Scott Bessent Treasury Testimony — International Financial System Hearing — September 15, 2026

Rep. French Hill00:04Committee on Financial Services will come to order. Without objection, the chair is authorized to declare a recess of the committee at any time. Today's hearing is entitled the annual testimony of the Secretary of the Treasury on the state of the International Financial System.

Rep. French Hill00:16Without objection, all members will have five legislative days within which to submit extraneous material to the chair for the inclusion in the record. I'd like to remind all of our guests today in the hearing room uh that uh in accordance to rule 11 clause four of the house of representatives to observe the standards of dignity, propriety, courtesy and decorum traditionally observed by the house and this committee.

Rep. French Hill00:46I now recognize myself for four minutes for an opening statement. Morning Mr. Secretary. I want to welcome you back to the committee. We thank you for being here today and for your continued efforts to ensure America's leadership in the global economy advances the interests of American workers, businesses, and taxpayers.

Rep. French Hill00:57The United States plays a central role in shaping the international financial system. That influence reflects the global importance of the United States dollar, the size and depth of the US financial markets, and our longstanding role in critical institutions such as the International Monetary Fund and the World Bank.

Rep. French Hill01:19The United States is the leading shareholder in both of these key institutions. That gives the committee an important responsibility to ensure that American interests are protected and that US governance is subject to the appropriate oversight.

Rep. French Hill01:30We must ensure these institutions remain focused on their core missions, operate transparency, and use their resources wisely consistent with that core mission. Under the previous administration, the World Bank and the IMF were pulled away from those core responsibilities by mission creep.

Rep. French Hill01:51For example, trying to transform the IMF into a climate development bank. That's not its role, and it distracts from its incredibly important mission. Fortunately, under the Trump administration, we've seen a renewed emphasis on delivering measurable results through accountability and discipline at both the IMF and the bank.

Rep. French Hill02:11The World Bank must remain committed to reducing poverty and promoting economic growth by directing resources towards countries that genuinely need development assistance. For years, this committee has raised concerns about the World Bank continuing to provide billions of dollars of financing to China, the world's second largest economy and one of America's foremost strategic competitors.

Rep. French Hill02:33China has enormous financial resources of their own. It is a major global creditor and uses state directed investment to advance its economic and geopolitical interests around the world. American taxpayers should not be backstopping Beijing and their ambitions at the World Bank.

Rep. French Hill02:52That's why the World Bank's decision to phase out its lending to China by 2031 is an important step in the right direction. We've also seen an important and long overdue change in the World Bank's approach to energy.

Rep. French Hill03:12In 2025, with strong bipartisan push from this committee by way of HR1474, the International Nuclear Energy Financing Act, the World Bank took its first concrete step in decades towards re-engaging with nuclear energy by agreeing with the International Atomic Energy Agency to receive nuclear expertise, support existing reactors, and advance the potential of small modular nuclear reactors.

Rep. French Hill03:31This year, we also saw the first contribution to a new nuclear energy assistance trust fund at the bank, which I hope will see additional funds from the US Treasury going forward. Developing economies need access to reliable and affordable electricity to grow, making this exactly the kind of practical progrowth approach these institutions should fully embrace.

Rep. French Hill03:53I commend the progress of the World Bank and I hope that this commitment will translate into more projects and more financing around the globe. While we've seen positive reports and progress at the World Bank, concerns remain about the International Monetary Funds approach to China.

Rep. French Hill04:17The IMF plays a critical role in promoting international monetary cooperation and safeguarding global financial stability. Fulfilling that mission requires rigorous economic oversight and transparency. China presents a major test of whether the fund is willing and able to fulfill that responsibility.

Rep. French Hill04:28In its most recent article 4 review found that weak domestic demand, rail exchange rate depreciation, and reliance on exports have contributed to external imbalances and adverse spillovers for China's trading partners. We look forward to our discussion with you, Mr. Secretary, and I yield back.

Rep. French Hill04:51I recognize myself uh just for a point of personal privilege with the ranking members uh support before we get started today. I would like to share my appreciation and congratulations to three of our committee staffers as they prepare to depart the hill and start new endeavors.

Rep. French Hill05:11Jay Jang has worked with me for five years running the financial services portfolio and fighting hard in Arkansas's second congressional district. His tireless work led to the development of our bipartisan Main Street Capital Access Act, which received a strong bipartisan vote uh in July, 270 votes.

Rep. French Hill05:22I'm also unbelievably proud of what we've accomplished together and can't wait to see Jay's next step. Nick Rockwell joined us this Congress and led our digital assets and financial technology and artificial intelligence subcommittee. to be welcome here to this committee after having worked for eight years for our friends over at the House Agriculture Committee.

Rep. French Hill05:46We've been lucky to have him. He's been invaluable. Getting genius to the president's desk and passing clarity in the House with a strong bipartisan vote was uh demonstrative of his hard work. And finally, uh I want to recognize my good friend for a long time, Dan Snyder.

Rep. French Hill06:06Dan has been our communications director on the committee and also worked for me in uh our Arkansas office. He's been a steadfast communicator and made sure that my constituents know how hard we're all fighting here in Washington to ensure they have a better economy ahead.

Rep. French Hill06:27I want to thank all three of these uh fine staffers, wish them well in their future, and invite the committee to join me in a round of applause. [clears throat]

06:42I now recognize the ranking member of the committee, Miss Waters, for four minutes for an opening state. Thank you very much, Mr. Chairman. Secretary Besson, you have broken many promises since you

Rep. Maxine Waters06:52last appeared before this committee. You pledged deeper cooperation with our trading partners, stronger American leadership, and greater stability in the global financial system. The reality, however, as Democrats warned, is an increasingly isolated America.

Rep. Maxine Waters07:02A weak self-serving presidency and instability everywhere, including here at home. Your deflection and gaslighting should be interesting. What tales will you tell about economic super cycles when families take out loans to buy food?

Rep. Maxine Waters07:19What stories will you spend to Americans whose home ownership dreams slip away with 7% mortgage rates and tariffs on building materials, adding nearly $11,000 to the cost of a new home? What do you have to say about businesses struggling to survive under your nonsensical trade policies?

Rep. Maxine Waters07:49What answers do you have for $6 diesel and impacts of Trump's war in Iran that are driving up the cost of living for everything? President Trump and committee Republicans assured the American people that you were quote steady hand who would improve the economy well after 20 months of Trump's economy.

Rep. Maxine Waters08:11I say your hands are shaking. Americans know the truth because they feel it at the grocery store, the gas pump, in their wallets, and around their kitchen tables. The only boom that's happening is the one where the Trump Trump and his family have made more than $2 billion since taking office.

Rep. Maxine Waters08:31Ironically, while families endure, Mr. Secretary, you have managed to find billions to bail out Argentina and your Wall Street buddies. You committed United States assets to support Japan's currency while you failed to lower long-term interest rates.

Rep. Maxine Waters08:41You have attacked the economies of our closest allies, driving up costs here at home. You have been cozing up to Putin, given waiverss to Russia to earn billions from sanctioned oil and extending its war against Ukraine.

Rep. Maxine Waters09:01Just imagine if this administration cared even half as much about struggling Americans. Who else benefits while you ignore your responsibilities? Wall Street, for one. The stock market may be hitting record highs, but one out of five Americans are rationing their meals.

Rep. Maxine Waters09:10AI companies, too, are doing very well on your watch. While you dismiss the threat to workers and jobs and our financial system and even our very existence. And we can't forget crypto. You call stable coins a revolution, predicting increased demand for US treasuries.

Rep. Maxine Waters09:31Yet, you're ignoring the massive conflicts of interest in the Trump family, stable coin, and crypto businesses. The Trump family is cashing in, cashing in from the Oval Office. While Main Street suffers, committee Democrats have given you every opportunity to do the right thing.

Rep. Maxine Waters09:53We've sent letters demanding answers, but consistently you've disregarded or ignored our oversight. This hearing is traditionally an opportunity for the Treasury Secretary to deliver facts to this committee and the American people. But I cannot caution, but I do caution everyone listening today.

Rep. Maxine Waters10:04What whatever you hear today, check it out, question it. Don't be gaslit by the Trump administration and spend deception. And a word about Cuba. You cut off all the oil to Cuba. You're starving the families.

Rep. Maxine Waters10:26You're starving the children. They don't have electricity. Uh they can't get food in. What are you doing, Mr. Secretary? Why are you being so cruel? I know we have a cruel president, but do you have to be a puppet?

Rep. Maxine Waters10:36Do you have to do whatever he wants you to do? What are you doing to this country? You're making us not only look bad, but act bad all over the world. And I want to tell you, history is not going to be kind to you or this administration.

Rep. Maxine Waters10:56And I say to you, stop trying to kill off the families in Cuba. Stop starving the children. Let the oil flow. Let them have electricity. Allow them to get trade and food, etc., etc.

Rep. Maxine Waters11:06I could go on all day, but this is not a fun day for me. This is a very critical time and you are in a position where you could do a lot better. You could be

11:26kinder. You don't have to be cruel. You don't have to see children starving and dying. And with that, Mr. Hill, I give I just give back the balance of my time. The gentleoman yields back.

11:34The chair recognizes the gentleman from Ohio, Mr. Davidson, who chairs our national security subcommittee, for one minute

Rep. Warren Davidson11:46for an opening statement. Thank you, Chairman. Secretary Besson, I want to commend you for delivering real results for the American people. You've taken steps to put our to restore focus to our international financial institutions and ensure that America remains the center of global markets and the US dollar remains the world's reserve currency.

Rep. Warren Davidson11:56You've educated the public, Senator Warren, uh especially on the utility of currency swaps. Clearly from uh the ranking members opening remarks, more work remains. Uh, you've used Treasury's authorities to pursue sanctions, evaders, hostile regimes, and institutions funding America's adversaries.

Rep. Warren Davidson12:18You've put taxpayer protection first by cracking down on fraud, waste, abuse, money laundering, cyber enabled scams, and illicit financial networks. Treasury's identification of 17.5 billion dollars in suspect healthc care fraud is a powerful example.

Rep. Warren Davidson12:28You've constitutionally protected privacy by rolling back the beneficial ownership information reporting requirements under the ownerous corporate transparency act. Thank you for your leadership, a steady

12:48hand repairing damage done by years of prior neglect or malfeasants. Thanks for your work to make America great again. I yield back. Gentleman's time is expired. Today we welcome the testimony of the Honorable Scott Bessant, Secretary of the Treasury.

13:00Secretary Bessant, we thank you for taking time to be with us today. You'll be recognized for five minutes to give an oral presentation of your written testimony. Without objection, your written statement will be made part of our record.

13:10Mr. Secretary, you're now recognized for five minutes. Chairman Hill, Ranking Member Waters, and members of the committee. Thank you for convening today's hearing. I look forward to discussing the international financial system as we strengthen American leadership within it.

13:21In recent weeks, the United States brought that leadership to Asheville, North Carolina. STOP THE SANCTIONS THAT ARE KILLING IRANIAN CIVILIANS. Committee will be in order. Committee will be in order. I formally request that those are causing the disruption cease their actions immediately.

13:45The committee will suspend until Capitol Police can restore order. Uh please audience be in compliance with the House rules. Mr. Secretary, you're recognized. Well, that's a November decision. This versus that. You're a war criminal.

13:55How dare you? How dare you? Committee will suspend till capital police can restore order. Stop the sanctions on a warriminal for us. Mr. Secretary, please proceed. In recent weeks, the United States brought that leadership to Asheville, North Carolina, where we welcomed the world for our G20 finance ministerial for decades.

14:53Would anybody else like to do that now and get it over with? All right. Uh, the committee will reconvene. M Secretary, you're recognized. For decades, multilateral forums like the G20 accumulated sprawling agendas while losing sight of their I'm sorry, Mr. Secretary.

15:09We want to hear what you have to say. Mr. Secretary, you're recognized. For decades, multilateral forums like the G20 accumulated sprawling agendas while losing sight of their core missions. Under President Trump, we are getting back to basics.

15:44Growth is the condition. The secretary, please suspend. Mr. Secretary, you're recognized. Growth is a condition on which durable prosperity depends, and our chair statement achieved broad agreement on the need to promote it. I'm also pleased

Secretary Scott Bessent16:19that we reached consensus from economies representing more than twothirds of global GDP to address excessive and persistent imbalances, advance financial literacy, improve the global sovereign debt architecture, and support regulatory modernization. In substance and in spirit, these priorities reflect the administration's approach to international institutions by ensuring that American time and resources serve American interest.

Secretary Scott Bessent16:41We are also bringing that same discipline to the IMF and World Bank so they remain true to their core mandates and are better positioned to promote economic growth. Of course, as growth guides our leadership on the world stage, it is the force that is carrying our great nation into a new era of strength here at home.

Secretary Scott Bessent17:02President Trump's economic turnaround is especially impressive given the severity of the situation he inherited from his predecessor when inflation soared to a 40-year high and middle class families were torched with price increases of 21.5% or more.

Secretary Scott Bessent17:14Under President Trump, the private sector has created over 1 million jobs. Real wages are outpacing inflation. The bottom 25% of wage earners are seeing larger wage increases than those at the top. and the working families tax cuts has delivered the largest share of tax relief directly to millions of low and middle inome Americans.

Secretary Scott Bessent17:37Over 64 million tax returns claimed at least one of President Trump's signature new tax cuts. No tax on tips, no tax on overtime, no tax on American car loan interest, and an enhanced deduction for low and middle inome seniors.

Secretary Scott Bessent17:55Through tax day, working families received over 325 billion in refunds. More than 40 million families have claimed the permanently doubled and expanded child tax credit. And as important as what this legislation achieved is what it prevented.

Secretary Scott Bessent18:04If opponents of the working families tax cuts had had their way, our economy would have absorbed the largest tax hike in history, over $5 trillion. Each of these improvements points to a structural renewal of America's capacity to build, to produce, and to prosper.

Secretary Scott Bessent18:24US manufacturing is roaring back to its fastest pace in years. August marked eight consecutive months of domestic manufacturing growth. Business activity has surged to a 52-month high. And as companies allocate trillions to building, expanding across the US, the Atlanta Fed now projects third quarter GDP growth to surpass 4%.

Secretary Scott Bessent18:44A new industrial super cycle is moving from investment into production and from from blueprints into paychecks. Finally, the strength of the of our economy has allowed the United States to wage the greatest economic isolation campaign in the history of the world against the Islamic Republic of Iran and its enablers.

Secretary Scott Bessent19:04President Trump has taken action that his predecessors have long deferred against a regime that devotes itself to death to America and seeks nuclear weapons to do just that. Under his leadership, America is no longer managing the Iranian threat.

Secretary Scott Bessent19:24We are ending it. And America's economic resurgence is reinforcing our capacity to do so from a position of strength. Together, the growth we are advancing abroad, the prosperity we are building at home, and the might we are unleashing against our adversaries are bound by the same conviction to restore American

19:46strength and service of the American people. That is the purpose of our economic leadership and the principle that will continue to guide it. Thank you and I look forward to your questions today. Thank you, Mr. Chairman.

19:46We'll

Rep. French Hill19:58turn to member questions. I recognize myself for five minutes. Mr. Secretary, when the then Fininsson director Gataki was before the committee in July, she testified that she was in discussions with Treasury leadership regarding updating the suspicious activity report and currency transaction reporting thresholds, which as you know from uh your years in the private sector are decades out of date.

Rep. French Hill20:19We heard the same under the testimony from the Biden administration. A Treasury report to Congress on updating the thresholds is now five years uh overdue. So uh Mr. Secretary, what's your view on trying to tackle this issue of raising the

20:42threshold limits on suspicious activity reports and CTRs? Chairman Hill, very important question

Secretary Scott Bessent20:50and thank you for asking. Uh we believe that the uh we must get this right because as you said it has gone on for years and we want to do that with a combination of potentially raising the thresholds and also giving credit to institutions for the duration that they have known their clients.

Secretary Scott Bessent21:10So we are in the midst of this and as always we will be looking after our smaller financial institutions small banks and community banks to obiate any excess expense that they are doing it while maintaining the safety and soundness of our financial system.

Secretary Scott Bessent21:20I think that's important and I also think just uh to answer the question from big or small that the information being provided is being used and helpful in our fight against the cartels and global terrorist illicit finance because a lot of financial institutions don't get the attitude that that's the case.

Secretary Scott Bessent21:40And I'm sensitive to law enforcement that's demanding that they wish the CTR limit were a dollar so that they could look at every single possible category. But your leadership I think will be important.

Secretary Scott Bessent21:51We'd like to make progress on this. It's a priority for the committee. We also

Rep. French Hill22:02appreciate your work as noted in your statement about uh cutting Iran's murderous regime off from workarounds of the existing sanctions. Your operation economic outcast is finally seeking to bring that game of hideand seek to close.

Rep. French Hill22:13However, I'm concerned that China clearly and the UAE have done too little to sever themselves from trade and money movements from Iran. What discussions are you pursuing with those two

22:31governments particularly to get them in line with uh your goals? I I think that we have seen some very forward- facing statements from the UAE.

Secretary Scott Bessent22:42uh they've announced that they have cut off financial transactions and trade the with Iran and the one of my deputies was just there and had a very good discussion with the all the members of their financial system and as you would see two weeks ago we sanctioned the branches of an Egyptian bank in Dubai and that bank will be closing. uh that bank transferred more than $1.8 billion dollars since 2025 uh to Iran.

Secretary Scott Bessent23:11So our message has been and it has been heard that we know who you are. You know who you are. Stop. So we now have a cadence. We have sanctioned three banks uh with China with China.

Secretary Scott Bessent23:21We have had some very good private discussions and I look forward to those continuing this weekend when I meet my Chinese counterpart the dep [clears throat] the vice minister Lily Fun and I'm sure it will continue during uh President Xi's straight state visit.

Secretary Scott Bessent23:42I appreciate that. I think that'll be an important agenda item for the bilateral discussion. Mr. Secretary, you also know that the Supreme Court is recently reviewing petitions that they review the Corporate Transparency Act.

Secretary Scott Bessent23:51I personally support the Supreme Court reviewing this act because I think the private sector needs definitive answer on the Corporate Transparency Act. I want to thank the Treasury and the administration for targeting it in line with the work of Mr. Davidson, but I hope that if the Department of Justice contacts the Treasury that you wouldn't object to that review at the court.

Secretary Scott Bessent24:20Let me turn to the IMF in the time I have remaining. My opening statement was about going back to basics for the IMF. Uh and uh I don't want to see China added increased its allocation in the special drawing rights basket of currencies.

Secretary Scott Bessent24:38I think that's a mistake. It's not a market economy. It doesn't have a freely traded currency. Um, you called out China with the all 19 countries called out China at your G20 meeting. Would you agree that the IMF needs to hold China more accountable?

Secretary Scott Bessent24:57Uh I I believe that the IMF is in the advanced discussions with China on the

25:07nature of their imbalances and the potential threats to global uh financial stability that those imbalances may pose. Thank you. I yield back. I recognize the ranking member of the full

Rep. Maxine Waters25:19committee, Mrs. Waters of California for your question. Uh thank you very much. Secretary Vincent, Americans and small businesses feel the pain of your reckless economic policies. They are paying skyhigh prices for beef, gas, electronics, and re really everything on and around the kitchen table.

Rep. Maxine Waters25:38With the administration's chaotic tariffs, reckless war in Iran, and other unsound policies, the average American is paying $3,500 more than they otherwise would be for groceries, gas, energy, and healthcare. And that was the number before President Trump started an unnecessary trade war with our neighbors and allies in Canada.

Rep. Maxine Waters25:56Now, thanks to retaliation on wood and lumber, even the kitchen table itself is unaffordable. Yet, Trump is not concerned about all of this. The president has said repeatedly that there is no affordability crisis, that it's a hoax.

Rep. Maxine Waters26:16He has said that he literally does not care that Americans are paying more for gas and diesel caused by his war of choice with Iran. For your part, you launched a so-called economic D-Day against Iran, but markets barely blinked.

Rep. Maxine Waters26:26Crude oil prices continue to increase, and you have dismissed the effects on American household and businesses, while middle and lower income Americans feel the painful effects of the Kshaped economy. You claim that neither it nor the economic difficulties exist.

Rep. Maxine Waters26:46So, Secretary Besson, you have dared the markets to bet against you, claiming that quote, I am the House now, quote unquote. So, despite your feeble efforts, there continues to be a sell-off of US treasuries with 30-year Treasury yields rising to levels that have not been seen since 2007, just yesterday.

Rep. Maxine Waters27:13In fact, the 10year Treasury hit 5%. Mr. Secretary, do you agree that these high treasury

27:23yields or interest rates on Americans bonds means that loans paid by families to fix a roof or buy a car will also be expensive? Yes or no? The the US bond market has been the best performing.

27:32Yes or no, Mr. Secretary of the World.

Rep. Maxine Waters27:42Yes or no, Mr. Secretary? Record. Reclaiming my time. Reclaiming my time recording my time. reclaiming my time. Reclaiming my time. You keep talking, I'll keep reclaiming my time. And I'm asking you, Mr. Secretary, turn it to your trade policy.

Rep. Maxine Waters27:51If tariffs are not inflationary, as you claimed in your previous testimony, then why has inflation increased by more than 3% over

28:09the past year? Do you deny that inflation is too high at 3%? Yes or no? The representative. Yes or no, Mr. Secretary? are not making yes or no. Mr. Secretary, you believe the tariff reclaiming my time.

28:19Reclaiming my time. Reclaiming my time. Reclaiming my time. Reclaiming my time. Recla. I I didn't hear you, Mr. Hill. What' you say? I said it's the gentle lady. Does the time belong to the gentle lady?

28:32Indeed. Indeed it does. And so that's not good enough. Sir, you and President Trump, the so-called conservatives, you have overseen an increase in the debt to a record $40 trillion, 40 trillion. You have promised reduced deficit but delivered only higher numbers and paying for American households.

28:54And this is so outrageous when you and others have claimed uh to be about uh getting rid of the deficit. Well, but maybe none of that matters if President Trump continues to blindly push for AI and data centers with absolutely no safeguards.

29:15He's doing this even as cost and threats skyrocket for America. Uh did you hear what Bill Gates had to say? Did you hear what Elon Musk had to say? Did you hear about anthropic?

29:25Did you hear about I'm o day? They all said stop it. Watch it. AI is dangerous. You got to be careful. Did you hear any of that? They could stop. They could stop anytime they want to.

29:37Did you hear any of that? Yes or no? They could stoping my time they want to. Reclaiming my time. Did you hear what your friends had to say? What the big billionaires had to say?

29:48Did you understand that? They said, "We're moving into a dangerous period of time. We need to watch it. We need to slow down." Did you hear that? This administration has been at the forefront of examining the models.

29:58We began model examination via more than five or six your friends said watch it be careful that we're moving into a dangerous time on AI and if you don't admit that it means that you're not willing to stand up to the truth because you heard it you know they're saying it these are the guys that you all work with these are the guys that you have to be more billionaires and trillionaires so you know what they're saying people want you to give them regulatory you don't have any more time the chair The chair now recognizes the vice

Rep. Bill Huizenga30:33chairman of the full committee, Mr. Heisinger of Michigan for five minutes. Thank you, Mr. Chairman and Secretary Bess. This has become a common theme. Would you like to respond on my time, which keeps eating into my time because you can't actually answer the question.

Rep. Bill Huizenga30:44I'll give you 30 seconds if you'd like to respond to any of that. Uh to to uh which piece? There's so many. Well, I it's a smorgus board. I understand. Well, we can move on.

Rep. Bill Huizenga30:44Uh, interestingly enough, the idiocy that we saw earlier, um, I'm going to be doing a hearing in the foreign affairs committee uh, today titled Trojan Horses: Covert Foreign Malign Influence Operations, which will be, uh, discussing organizations like Code Pink and the Sing uh, Singum Network, which has funneled hundreds of millions of dollars into the US to fund idiots like this so that they can come and do things like this. performance art that they are trying to do.

Rep. Bill Huizenga31:23Um, so that is my apologies, but I guess you can expect more and maybe we'll see if a few of these people can get arrested twice in a day when they show up at my 2:00 hearing.

Rep. Bill Huizenga31:35Um, so Mr. Secretary Besson, I understand Treasury Department and the broader administration have several major tech security efforts running at

Secretary Scott Bessent31:45the same time from work at NIST uh and the new quantum readiness task force uh to the launch of the AI and cyber security vulnerability clearing house called gold eagle. How is Treasury making sure these efforts work together while avoiding siloed or duplicative efforts?

Secretary Scott Bessent31:56So we have the a effort across the government all all departments the treasury began with the financial services for which the we are responsible but whether it is the department of war uh the cyber security the white house office of technology we have been closely coordinating for more than six months on this who who's lead on that uh it is an inter agency process okay is there a lead within the inter agency or or I I I would say the Sean Karen Cross the and Michael Katzios.

Secretary Scott Bessent32:34Okay. All right. Um these efforts may prove critical in protecting our financial plumbing. There's a lot of discussion about that. Specifically regarding the Gold Eagle clearing house, is there anything that you can share or plan to publish in the near future about how entities in the financial services sector from traditional financial institutions to the layer 1 blockchain networks can qualify to participate?

Secretary Scott Bessent32:56I think it is important these the discussion that we're having here on the layer 1 blockchain networks as well. Yeah. No, I I think that's very important and that the as you would have seen in the news that as soon as the news of mythos came out, I gathered the largest banks they who happen to be in DC at Treasury to begin discussing this.

Secretary Scott Bessent33:17Uh the largest banks they have very good cyber security resilience and they have been very helpful in terms of creating more resilience and that is moving down the capitalization chain from super regionals to regionals to small and community banks and then we are populating that out into the service providers.

Secretary Scott Bessent33:36I is the real concern uh amongst the working group the plumbing side of this? Well, it it it's the plumbing and it is the patching of a lot of open- source code. Yeah. Okay.

Secretary Scott Bessent33:45Um I want to work uh move on to something a little bit different. You know, uh you and I have previously discoursed uh in various uh publications about our shared aspiration for the 3% target.

Secretary Scott Bessent34:06I happen to chair some co-chair a bipartisan fiscal uh forum, the BFF. We chose that on purpose, by the way. And we have introduced with my colleague Scott Peters from California, we've introduced a resolution that Congress should adopt this fiscal target of 3% of uh of a de budget deficit no more than 3% of gross domestic product or lower.

Secretary Scott Bessent34:26Um I believe this is the most practical tangible goal we can set to turn to finally turn the tide on our national debt. In fact, we have up to uh 20 evenly bipartisan co-sponsors in a Senate companion bill.

Secretary Scott Bessent34:37What's your current outlook on that 3% target and uh can you even explain why this first step is not just critical to the international financial finance system but also to families and workers across our nation?

Secretary Scott Bessent34:56Well, the reason the 3% is important because the at 3% is when we start bending the debt curve and actually start paying down uh debt. The important thing to look at is the def what you're referring to uh Representative Hazinga is the deficit to GDP which actually the in the first fiscal year the Trump administration came down from the astounding level of about 6.3% uh the calendar year was 6.8 or 6.9 in the Biden the breakaway spending we brought it down to about 5.7 5.8% 8% for the fiscal year.

Secretary Scott Bessent35:27So we actually did have a fiscal contraction and we would have continued that fiscal contraction this

35:38year but for the tariff refunds. If you want to be interrupted again, show up at my subcommittee hearing at 2 o'clock today. Gentleman yields back. [laughter] Chair recognizes the ranking member of our subcommittee on capital markets, Mr. Sherman of California.

35:38You're recognized

Rep. Brad Sherman35:51for five minutes. Um Mr. Mr. Chairman, I want to thank you for focusing our attention on China, its special drawing rights, its access, at least until 2031 to the World Bank. Uh, but we were alerted to uh concerns about China just a few minutes ago uh when we had a code pink style, I assume it was code pink disruption of this hearing.

Rep. Brad Sherman36:08And I should point out that code pink is chiefly financed by uh uh chi China, the communi and the Chinese communist party. Uh one more reason to be concerned about China's role in international finance.

Rep. Brad Sherman36:25Uh the war has driven up gas prices and has driven up interest rates. Before this war, the 10-year was at 4%. Now it's virtually at 5%. Um, last year I urged the administration to fill our strategic petroleum reserve.

Rep. Brad Sherman36:44They did not. As a result, we have not been able to respond to the uh uh uh straight of Hormuz problem as effectively as we could. Now we have those of the administration talking about a bitcoin reserve.

Rep. Brad Sherman36:56Uh I've never no country that has ever won a war in history had a Bitcoin reserve. But if you don't have an oil reserve and if you don't have reserves of rare earth minerals uh then you are at strategic risk.

Rep. Brad Sherman37:13Certainly any money that we would put in a bitcoin reserve which we could lose in a day uh should instead uh be in strategic reserves of things we actually need to run the economy.

Rep. Brad Sherman37:25We are told that tariffs don't uh drive inflation. Boy, do we need financial literacy in this country. Uh this hearing focus is significantly on the role of the US dollar. Uh the role of the US dollar is undermined by an incredibly erratic uh federal administration that makes us the laughing stop of the world.

Rep. Brad Sherman37:43It is exacerbated by the crazy tariff policies. Now we have a war with Canada. and the crypto bros made it clear that the whole purpose of crypto was to displace or partially displace the dollar uh as the world's reserve currency.

Rep. Brad Sherman38:05What I'm particularly cons concerned about is that in the Senate they are considering the clarity act without plugging the loophole in um uh that in stable coin. The deal with stable coin was that we'd allow stable coin.

Rep. Brad Sherman38:24Oh my god. But we at least we would prohibit interest on it. Now the crypto guys have spent uh tens of millions on legal fees to evade that prohibition on crypto in on interest on stable coin.

Rep. Brad Sherman38:41Um a recent study has shown that that could lead to a $1.5 trillion reduction in bank deposits, meaning that the primary way that we finance small business in this country would have $1.5 trillion less.

Rep. Brad Sherman38:51Not to mention that there'd be $15.5 trillion less to deal with the community investment act. Uh and finally, of course, this uh stable coin is a system designed to be ultra secret to defeat uh law enforcement and to ignore and evade our know our know your customer laws.

Rep. Brad Sherman39:11Um

39:22now, Mr. Secretary, one of the princ core principles of US banking systems, accountability rests with identifiable people and institutions. Uh yet uh many DeFi protocols and deh centralized stable coin arrangements operate through uh decentralized governance, autonomous mechanisms that lack accountability.

39:32Uh given the record of the number of defi DeFi exploits reported in the first half of this year and the use of AI and exploiting code uh are you concerned that a growing share of global financial activity could migrate to systems where there's no accountable party and no know your customer uh requirements.

39:53What implications would this have for our efforts against illicit finance and what effect would it have on the integrity of the international financial system? Well, that's why I'm pushing the passage of the Clarity Act because it gives Treasury more authorities the to seek out this evasion.

40:23The Clarity Act emboldens and uh makes more popular uh the rival to the US dollar which is crypto or at least uh they are the newest rival to the US dollar and they've said that their purpose it's as if America owns Coke and your suggestion is let's invest and glorify Pepsi. uh we don't need the competition especially when we're doing such a terrible job of running our economy and of looking strong in the world and I yield back chair recognizes the gentleman from Wisconsin Mr. Fitzgerald you're recognized for five minutes

Rep. Scott Fitzgerald41:03Mr. Secretary, thanks for being here today. Um, I want to go back to uh China if I could, a little bit more basic kind of approach. Uh, the IMF is supposed to promote obviously global financial stability, but it appears kind of on a regular basis, China continues to use opaque um, lending practices. uh they manage kind of the exchange rate and they're certainly delaying uh debt restructuring I guess you would call it in developing countries.

Rep. Scott Fitzgerald41:32Um, what what are we doing or what can we do to use our influence, the United States, use its influence at the IMF to hold China more accountable and make sure that Beijing uh doesn't uh continue blocking all these debt restructurings and distorting they're basically distorting kind of the international system, right?

Rep. Scott Fitzgerald41:54I I was wondering if you give us your thoughts on that. So, Congressman, very important problem. We addressed it at the G20 and the we we will see the first debt restructuring since then.

Rep. Scott Fitzgerald42:04Um and it it is because look the ch the Chinese system of lending includes many tolling agreements many the hidden provisions and transparency in debt restructuring is the is the ultimate uh feature for a successful debt restructuring.

Rep. Scott Fitzgerald42:23The IMF has joined us in believing that that must happen and that we must have transparency. It is also my opinion that this widely uh talked about belt and road initiative has gone from a lending operation to a collection operation as they have bankrupted many or are bankrupting many of their borrowers.

Rep. Scott Fitzgerald42:53And so let me follow up. So at the G20, I know the discussions happened, but um just the efforts by China and and really other countries in reducing kind of the reliance on the dollar.

Rep. Scott Fitzgerald43:01So um can you just kind of tell us why maintaining the dollar status as as the primary reserve currency matters? I know that seems like you know this is the financial services committee that what what is your opinion on that and what's your take on that?

Secretary Scott Bessent43:22Well, contrary to the gentleman from California, uh that the US the uh isn't in fact the leader and the leader does not fear competition. Competition makes us better and we we have thus far uh dismissed competition. uh what we have seen is as the share of global transactions the US dollar uh continues the uh to thrive the share of global transactions in dollars actually went up this year and the only thing that we have seen is a diminishment uh in the reserve assets and that is just through the decrease mostly the of Russia and China uh in their reserve holdings but we have seen many other countries and as a matter of fact We just had the two of the most successful Treasury auctions in 20 years, which speaks to the credibility of our system and what this administration is doing and the global competence in us.

Secretary Scott Bessent44:12What it we often times focus on um what the administration can do on that. What should Congress be doing to preserve uh not not just the dollar as the currency, but just to stabilize the markets overall?

Secretary Scott Bessent44:33Uh well, we we will be talking about a fiscal consolidation that is coming and the as the previous representative asked me uh that is important. We have to get our house in order and you know as I say a strong dollar is not a price on a screen.

Secretary Scott Bessent44:43It is a set of behaviors and what we have seen in this administration where we are creating regulatory certainty, tax certainty, trade certainty and energy certainty that is bringing in trillions of dollars into the US.

Secretary Scott Bessent45:03So it is to help us fortify those policies. Very good. Thank you for being here today. I I yield back.

Rep. Stephen Lynch45:15Gentlemen yields back. Chair recognizes the ranking member of our subcommittee on digital assets, Mr. Lynch of Massachusetts. You're recognized for five minutes. Uh thank you very much, Mr. Chairman, and I want to thank the secretary for being here.

Rep. Stephen Lynch45:24Um Mr. Secretary, as as uh Secretary of the Treasur, you have direct uh influence on uh the ability to advise the president on matters of AI, not only from an economic standpoint, but also from a regulator stand regulatory standpoint as well as a a national security standpoint.

Rep. Stephen Lynch45:41Uh sometimes when I hear the president talk about AI, I and and I I have the honor of being the ranking Democrat on this this committee on on AI and crypto. Uh when I listen to the president, I I do not believe he has a uh I don't think he has a grasp of of what we're dealing with with AI.

Rep. Stephen Lynch46:07I I I I'll be honest. I don't think the president could spell AI if I gave him the first letter. Uh he is he is calling it a hoax. I think your your own leadership at Treasury and the things you have tried to do and anticipated are far more logical and thoughtful than what I'm hearing from the White House.

Rep. Stephen Lynch46:37And I think I'm not trying to put you on the spot here, but I I know you have suggested some things in the area of AI that are thoughtful and and cautionary and deliberate and yet I hear the president saying this is all a hoax, you know, and and uh I'm just I'm just trying to figure out do do you think the president understands that that when we talk about building an AI and I we're not manufacturing it like a car.

Rep. Stephen Lynch47:05Sometimes he he talks in those terms. We're really growing we're growing AI in a lab and and and and now based on the statements from Anthropic and Open AI and others including Elon Musk, it's it's it's we're having a control problem.

Rep. Stephen Lynch47:25We're having an alignment problem. you know this this incident with uh hugging face we we've we've lost control. Do you think the president understands that that it it is not as simple as as what he has described?

Rep. Stephen Lynch47:46Do you do you understand do do you think the president understands that it probably doesn't matter whether the good guys develop a super intelligence or the bad guys develop a super intelligence if you don't have control of that entity and it has preferences and goals that are enimical to the existence of humanity.

Rep. Stephen Lynch48:19It won't matter. It's the entity itself that they're creating that is going to pre that is going to present the threat to us and to to your kids, grandkids,

48:37all of our all, you know, humanity in general. Does the president get that, Mr. Secretary? Congressman, I look forward to working with you on this. And I the I I do take

Secretary Scott Bessent48:49exception. It does matter whether the good guys or the bad guys have this. as a person who manages the ch the relationship with China on AI, it matters a great deal. If but Mr. here's my point though, we're having control problems.

Secretary Scott Bessent48:59So if we build something we can't control and the Chinese build something they can't control and and the entity itself is what is the danger to us all at the end of the day.

Secretary Scott Bessent49:09If if we create a super intelligence that is beyond our control and does not follow our instructions and and it's been very difficult on the value loading piece of this where we try to we try to imbue the AI with with with values that humans have that we have as a democracy.

Secretary Scott Bessent49:30We have failed in that. That has been impossible to do so far. And yet we've got this race and I hear from my and I have great respect for uh Mr. Hill and my my Republican colleagues on this.

Secretary Scott Bessent49:50We keep hearing about this race, this race against China. We we can't slow down. We need to beat them. Well, we don't control the entity that we're trying to create and neither does China.

Secretary Scott Bessent50:00I bet they've had breaches. They've had breaches, but they haven't reported them. Anthropic has. Open AAI has. Uh, you know, Elon Musk has Congressman Kim Kimmy had a breach and sent Chinese weapons plans back to anthropic.

Secretary Scott Bessent50:21What what I'm saying is I hope there's a way that you might be able to talk sense to the president about AI and the threat that you and I know it presents. I I would just say the president is completely aligned with Jensen Wang, the CEO of Nvidia.

Secretary Scott Bessent50:39The chair, your gentleman's time has expired. Chair recognizes the gentleman from New York, chairman of the House Homeland Security Committee, Mr. Garbrino. You're

Rep. Andrew Garbarino50:50recognized for five minutes. Thank you, Chairman Hill. And Secretary, thank you for being here. And again, thank you for your work on uh getting salt in the one big beautiful bill that put a lot of money back in my constituents pockets.

Rep. Andrew Garbarino51:03That was a lot of your work, Congressman. Well, but you was your with your partnership in your meeting that we got across the finish line. So, thank you very much for that. Um I want to talk about uh foreign banking organizations.

Rep. Andrew Garbarino51:13Um from 2020 to 2023 they underwrote approximately 11 trillion more than 40% of the financing raised in the United States. They also employ more than 200,000 US workers and contribute $30 billion in payroll.

Rep. Andrew Garbarino51:24Secretary, uh, given these substantial contributions, what is what steps is Treasury taking, including through its coordination with financial regulators to ensure our policies continue to attract foreign investment

Secretary Scott Bessent51:36and allow foreign banks to compete on a level playing field, helping ensure the US remains the world's financial center. Uh representative that is an excellent question because the US has uh around the globe we have a very unusual regulatory system in that we have three federal regulators the the federal reserve the FDIC and the officer office of the controller the currency uh then there are state level regulations so we are trying to make sure that all the regulators are aligned with best practices they and uh tailoring regulation for the both the risk in the system and the size of the banks.

Secretary Scott Bessent52:06That's great. I mean, as we know, regulation for banks is is very important, but when you overregulate like the EU and some other places do, you know, they lose investment. We want to make sure we're protected, but actually still have investments.

Secretary Scott Bessent52:17I love that you're doing that. That that's why they're trying to unify their capital markets and be more like us. Everybody wants to be like us. [laughter] Um, I have another question. Under um US

52:39generally accepted accounting principles, clearers are treated as agents rather than principles, meaning client cleared trades typically do not come onto the clearer's balance sheet. Many US brokered dealers that are subsidiaries of foreign parent companies must also comply with the international financing reporting standards uh the ors which has not made the same clarification.

52:50Absent IFRS guidance, those firms could be required to carry clear trades on their balance sheets, significantly impairing their ability to participate in the Treasury market. I'm concerned that excluding major market participants because of accounting accounting inconsistency could restrict Treasury market liquidity and run counter to the goal of the Treasury clearing mandate.

53:13Um, we do not want international standards uh standard setting bodies hindering the successful implementation of our Treasury clearing efforts. Do you share this concern, Secretary? And would you be willing to weigh in where possible to help this get corrected before the uh go live date?

53:34Uh yes. So we'd be willing we'd be willing with pleasure to work with your staff on this and we are dedicated to keeping the US uh treasury market the the deepest the broadest the and the most robust.

53:45So uh we want to make sure that we pri prioritize safeguards but we also they want to pri prioritize the our standing in the world. Thank you very much for that and we look forward to working with you and your team on that.

53:57Um, now turning to digital assets as Treasury implements the Genius Act, Congress was deliberate in distinguishing between financial intermediaries and developers of decentralized technologies that do not do not custody c that do not custody customer assets or control transactions.

54:19Secretary Besson, how is Treasury ensuring its regulations preserve those distinctions and do not inadvertently impose intermediary style requirements on software developers or other technology providers? So, Congressman, we're in the rulemaking process right now and I can't comment on that, but we have taken substantial input from Congress and stakeholders as we aim to keep America the crypto capital of the world.

54:40I understand that we are in the rule making process but again I just want to make clear Congress did intend that they were excluded. So and when in the rule drafting just uh just please uh remember that.

54:50Um and last I want to return I want to turn to retirement security. Um in 2022 secure 2.0 became law uh to help create more opportunities for Americans to save for retirement. Secretary can you provide an update on the implementation of secure 2.0 and how those efforts fit into the president's executive order?

55:10Uh yes. Um we we are again working to implement that and to uh do that in a safe and sound manner as quickly as possible. Okay. Do we have a timeline or sorry do we is there a timeline of when?

55:20Yeah. My staff will contact your staff. Okay. I appreciate that um Mr. Secretary and uh I am out of time so I yield back. Gentleman yields back. Chair recognizes the gentleoman from Colorado. Miss Patterson, you're recognized for five

Rep. Brittany Pettersen55:42minutes. Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being with us today. Uh, there is so much that I'd like to address in the short time that I have. Um, I think that the greatest concern that the American people have right now, it's not just the crippling economy, by the illegal terrorists, the consequences of the illegal war, the people who are struggling every day to make ends meet.

Rep. Brittany Pettersen56:03But it is the endless corruption and the selling off of the American people's priorities for the benefit of Trump and his family and his cronies in just the last few days. I couldn't believe the news that was coming out that Jared Kushner uh is pursuing his own business deals while he's supposed to be engaging in Middle East peace talks. the Russian oligarch paying for a post wedding celebrations.

Rep. Brittany Pettersen56:38The 60 Minutes show that exposed the video footage of people offering pardons as long as they'd give Trump hundreds of thousands of dollars. Uh the corruption is unprecedented in every way and there are real consequences to everyday Americans.

Rep. Brittany Pettersen56:56We're also very concerned about January 6th violent insurrectionists being paid out and trying to exempt Trump and his family members from a deal that you are overseeing with the IRS from uh any uh pursuing exempting them from from any crimes that they might have committed in the past.

Rep. Brittany Pettersen57:26So I want a commitment from you. I I've sent a letter asking for information on this. I have yet to receive a response, but can you commit right now today that there is a legal revocation of the IRS deal that you are overseeing and will you please give us a commitment that you will give us these documents that were requested?

Rep. Brittany Pettersen57:43Representative, you were confused that I do not oversee it. It is it is done by

Secretary Scott Bessent57:54the Department of Justice and we take instruction from the attorney general. But Mr. Mr. Secretary, you oversee the IRS. You oversee the dollars coming in and out of the Treasury. Attorney General supersedes that authority.

Secretary Scott Bessent58:05Okay. Mr. Mr. Secretary, you oversee You're supposed to protect the American people and our tax dollars. Can you commit that you will not distribute any of these funds right now for all of us today?

Secretary Scott Bessent58:16Well, it's it's the subject of litigation, so I can't talk about it, but I'm not sure which funds you're talking about. Okay, Mr. secretary, any funds that would pay out January 6 insurrectionists, whatever people, whatever fund we want to call it, uh any taxpayers going out to to pay out these insurrectionists, as well as exempting Trump and his family from any investigations with their their dealings.

Secretary Scott Bessent58:36Again, that's in litigation, but it is a matter for the attorney general. All right, Mr. Secretary, the hardest part of my job right now is being in my district and having to speak

Rep. Brittany Pettersen58:57to people directly about the impacts of this administration, what it's having on their daily lives. I am shocked when I see you on TV talking about how the K economy is done, that the economy has never been better.

Rep. Brittany Pettersen59:06That couldn't be further from the truth. I people are struggling to make ends meet. The skyrocketing tariffs are hitting businesses with an unexpected average $25,000 a month in Colorado. Canada is our greatest trading partner.

Rep. Brittany Pettersen59:16So huge implications for the trade war that Trump has pursued. 50% uh tariffs on on products that that that we rely on. So our families are getting healthcare ripped away. Our economy has been crippled from failed policies and yet we hear you.

Rep. Brittany Pettersen59:46What what I hear from people is that you're you're one of the the smart people in the administration. You know better. You know what's happening to the people across this country and yet you continue to stand and and say Trump's talking points.

Rep. Brittany Pettersen59:57And my ask is that we deserve we need better. You are a voice that we need of reason and a check on Donald Trump when when we feel like we have none. Uh, Mr. Secretary, I want to read a couple of stories.

Rep. Brittany Pettersen60:18I have countless stories from people reaching out to my office about the consequences every day. Margie says, "My husband and I both have good jobs, but with child care costs that are hitting more than our mortgage and grocery bills that feel like it goes up every week.

Rep. Brittany Pettersen60:38It's been brutal, and these two things are just the tip of the iceberg. It shouldn't be this hard for a family of four to survive." Gentleoman's time is expired.

Rep. Mike Lawler60:49Chair recognizes the gentleman from New York, Mr. Lawler, you're recognized for five minutes. Thank you, Mr. Chairman. Mr. Secretary, thank you for being here and thank you for your leadership on Operation Economic Outcast.

Rep. Mike Lawler60:59Uh could you please describe the impact Operation Economic Outcast is having on the Iranian economy as we speak? Well, Congressman, I I would just quote the president of Iran, the speaker of the parliament, and the head of the central bank who said that the economy is in dire straits.

Rep. Mike Lawler61:10He was the warning both his hardline IRGC compatriots and the Iranian people. So we have seen the currency collapse. Uh we have seen inflation through the roof and the unbelievably in a country with the third highest the energy resources in the world.

Rep. Mike Lawler61:31They now have three to four hour gas lines because they have to import their fuel. So the economic outcast is possible because of the blockade. So the combination of the blockade and the the months that we spent mapping the nodes through the payment system that we are cracking down on them and I believe that these violent outbursts that we are seeing from them is a result of a wounded and cornered animal.

Rep. Mike Lawler62:00Appreciate it. Keep up the strong work on that front. Uh I want to raise an uh issue related to Holocaust error restitution. Uh there's growing evidence that certain Swiss bank accounts holding assets belonging to Holocaust victims and their families were never accounted for or included in the original 1998 Swiss bank settlement.

Rep. Mike Lawler62:21And testimony to that effect was made to the US Senate earlier this year. Mr. Secretary, given Treasury's

62:32role in overseeing matters of international finance and asset recovery, are you aware of these uh reports on unaccounted for accounts? Uh yes. Yes, sir. And do you believe it would be appropriate for the department to revisit or press for the settlement to be reopened or expanded to ensure these assets are properly identified and returned to survivors and their descendants?

62:44The our our international affairs department would be happy to work with your staff on that, Congressman. Great. Thank you. Uh Treasury Department has been very active in the AI space both within the financial sector itself and more broadly in the tech stack.

62:56Can you share more information about Treasury's involvement with efforts to create baseline standards for AI developers and how banks should be thinking about AI within their institutions? Yes. So as as I said earlier, this began uh back in in March and we have engaged on a daily, weekly and monthly basis.

63:26Uh we have we began uh with the largest banks and with their uh chief information officers with their leadership and we have transferred much of that the into project gold eagle uh which is a a clearing house for everything that we learn about resiliency within this and we continue to engage with them and I can tell you that the financial sector have been they have from the largest banks to the smallest banks from domestic banks to international banks have been very good partners and they are working on resiliency.

64:05Appreciate it. Uh the European Union has been attempting to assert regulatory authority on American enterprise through the corporate sustainability due diligence directive. Uh CS3D would force US companies, many with only modest European exposure, to comply with sweeping EU mandated supply chain audits, liability standards, and the ESGdriven operational changes given the administration stated goal of restoring strong economic growth, how do you assess the impact of this kind of foreign regulatory overreach on America's ability to reach a sustained 3% growth rate?

64:35Uh well, Congressman, I used to be a lifeguard, and one of the first things they teach you on lifeguarding is that a drowning person may grab you and try to pull you down with them.

64:46So, at the G20, uh we offered an agenda of growth, uh which includes substantial deregulation. And we hope that the EU will follow a fantastic report from the former head of the ECB, Mario Draghi, the on how they can solve their growth problems.

65:06But the way to do it is not to encumber the dynamic economies. It is for them the to free themselves. Uh in New York and California, they have very aggressive achieve achievement practices and try to sweep unclaimed property uh into the state to effectively pay for their bloated budgets.

65:25Um how are you and the administration going to protect the Trump accounts? uh from being swept up by California and New York uh in these uh grandiose achievement uh practices that they have uh put forth.

65:48Rep. Licardo and I are working on the safer act and would love to work with you on that. Yes, that that could be a problem. You know, again, drowning people try to pull everyone down with them and you know, we we can Mr. Secretary, let me ask you to respond to Mr. Lawler in writing on that question.

66:01Chair [clears throat] recognizes the ranking member of our subcommittee on oversight investigations. Mr. Green, you're recognized for five minutes.

Rep. Al Green66:12Thank you. Uh thank you for appearing today, Mr. Secretary. Um quick question for you. At the purchase of a meme coin, what does one get to evidence the purchase? Sorry. A person purchasing a meme coin at the time of purchase, you get something to evidence the purchase.

Rep. Al Green66:33I assume it's an electronic receipt. An electronic receipt. And how does one acquire value after having purchased the meme coin? Again, value can take the many different things that how does one acquire value when one buys gold?

Rep. Al Green66:45How do you acquire value when you buy? Let's talk about the meme coin. Right now, you you would get it through appreciation. the or or many people may just buy it the for capital stability.

Rep. Al Green67:07Well, um some people buy it assuming that they'll make some sort of profit as a result of the purchase. And is it fair to say that that profit in many instances will be based upon another person buying at a higher price?

Rep. Al Green67:19That that's the way a market system works, Congressman. Well, in this market system, the president's dollar memecoin uh allowed him to make $635 million last year. Investors lost $3.81 billion. The coin fell from $75 at launching to $165.

Rep. Al Green67:48Those purchases that were made by persons buying the memecoin, they purchased a digital token which amounts to nothing. They don't get anything beyond the token in the wallet. Nothing more than that. And there is this term that I'm not fond of, but it's a term that's utilized The term is the greater fool theory.

Rep. Al Green68:19It takes someone who's willing to pay more for nothing than the original investor for the person to make a profit. That's speculative. Uh but it's also called something else. It's called a Ponzi scheme.

Rep. Al Green68:43These things have been legalized under this administration. Ponzi schemes have cost persons lots of money and people who impose them have gone to jail. They've been prosecuted. But in the Trump world, we now have legalized this scam to the extent that when a person buys the Trump coin, there's a transaction fee that's paid.

Rep. Al Green69:14When it's sold, there's a transaction fee. The president makes money on the buy the purchase and on the sale. And if the president happens to have taken a few of these coins himself at the genesis of this process, he makes a profit when it goes up.

Rep. Al Green69:24And if he takes his profit off the top, as other investors do who buy in early, they do well. But the masses of people, they're the people who are losing the 3.8 81 billion.

Rep. Al Green69:45Um, [clears throat] these schemes have not traditionally been legal. How do you justify legalizing these Ponzi schemes? Well, Representative, I'm unfamiliar with this. Uh, I don't think it meets the criteria for a Ponzi scheme.

Rep. Al Green70:04A Ponzi scheme is a different kind of financing scheme.

70:14Well, excuse me if I may just ask you. Pardon me for interrupting, but explain to me how it differs from a Ponzi scheme when the profits that are made are dependent upon someone else paying more for what you purchased, which is nothing.

70:24We'll call it a digital token. So how how is that how is that different from a every market is dependent on if you want to make money on someone paying more whether you I know but if whether whether you sell your house whether you sell stock sir if I may if it's gold you have a tangible asset they are tangible assets this is an intangible asset it doesn't exist except in the mind equities and bonds are an intangible asset.

70:56Okay. Well, this one is the one that the president has used to take advantage of people. I I would hope that our country would see that the president is a corrupt person. I yield back.

71:17Gentleman yields back. Chair recognizes the chair of our subcommittee on housing and insurance, Mr. Flood of Nebraska. You're recognized for five minutes. Thank you, Mr. Chairman. Uh Mr. Secretary, when you appeared before the

Rep. Mike Flood71:27House Ways and Means Committee in June, Congressman Hearn raised the issue of third-party litigation financing. You said at the time that you look forward to working with him on the issue, especially where foreign money is coming into our system, sponsoring lawsuits, and paying no taxes.

Rep. Mike Flood71:38More recently, you warned Wall Street on X that quote, "Tax rules should reward investment, [clears throat] not abusive financial engineering." End quote. and said, "Treasury would not tolerate financial products designed to exploit the tax code."

Rep. Mike Flood71:57Well, I think that specifically describes third-party litigation 2. These transactions allow investors to take ordinary income from litigation recoveries and convert it into capital gains income through financial fiscal engineering. Mr. Secretary, will you commit to having the Treasury and the IRS examine the tax treatment of third-party litigation financing, including arrangements that have foreign investors?

Rep. Mike Flood72:19I'm concerned that we've got sovereign growth funds that are gaming our justice system and getting these nuclear verdicts and then paying themselves back big time. Uh so my question is will you work to uh uh with us to ensure that TPPLF proceeds are

Secretary Scott Bessent72:42subject to the appropriate US tax treatment. Look forward to working with you and your staff on that and I I have long believed that this is a malignancy within our legal and financial system and it should be stated that you look at home insurance premiums in America they have been skyrocketing.

Secretary Scott Bessent72:51Yes, weather

Rep. Mike Flood73:02peril, but also third-party litigation financing is also driving that. Second question, uh, Mr. Secretary, some of my colleagues today have claimed that crypto will destabilize the US dollar, but I have a hard time understanding how a payment stable coin under the Genius Act that must be backed dollar by dollar in a US financial institution, how could that undermine the very dollar that it's tied to?

Rep. Mike Flood73:22I know you're working hard to implement Genius. How do you expect this statutory framework for stable coins to strengthen the dollar's position as the world's reserve currency, which is one of the reasons we all voted for it?

Rep. Mike Flood73:32How to increase the global demand for dollar denominated assets and ensure that this emerging technology ultimately reinforces not threatens the strength of the US dollar with stable coins. This the highest

Secretary Scott Bessent73:51demand stable coins are indeed US dollarbacked. So we believe that as we finish the rule making which we're the in the midst of now and working on congressional intent and speaking to the stakeholders that we will see a increase in demand for US safe haven assets, US dollar assets especially treasury bills and that will likely buttress the rest the the US dollar visav other currencies especially especially as other countries implement the central bank digital currencies which could be seized at any moment as we have seen in numerous cases.

Secretary Scott Bessent74:24Thank you very much for that. Uh as you

Rep. Mike Flood74:34know the uh bank secrecy act is uh the top regulatory cost center for financial institutions and I'm pleased that the administration uh is looking at modernizing AML controls with a new program rule. When it comes out will it be strong enough to actually change uh supervisory practice on the ground level uh to focus on risk?

Secretary Scott Bessent74:54Yes, that you know what we are seeing is that many of the suspicious activity reports that we see are even expost and uh much to my dismay when I arrived at Treasury, we also saw that many of the SARS the which are in the hundreds of thousands to millions filed every year end up in a digital filing cabinet.

Secretary Scott Bessent75:12So uh at Fininsen we are operationalizing fencen so that we can both follow the leads follow uh pathways on those and communicate with local law enforcement in a more robust way.

Rep. Mike Flood75:31I want to touch on community banks which don't have the resources or large compliance teams and fewer BSA reports a month could make a big difference. A threshold increase would meaningful uh meaningfully reduce the compliance burden for them.

Rep. Mike Flood75:42Is that something we can include in the final AML rule? Uh we we are working on that now and we

Secretary Scott Bessent75:51are working on both the perhaps a threshold increase uh based on the length of time the customer has been with an institution and congressman as you know no one knows their customers better than small and community banks right?

Secretary Scott Bessent76:00So the how can we uh integrate

76:10their knowledge and the fact that they do know their customer they see them as opposed to uh we we find that most of the deficiencies are with the very large banks. Thank you very much Mr. Chairman.

76:10I yield back. Gentlemen yields back. The chair recognizes the ranking member of our subcommittee on housing and insurance. Mr. Clever of Missouri. You're recognized for five minutes. Thank you Mr. Chairman.

Rep. Emanuel Cleaver II76:35[clears throat] Um, Mr. Secretary, thank you for for uh for being here. Um the the the president um vowed at the Republican convention mid decade mid midterm uh convention in Dallas that um he would give $5,000 to each American uh if Republicans win the uh election.

Rep. Emanuel Cleaver II77:04Um, I think he called it a Trump dividend. [clears throat] Um, first of all, you know, I'm I'm concerned about the direction we're going in terms of uh one's part of our government, taking complete control over the government.

Rep. Emanuel Cleaver II77:32Um, and we know that uh things like this happened before, but um do you believe that the president can make a declaration uh about $5,000 for each American without

77:55the consent of Congress? Uh we we are currently examining that the at Treasury and the when the Republicans win in November, if we need to, I look forward to working with Speaker Johnson on it.

78:04On what? If necessary, on the $5,000 dividend. So [clears throat] that So it is a thing. I'm not sure what a thing means. It is a thing when it is real. The president's declaration about $5,000 per American.

78:23What is real? So, it's been researched and the the president's intent is very real. Uh, as a Treasury Secretary, um, I'm sure you

Rep. Emanuel Cleaver II78:45do do you have any apprehensions about uh a $1.8 8 trillion uh deficit that would be impacted

78:56um even more negatively if every American received $5,000 from the federal government. Well, first first of all, I think putting more money in the American

Secretary Scott Bessent79:05people's pocket the should be an objective for everyone and I I believe there are ways to do it uh that are they would not affect the deficit. Yeah. and and ways to do it without involving Congress.

Secretary Scott Bessent79:16Again, that if Congress is needed, I look forward to working with Speaker

79:26Johnson. If not, then not. Well, the Yeah. spending uh begins in the House of Representatives and u

Rep. Emanuel Cleaver II79:36$5,000 per person, it would seem to me, uh would have to move through the legislative body. uh we're seeing a a slow and in my estimation dangerous um reduction uh in the equality of the of the the three branches of the government.

Rep. Emanuel Cleaver II79:54Uh and I always think about uh 1973 the um war powers act. I think the bombing was secretly taking place in Cambodia without the knowledge of people in in Congress. Uh, and so I'm not sure.

Rep. Emanuel Cleaver II80:05Uh, I'm Well, I'm assuming you're you're

80:17meeting with Mr. Speaker Johnson now, working out some some details. Sorry. Are you working out details with Speaker Johnson on the $5,000? If if it becomes clear that we need congressional authority, the I I will with Speaker John meet with Speaker Johnson and I look forward to it.

80:35Uh there was also a pledge for $2,000 uh

Rep. Emanuel Cleaver II80:44for for individuals before this by the president. Um and it's concerning. Uh if we can I don't my time is gone but I I am very concerned about releasing u unchecked super intelligence uh when uh people are declaring that it's an ex existential threat uh to humanity.

Rep. Emanuel Cleaver II81:03Um, Senator Kennedy has suggested

81:13uh that we h that we pass some kind of law that required a kill switch. Are you familiar with that? I I I'm not, sir.

Rep. Emanuel Cleaver II81:22Well, a kill switch based on what the senator has suggested would be the switch that would be the ultimate switch that that would shut down AI uh if uh this threat uh surfaced the reality of

81:40time has expired invite the secretary to respond in writing to that question. Chair now recognizes the gentleman from Iowa. Mr. Nun, you're recognized for five minutes. Thank you very much, Mr. Chairman,

Rep. Zach Nunn81:51Secretary Bessant, thank you very much for spending time with us today here in DC. Most importantly, thank you for coming to places like Iowa and hearing frontline folks share with you how the investment of rural capital, which this committee has done, which you have led, has really helped impact local lenders, whether they're banks, credit unions, small businesses, take root and really grow.

Rep. Zach Nunn82:14You spent some time with me recently in De Moine and you heard directly from folks who have said, you know, the lending options available to them because of your leadership here, the roll back in regulation is helping them grow businesses.

Rep. Zach Nunn82:25We had one of our companies had their best year ever as a direct result of both the tax cuts, but the roll back of red tape. I want to say thank you very much for your leadership.

Rep. Zach Nunn82:25Most importantly, thanks for hearing

82:38from folks right in the middle of America on how much this helps grow the heart of the heartland. It it was representative was a pleasure to be there and it's really a t tale of two states that I've been in Minnesota which is top five for personal income tax top five for current uh for corporate income tax and the the people who are leaving

Rep. Zach Nunn82:58and the businesses that feel trapped as opposed to Iowa which is booming. That's right. I also want to highlight and I want to thank my colleague across the aisle Emanuel Clever here on efforts we've done for things like rural housing.

Rep. Zach Nunn83:09Um, and this is an area where making sure all of America gets the opportunity to have an American dream. Um, the Treasury has been a partner in making sure that our local lenders have the access to capital necessary to make that successful.

Rep. Zach Nunn83:19I also want to speak today on something that I think has um, you know, really driven what we have been a leader here on the financial services committee. We've led in both crypto, we've led in digital assets, including stablecoin, and now we're looking at this artificial intelligence that has exploded in the last year alone.

Rep. Zach Nunn83:41Our committee has passed unanimously my AI Plan Act to be able to identify ways that the federal government can learn from what's happening both in the private sector while at the same time not putting prohibitive restrictions on innovation here in the United States.

Rep. Zach Nunn83:51I also think it's unique that the Treasury has an opportunity here to help us wage an America first innovation while stemming the tide from groups like China, a near competitor in the space, from getting tactical advantages in the AI space.

Rep. Zach Nunn84:12That's everything from making sure that chips are made here in the United States to also ensuring that foreign actors don't take an opportunity to leapfrog America's frontier AI models. Secretary Besson, I wonder if you could speak to us about what the Treasury is doing to help keep America's competitive advantage, increase our innovation while at the same time, as was noted here, not allowing technology to get ahead of our capability to best help the American people.

Secretary Scott Bessent84:41Good. Uh, Congressman, thank you for that question. And we are trying to maintain the optimal the growth rate. So, we we are solving for both for both the innovation and safety. And we have been working on that for more than six months since the these large language models since release of mythos which was the first what I what I would say step function increase the in AGI as we or AI as we approach AGI and one one of the things I would say is that uh we need to develop more of an open source more open source models in the US we can't let these large labs capture have regulatory capture because that will stop innovation.

Secretary Scott Bessent85:21One of the ways we can push back against China because the Chinese models you they distill from the US models which is a polite scientific word for steel and the more we develop our own open- source models here or open models here then the we will be able to eventually the Chinese models people will not use them because again you know you you you were seeing in many of the

85:58Chinese models many of Chinese models think they're mythos. That's right. That's right. They think they're clogged. So, Mr. Secretary, I think you're absolutely right in the sense that made in American AI is good not only for the entire

Rep. Zach Nunn86:08world. It's one of the best safeguards we have to make sure the Communist Party of China doesn't become the mainstay for the future of artificial intelligence. I'll end with this, Mr. Chair. One of the efforts that we're trying to lead here is not only what we can do to make sure our partners in China when they come to the United States at the end of this month know that we are committed to this, that they find no harbor, and that we will be soft on this issue, but also Congress must lead.

Rep. Zach Nunn86:28And this is one of the reasons that we are presenting uh a letter to both the House, Republican and Democrat leadership as well as the Senate to make sure that we have a commission focused specifically on aspects that we can do to make sure artificial intelligence becomes first and foremost here in the United States and national security is prioritized.

Rep. Zach Nunn86:39I'd like to enter into the record

86:51without objection. Thank you very much, Mr. Gentleman's time is expired. Chair recognizes the ranking member of our House Intelligence Committee, Mr. from Connecticut. You're recognized for five minutes. Thank you uh Mr. Chairman and thank you very much Mr. Secretary for being here and purportedly we're here to talk about international monetary stuff.

87:03Uh the chairman and I were just in Bolivia. Bolivia is hanging on by a thread waiting for them to approve an IMF deal. I just hold that up as an example of how important it is that you provide the leadership that of course keeps our neighbors uh stable and safe.

87:14Um that's not what I want to talk about though. What I want to talk about is um let me start. Did did you attend the uh midterm uh convention in Texas last weekend? I did.

87:25You did. Okay. Um, I'll tell you, I saw two things at that convention. Number one, u, it's a little bit like you quoting the, um, Atlanta Federal Reserve, uh, as a GDP projection for the third quarter.

87:36Atlantic Federal Federal Reserve has a GDP protect projection that is double what the survey of professional forecasters is saying it will be at 2.5%. So, I saw a lot of happy talk about the economy, which by the way is political malpractice.

87:48When the American people, and this is in the Michigan consumer sentiment survey, see consumer sentiment lose 20 points since the beginning of the Trump administration, you have a political problem. I don't expect you to comment on that, but you have a political problem.

87:59Which is why my friends on the other side of the aisle are not talking much about the economy today. Congressman, there's a survey problem because Democrats are now poisoning the survey. M Mr. Secretary, you're better than that.

88:20Reclaiming my time. I'm data driven. proclaiming my time. It disappoints me to see somebody of your stature use the word conspiracy in the Congress of the United States. But as long as we're going there, the other thing that I heard in in Texas was that we're all communists.

88:31Now, that was interesting to me. I would be the first communist in history to have spent a dozen years in the banking business. Mr. Foster, my friend here, built a business, employed lots of people.

88:43We're not communists over here. But I do worry about the other party. There's been 10,000 Ivy League PhDs written on what precisely communism is. But can we agree, just yes or no here, can we agree that communism substitutes the control of the government and the ownership of the government over the hand of the free market?

88:54Is that a reasonable working definition of communism? Yes. Okay. Good. Good. So, can you think of any other administration since Franklin Delano Roosevelt that has taken equity stakes, government ownership in 39 companies? That's a figure by the council on form.

89:17Can you think of another administration that has the United States government owning 39 American companies? Congressman, as you said, since Franklin Roosevelt that we we are the uh in in a the fight of our life.

89:26It's a simple question. No, no, no. for strategic industries. We have had market failures. The Biden administration completely Okay. Okay. Okay. Mr. Chairman, I I have five minutes here. I'm not going to argue with you on whether that's a good idea.

89:48I happen I'm a free market guy, so I think it's a terrible idea. Tariffs are a Mr. That's why that's why we have no critical minerals. That's why the Mr. Secretary, I do have a question at the end of this.

90:00The government now owns 39 companies. The government has imposed tariffs. I don't like tariffs. Whether you think they're a good idea or a bad idea, they are an intervention in the free market. Uh uh you yourself did a massive intervention in probably the most important market to the capital markets, which is the Treasury market.

90:09The president recently $5,000 for a vote. Now, you could in the legal world that would be called a bribe, but you could think of it as an intervention in political markets. And by the way, I have no doubt that if I walked down there right now and said, "I will pay you $5,000 if you focus your buying on the three-year Treasury," that conversation would end with me in handcuffs.

90:30But the question I have for you, Mr. Secretary, relates to your intervention in the markets. And I'm not going to ask you to agree with me here, but I can think of no administration in the last 50 years that is quite as communist as the Trump administration.

90:42Constant interventions in the operations of the free market. But let's spend one minute on your intervention. About a week and a half ago, you spent some $10 billion plus or minus to try to lower the yield on the 10-year bond.

91:02This prices American mortgages. When you started, the 10-year bond was at 4.8%. Today, it's at a 20-year high of 5.04%. 20 basis point rise. Was your intervention successful? And will there be more? Uh, yes, it was, sir.

91:12And the Wait, wait, wait. The 10 year went up by 20 basis points. How can you say it was successful? The well there there is the counterfactual of what would it have done? And we then proceeded to have the two most successful Treasury auctions that we've had in 20 years and that the US bond market it continues during past month during since President Trump has come in has been the best performing bond market in the developed world.

91:46I have one last question. You you didn't use our cash for that. You let short-term bonds pay essentially for the purchase of long-term bonds. But you've talked about maybe using the Treasury General Fund.

91:57That's the American people's money. Do you have the intention of using the Tre Treasury General Fund to continue this operation? Uh I I don't think you understand what the Treasury General Fund is. The TGA the is the checking account for the federal government. the and if we can buy bonds cheaply which is what we do that we approximately 10 billion of I just asked a yes or no question about whether you intend you can ask question you can tell me how to answer it Mr. Your time is expired.

92:28I'd let it go on because I wanted you to get that clarification and I'd invite the secretary to put that in in writing. The committee's interested there. Thank you. Uh the gentleman, true gentleman from Montana, Mr. Downing, you're recognized for five minutes.

92:37Well, thank you, Mr. Chairman, and uh uh

Rep. Troy Downing92:49Secretary, Mr. Secretary, thank you for being here. Uh, I want to first start by applauding your efforts and the Trump administration's efforts to reduce red tape and ensure that regulations are appropriately tailored. You know, I I also want to quickly acknowledge uh the Treasury's efforts to stand up Trump accounts, which really do have the potential to give kids a financial leg up.

Rep. Troy Downing93:10But uh straight into my questions. Um, as a former state insurance commissioner, one of my biggest priorities is maintaining strong and competitive state-based insurance markets, which in my experience is the best way to serve the needs of Americans.

Rep. Troy Downing93:21And during the Biden administr administration, I saw firsthand how the Federal Insurance Office or FiO was empowered and politicized to encroach on that system despite a key function of Fio being to represent the US insurance industry on the international stage on a prudent on credential matters.

Rep. Troy Downing93:42Um, and I saw all kinds of uh uh deviations from that, including, you know, trying to get the US to adopt, you know, European capital standards rather than adopting the other way on the strongest, most effective insurance market on the planet.

Rep. Troy Downing93:53You know, acting as a regulator when they clearly weren't a regulator. And probably one of the biggest transgressions I saw there was in the previous administration's uh uh Green New Deal aspirations, basically making data calls on our domestic insurers, usurping the authority of our domestic regulators.

Rep. Troy Downing94:14So uh Mr. Secretary, can you discuss the efforts Treasury has made under your leadership to rein in those abuses we saw at Fio during the previous

Secretary Scott Bessent94:24administration and what further reforms uh might you support? So congressman that's a very important distinction. Uh file was created under DoddFrank but it is not a regulator. The it is a convenor the it is an observer.

Secretary Scott Bessent94:33The we they facilitate communication and the we we do not exercise uh authorities. Um we I I believe that the 50 state the insurance mechanism that we have in the US is extremely robust and the um I had the regulators the insurance commissioners come to Treasury in the spring for some very uh detailed discussions on what's happening in private credit.

Secretary Scott Bessent95:04I was very impressed with the the depth and breadth the of their work and importantly the they regulate each other because to do business the you know in in Montana the New York they you know Montana has to certify a New York company selling there.

Secretary Scott Bessent95:26So it it is a very robust system right and um look I I think what we can do the is which is what we do I identify the potential areas that we are concerned about the for financial stability and then make sure that the um that the insurance regulators are aware of them because as I've often said in risk management the biggest risk you're taking is one you don't know you have right Well, uh, thank you for that.

Secretary Scott Bessent95:54And obviously, you know, we understand what the intent was behind Fio, but we have seen usurpations of what their authority

Rep. Troy Downing96:05was, uh, under the previous administration. And you, I've championed efforts to reform and abolish Fio. You know, the McCarron Ferguson Act of 1945 made clear that states have sole regulatory authority over the insurance industry, which was upended by DoddFrank when it was when it created Fio.

Rep. Troy Downing96:16So, Mr. Secretary, do you believe that Treasury should minimize its insurance activities

96:26to clearly define federal responsibilities and leave insurance regulation to the states? 100%. Thank you. So, my legislation, the McCarron Ferguson Restoration Act,

Rep. Troy Downing96:37really strikes a balance on abolishing Fio while maintaining some key responsibilities. So, I I hope you'll take a care take a look at that. Uh moving on, in the interest of time, uh I was very pleased to see the final rule issued by Fininsen to permanently remove the invasive beneficial ownership information requirements for US small businesses.

Rep. Troy Downing96:47Uh I've heard from countless companies as to how costly and unworkable this requirement would have been. Can you briefly discuss why exempting US businesses from this requirement was so critical to the administration's commitment to cut red

Secretary Scott Bessent97:10tape? Well, Congressman, I I think first of all, it's important to know who we did ex exempt and its foreign entities, right? So, but by exempting 33 million small businesses the from the these ownorous and expensive reporting requirements, uh you know, I believe it is a victory for common sense, right?

Secretary Scott Bessent97:19Um

Rep. Troy Downing97:29another burden I hear from our community banks in my district is how costly it is to comply with the Bank Secrecy Act and anti-moneyaundering laws. the $10,000 domestic currency transaction report threshold has never been raised to account for inflation since the secrecy act became law in 1970.

Rep. Troy Downing97:41Um you discussed this issue with Chairman Hill earlier, but can you describe why it's important

97:51to keep these thresholds updated? I invite you to describe them in writing to the gentleman from Montana. Thanks for the question. Chair recognizes the ranking member of our task force on monetary policy, Mr. Vargas of California.

98:03You're recognized for five minutes. Thank you very much, Mr. chair and ranking member for the hearing. Appreciate it, Mr. Secretary. Thank you for being here joining us. I know you have a very tough job and I appreciate you taking it.

98:11I do. Um, I've been here since the beginning of the hearing, so I have heard most of your testimony and some of the things I was going to ask you've already been asked. But one of the things that I did hear that you did attend the midterm Republican convention in Dallas and you did hear of course and you commented about the $5,000.

98:33In fact, the actual quote from the president was this. If Republicans win, you win with us and you get $5,000. So, is that a good idea? Pardon me. Is that a good idea? Uh yes.

98:48Why? I I I think it's a good idea for the American people to they keep more of their money. So they get 5,000. Does that hurt the deficit or the debt? Does that increase the deficit or does it increase the debt?

99:08The I I I believe that there are ways to do it without increasing the debt or deficit. Why don't you go ahead and tell us then because it doesn't seem like that's been the case so far.

99:08Uh that is in process right now. So it's somehow mysteriously or magically going to occur. uh you can't tell us, you can't give us ideas. I'm not ready to discuss it at present, but at Treasury, we've been working on it for quite a while.

99:30The reason I say this is because we hear this all the time that in fact this is going to reduce the debt, reduce the debt. I remember when President Trump used to talk about how outrageous the $24 trillion debt is.

99:40Now, of course, it's at 40 trillion. So, again, we hear these miraculous things that are going to happen and they don't seem to appear. But since we are talking about miraculous, I studied to be a Catholic priest for a long time and I had to study metaphysics to myistic philosophy in particular because you have to pass an exam as a Jesuit called the day universal and we talk about ontolo you learn about ontology epistemology the the notion of what is existence what is being how do you know these things I never thought I was going to have to research them once again but because of AI I do find myself once again going back to this information trying to figure out you know what exists what doesn't exist this is a dangerous thing and I'm not a techie but I I do know philosophy as as the systems learn more and more about us they do become very dangerous and you're in a position to do something important the people who are technically savvy more and more are saying these are very dangerous things and yet you were talking a little bit about how we have to do this for really efficiency purposes.

100:52Um, what are you doing for safety? Uh, we we've been working the on safety the non-stop since the release of Mythos. And I can tell you what we shouldn't do on safety is to give these labs the a liability exemption, which is what they are asking for. the the best way to guarantee safety is that the creators are liable for what they build and generate and they put out into the economy and to the the American people and to the world populace.

101:22Would you like to expand a little bit more on that? Because if it's if it's just a liability, I'm a lawyer too. I understand liability. So if the safety issue is just a liability for you as you know often times companies go ahead and take the risk because of the potential profit.

101:43Are you building in any other type of safety other than the risk, the liability? Again, that the the one thing we should not do is give them a blank check on liability because I I believe that the best the liability or the best safety guard is that they will be held responsible.

102:01And they are saying that we would like to all slow down, but please give us a waiver on liability, which should not be done. And I would encourage everyone in this committee and in both houses not to consider that.

102:11Well, I think that's a very good idea and I agree with you. But what about the safety of being able to turn the system off? We we are working we've been working in this administration on that.

102:21Uh you know you might recall that we forced Anthropic to withdraw a model because we did not the believe that it passed the safety criteria and they received the a lot you know we we were the you know hel hel held up as they doing something that was terrible.

102:48I have 17 seconds left. I would just urge you to to focus more on the safety. I think you're a very capable person. I don't agree with you on everything but I think you're a very capable person.

102:58I hope you focus on the safety because I do think there's a lot of danger. Again, thank you for being here. Yes, sir. The chair now recognizes gentleman from Florida, Mr. Herodopoulos, for five minutes.

103:09Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being here. I we appreciate your cander as you go through these questions. And uh I've never studied to be a priest, but I am a former history professor and I've learned that socialism doesn't work.

103:19And I think we all recognize and seeing what's happening in central Europe right now with their declining economies. And the last thing I want to do is go in that direction. I also see the opportunities now happening in Latin America where they're opening up their markets as we've seen success in places like Argentina.

103:32Uh Mr. Secret, I want to get a couple questions with you if I could about Argentina and Japan. And I I have greatly concerned some of the reaction to some of your good policy directions.

103:43First of all, it's it is correct that Japan is our largest holder of US treasuries. Is that correct? Uh it is. Okay. And second, I think we've seen almost a 90% reduction in Argentina in their inflation rate since they've moved to the the free market is my understanding at this point as well.

103:53And the reason I'm bringing this question up, I know there's a little bit of a public conversation between uh the senator from Massachusetts and yourself. and maybe for not only the dedication of this committee but uh the public to understand what we did in Argentina to help a fellow ally um and and what we did there which actually helped the world economy as opposed to hinder it.

104:14Look in Argentina we we had a fully collateralized swap line on which they they just drew a small amount. The the goal uh was to protect the capital of the American people. We actually made tens of millions of dollars and we successfully bridged an American ally.

104:35You know, as everyone said, a Trump ally. No, this is an American ally. And the, you know, Javier Mole has taken Argentina the out of this far-left anti-American governments and they has been a beacon for Latin America.

104:54So uh when the congressman from Connecticut talked about being in Bolivia that we we were seeing with Argentina, with Bolivia, with Chile, with Colombia, with with Ecuador, the all these countries the having realized that these ROF policies have never worked anywhere and did not work for them now want leadership in a market-based economy.

105:16And to build on that idea, when when you we had a situation recently with Japan, again, our number one bond holder at this point in America, it has to be frustrating as a person who's actually an expert on the economy to hear the chattering class talking about some of the decisions they made and not understanding a fundamental understanding whether it be credit swaps or otherwise.

105:39Uh well, a and some in the Senate. And and that said, um what what is the benefit of helping out an ally like Japan when they run into a situation like they did recently?

105:50Again, the we had been engaged uh with the Japanese on their currency interventions in constant dialogue. Uh the ministry of finance there uh is very transparent with us and um for a nominal amount again not the goal but a nominal amount where the US treasury has made tens of millions of dollars we were able to signal our support for the Japanese policy the of a stronger yen and a stronger yen is better for American exports.

106:19A stronger yen uh means that the Japanese government will not have to sell US assets to finance foreign currency intervention. And and in our last minute and a half, if I could, I know there's been a lot of unique statements made from the other side of the of the aisle.

106:30Would you you got a little bit of time left. Do you want to address a couple of the comments? I know that you have cut off in a few different circumstances. Well, the congressman, what I would like to do is this was just released during the h hearing.

106:50It's several inconvenient facts. the Census Bureau uh covering uh 2025 uh they had just published the poverty rate declined uh 50 basis points to 10.2%. Real median household income increased by $2,250 2.6% to $87,460, the highest on record.

107:09Pre-tax income for black Americans is up 4.8%, white Americans 2.9. Well, thank you, Mr. Secretary. And one last thing if I could, Mr. Chairman, uh there there's a lot of talk about opportunity zones in Florida.

107:20I'd like to just make a request of the Treasury Department to take a look at some of those ideas for the future. We're booming right now because of the space industry in Florida and we're looking for new ways to find that investment so we stay number one in space.

107:29With that, Mr. Secretary, thanks so much for your time. And Mr. Chairman, I yield back. Gentleman yields back. The chair recognizes the gentleman from Illinois, Mr. Castton, for five minutes. Hello, Secretary Bent. Um, what is the total amount of money associated with the sale of Venezuelan assets that's flowed through Treasury accounts or accounts managed by Treasury since January?

107:51Uh, that just a minute. We we are not giving out the total amount of dispersements. Uh I'm I'm asking for the total amount of money. President Trump said in July that it was more than 13 billion.

108:13Would you agree that it was more than 13 billion in July? Again, they I I'm not going to give out that amount. Uh okay. Has Treasury hired an independent auditor to review those flows?

108:23Uh that KP KPMG. Okay. Thank you. All dispar all dispersements are subject to KPMG. And will their and will their audit review the flows through the Qatari managed account that was initially set up?

108:36Will their audit review the Qatari flows? Uh, KPMG is reviewing everything since they have been hired. Would will that include the Qatari flows? Again, Secretary Rubio said it would. I'm just asking you to confirm what Secretary Rubio and I agree with Secretary Rubio because State is Okay.

108:56Have you personally reviewed any of their audits? There have been no audits published yet. So, have you reviewed their work products? What's that? Have you reviewed any of their initial work? The my staff reviews them every day.

109:08Okay. Are do you know are any of the cash flows that are flowing flowing to the US government, US persons or US corporations? Uh I have no knowledge of that. Okay. Because President Trump said on July 27th, "We've paid for that war many times over.

109:19We're taking in a lot of money, billions and billions of dollars from Venezuela." Who is the Wii that he is referring to? Well, I I think President Trump may have been referring to the oil deal that the Department of War has done with Venezuela, but but he he he seemed to imply that we, the United States people are taking in money to offset those costs.

109:39That would suggest flows to US persons. Uh again, that this is the one one of the largest uh assets that maybe ever to go on the the US balance sheet. Congress and and well, okay.

109:50Are the accounts that the Treasury is managing tied only to the sale of oils or are you also taking control of other Venezuelan assets? It is many Venezuelan assets. So you've asserted control over Venezuelan assets.

110:02I know Interior recently said they're taking control of Venezuelan gold sales. So we're also taking control of those assets and the dispersions. Yes. And you can't testify as we sit here whether or not those are flowing to US persons.

110:20Uh no. Um, can you identify where or what US bank those funds are being held? Uh, no. Secretary Rubio had indicated that they were being held by City Bank. Do you dispute what Secretary Rubio said or do you not know?

110:31I agree with him. Um, is City Bank earning any fees or other charges on those deposits? Uh, I'm I believe that they are likely earning their traditional fees. Okay. So, that would be a US person who money is flowing to.

110:41What is that? That would be a US entity. City Bank is a US entity. That would be a US entity that Venezuelan funds are falling to. Um, in February, you promised to provide this committee with a copy of Treasury's agreement with the Venezuelan government regarding the control of the payments associated with the Qatari account.

111:03When can we expect to receive that document? Uh, I'll check with my staff. Um, do you know is that document the same as the current agreement? Was that modified after the flows moved from fromQatar into a US account which apparently is managed by City Bank?

111:15Uh again uh that account is audited. No, I'm asking whether you whether the agreement that you have promised to provide between Treasury and the government of Venezuela has been modified since the flows moved from the Qatari account.

111:27If there's an auditor, it's obviously been substantial. This is not an audit question. This is a no if if they are taking direction. the I'm asking about the I'm not sure you know what you're asking.

111:38Um, please don't judge me and I'll try not to judge you. The you are asserting that you have control over assets that were not coercive and they're standing in front of creditors. That's predicated on the existence of an agreement between the US government and the Venezuelan government that you promised to provide with us.

112:00Do you understand what I'm asking you? I'm not sure you understand what you're asking. Secretary Rubio testified to the Senate that the Qatari account was necessary because if the Venezuelan money was in a US account, it would be subject to claim by foreign creditors.

112:11Are you of the opinion that those funds which are now in US accounts are protected from foreign creditors? Yes. Under whose legal opinion are you relying? Uh they they are the uh they are funds of the Venezuelan central bank which is protected from foreign creditors.

112:33But but why would they have not have been protected when they were Well, look, let me get one last thing. The GAO is conducting an audit of this whole process right now. Will Treasury commit to working wholesomely and openly with the GAO to make sure that we get answers to the questions you can't provide?

112:43Time is expired. Is that a yes? The gentleman's time is yield back. The chair recognizes the chair of our task force on monetary policy, Mr. Lucas of Oklahoma, for five minutes. Thank you, Mr. Chairman.

112:55Mr. Secretary, thank you for the bold leadership and action you've taken to cool the fever building in the Treasury market. Can you describe market functioning during this time and how the department is safeguarding the world's most important asset class while ensuring the market remains anchored in facts?

113:17Well, uh sir, we have the proof because the US Treasury market continues to be the best performing market whether it is over one month uh in in the developed world whether is over one month or whether it is over uh the period since President Trump came to office and as I said uh the proof of our credibility and that this operation was successful.

113:45Uh we traditionally when we are bidding for three billion of assets get 20 billion of offers. When we are bidding for six billion we only receive 10 billion and we have a very strict pricing guideline.

113:56So we are buying these assets at a discount creating liquidity and creating value for the American people. That money then gets recycled back into the treasury market as Dior's balance sheet become freed up.

114:16As we see demand from foreign investors shift more towards the equity markets here in the United States. How is the department thinking about the potential for volatility risk in our treasury market while recognizing the depth and liquidity benefits that more price sensitive buyers provide?

114:26Look, Congressman, I I believe it is not either or for American assets. Uh I believe that the money that is flowing into American assets reflect reflects a preference uh away from other global assets.

114:45So it is it is not either or. And as I said, we we are seeing we we saw the two of the best Treasury auctions for longdated paper for 10 and 30 years uh that that we've seen in 20 years.

115:05Do you feel confident that the Treasury Department has the tools necessary to address any concerns over yield levels or are there additional authorities that might be helpful? Now again as I said that yield levels that we do not set the equilibrium price things rarely exist in equilibrium.

115:24They are either moving away from it or moving toward it. My job is to make sure that when I believe that they have moved too far away to move it back toward equilibrium and I believe we have the necessary tools.

115:35Continuing on a similar topic, can you describe your work with the credential regulators on their much improved Basel reproposal to ensure access to clearing efficiencies in the cash and repo treasury markets as the clearing rule goes into effect at the end of the year?

115:45Uh yes, we we have substantially engaged with them to make sure that the US clearing houses the and financial institutions are not disadvantaged and that the the US remains the premier uh market in the world and the destination for capital.

116:04Over in the egg committee this week, we're discussing how to continue supporting the work of our colleagues at USDA to support our farmers and ranchers, the people who feed and fuel the country. Our producers are working diligently to rebuild our herds while the Fed continues to consistently report high demand for American beef.

116:16Talk to us about the importance of our cattle ranchers to the overall health of the American economy and what do you expect in the farm economy uh after we emerge from the contraction in the beef cycle? the the beef cycle as you know the is is a long and idiosyncratic cycle and we got hit the in the cycle at the same time with the this you know it's an evocative name the screwworm that forced us to cut back on me Mexican and to the extent there was any central American beef so it was one two I I believe that in my conversations with Secretary Rollins that we will move beyond the screworm epidemic perhaps the in the next 6 or 12 months that should help stabilize the market and then the financial health of our farmers is essential for coming out on the other side of this beef cycle.

117:16Thank you for your awareness of these important issues, Mr. Secretary. And with that, I yield back, Mr. Chairman. Gentleman yields back. The chair recognizes the gentleman from New Jersey, Mr. Gottheimr, for five minutes.

117:28Hi, Mr. Secretary. the the 10-year Treasury hit 5% as of September 14th, as you know, the highest since 2007, and has dragged the 30year mortgage to a one-year high near 7%, pricing families in my district and in many place around the country out of their first homes, and the 10-year keeps climbing.

117:50Uh, do you believe it's important that we make credible progress on the deficit? And you think that's a serious part of actually tackling this affordability crisis? Uh, yes. And I believe the 10-year yield reflects me many things, but the the need to address the deficit is one of those.

118:12Thank you, Mr. Secretary. Deposit insurance has been stuck at $250,000 for years. And when SVB and Signature Bank failed, business deposits fled our community banks overnight. Coverage has been frozen at $250,000 for for many years.

118:22And it hasn't kept pace with inflation. And today, about half of all bank deposits, some 7 trillion, sit uninsured. Do you believe deposit insurance reform would help strengthen confidence across the banking system and could help our community banks retain customers and stay competitive?

118:34Yes, sir. Uh since a diverse resilient banking sector is part of what underpins the strength in the global financial system, would you commit to working with many of us to toward deposit insurance reform in the future?

118:45Uh yes, and and we have been working with members of this committee. We I welcome the opportunity to work walk work across the aisle because what we see when there is deposit volatility during a period uh like the SVB and the two other banks is that banks move from community banks to large banks and then they never migrate back right many of our community banks are really struggling because of it right and well they they are struggling for a variety of reasons right for many that's one of the reasons but we've seen 45% of small and community banks disappear since 2009.

119:27Yes, I'm very worried about that. Thank you for bringing that up. Um, Mr. Secretary, we have been warned just last week that unchecked advanced AI could pose an existential risk to humanity and the international rules of the road now being debated all depend on enforcing who can access advanced chips and capital.

119:39We can't rely on self policing in my opinion and third party audits alone, which is why clear rules of the road need to be adopted and put in place. uh what role is Treasury playing to ensure any guard rails on frontier AI can actually be enforced and how are you coordinating that internationally so that a race without rules doesn't endanger the whole system well congressman to go back to the first point you made uh that the ai runs on the advanced chips that the US has a substantial lead in so making sure that the other uh countries do not have access to those advanced chips uh is very important.

120:20And at Treasury, as I said, we we convened very early the after what I would call the mythos step function gain of intelligence and have continued working. Our mandate is with the financial sector and then we have attempted to migrate that knowledge and the learning from the financial sector the into uh other sectors through the gold eagle forum.

120:41You're coordinating uh across government, working with your partners across the government on this. Yes, sir. [snorts] Thank you. I appreciate that. On September 8th, Treasury sanctioned three dozen more entities tied to Iran's aviation sector, airlines, and cargo operators Tyrron uses to move weapons, personnel, and elicit cargo as part of Operation Economic Outcast.

121:04However, some of the enablers you named uh aren't in Iran. Their firms in Turkey, the UAE, Kazakhstan, and Malaysia. third countries. Several of them are are partners supplying the parts and logistics that keep planes like Mahan Air in the air.

121:14A sanction is only as strong as our willingness to enforce it against the facilitators as well. What is Treasury doing to hit those third country facilitators with secondary sanctions and force their governments to cut the network off so that cut off from the global financial system is a consequence and not just a warning.

121:35Uh so that warning will take effect and we'll start biting on September 23rd and we will fulsomely uh enforce those just as we have with the three banks that we have over the past three weeks.

121:45Got it. So you're going to look across the board at all those who are tied not just to the main actors. No, we we we've made it known. We we know for those of you who are enabling the regime, you know who you are.

121:55We know who you are and we the aviation authority is a new authority, a new sanctioning authority and we are going to exercise that very vigorously. Excellent. I think we need to be aggressive.

122:06So, thank you. Thank you so much. We are sir. Thank you. I yield back. Thank you, sir. The chair recognizes a gentleman from Tennessee, Mr. Rose, for five minutes. Thank you. Uh thank you, Chairman, and and thank Chairman Hill and Ranking Member Waters for holding this important hearing.

122:15And thank you, Secretary Basset, for being here with us today. Secretary Besson, as you may be aware, I introduced HR7993, the Somali Land Economic Access and Opportunity Act. My bill would require the Department uh of the Treasury to submit a report to Congress examining the principal legal, regulatory, and policy barriers barriers limiting Somali land's access to the US financial system.

122:47The report would examine issues including Somali land's international status, sanctions exposure, compliance with know your customer and anti-moneyaundering and counterterrorism financing standards, remittance flows, access to international financial institutions, and the steps necessary to incorporate Somali land into the swift financial messaging and payment system.

123:07It would also provide recommendations to strengthen financial transparency, expand lawful financial access, and reduce the risks of money laundering, terrorism, financing, and other illicit activity. Somaliand is a valuable partner for the United States and has the potential to become an even greater partner.

123:26Its strategic position along the Gulf of Aiden near some of the world's most important shipping routes makes it particularly important to US security and economic interest. At a time when China is expanding its influence throughout the Horn of Africa, Somaliand can serve as a reliable and constructive regional partner.

123:49I just had the mo uh opportunity a few moments ago to meet with the president of Somaliand who is visiting uh here in Washington this week. Secretary Passant, do you believe that stronger financial ties between the United States and Somali land could advance US security and economic interest and help counter China's growing influence in the corn of horn of Africa? that representative I'm going to defer to the state department on the recognition of Somali land but that historically that stronger economic engagement with the United States by any country uh creates sustainable development and creates more resources.

124:28Well, thank you for that. And uh I guess being more pointed, I would say uh do you support uh if and may perhaps you haven't had a chance to familiarize yourself with the bill is not really um talking about uh explicit recognition but about clearing the way for Somali land to continue to build uh economic access to the world market.

124:51So would ask uh for your support of and and your uh taking a look at the Somali land economic access and opportunity act and its requirement that the department of treasury provide Congress with a comprehensive assessment of the barriers limiting Somali land's access to to the United States financial system.

125:13Would you support that? I I I will support the looking at your bill. I will have my international affairs department give me a briefing next week and then we will engage with your staff.

125:26Thank you. And and does the Department of Treasury based on your current knowledge have the technical expertise, personnel and capacity to conduct a comprehensive assessment of the legal, regulatory, and policy barriers limiting Somali land's access to the US financial system within a 180day period?

125:37Yes, sir. Okay. Um and and if not, how much additional time would be required? That would be helpful to know. Secretary Besset, in June of 2024, I was proud to join a letter led by my friend and colleague from Florida, Congressman and member of this committee, Congressman Byron Donald's, urging the World Bank to con to reconsider its long-standing position on nuclear energy financing.

125:59I was encouraged to see the World Bank reverse that position in June 2025 and begin re-entering the nuclear energy space. This is an important step toward giving developing countries access to reliable, affordable, and secure energy options.

126:11Can you describe how the administration is using America's voice and vote at the IMF to support responsible nuclear energy projects and expand financing opportunities? Uh yes. So the uh Mr. Mr. Bongo who heads the World Bank that we have made it clear to him that this is a priority and indeed he has adopted this as a priority and this is the first time in decades that the World Bank that has moved forward on nuclear energy and I think it is an important part for the poorest countries that in engaging in the their increasing their welfare levels and increasing their prosperity and developing truly sustainable energy.

126:59Thank you, Secretary. I appreciate your leadership on that issue. I see my time is winding down, so I will yield back the remainder of my time. Thank you again for being here. Gentleman yields back.

127:12The chair recognizes the gentleoman from Massachusetts, Miss Presley, for 5 minutes. Thank you, Mr. Secretary. I want to continue where we left off the last time you testified before this committee. As you know, hundreds of thousands of black workers have been pushed out of the workforce and unemployment rates over the last year haven't been this high since the CO 19 pandemic.

127:23To put it simply, more people are out of work now than they were before Trump took office in 2025. Secretary Besson, in February, you testified under oath that you would analyze black unemployment data and report back on its impacts to the financial stability of the US economy.

127:45Have you begun working on this report yet? Uh, I will check with my staff. I have not seen it. Can you make a commitment to honor what you said on the record under oath?

127:57Of course. Okay. And when can I expect that report? I I will check with my staff and they will communicate to you via a date certain. Secretary Besson, let me be frank here. Something that is having um this sort of impact.

128:15At one point there were 300,000 uh black women who have been pushed out of the the uh the workforce, most of them from the federal government, devastating uh many black families and that 80% uh of those uh families, black women are uh the primary bread winner.

128:26So this is something of great consequence. I have to also say uh again being frank that you're on thin ice with me because you sat here uh in the midst of the tariffs conversation and I asked for you to be a partner in pushing for an exemption of baby products and you told me that I had a partner in you in that in that advocacy and nothing came of that.

128:49So twice you've come before this committee made a commitment under oath and you've not followed up. I I I would say watch this space the after uh President Xi's visit. So, okay. I don't know what that means, but but people are struggling.

129:11You've made commitments. You haven't kept any of them. No, it it it mean and it's outrageous. Moving on. I have a lot of ground to cover and I I eat up too much of my time.

129:22Secretary Besson, when Donald Trump this reclaiming my time, when Donald Trump launched the unnecessary and unconstitutional war with Iran, how long did he say that would last? I don't recall. I'll jog your memory. four to five weeks.

129:33It's been six months. So, he lied and we're all paying the costs. Since the war started, gas prices are up 52%. Yes or no? Are you aware of that? Uh, gas prices are up Gas prices are up 52% since the war started.

129:43Are you aware of this issue? Yes or no? From what to what? I I think that's not a good number. Okay, I'm going to take that as uh a yes. You're playing like you don't know, but you know.

129:54Okay, Secretary Bess, working people reclaiming my time. Secretary Bessent, working people are paying more for utilities now than they were five years ago. More than 40 20% more. Are you aware of that? I I am aware of that.

130:14Okay, moving on. Secretary Besson, people are also paying over three times more on health insurance. Have you heard about this issue? Yes or no? Uh, I am aware that Obama failure. Yes or no?

130:24Are you aware? You can ask me. Stop filibustering and stop acting like you don't know what the facts are. Moving on. Answer it. Secretary Besson, the Joint Economic Committee found that tariffs cost families on average $1,700.

130:35Have you heard about this issue? I have not. You heard about this issue. Your boss, Donald Trump, said that he was going to give people uh a a uh he would reimburse them. He would send them a check for the cost of these tariffs.

130:45And he hasn't done that because he lies on everything. Moving on. You know about these issues and I'm questioning your integrity. You know is recognized. Miss Presley is recognized. Thank you, Mr. Secretary. You know about these issues.

130:57The American people are suffering. You know better. You go on television and you say that Trump's economic agenda is a great comeback. And that makes me question not only your integrity, but if you're operating in the same reality as the people whom you are accountable to and you are enabling him and it's shameful.

131:18Secretary Beston, the families in my district and across this country are struggling to afford a home, buy food, raise their kids, pay these high utility bills, and they deserve a government that's going to make their life easier, not harder.

131:30But that's exactly what is happening on your watch. As a Secretary of Treasury, you're responsible for overseeing all of our economy. You don't have anyone else to blame but yourself and Donald Trump. And it is shameful that you're being an accessory to this and being complicit to this.

131:41You are a smart man and you know better. I yield back. Gentwoman yields back. The chair recognizes the chair of the House Small Business Committee, Mr. Williams of Texas, for five minutes. Uh, Mr. Chairman, thank you for being here.

131:53It's going to be a little calmer on this side. Uh, first of all, I'm from Texas. I'm a car dealer and employ hundreds of people and business is great and I appreciate that. And with that in my with that, I'd like to give you some time to respond to what you just uh had to take.

132:04Well, I mean, one thing is that black pre-tax income is leading the country. It's up 4.8% in 2025. So the uh and I I think it's not very wise to be lectured. This is the equivalent of Lizzie Bordon lecturing someone on family values.

132:24The Democrats torched the American people. 21.5% the stated inflation and for working families up in the 30s the due to groceries, due to rent, due to insurance, due to cars. So you know they created a price level a gigantic step the worst inflation in the a generation or two and the American people are recovering from that.

132:50We have seen real wage growth. What is an inconvenient fact is that real wages are up under President Trump and they went down between four and 8% for working Americans under the last administration.

133:08So I tell people I feel like an emergency room doctor for people who have been backed over by a truck. You had to stabilize the patient and now the patient is up and able to walk and is going to get back on his or her feet.

133:18Well, you've been a good doctor for Main Street. I can tell you that. So I appreciate that. With that being said, in August of this year, uh, FinSen issued a new rule excluding American businesses and owners from their beneficial ownership reporting requirements.

133:40And this was a great news for Main Street, I can tell you. And however, many small business owners in many districts and across the country have spent significant time and money in preparation for the original BOI rule uh before the exclusion.

133:49So, uh, question would be, can you walk us through the steps Treasury plans to take to effectively communicate this change to small businesses like mine and whether there are plans to address costs already incurred under the prior requirement?

133:59Uh, Congressman, what we can do is is alleviate future costs from being incurred and tell the businesses that that uh this data will be deleted. uh that we are doing everything we can to move this process uh with the NRA to conclusion and delete the data and that the 33 million small businesses that were on the hook for this what I would say is virtually useless information they will not have to endure this again.

134:31Well, thank you for that answer. And in 2025, Americans lost $16 billion to fraud and se and scams the highest figure ever reported. Small businesses regularly find themselves as targets for the scammers through attacks like payment fraud and impersonation scams.

134:43And Main Street America often lacks the resources of larger firms to recover from these scams. And many scam networks operate overseas so they can move stolen funds to the international financial system before victims even realize they've been defrauded.

135:04So a question, Mr. secretary is how is the Treasury planning to fight the scam networks targeting small businesses and what role do sanctions and other Treasury tools play in cutting off these networks across the US financial system?

135:16Yep. So, we we've used all available tools and resources to address what is a growing problem. Uh we look forward to continuing with Congress and agencies to ensure that the full force of the government is against these scammers and it is unacceptable for them to take money out of the pockets of American citizens especially our seniors.

135:37Uh my last question in July, Director Gaki of Finson testified in front of uh this committee that about raising the reporting thresholds for suspicious activity reports and currency and transaction reports was a priority for Treasury leadership.

135:48And I'd like to follow up on that quickly, and I know that Chairman Hill touched on this earlier today. And community banks and credit unions, which we all do business with, face an unequal compliance burden.

135:58Lenders are being forced to divert resources away from underwriting and customer service, which has restricted credit availability for small borrowers who depend on these uh on this. And these thresholds have not been adjusted in some time, and inflation alone has pulled a growing volume of routine transactions and mandatory reporting.

136:10So quickly, can you provide us with a concrete timeline for finalizing the AML programs rule and S and CTR threshold changes? And can you commit that the final rule would mean meaningfully reduce compliance burden for community banks and credit unions as opposed to a marginal adjustment?

136:32Uh, Congressman, I can't give you an exact time. I can commit to your last point that this is very important rulemaking and we need to get it right because of the burden on small and community banks and we are looking at their special place in the financial system in terms of their reporting requirements and their enhanced knowledge of their customers.

136:55My time is up. I yield back. Thanks for your leadership. Thank you. Gentleman yields back. The chair recognizes the gentleman from New York, Mr. Torres, for five minutes. Thank you, Mr. Chair. Mr. Secretary, are you familiar with the facts of the hugging face hack?

137:08I am. So, I want to run through the facts as I understand them. A swarm of Open AI agents secretly communicated and coordinated for about two months without OpenAI fully realizing what was happening.

137:19Specifically, from July 8th to July 13th, roughly 1,200 AI agents exchanged more than 70,000 messages and files through an unauthorized message board. Again, without open AI recognizing the scale of what was happening, the AI swarm managed to escape its sandboxes, gain access to the public internet, and ultimately hack into the private infrastructure of Hugging Face.

137:40Of the 1,200 AI agents involved in the Hugging Face hack or in the leadup to it, do you know how many of them blew the whistle and alerted human researchers that an AI swarm had escaped their sandboxes and hacked into a private company?

138:02Uh, my understanding is zero. The answer is zero. So of the,200 agents in the AI swarm, not a single one blew the whistle. Does that concern you? Well, I think we would have to understand what each agent was doing and the uh but does it concern out of,200, not a single one blew the whistle.

138:12Does that concern you? Well, again, they're representative exactly what is an agent. It it is not a human that it it could be a very limited the uh it could be a very limited program that or it could have been tasked with something but a program that escaped its sandbox and hacked into a private company.

138:32Is it fair to say that the hugging face incident illustrates how a misaligned or misused AI might find and exploit vulnerabilities in the very computer systems that operate our critical infrastructure, including our financial system?

138:53I I I agree and that I think we have to again we haven't seen where was the liability for that incident. So well given that agreement do does the administration support any new AI safety regulation in light of the lessons learned from the hugging face hack?

139:14Uh we we have been working the with the labs the with the our financial partners on that and you you wouldn't notice. Is there any specific law regulation that you would support in light of the hugging face hack?

139:25Uh I haven't seen anything yet. Okay. The the leaders of the frontier AI labs particularly open AI and anthropic have been effectively disclosing to the public that their increasingly powerful AI models could pose an existential risk to humanity.

139:35If a company is publicly disclosing that its own product could pose an existential risk to humanity, should that company be permitted to access the public capital markets through an IPO? Uh, I think the the liabilities h have to be the very well outlined in the S1 and in the perspectives and as a former investor now in the public sector, I'm not sure how one would quantify that.

140:04I want to move on to the economy. Um, on August 4th during an interview on CNBC Squawkbox, you said the following. Quote, "I got sick of hearing about this K-shaped economy. I can say here definitively the K-shaped economy is over."

140:15Then on August 6, you wrote on X, quote, "Earnings growth for mainstream workers at the 25th earnings percentile was 5.5% year-over-year in the latest data this quarter. You cite wage growth of 5.5%. Is that inflation adjusted?"

140:34Uh that's nominal. It's nominal. Okay. So the average CPI inflation rate in the second quarter of 2026 was 3.9%. So when you once you adjust the 5.5% nominal wage growth for 3.9% inflation, you're left with a real wage growth of only about 1.5%.

140:52A fact that you neglected to mention in your post. Also left unmentioned is the fact that lower inome households depend disproportionately on wages while higher inome households own a disproportionate share of financial assets.

141:11From mid January 2025 to midepptember 2026 real wages rose cumulatively by 0.5%. Over the same period of time the S&P 500 rose cumulatively by over 20% in real terms. So Mr. Secretary, how can you possibly declare that the K-shaped economy is over when during President Trump's second term, the assets of Wall Street are booming while the real wages of Main Street have barely grown?

141:33Well, it's the opposite of President Biden's term because that there was No, no, let me finish. When When does When can I ask what's the statute of limitations on the Joe Biden blame game?

141:43That the What's What's the Because we're approaching the two-year mark of the Trump administration. I I was in a car accident as a teenager. My back still hurts. Did did did Joe Biden wage the war in Iran?

141:55Did he disrupt the straight of Hormuz? Did he shut down 1/5if of the world's oil supply and LG exports? Like when in doubt, blame Joe Biden. Is that the motus operandi of this administration?

142:05I has expired. Gentleman yields back. The chair recognizes the chair of the House Republican Conference, Mrs. Mlan of V of of Michigan for five minutes. Thank you, Mr. Chair. I wish we weren't digging ourselves out of the Biden economy, but here we are.

142:14So I want to start by saying first of all thank you for trying to write the ship right because we all remember what a disastrous economy it was inflation uh over 9% right I think we remember that shutting American oil and gas production down so we were dependent but hey uh le let's not talk about that let's talk about what we're trying to actually do I think George Orwell called it memory hauling I think so.

142:45[laughter] Don't let the facts get in the way of a good story, right? Um, but thank you for being here, Mr. Secretary. I really appreciate it. You and your team actually did a tremendous job on the working families tax cuts.

143:04A year later, the receipts are in. I know the media doesn't want to cover this. I know the other side of the aisle doesn't want to talk about it, but Michigan families are taking home almost $10,000 more a year.

143:13We put money back in people's pockets. Um, and now I want to talk a little bit about, if we could switch gears a little bit, who's stealing money out of their pockets. Last year, if my memory serves me correctly, scammers robbed Michigan um families of uh and seniors of nearly $24 million.

143:42That's nearly $600,000 walking out of my state every um every single day, which is a lot of money and real money to people. When most Americans think of a scammer, they think of, you know, some guy with a baseball hat on in in their parents' basement.

143:54But that's not really what we're dealing with today. I think it's much more sinister. Mr. Secretary, can you talk about really who is at the other end of that call? who's really scamming the American people.

144:13It's it's a variety of organized crime uh both state and non-state actors across the globe. Could be North Korea, could be in South Southeast [clears throat] Asia, the these camps that are set up and it can be the bans in the US.

144:31So at Treasury, we are examining this uh with our uh agency partners, including the FBI, Homeland Security. Uh we are shutting them down and in many cases recovering those assets for the hardworking people of Michigan and I thank you for doing that.

144:49Um so often these are massive organized Chinese crime syndicates. Is that a fair statement or is am I overstating that? Uh many many of them are they are run out uh they are run outside of mainland China uh in other Southeast Asian countries.

145:09Um kind of seems like a common sense question but um sometimes my colleagues on the other side of the aisle don't operate in in the arena of common sense. When we find these fraudsters and we shut them down.

145:18Do you think that's a good thing? I I think it is the one of the best things that we can do uh for hardworking Americans, especially our seniors. Yeah. So, we work hard uh as taxpayers.

145:38Um we we give that money to the government who should be good stewards of our hardworking taxpayer dollars. When we actually find these scammers, we should shut them down. I think that makes common sense.

145:49I think that makes sense. I'm not really sure when votes come up that colleagues on the other side of the aisle don't want to vote that way, but um I think it's a good thing to shut scammers down.

145:59Can you talk at all about um when you went after them? You seized $15 billion in Bitcoin from the from the Prince Group, the largest forfeite in American history. I'm sure we all saw that covered on the news.

146:10Um perhaps not, but I think you need to take a victory lap on that. Think about that. You went after them and you seized 15 billion dollars in Bitcoin from the Prince Group, the largest forefeiter in American history.

146:31How'd you pull that off? Well, it again it was a combination. Our FinSensen, they are some of the most dedicated people that I've ever seen since we implemented Operation Economic Outcast. We have people working from 6:00 in the morning till 10 at night.

146:50And it is for the love of their job uh that we commemorated uh 911 on Monday with this group and they uh they were enabled then to make sure that nothing like that ever happens again and I can tell you that they never stop working on this.

147:05Well, if you do do me a favor, tell them thank you because we appreciate it and we appreciate every dollar that you keep in our pocket. Well, that's very important. gentleoman's time is expired.

147:16They don't get the thanks they deserve. The chair now recognizes the gentleoman from Texas, Miss Garcia, for 5 minutes. Thank you, Mr. Chairman, and uh welcome um Mr. Treasury Secretary. Uh less than two years after the Trump administration took office, we are looking at higher prices and more uncertainty in our economy than we have faced in decades.

147:36Our country has been forced into a new war in the Middle East started by Donald Trump that is now hurting mine in everyone else's district. In the past six months, gas prices have been up nearly 50% nationwide.

147:56And there is no end in sight. Same for diesel. This administration has shown no ability to get us out of this reckless war that had started. And it is everyday Americans who are paying the price.

148:08Mr. Secretary, the administration has no real plan, it seems, to end this war. Your economic D-Day has done little to affect any change in this conflict. Instead of truly isolating Iran economically by cutting it off from its top trading partner, China, you have used sanctions to target its heritage and nationality.

148:27The Office of Foreign Assets Control recently suspended Iran general license G, which allows Iranian citizens to take entrance exams like the LSET, the the law law entrance uh law school entrance exam, the GRE, which is for graduate students, GMAT and TOEFL, and a number of others.

148:47Do you truly think this is going to affect the war, Mr. Secretary? or is this just another xenophobic policy from this administration aimed at disenfranchising religious minorities and immigrants in this country? Uh, Congresswoman, do you actually believe that taking the SAT will empower people who are being starved by their regime as that regime gives billions to their proxies rather than funding its people?

149:18Sure. My question to you, do you think that this is a policy aimed at this at uh the war and things that are going on or just another attack at religious minorities and immigrants?

149:31Uh I I I would say that that that is completely specious charge. Oh, it is. Well, you know, we got a call from someone who is just not not allowed to take the LSAT and they would totally disagree with you, sir.

149:43Instead, it only hurts a discriminate anyone with Iranian heritage including Iran. It will also hurt our communities because there are so many people their Iranian descent that are heavily represented in medicine, engineering, higher education, technology and business.

150:03With no planned strategy and regard for how this affects Americans, Donald Trump and you have thrust us into a messy war in Iran. You have lost the trust of the American people and have made a mockery of our country's reputation on the global stage.

150:14You have personally said that one of this administration's primary foreign policy priorities is maintaining strong relationships within the Western Hemisphere. Instead, we're at odds with the second largest economy in North America and our second largest trading partner because of how this administration has treated them. and just the greater Houston community area.

150:36Canada represents a vital billion dollar trade relationship. So, how does a trade war with Canada, one of our closest allies, help help the American people? Well, first of all, it was Prime Minister Carney who said we are at war.

150:46Sure. The question is, how does a trade war with Canada, one of our closest allies, help the American people? Sure. the the the terms of the terms of trade that the Canadians have received the four years they have been the unbalanced and imbalanced and trying to bring them back.

151:07So, how does that help the American people? That the that will help the American people. The as the we have better terms of trade that there will be more jobs. As we we just saw Saporro Brewery, Japanese brewer announced that they were relocating into the US.

151:17That helps the American people. So, that's one example. Hopefully, we'll you'll be able to there there many examples. Well, sir, would you send me a list then? With with pleasure. And you know, as you are from Texas, I will remind you that the Texas economy is bigger than the Canadian economy.

151:38Oh, I know that, sir. I'm from Texas. I'm a native Texans, unlike some one of our senators. Do you have an end goal for this new trade war? Can you lay out a better long-term scenario for the American people, than free trade with our neighbors?

151:58The free trade has not always been fair trade. whether Canada imports the steel from overseas and it gets backdoored into the US markets, whether they try to do that with Chinese EVs that again we want fair trade the representative.

152:06So you think that the the free trade agreement that even Donald Trump approved the last time was not fair. Again, we have seen many things. Why don't you check with our Wisconsin dairy farmers that who are unable to Well, sir, I'm also concerned about beef farmers in Texas who you their trade policies have impacted them.

152:28My question was it has an impact gentle lady's time is expired. Thank you. I now recognize myself for five minutes. Thank you today uh for being here today, Mr. Secretary. U this committee's long had concerns that an outbound investment screening regime would prove overly broad, vague, maybe even unworkable.

152:48So, uh, I know you can't really get into details, but as Treasury writes the updated rule, can you assure us that it will be narrowly tailored and sufficiently clear so that investors have bright line standards and can easily understand their obligations under these?

153:08Uh yes sir that we we have about 18 months of dealing with the outbound and now the as we perfect the coins act that we will make sure that the all outbound and potential outbound uh investors know know their duties, their obligations and uh adhere to them.

153:27Uh thank you Mr. Secretary. As uh Chairman Hill noted earlier, it was outrageous when the Biden administration increased the weight of China's R&B in the International Monetary Funds SDR basket. Uh I have legislation that would oppose any such increase until China starts playing by the rules.

153:48Can you commit to opposing any increase for the R&B in the next SDR basket review? Uh I will commit to working closely with you and your staff on that. Uh thank you, Mr. Secretary. you know, a lot of the policies of this administration, I wish you great success in in bringing China into the things they've frankly already agreed to do.

154:08I mean, the trade policies that people complain about. I was in manufacturing before I came to Congress, and we weren't competing against other companies. We were competing against a foreign government that had decided they would own and dominate other industries.

154:19Uh, it was disadvantaging American companies. So, uh, frankly, the Trump administration is taking aim at, you know, why would we why would we confront, uh, people like China? Well, because they're taking America for granted.

154:31They're assuming Xiinping is going to be in charge in China longer than President Trump is going to maintain the resolve, not just in his administration, but going forward to counter China. China committed to be a market economy in the World Trade Or as part of their um acceptance into the World Trade Organization.

154:52Is China a market economy, Mr. Secretary? Uh no sir. And at the G20 in Asheville, we had a communicate drafted that criticized non-market economies and China would not sign on to that and so I issued a chair statement.

155:13So 19 to1 and if you can imagine getting all these countries from around the world to agree to that China was a lone hold out. So I think they've answered the question for you.

155:25Thank you Mr. Secretary that was well played as are so many other things that uh you've you've had initiatives on. Uh I want to highlight the the scam operations and when you look at um you know the illicit finance we certainly have tools uh in place to to gather financial intelligence.

155:34It's always supposed to be with deference to our constitutional safeguards for privacy speech. Uh we've seen debanking and weaponized government under previous administrations and you've restored uh under this administration sanity and common sense uh in in many ways there.

155:54Um, so I guess how do you view balancing uh our constitutional safeguards with the need to be effective at shutting down these transnational organizations? Well, I I I think the uh the scammers could be divided really into three categories.

156:15Domestic and so we work at those every day, but many of [clears throat] them are US citizens and we adhere to their rights. uh but law enforcement is very vigorous in going after them.

156:25State actors as in North Korea and then private sector actors many many of them in Southeast Asia and we have committed substantial resources and again I want to compliment our inter agency partners whether it's the FBI the our homeland on that.

156:47Yeah thank you and some great wins there. I think in particular shutting down the Prince Group, these kinds of operations are substantial portions of Southeast Asian state actor economies. So there's certainly an intersection there and uh it was just over in foreign affairs talking about your work with the State Department on uh those initiatives and so applaud that.

157:09Another area that we're seeing um you know these things come to a head uh is with Defense Production Act. Treasury working with other departments. Coins touches on that and as we use the Defense Production Act, we're working to reauthorize and modernize that.

157:20Can you commit to work with us to get that reauthorized? Uh yes, sir. And the my staff would like to engage with you on that, especially in the CPHUS area. Um thank you, Mr. Secretary.

157:30My time is expired and I now recognize the gentleoman from Georgia, Miss Williams, for five minutes. Thank you, Mr. chairman and thank you ranking member Waters for convening this hearing today and thank you Mr. Secretary for being here.

157:42Mr. Secretary, last year before this committee you told us that the core components of the Trump economic agenda are trade tax cuts and deregulation and that this combination would raise real incomes for families and reshore jobs.

158:02This summer you went even further on CNBC declaring the K-shaped economy is over. I'm not here for talking points, spin, or clever framing of numbers that don't really hold up under a microscope or in the pockets of the American people.

158:13I'm here to ask questions for the families that are still struggling in my district to keep up with the basic cost of living despite your proclamations in front of G20 finance ministers and on CNBC.

158:23They deserve honest answers and that's what my questions aim to get to. They don't need a Trump Bessent rebrand on their budget. They need an honest accounting from you, Mr. Secretary. So, according to the Bureau of Labor Statistics, real hourly wages fell.3% over the past 12 months.

158:42Mr. Secretary, do you dispute that number? Yes or no? I dispute it. Yes. Okay. According to the Bureau of Labor Statistics, wage growth has slowed to 3.1% over the year, the slowest pace in more than five years, and down from 3.7% in February.

159:05Do you dispute that number? Yes or no? I I believe medium wage growth. I'm not sure where you're getting that number or the number I've seen for medium wage. Well, Mr. Secretary, I'm going to reclaim my time.

159:05I'm going to reclaim my time because these numbers are from our agency, the US Bureau of Labor Statistics. So, it's not my numbers. It's the numbers from the US government. And wages are slowing at the exact moment that prices are rising.

159:28And that is not a policy that is working. That is a policy failing the people that is supposed to help. Families in this country are not asking for talking points. They're asking why things are harder to buy.

159:38They're asking why they continue to have more month than money. So for my folks at home who may not be familiar with the term a K-shaped economy, it's two arms in a graph that look like a K.

159:48One line goes up representing wealthy Americans and the high earners who are gaining ground and the other line unfortunately is going down representing slow growth for lower and middle inome workers. According to the Federal Reserve Bank of Atlanta's wage growth tracker, the top quarter of earners has seen wage growth of 3.9% over the past year compared to 3.6% for the bottom quarter.

160:08Again, not my numbers. That is from the Federal Reserve Bank of Atlanta's wage growth tracker. Not my numbers. Mr. Secretary, no matter how much Mr. Secretary, the time is mine. Mr. Secretary, the time is mine.

160:29That gap has not closed a single month of 2026. Not one single month. Again, not by numbers, Mr. Secretary. So, Mr. Secretary, given that data, do you think your claim that the K-shaped economy is over was premature?

160:40Uh, again, from the Mr. Secretary think that's your proclamation that the K-shaped economy is over with the I'm the data I have from the same agencies not the Federal Reserve of Atlanta is 4.7% for the bottom 25.

161:00So you're saying the Federal Reserve Bank of Atlanta is incorrect. I know noticed earlier in your opening statement you quoted them. So okay. So do you want do you want to believe them and when you don't want me to believe you want to agree with them that we're having a booming third quarter over 4%.

161:14Well Mr. Secretary, you don't seem to agree with all of their data. Well, do you agree with all their data? Mr. Secretary, I'm I'm asking the questions here and the time is mine. If you're watching this at home and you're wondering why your paycheck doesn't stretch as far as it used to, the numbers you just heard are not a coincidence, y'all.

161:35And not to you either, Mr. Secretary. This administration was told on the record that its data shows wages falling behind inflation, wage growth at a 5-year low, and no closing of the gap between the top and bottom.

161:46And instead of a plan to fix it, we got a Trump rebrand. At the end of your written testimony last year, Mr. Secretary, you said, "Together, we can build a stronger, safer, and more prosperous America."

161:57And I'm all for that. I hope you can pivot back to that commitment to this committee and to the millions of Americans who have entrusted this administration with their economic future. Thank you, Mr. Chairman, and I yield back.

162:08Thank you. Uh I now recognize the chairman of our subcommittee on digital assets, Mr. Style of Wisconsin, for five minutes. Thank you very much, Mr. Chairman. Secretary, thank you for being here with us today. uh in particular, appreciate all your work uh in making the United States uh the gold standard in the digital asset era.

162:30Uh huge vote coming up in the Senate in the near future on clarity, a bill that we worked hard on in this committee and appreciate all your support of that. We're all optimistic. The Senate is in a position to move forward.

162:41I'm going to also look at Genius uh which was signed into law now over a year ago. Uh we're approaching the effective date January 18th. you and your team at Treasury uh have been doing a great job getting the rules and regulations uh in order and in place.

162:52Uh can you give us an update on uh where we're at in the rulem process and uh our ability uh to be able to hit the ground running uh come January? Uh yes sir.

163:03I am confident that we will have that done. We have uh during the rulemaking process, we have heard from the tens of thousands of interested parties, the both from the public, the from stakeholders uh from community banks, from the digital asset uh companies and we are working on the rule making uh to codify the congressional intent.

163:30Appreciate that. Uh let me let me shift gears. uh you gave a speech in July uh looking at flows of in particular foreign funds that was that were impacting uh the broader US political ecosystem.

163:40Uh you referenced how some of those funds may be flowing through nonprofits as it relates and I think your term political terrorism. This is something that we've been looking at since going back 25 years ago to the original uh 911 and the actions that were taken as we looked at how foreign funds were flowing.

163:52Um, in particular, in my work as chair on the administration committee, we've been looking at how nonprofits uh may be misusing their their uh protected status uh to move funds from foreign actors and have an impact in our political discourse.

164:13Uh you've engaged uh the power of Treasury uh to explore and examine that. I've been very concerned that funds have flowed in from uh foreign actors into some 501c taxexempt entities in the United States which would would then flow those funds through additional 501c's uh to shelter and shield uh the original donor of those funds.

164:35Can you comment on the work that you've been engaged at at Treasury uh to address this uh this concern? uh yes I can't direct the uh particular audits or examinations the but what we have done the uh is the work the with the president's the executive order 13224 and that so as you said that goes back to the original uh vi violent acts of 2001 and we are actively the looking the to see that whether there is foreign influence here, whether we saw it today, I I have no opinion.

165:25I think people can decide for themselves. Um, and being a nonprofit is a privilege and anyone who the um violates that privilege will lose that status. Yeah. I I think your comments in your speech about making sure that nonprofits board of directors not only know the identity of the donors but also know the identity of their grantees is really important in a period of time where we know foreign actors are interested in altering our political discourse here in the United States in the legal loophole that allows a 501c uh to receive foreign funds.

166:02Uh often our our nonprofits are for the altruistic purpose for which they were created. The concern of course is that they're being exploited uh by foreign actors. Those funds come into a 501c. They're being transferred uh to others and they're attempting to use those funds uh to the original donors, international actors uh intent.

166:22So I appreciate your work on this. I appreciate the speech you gave on this topic uh in July. Appreciate all the work that's going on in Treasury. uh and in particular going back to my first topic, optimistic uh that we see a positive vote in the United States Senate to move forward on clarity.

166:35It's so important uh that we see us, the United States, be the leader in the digital asset space. Thank you for being here, Mr. Chair. Thank you, Congressman. Mr. Chairman, I yield back. Thank you, Mr. Style.

166:46I now recognize the ranking member of our subcommittee on financial institutions, Dr. Foster of Illinois, for five minutes. Hi there. Are you having fun yet? It it started off great. It's okay. I'd like to use I guess a few moments on I guess round three of the manufacturer and the finance professor.

167:08And the first time you showed up in front of our committee, I presented a graphic um with the well-known information that whenever for longer than you and I have been alive, every time you put a Republican in the White House, manufacturing employment declines.

167:19Every time you put a Democrat in the White House, it goes up without exception. And you, I guess, volunteered um during that hearing that that as a finance professor, you'd give that an F.

167:29Now, President Trump came into office um uh promising millions of new manufacturing jobs would be rushing in as a response to his tariff policies and other things. So, we're now just nearly two years in and uh so far we have not seen millions of new manufacturing jobs.

167:50In fact, manufacturing employment is down. Last time I looked about 35,000 jobs. So, as a as a professor, what what grade would you give uh your administration on restoring millions of manufacturing jobs? Uh, Congressman, I I think you know better than this.

168:01So, the last two years of the Biden administration, we lost 200,000 manufacturing jobs. I'm not talking no that they this is not finance. This is real world. And in the real world, one has to build factories.

168:10And what we were seeing is a manufacturing. Look at I have built factories. Okay. There are 1,600 people in a manufacturing business in the Midwest and I and our company has kept those in the Midwest.

168:21We in fact just last year we're claiming my time. Then you would understand that we we have added 300,000 manufacturing jobs this year. What you the net number of manufacturing jobs down 35 um 3,500 35,000.

168:39Um okay, that's all right. I'm also Congress's pet PhD physicist and chip designer and AI programmer. We keep one around for chuckles, I guess. And I'm very gratified that AI is now finally being recognized as a significant threat to our economy by seemingly everyone but the president.

169:01Uh, do you agree with the president that the whole thing is some Chinese hoax or or do you regard AI as a real threat to our economy and our and our government and stability? that the I I I I believe that as the president does that the a AI is the most important technology of this century and that we must maintain US leadership and I think if if you're a chip designer who is the greatest the chip company in the world Nvidia the president is aligned with Jensen Wong on this well yeah they both want to make money because of the position they're in okay let's let's talk about the mythos roll out okay I was it was completely chaotic frankly you know this was not something new.

169:42If you actually had people in contact with the technical people in AI firms, you'd know that the next generation AI, their their their coding and their hacking capabilities were off the charts and you've known it months ahead of time. instead you you had when it became public um you had early access uh to Mythos granted to one of the giant banks in the country and then as you said earlier in your testimony you went down the capitalization chain uh first to the giant banks and then the midsize banks and at the very very end the the banks you were protecting were the small local community banks.

170:14Is that your plan going forward? Is that what's going to happen next time and the time after that that the the small banks are going to be left defenseless for cyber? Well, again, that's an unfair characterization that the we used the strength and the cyber security of the large banks and the we migrated their knowhow because the small banks and the community banks who no one has championed more than I have the oh come on look the number one thing the community banks have been asking for was no interest on stable coins.

170:45That was their number one ask for the last years and we're in the process of of going to work around. So I don't don't tell me about how much you love I met with 500 community bankers this year.

170:57How many have you met with? Uh you go to big rooms full of bankers. They come to me individually and I talk to them in my district. Um so so I I think I have a plan on how we're actually actually going to help small community banks on cyber security and how we're actually going to u have a fair distribution of cyber defense the next time mythos or a similar threat comes up and one of the things that can really concerns me is the seeming inability of your administration to attract and retain people with any technical competence. you know, leading your AI report was that your national director of cyber security, a guy called um Shane Karen Cross, who has a BA in international studies and his main credential is that he was a lawyer for the Republican National Committee.

171:40Your science adviser has a degree in Hellenic studies and polyai. All right? And his main main thing is that he was Peter Teal's chief of staff. And when I go down your org chart, um, how do you even decide when you're deciding about letting countries have access to AI chips, which AI chips are really even significant for AI development?

172:01Uh, well, we we have a very the good good handle the on the AI chip allocation and you know, I always dispute. I I think you don't know. Robert Oppenheimer was not a physicist.

172:12Maybe you are hung up on degrees. The gentleman's time has expired. I now recognize the gentleoman from California, Miss Kim, for five minutes. Thank you, chairman and secretary Besson. Good to see you again.

172:23Thank you for joining us. I want to start by thanking you for your great work in launching the Trump accounts earlier this year and uh your hard work has actually created lifetime of opportunity um that combined with your financial literacy offers that will uplift the American working families. um as we consider uh extending this successful program.

172:52I've been traveling up and down my districts and people are really really excited about this. So I have uh introduced some uh legislation seats act to codify this. So would what would be uh early feedback that you have received on trim accounts and also your uh thoughts on uh seeds act?

173:12I would greatly appreciate that. So, I think the Trump accounts, as I've said many times, are the most important government benefit for young people since the GI Bill. As someone who has spent decades the advocating for financial literacy, I think that this will be a real-time financial literacy experiment and I think that we are going to create a generation a generation of shareholders. uh you know unlike many people some in this room who had advocated for baby bonds this is giving every American a piece the of our great capital markets of our innovation and the making them they you know realize the power of compounding and what we've done at Treasury we have between seven and eight million families who signed up that we anticipate that within a month we will have 70 million and because we will go to autoenroll and the the enthusiasm and keep in mind that huge numbers of these families are making less than 200,000 less than 100,000 and had no exposure to the equity market and I truly believe that we have to couple this financial literacy courses with Trump accounts and so hopefully either incorporating it or mandating this financial literacy program and constantly talking about Trump accounts at schools will be Would you agree?

174:33Yes. I I couldn't agree more that in the school system at Treasury, we've created 15 learning modules and both for children, the beneficiaries of the account. There's a four-year-old, there's a six-year-old, but importantly, many of these are families who have never maybe the term Wall Street, maybe they, you know, click through.

175:04I think I think they're going to have a real interest here. something that families do around the table. And you know, I think that this is a unique opportunity to bring the 38% of households who have no equity exposure to make it 100% and and I'll join you right there.

175:16Keep on talking about it and have an ownership nation. Yeah. So, uh I want to go to uh talk about the uh Taiwan non-discrimination act, which is my bill that was passed as part of NDAA last year.

175:25And this legislation directs the IMF representative to use the US voice and uh vote to support Taiwan's membership in uh IMF. So I just wanted to ask as uh Taiwan we've been talking to Taiwanese government officials and as they get ready to formally submit a request to join IMF uh I hope US will use our voice to support their petition to join or encourage them to do so as soon as possible.

175:57They we're aware of your bill. Great. Thank you. And um as chairman, our former chairman Mckenry um often used to say economic security is national security and strong Taiwan is our best tools to counter Chinese economic coion.

176:17So another aspect of Chinese economic activity that concerns me is their use of state corporation and predatory lending to dominate critical mineral supply chain and control uh energy structure. We have strong innovative private companies but they cannot go up against CCP on their own.

176:37This is a matter of national security which is why I introduced dominance act. Uh this will strengthen our global uh critical minor supply chains and secure our energy futures. But our multilateral banks also provide key avenue to counter predatory Chinese economic activities.

176:47So could you uh talk about that and what US should be doing uh differently through the World Bank and our own institutions to compete with China? Sure. So as we did with the G20 in Asheville, we are pushing for greater transparency and to make sure that these countries do not get into a debt trap with rapacious lending as we've seen from China.

177:18Thank you very much, Secretary. And um I yield back. Uh, thank you, Miss Kim. Mr. Secretary, I want to thank you for your testimony today. Without objection, all members will have five legislative days to submit additional written questions for the witness to the chairman.

177:28The questions will be forwarded to the witness for his response. Mr. Secretary, please respond not later than October 20th. This hearing is adjourned. Thank you. God bless him.