the economy, 

we have seen great investment. We have seen the markets respond 

over the course of the year dramatically to regulatory reforms, to 

the expectation of tax reform, and now the occurrence of the tax 

reform. It is not like President Obama’s friends, like Tim Cook, 

somehow forgot to make these big investments during the Obama 

economy. They are making the investments now because it is a 

fact: These things are going dramatically upwards. So, while there 

was a trend, a trend of the stagnant growth and stagnant wages, 

the trend now is toward dramatically increased growth and, finally, 

some traction on wages. 

How do you feel about the outlook ahead for that trend? 

Secretary MNUCHIN. I think it is quite positive. 

Mr. DAVIDSON. Thank you. 

And I think the last thing I would ask you is, do you consider 

China a market economy or not? 

Secretary MNUCHIN. No, I do not. 

Mr. DAVIDSON. Thank you. Mr. Chairman, I yield. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair wishes to inform members that the Chair expects to 

clear two more members, Mr. Kihuen and Mr. Kustoff, and then release the witness. 

The gentleman from Nevada, Mr. Kihuen, is recognized for 5 

minutes. 

Mr. KIHUEN. Thank you, Mr. Chairman. 

And thank you, Ranking Member. 

Thank you, Mr. Secretary, for being here this afternoon. As you 

might know, I represent the Fourth congressional District of Nevada, which is north Las Vegas, which was the epicenter of the 

foreclosure crisis during the recession where over 60,000 people all 

across the country lost their home to foreclosure, including 3,600 

in the State of Nevada. 

Now, I know that you ran OneWest when the bank was aggressively foreclosing on homeowners, including thousands of seniors in 

the State of Nevada. Now, as Secretary of Treasury, you are a key 

voice in the Administration’s position on housing finance reform. 

Now, how can we trust you to support responsible reforms that 

will hold lenders accountable when you yourself were responsible 

for abusing the system when you led OneWest? 

Secretary MNUCHIN. Again, I think I have talked about this in 

the past but let me just, again, state I didn’t originate any of those 

loans. Those loans were inherited. When you say we aggressively 

foreclosed, we were required to follow FDIC requirements and 

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HAMP modifications. And I think I have a great understanding of 

the issues that all those homeowners went through, and we are 

proud of the fact that loan modification started under the FDIC at 

IndyMac and we hope to expand that. 

Mr. KIHUEN. Well, sir, there is a reason why you were dubbed 

the foreclosure king. And there is a reason why you have made millions of dollars, quite frankly, on the backs of my constituents who 

were losing their homes. And so that is why—you mentioned you 

have talked about this in the past, but not in this committee, not 

with me being here. And so it is it my responsibility to speak on 

behalf of my constituents. 

Now there was a specific example, a 90-year-old woman, who 

claimed that Financial Freedom initiated foreclosure when she 

came up just 27 cents short on an insurance payment due to confusion about how much she owed. 

Now, can you explain why it would make sense for a bank to initiate foreclosure proceedings against a person who just owed 27 

cents? 

Secretary MNUCHIN. It made no sense. And that is actually why 

we wrote HUD (U.S. Department of Housing and Urban Development) and tried to have those laws changed. So, again, that was 

a HUD loan that we were required to do, and we actually asked 

HUD to raise the limits up to several thousand dollars. It made no 

sense. In many cases, we appealed to them for exemptions. It was 

a very difficult situation. 

Mr. KIHUEN. Mr. Secretary, specifically, what reforms do you 

think Congress should consider to ensure that households facing 

foreclosures are never again subject to the kind of predatory behavior that OneWest engaged in? 

Secretary MNUCHIN. Well, again, OneWest did not originate 

those loans. I think the most important thing is that banks originate loans that borrowers can afford and underwrite them properly. And that was the biggest problem with the housing crisis. 

Mr. KIHUEN. I will give the rest of my time to the Ranking Member. 

Ms. WATERS. Thank you very much. I appreciate that. 

But I am going to yield the time that you are giving to me to 

Mr. Ellison, if that is OK with you. 

Mr. ELLISON. I thank the gentlelady. 

With my 1 minute and 37 seconds, I will just acknowledge that 

I have seen you and some of my colleagues congratulate each other 

on this tax bill. You have been invoking small business people, 

baristas, you have been invoking bank tellers, regular folks like 

that, but I notice that you didn’t mention the hedge fund managers 

and the private equity folks or even the President and the tax benefits that perhaps one Secretary of the Treasury might benefit. 

Have you calculated your own personal benefit from this recent 

tax bill? 

Secretary MNUCHIN. I don’t think I get much benefit at all. I 

think, as you know, I was required to sell almost all my investments in coming into this job. 

Mr. ELLISON. Right. Well, it is funny, because you were asked by 

Jake Tapper about this question. And he asked you, who is going 

to benefit? And you said the rich will not benefit. In fact, you said, 

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quote: ‘‘In high-tax States, actually, rich people’s taxes will be 

going up.’’ 

Well, what we know now is that, by 2027, 9 of 10 members of 

the wealthiest 1 percent in every State will see their taxes go 

down. 

Are you prepared to amend your claim that the taxes for the rich 

were going to go up? 

Secretary MNUCHIN. No. I was commenting on what it was now. 

And, again, we hope that those situations in 2027— 

Mr. ELLISON. Let me just reclaim my time and say that this tax 

bill is going to impose a $1.4 trillion deficit on the national debt. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Tennessee, Mr. 

Kustoff. 

Mr. KUSTOFF. Thank you, Mr. Chairman. 

And thank you, Mr. Secretary, for being here today. 

I represent an area in west Tennessee and in the Memphis area, 

and I recently, a couple weeks ago, convened a banking roundtable 

of some of my good community banks in the Dyersburg, Tennessee 

area. And one issue that really drove the conversations was that 

of CRA, or the Community Reinvestment Act. And if I can, to put 

it in perspective, one of the banks that I met with in the district 

talked about how they were required to open up a branch for CRA 

purposes, and it is now losing about $100,000 a year. I think that 

this speaks to the outdated requirements of the CRA when it comes 

to brick-and-mortar facilities, those physical banks. 

The regulators have increasingly included in their CRA examinations criteria that is unrelated to the CRA, including compliance 

with other financial laws or consumer regulations that have lost— 

have their own standards and penalties for violations. In my district, one example that I heard is that these banks are being subjected to fair lending questions during their CRA exams. 

Mr. Secretary, in your role as Secretary of the Treasury, do you 

envision modernizing the CRA to better suit the needs of the financial institutions and the communities that they serve? 

Secretary MNUCHIN. We do. It is something we are actually 

working on now. It is something that I actually think we are focused on really recommendations as to how it can better serve the 

community. 

I think in many places, banks are spending a lot of money, and 

they are not going to the right places. So we are going to be working with members in the community and banks to try to come up 

with proposed solutions. 

Mr. KUSTOFF. Thank you, Mr. Secretary. 

You have begun a review of the CRA then? 

Secretary MNUCHIN. We have. 

Mr. KUSTOFF. And do you know when you expect to release findings from the report? 

Secretary MNUCHIN. It is over the next couple of months that we 

would hope to be able to do that. 

Mr. KUSTOFF. Are there aspects of your recommendations that 

will come out that could be accomplished without rulemaking? 

Secretary MNUCHIN. Again, that is something that, as we go 

through, we are going to look at carefully. Some of it we may be 

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able to do it through the regulators. Some of it may require 

changes in legislation but— 

Mr. KUSTOFF. Thank you, Mr. Secretary. 

One aspect that I think that the banks in my district do exceptionally well is financial literacy. However, the financial literacy, 

unless it is done in a very specific area, it doesn’t count toward the 

CRA requirements. 

Is there a way to modernize that? 

Secretary MNUCHIN. That is one of the specific things that we are 

looking at, and one of the things that I had specific experience in 

as a banker. I think there is tremendous need for financial literacy 

in the public school systems. 

Mr. KUSTOFF. Thank you, Mr. Secretary. 

And I would like to yield the remainder of my time to the Chairman. 

Chairman HENSARLING. I thank the gentleman for yielding. 

Mr. Secretary, one of the things that has always concerned me 

about the stress test is the possibility of one imposed view of risk 

and having all of our major financial institutions tested, again, 

with the same set of assumptions. And doesn’t, in some respects, 

this undermine market discipline if we are subject to a group regulatory, a regulatory group think? Do you have any comments on 

that? 

Secretary MNUCHIN. It is something we need to be careful on. 

Chairman HENSARLING. Another question. I have been concerned, also, about the cost to investors on mandatory, certain 

mandatory disclosure requirements that seem to be targeted at, 

say, social investing, in social questions other than what might be 

considered within the ambit of the traditional materiality concept. 

And so do you have an opinion on, say, the proliferation of these 

requirements, and ultimately what impact they could have on capital formation, economic growth? 

Secretary MNUCHIN. I think there should be proper disclosure, 

but as you said, we need to be careful as to what that proper disclosure is. 

Chairman HENSARLING. The time of the gentleman has expired. 

I would like to thank the witness for his testimony today. 

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. 

I would ask, Mr. Secretary, that you please respond as promptly 

as you are able. 

This hearing stands adjourned. 

[Whereupon, at 1:33 p.m., the committee was adjourned.] 

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