i see it as possibly the biggest threat to the u.s. financial system and i think part of the problem is the patchwork of conflicting data security and breach notification laws is one of the major issues that's exasperating the problem that we already have and some of us, think that we need some type of uniform national standard. mr. dimon. what's your thoughts on that >> you're absolutely correct i mentioned in my opening comments early on that all of us, i think all of us are going to meet with secretary mnuchin, homeland security, with all security officers is absolutely essential to work closely with the federal government that we share information faster we already do it among ourselves and we have more common standards. we don't have 24 people auditing us and doing penetration testing, et cetera, which will make it riskier, not safer. >> did you ever find out a situation when you're in compliance with one regulatory agency and out of compliance with another

>> yes >> more often than not. >> all the time. >> mr. moynihan. why is it important for the financial federal regulators standards and examis so they're consistent across the agencies >> we are in effectively a war on cybersecurity and any energy that is lost to people to give information, the same information twice and anything that slows down the process of getting information and getting to all institutions and we work together, the large institutions funded a group to get that information out faster anything that spends time trying to figure out something that may not be as important as something else, those are time taken away from actually defending the two basic principles second, finding out who is doing it, which is important to the infrastructure of all america and the world, frankly what we find out doesn't help the banks, it helps all kinds of

companies. >> thank you i'm from georgia and we, we are actually home to the nation's two-thirds of the nation's payment processing and i'm also co-chair of the payments caucus with my good friend and colleague, representative scott from georgia. mr. dimon, you said something recently you said that you were both inspired and worried by china's strength very inest thering comment what should our policymakers be doing to make sure united states remains competitive in this field and on a global scale? >> we also protect our clients we do a lot of cyberprotection for our clients which includes hospitals, government, states, et cetera. that's off our our back bone that does a lot of that work we had a team of people go to china recently and they met with a lot of the companies there they are very smart. they're probably ahead of us in ai, but i think the bottom line and i'm not afraid we're going

to compete i think the bottom line is we have one of the most innovative societies in the world and it's being hampered by a lot of stuff. we're not building infrastructure and i'm talking about grids and network and faa and we have to get that going. and allowing companies to compete. you are going to fail when you try new things so, it is a critical factor as inf infrastructure >> thank you, i appreciate that. i think i see in this chamber today a lot of partners that we can partner together to make america safe, secure and strong because we all benefit for it and i look forward to continue the partnership with all of you and i yield back >> thank you we promised our witnesses here today that we would have a break about this time for ten minutes. so, let us take a break and we will come back and complete the questioning for our witnesses this afternoon thank you.

ten-minute break >> hi, everybody welcome to "the exchange." you have been listening to the major bank ceos testifying for ten years after the financial crisis to reflect and talk about that. as you just heard, chairwoman maxine waters says they're going to have a ten-minute break fiery all morning, really. let's get some reaction. we have dom and mike on set here with me and, guys, you have been listening all morning. dom, are we seeing any movement in the bank stocks today >> the markets have been fairly stable all morning long and we were thinking that there might be some fireworks with regard to maybe policy shifts and announcements and how these guys would go after them on regulatory fronts and everything like that. there hasn't been a lot of movement on the bank stocks and maybe not surprising this isn't the forum with which you would like to see some of those policies manifest themselves but, still interesting comments with regard to ceo pay versus the average worker and everything else. it brings out talking points for

politicians, but not a lot for wall street just yet >> i am hard pressed to find anything that comes of this. part of it is to see if the ceos could hold the stage up there. we've seen plenty of people make this trip to capitol hill and not keep their job afterwards. going back to tim sloan and the personalities are on display as much as the policies are what do you think comes of this. >> it reflects the fact that as institutions they're playing defense in this long game and i think they oriented their companies this way the ceos that are there, first of all, with the exception of jamie dimon were not there during the financial crisis and the relatively unfocused set of issues being thrown at them lowers the stakes for what it means for their business the good news is that the bank stocks aren't reacting and they were earning so cheap and evaluations don't build in a lot of great news along deregulation or anything else >> that's a great point.

as we've been discussing, a lot of moments of personal drama a lot of issues, and cybersecurity did come up quite a lot. do you see any policy take aways that will come from today's event? >> i think, hallie, you're exactly right. united both sides of the political aisle in this debate which is a big difference from the wells fargo hearing, for example, last month. where republicans and democrats were united and that increases the chance, therefore, of some kind of policy to come out of it of course, just add to the fact that we have a republican president who's favoring deregulation instead of decreased regulation in fact, we have an example of exactly that on the topic of where the banks should be big or shouldn't be big and the chair democrat maxine waters was asking towards

the start of the hearing about whether a smaller bank leads to an easier to manage one. >> i have a foreign leader waiting in my office at 5:30 okay i agreed to stay longer. it will be embarrassing if i keep this person waiting for longer >> that is secretary mnuchin so, i don't know if we have the sound bites to come, guys. i'm sure someone will let me know when we do. but the size of banks was clearly highlighted. the different political tones these guys were taking maxine waters on democrat side asking with a clear implication clear for you to manage your banks and smaller on the flipside later republican congressman duffy was making the point and asking the question as to if the banks got smaller, would the business go overseas as opposed to smaller banks but a clear political divide on

the questions here, guys >> bob is here, as well, watching the markets and the reaction bob, a little bit of weakness in the bank stocks. like dom and mike were saying, that has been the story for months now because this morning a weak cpi inflation report again. >> yes the banks are slightly down to flattish today but i don't think anything in the hearing is changing anything about bank fundamentals. so far this has been a hearing in search of a headline. banks were weaker today because, number one, you tend to have a little built of weakness going into earning season for the banks. this is not unusual three or four days before jpmorgan and wells fargo report to sell into the banks. that's number one. number two last couple days yields have tend to move to the downside and banks and the stock market have become extremely sensitive to yields in fact, really, we bottom the yields at the end of march and

you can plot yield ten year and take any of them take a ten-year yield against the s&p 500. if you put that up in the last two weeks and they track pretty well as yields started moving up, stock markets started rallying and then the last couple days as yields have struggled, the market has struggled overall. so, two reasons why the banks have nothing to do with the committee hearings the other thing i would note today. the dow went negative early on that had nothing to do with the banks. it had to do with the big industrial names boeing, caterpillar, 3m, united technology all moving to the downside a real problem overall for the, mats again, these were global growth concerns and terror concerns overall. finally, cegoing friday into earning season and a lot of disparity here people are concerned about earnings being down 2% for the quarter, but so far the overall revenue number has been strong up about 5%. and that, that difference is going to be a very hot topic of

discussion that indicates some imprepgzs that are starting to emerge in the market we'll hear more about higher costs over all >> that is a great point, bob. we saw prices are going up and wages are going up and the consumer price index is not so much let's talk more about these markets with barry james james investment research joining us now barry, first on the banks and then we can broaden it out a little bit there are some cheap, pretty cheap names historically speaking out there in the financial universe any names you are picking up here >> well, we do like jpmorgan not selling very expensive with good margins we expect a lot of volatility in margins. so, companies that don't have a lot of volatility historically are a little more attractive and that fits the bill with jpmorgan >> what do you think is going on with profit margins, barry what kind of companies do you want exposure to in this environment and which ones should you avoid

>> well, that really is a great question and that's wucone of the resear avenues we have gone down. looking at companies and their profit margins a lot of them are very, very high, but there is a lot of volatility in those. and those would be the ones probably to avoid when you get into a period when you expect earnings to be less than attractive to put it mildly. the earnings are off about 8%, even though revenues are up a little bit so, we would try to hedge our bets with the companies that we're buying by not giving exposure to lots of volatility in the margins you can find a lot of those companies out there and jpmorgan being an example of one of them. >> in this environment like a r kroger, verizon. bob pisani, we had an auction for ten-year notes at the top of the hour let's bring in rick santelli with how that is going

>> originally auctioned in february and this is the second reopening. the yield 2.466 which is where it was trading lower yield priced right let's go through the internals by the way, i gave it a b as in boy. definitely above average 68.4 on indirects, the best since november of '18 and 12 on direct so directs were pretty much straight average of priced well and indirect and dealers take 9.6% of the auction. you know, yields continue to slip a little bit here and mayb the important feature is just in a macro. intra day up to 2.55 and maybe we'll remain in this range, especially as we look forward to the second of the data points like cpi today and see how traders think about the fed. don't see cpi today changing

anyone's mind regarding the pace of any fed moves moving forward. back to you. >> so true, rick, thanks back to you. under 2.5% on the ten year the kind of market we have been in, they are in favor with a lot of value investors berkshire hathaway owns big banks in its top ten holdings and you heard barry talk about jp mortgage a moment ago and people who see long-term value here >> virtually the only big sector that is trading at a steep discount to where it has historically whether that is justified or a recognition of the reality that returns are lower for this whole industry in this environment also, the yields are starting to look bad and the dividend yields on these bank stocks relative to where treasuries are right now they have been in the penalty box for a very long time in multiple ways. investors, as well as politicians. so, i don't know if you see a catalyst for sparking a change in that. >> and maybe, dom, thatt is the most important take away from

today's hearings feeds into the multiple c compression if you want to call it that. ten years on they're back on capitol hill and still being hammered with questions even if there is no real headlines >> ten years on, the banks are a different type of instrument for investing than they were 10 to 15 years ago there was a time early on in my wall street career and even beyond that when banks were viewed as the utilities of the industry they paid very thick, rich dividends. you could always count on them to grow. a certain investor base that they cater to. that landscape much better, but still not nearly where it was before you have taken that investing piece for what banks had an investor base and kind of moved it away from that traditional kind of investor you had before. now, if you take a look at yields like mike said a reason why these banks are becoming slightly more attractive if these yields do continue to remain low and what rick said, i mean, with a 68% indirect. that's foreign and central banks include in that mix.

dealers take down 19% of the offering means that there is demand outside of the dealer community for yields at 2.47 >> german ten-year hit another low. >> those rates for sure. >> negative 0.4. it just keeps falling. >> if you look at japan and euro zone and other places. the yields that we have here i joked around earlier this morning on social media, my 2.2% savings yield looks pretty darn good compared to what the banks are offering else where around the world right now. >> by the way, david solomon made the same point about marcus earlier. barry, final question to you and i'll end this on kroger. a name that you like and a name being put out of business by amazon with everything else that is happening in today's environment. tell us before we go why you like that stock. sglft fir . >> first of all, it's everywhere p people buy their groceries a lot

locally. they have gone to the internet and they're actually delivering things to people's homes, you know, that you order online and that's true in my area right here it will take a little while for it to catch up from a profit side but it's coming and kroger is a well-run company and i firmly believe that it will do very well over the years ahead. >> barry james, sir, thank you very much. dom and mike, thanks, as well. we'll dip back into the hearing under way once again questioning the bank's ceos. >> discuss the success of changes made over the last decade and thanks to dodd frank and other legislation and changes you made since the financial crisis and changes you have also made i am grateful for the changes that have been made. prior to serving in congress i worked at microsoft where i was lucky to work on the cutting edge of technology and the cloud and you devote innovation to

technology and i have a quick question and maybe i'll start with mr. moynihan. what do you think the banking looks like and how will it affect your institution and the space? >> i think the question is how it is affecting it today if you look at the percentage of activity that goes through the 27 million mobile banking customer and it is increasing. and then the interactive clients. the way we can help people manage their finances better with smartphone and alerts and warnings and your low balance and here you can avoid an overdraft. these are terrific things. and then you take across all the segments whether it's more affluent consumers or companies. it's a tremendous impact it makes us more efficient and takes risk out of the organization but it could be driven by what our consumers do >> thank you, sir.

if i turn to small business for a minute your institutions all provide a tremendous amount of lending to businesses 40% of the total lending done in the industry, which is important to providing credit to small businesses across new jersey and across my district if i could start with mr. dimon. could you describe the work your firm has done in the small business arena and what they are doing to facilitate small business growth. >> you can get loans in a day if you need it or home line of credit that you could access right away you can move money very quickly and very cheaply and realtime payme payments you could manage your investments on the phone so, we're just adding more and more digital services. a lot of these aren't going to need the same kind of atms they could bank rural small business and get almost all the services they need in their phone. >> mr. solomon, you mention in your testimony that goldman

sachs is dedicated to help entrepreneurs providing greater access to capital. can you elaborate on the initiatives and the results you're seeing. thank you. >> sure. we created the 10,000 small businesses program over a decade ago to try to find because we're not a big platform lender like the number of other companies that we can help support small businesses over $500 million to educating business owners throughout the country. they go through an intensive six-month program and we've seen real results and the context of adding jobs in their businesses and growing the revenue and expanding platforms by providing basic business education and support for financial services and broadening their financial capability >> thank you, sir. on dodd frank, what changes have been implemented do you believe makes your firm safer than they were before the financial crisis top hits.

>> double the capital, cut the leverage by 75% and put in place a living will orderly resolution and pass the annual stress test and fundamentally change the organization where we now operate precrisis we had risk limits in the low hundreds >> i'll submit several charts, too, for the record, about how much has been invested in our country and loans to small businesses and, of course, businesses of all sizes and many in my district, which i'm grateful for and has really led to a lot of growth i thank you very much for being here today >> thank you >> thank you very much >> the gentleman from ohio, mr. davidson, is recognized for five minutes. >> thank you, madam chairwoman witnesses, thank you very much for your testimony here today and for the quality work you've done to strengthen our financial systems. i want to focus on technology, particularly certain sectors with the incredible power of modern computing in the internet, we're entering into a

new era of innovation. currently changing our financial system and cybersecurity and how entrepreneurs and start ups are able to raise capital. as the rest of the world speeds ahead to take advantage of this new technology, the u.s. is now lagging behind heavily due to regulatory certainty issues that the market needs to protect consumers, empower innovators and entrepreneurs. my colleagues and i and others that aren't on the committee, darren soto and scott perry introduced a bill that would provide regulatory certainty to take advantage of this thriving sector mr. solomon, i'm going to read an excerpt from an article that recently caught my attention quote, goldman sachs plan to establish a crypto focus unit by the end of 2018. as reported by bloomberg in

december last year however, on september 5th, business insider reported that unnamed sources said the firm is scrapping crypto trading desk plans due to an unclear regulatory environment in the crypto industry. mr. solomon, why did goldman sachs initially choose to open a crypto trading desk? >> the first article wasn't correct. like others, we're watching and exploring and doing work in trying to understand crypto currency market as it develops certa other than that, we never had plans to open any crypto currency trading desk. we might at some point in time, but no question when you're dealing with crypto currency, it's a new earea and a lot of issues and unclear and it's not clear whether or not in the long run as a currency, you know, those technologies will work and be viable. >> clearly and certainly some of those tokens that are issued are awaiting definition as to what will be a security, what is not

a security, what is the appropriate trading platform a number of issues that our bill goes into it and frankly a number of things that will be need to be addressed afterward you called crypto currencies, quote, not a real thing. but this year your firm unveiled jpm coin and stated, quote, we're supportive of crypto currencies as well as they're properly controlled and regulated. why the shift? >> a lot of people are using and testing it today and we think it will work over time. but the part that is not real, the crypto currency is not supported by anything. no value behind it unless the next person will pay for it. they have serious issue with that the jpmorgan coin is a token which is supported by jpmorgan shipped around the world and a lot of data and split it into minutes and the second someone wants cash, we can move the cash >> the settlements will happen almost instantaneously and how

will that facilitate better payment systems if it works correctly? >> well, the payment systems today, they do work but the fact is this might be a faster way, could be faster and it comes with data. and everyone would have the same data at the same time. so, instead of us having to call each other's banks up and saying what happened to that shipment from singapore, we go to the screen and see it. >> more transparent. >> it has to be secure and in this case permissioned not everyone can access it we need security around moving the money. >> we can't talk about the thriving new sector without discussing how to protect consumers. as your role as banks secure custody of digital assets is essential, but no regulation or guideline on who can be a qualified custodian for digital asse assets in looking at your policy regarding crypt ocurrency on

your website a barrier to providing custody for digital assets can you expand on this statement and highlight any regulatory hurdles you're facing in this space. >> sure. i think just as the website says, there is lack of clarity and i think that's one thing that stands in the way quite honestly, it's something that it's, crypto currencies are very early in their existence. they're not significant today to speak of in terms of being used as a real currency to move value we are actively thinking about what we want to do one of the biggest issues is anti-money laundering. >> thank you, my time is expired and i yield. >> thank you very much the gentleman from guam, mr. sam nicholas is recognized for five minutes. >> thank you, madam chair. good afternoon, gentlemen. thank you so much for your time. i was very excited to hear that

the entry level wages at bank of america are going to be going up to $20 an hur o. but it was disheartening in the fact that none of your enterprises do business on guam. none of your enterprises really, in fact, do business in any of our territories, in terms business that employ people in our districts and i kind of want to put that on the record because there is a serious disconnect in this country when it comes to job creation and that disconnect is impacting not only my district and not only territories, but a lot of rural america. if we reference the chart that is put up there, you'll see that post-financial crisis, nonmetropolitan areas have not recovered their job markets. they're still about two points below the norm while

metropolitan areas are eight points above where we were in the recession. and a lot of this has to do with the fact that, you know, the job creation is happening where there is just a lot of economic activity, but part of it also is the fact that the access to credit in these areas is just a lot more pronounced. a lot of your firms are more concentrated in the metropolita area 97% of the country have two or fewer banks. not a territory issue and a bipartisan issue in fact, my friends in the colorado third and the north carolina tenth and oklahoma third and the tennessee eighth and the texas fifth and wisconsin sevant are mostly rural areas. i wanted to preface my question to this panel by raising all of those points and by raising a question to some fiscal policy considerations that i have been working on when the fed chairman was here,

i inquired as to whether or not he would be open to evolving interest rate policy, which currently is blanketed across the board for all financial institutions and whether or not he would consider bifurcating interest rate policy between metropolitan and unmetropolitan areas and the reason why that would be a good thing is because if we keep interest rates low in nonmet ropolitan areas we would have more money in the pockets of consumers and we would be able to grow jobs there. metropolitan area if we had a different interest rate policy, we would be able to combat inflation because of population densities in those areas so, i wanted to ask the panel if you would be open to exploring the idea of evolving interest rate policy between met ropolita and nonmetropolitan area

>> open to exploring >> i would explore, to be honest, it wouldn't work >> i think it creates all sorts of arbitrage of people moving businesses in and out of that community. i would do it through tax and other reforms to rebalance >> i would agree i think any idea is a good idea, we just have to figure it out. but i think if you really want to do something quickly, i think through incentives and other things, which is what my colleague spoke about. accomplish it faster without the worry, just off the top of my head, without the worry about how it would have impact >> of course, we would explore, but i think there are more direct ways to get at the issue. >> i would absolutely explore it and i would explore the other alternatives, as well. >> i'd absolutely explore and i think it's great you are raising it because it is a real issue and something that needs focus but i agree with my colleagues that i think the suggestion is tough and i'd look at other

means to try to address an issue that is real that you are approaching. >> i thank you all for your feedback the fed has two mandates job inflation and fighting inflation. it uses interest rates as its primary tool to dothat when we have the fed raising interest rates nine times since the financial crisis while nonmetropolitan areas continue to be in a position where they're not recovering their job markets, it just underscores the fact that, you know, we're underserving segments of our community and we're choking off their economic opportunities because we're not looking at them and we're not treating them the way we should be if we are taking everything into consideration. but i do appreciate everyone's feedbook a feedback and look forward to working with you and be able to address the lack of job growth in nonmetropolitan areas thank you, i yield back. >> the gentleman from north carolina, mr. bud, is recognized for five minutes >> thank you, madam chairwoman for yielding and i want to start

by entering a document produced by the forum that cites publicly available data from the federal financial institutions examination counsel. this shows the institutions represented here today account for nearly half of all consumer lending in our economy also double the liquidity and hold 40% more capital than they did ten years ago. that is $750 billion in capital that these institutions hold right now, which significantly strengthens their resiliency is that okay with you, madam chairwoman >> are you submitting that for the record >> yes to our witnesses, again. thank you for being here today we talked about the vast improvements that your institutions have made over the last ten years although strong capital requirements are a critical element of a resilient system capital is not free

banks to hold more capital than appropriate will unnecessarily increase cost for consumers and reduce bank investments in important areas such as cybersecurity. so, any of you who would like to comment, could a couple of you explain how capital requirements affect your institution's decisionmaking such as how you would more effectively allocate capital of these requirements thatt were on you were recalibrated >> we'll continue to monitor this hearing for you, but in the meantime, we want to go to a different part of washington, d.c., where our sarah is sitting down with steven mnuchin thank you for taking the time. >> thank you great to be here with you. >> we were just showing hours and hours of testimony, one

question, my favorite question that they were asked what is the biggest risk to the financial system and mostly cyber and global growth. how would you answer that question >> i would agree cyber is an issue. i'll be meeting with the bankers and we'll have a meeting at treasury to talk about the cyber issues we feel comfortable the financial system is secure and this is an area that we all need to stay on top of. a private, public partnership making sure we keep the financial infrastructure safe. >> we did watch your testimony yesterday before the same committee and got very fiery at the end in an exchange with maxine waters. what happened there? >> really unnecessary ending i offered i would be happy to come back to the committee and answer all their questions i look forward to seeing them in may. i think it's important that of all the congress people have the appropriate time that they have their questions answered

i knew we weren't going to be able to do it all in one session. silly ending >> do you feel like you were treated without respect at that hearing? >> i'm not going to go there on that i think it was an unnecessary ending i was prepared to come back and spend as much time as they wanted and i had been there for over three hours and 15 minutes, which was longer than any secretary had been in a very long period of time and i would also comment, i was there to talk about and i did not get one question >> so political theater in. >> little bit of political theater. >> you were having a conversation last night with the chinese premier. >> very productive the ambusder and i were conducting these meetings on an ongoing bases and i think he and the entire team have been doing a great job. we have an enormous amount of staff and ustr and the

interagency process working on this we went late into last night and another call scheduled for tomorrow morning and alternating between nights and mornings and i think we still have some important issues to address, but both sides are working very hard on this agreement. >> on the time frame, president frump said we'll see if we can make a deal in four weeks. that brings us to about three weeks from tomorrow. is that realistic? >> president trump has been very clear, he wants to make sure we have the right deal. he's more focused on the right deal we have this documented correctly. as soon as we're ready and we have this done, he is ready and willing to meet with and it's important for the two leaders to meet and we are hopeful we can do this quickly but we're not going to set an arbitrary deadline if we can complete this agreement, the most significant changes to the economic relationship between the u.s. and china ain really the last 4 years. the opening of the chinese economy will be a tremendous

opportunity with structural changes that will benefit u.s. workers and u.s. companies and will help china. >> what are the sticking points right now in getting there >> i wouldn't say there is any one sticking point i think as we talked about 150-page document that goes through multiple chapters. some of the chapters are close to finish. some of the chapters is it ilhave techi still have technical issues. we have agreed on an enforcement mechanism. both sides will establish enforcement offices that will deal with the ongoing matters. this is something that both sides are taking very seriously. >> so, you've agreed on the enforcement mechanism. what does that mean for tariffs. if there is a deal, do the tariffs in place go away >> i am not going to comment on the specifics of the tariffs and what would stay in place and what would go. but i would just say, we're really focused on the execution of the documents and, as i said, ambassador lighthu ambassador, we're irk withing around the clock. >> the administration is

proposing new tariffs and certain european exports like cheese and olives in retaliation for the airbus subsidies why escalate tensions with europe right now >> well, this is really, this is a case we have won on airbus and there is an appropriate response i think, as you know, the president is very determined on trade. we couldn't be more pleased with the usmca agreement and i hope the speaker brings it to the floor quickly. i think this will pass i don't know why it has not been scheduled yet. we look forward to her bringing it to the floor. we look forward to continuing these discussions with china and we look forward to continuing discussions with europe and others these are ongoing changes that are just really, really important to american companies. >> but with europe, in particular, some wonder, you know, there is already tariffs back and forth over the steel and aluminum tariffs constant threats of tariffs from your administration. why pick a fight with one of our closest allies economically and

militarily >> this isn't really about picking a fight. this is a specific situation on an airbus case about subsidies that has been won through the legal process. >> just today you see referenced the tariffs. he said the repeated voicing of tariffs actually does hurt confidence, which hurts the economy. do you feel responsible? >> the president has been very clear with the g7 and the g20 that we'd like to have an environment where there were no tariffs. there were no subsidies and no blockage of trade. trade is something that has been very important to the u.s. economy. but we need to have fair trade we can't have one-sided trade where all these goods come into the united states and we can't compete fairly abroad. that is really what this is about. i'll, obviously, see a lot of my counterparts over the next few days and a major part of the discussions. >> we are here at the meeting and it's just downgraded to the lowest level since the financial crisis

do you feel that the tariffs and the trade fights have played a major role in the lower growth outlook sph. >> i don't i think we're in an environment where the u.s. is the bright spot of economic growth. no question that the president's economic plan, tax cuts, regulatory changes and trade are really helping propel the u.s. economy. and there's no question that growth has slowed down in china. growth has slowed down in europe that will have some impact on the u.s. economy, but this is really, this is not about trade. this is about issues slowing down in europe and abroad. >> do you worry about the resilience of the u.s. recovery? we came off a strong growth year last year and the forecasts keep coming down for this year. >> the economic policies in the u.s. are working and we're seeing tremendous investments in the u.s. we're seeing lots of capital come back. we're seeing inflation remains very low so, we're really seeing all the key ingredients that continue to

have a very robust outlook for the u.s. economy and that's really one of thereasons why w continue to see a lot of money, continue to flood in to investments in the u.s. relative to the rest of the world >> though, the forecast, they're up for debate. the imf puts it in the high twos, 2% growth for the u.s. and fed at 2.1% and the administration is still at 3%, according to the latest budget why the gap there? >> last year we had plenty of gaps and we outperformed everybody else i expect we'll have a very strong year this year and we'll see where it comes out but we have every reason to believe that the u.s. economy is still the bright spot in world growth >> if we're going to have a very strong year, then why is the president suggesting that we need a half a percentage point rate cut from the federal reserve right now? >> i think, as you know, in my position as secretary of treasury, i feel obligated to respect the independence of fed monetary policy and i am not

going to comment on it one way or another. >> the president has voiced frustration all the time with the current fed chairman do you feel like you picked the wrong person >> i don't feel like i picked the wrong person but i respect the president's views. >> what would you say to people who are now actually worried about the independence of the federal reserve with some of the proposed nominees? very close political allies to the president. >> i don't think there is any reason whatsoever to be concerned about the independence of the fed it's the president's right and obligation to nominate people to the board. these are two people that the president has confidence in and they will go through the normal senate confirmation process. and if and when these people are confirmed, i'm sure that they will have the responsibilities on the fed board as do all the other fed board members to uphold the mandate of the fed. >> so, you're saying should be confirmed based on his past and

all the questions around had im? >> again i'm not going to make individual comments on individual people. i know moore well and i know the president supports him and feels strongly, so, i think he should be confirmed >> the market has been racing ahead in 2019. near record highs. i mean, you said before you think this is a market business do you think it is a reflection of the president's policies or what do you think is driving the recent optimism? >> i do, indeed. but i also commented you need to look at the market over a period of time. you can't look at it in any one day. i felt at the end of the year, the market had overreacted on the down side in an extreme it didn't make sense that the fundamentals were very strong and earnings were very strong. so, i think the recovery -- >> was it good as you said >> good as we know >> a little controversial. >> only a very little. i don't think it was a mistake

whatsoever it is something that is part of the job of the secretary of the treasurer to make sure there are market moves and there aren't surprises. i think the market today reflects the long-term focus of the u.s. economy and a great place for u.s. investors >> what do you think the inverted yield curve which we're starting to see in key parts of the bond market reflect? >> i think markets are good long-term predictors and in the short term, markets always have corrections and everything else. so, i am not at all concerned with the yield curve in predicting anything. obviously, what the yield curve is predicting. it's the market's prediction that they think interest rates are going to come down so, i think it's really just a function of where you see the market inverted. now, some people will say that could be a prediction of a reception. i don't see it that way and i would say the market has never been a good predictor of recession. i think it's the market's

expectation that interest rates will be coming back down >> is it still your view and the administration's view that there is no recession in sight >> i don't see anything that would predict that >> what about your performance in general how is your relationshipperform. you are one of the last remaining cabinet members. >> that's not true i have known the president for a very long period of time i campaigned with the president. and one of the things that prepared me very well for this job is i traveled the entire country with the president i understood why he was elected. we met with literally thousands and thousands of business people, small business, big business i helped develop the president's economic plan from day one i was, obviously, part of passing the tax cuts, which are critical to economic growth. i speak to the president at least one time a day and, as i've said, the reason i feel comfortable when i don't agree

with the president and telling him that, but i fully respect. he is the president and he was elected and it's my job to serve him and the american people. >> when do you not agree >> there could be issues of different things and, again, i tell the president what i think, but at the end of the day, i'd say mostly all the time we agree. we agree on all the economic policies but, again, it's a great honor to serve the president and serve the cabinet. >> which brings us, you made big news yesterday when you revealed that white house lawyers have been in touch with treasury lawyers over the release of the president's tax returns. can you just clarify your position on this matter and whether you would stand in the way of the treasury and the irs, which you oversee, releasing the tax returns to the democrats >> well, let me fist say, i don't know why it should be big news at all and i went out of my way of being clear, although that i had not headed any discussions.

i wanted to be very clear. i think it is appropriate. this is a significant legal issue. i think it is appropriate that we would consult with white house counsel and, again, that's consult. we're not taking direction we will consult with the department of justice. this isn't about just the president's return this is really about the issue of protecting american taxpayers and make sure that we enforce the laws correctly as i've said, we will follow the law. but this is a very important issue. this isn't just about the president and congressional oversight. as i said yesterday, can you imagine if kevin brady when he was chairman he had requested tax returns of prominent democrats, not the president who had disclosed it, but prominent democrats. the cabinet, members of congress, prominent contributors again, we want to make sure that we follow the law properly

>> so, you think this is political? >> i am not going to comment on the specifics of that. what i will say is we want to be very careful i take this very seriously and, as i've said, we will follow the law. >> mr. treasury secretary, thank you very much. >> thank you >> that is our treasury secretary steven mnuchin we'll send it back to you guys in the studio. >> thank you so much just made news on a number of different fronts, including on china the treasury secretary saying there has been an enforcement office and an enforcement mechanism agreed to, although he stopped short of saying the tariffs would come off if that u.s./china deal is accomplished. let's bring in eamon javers. i'll begin with you. discuss the irs and he talked, as well, about the fed and perhaps that is also where there were some interesting remarks where he said to sarah, i don't feel like i picked the wrong person and he also basically

said that herman cain should be confirmed and had no reason to be concerned about the fed's independence or his nomination >> after initially saying he wasn't going to comment on any individuals and then he did say that herman cain should be confirmed because he trusts the judgment of the president in selecting him or indicating he will nominate him technically for the fed board. that was an interesting point. what markets are going to focus on here is what he said about china and the negotiations ongoing there. sara asked him about what the president said last week, this four-week timeline the president suggested we might know in four weeks whether we have a deal or not, two weeks more than that to paper the deal today secretary mnuchin didn't really endorse that time frame at all he said we're not going to have an arbitrary time frame for this decision i thought that was interesting and then the flash point that we saw yesterday with maxine waters and steven mnuchin in the open hearing. mnuchin suggesting it was just a

silly thing that had occurred between the two people clearly, there is some personal there if nothing else. testing nerves after a long hearing, but also mnuchin was asked by sara whether he felt he was treated with respect he said i'm not going to go there on that. i think the answer is, yes, he did not feel like he was treated with respect he said i'm not going to go there. not answering the question whether he feels he was treated with respect up on capitol hill yesterday. >> dom, we're watching the market reaction and looking at some of the industrial names on the points about the trade deal. caterpillar for instance is now higher on the session. >> if you look at the charts, not just of the cdow, s&p and nasdaq, what you are seeing is a move higher. now, this move higher is not a rocket higher by any measure markets have become a little bit more acustom, let's just call it, to some of the trade headlines coming out over the course of the five, six, nine, 12 months. what you do have is a market

trying to handicap this in realtime an incremental move in stocks and we were negative and slightly positive on the day industrials will be some of the flash points like eamon said on the proxies. the caterpillars and boeings and other china trade centric stocks what would be curious is if we see that move continue into the afternoon after this interview is over. we have seen in the past a bit of a fade after these moves an at the same time in washington, this hearing, the house financial service committee and bank ceos still underway just a moment ago representative grilling them about climate change take a listen. >> do you believe this climate change is a serious risk to the financial system, not to mention the planet >> can you ask that again? i'm sorry. >> do you believe that climate change is a serious risk to the financial system not only the

planet >> yes >> i would say not directly to the financial system i think climate change is real, and we should be taking action immediately to do something about it, and most of it is going to have to be legislation. >> we don't have -- if we don't have a planet, we're not going to have a very good financial system, so i guess >> agree with my colleagues and i agree that we believe at bank america we take action on it >> i do agree. >> i do agree. there are affects on the financial system >> i do agree. >> would you be willing to restrict, limit, or change what your bank finances -- what your bank finances if you're found out it is making the climate change worse in our country, in our world? would you change some of your behavior >> i believe we already have started that >> uh-huh. all of you >> we -- we've already started that we agree it's important. in the meantime the united

states was need emergency to eat, drive, get here, heat, ventilate hospitals and there's a smart way to do this and a not smart way to do this >> yes >> we believe that and we already have taken action. >> we have taken action. >> yes >> we have and continue to take action >> i'm glad that you're all agreeing a report released two weeks ago shows underwriting is dominated by big u.s. banks four of which are sitting right here in front of us. chase, wells fargo, citi, as well as bank of america. our top four banks in the world financing fossil fuel industry mr. diamond, your bank alone has provided more than 195 billion in fossil fuel lending and underwriting in the past three

years since signing of the paris climate agreement making your bank the number one funder of fossil fuels in the world. citi, has provided more than $129 billion fossil fuel funding over the past three years. number three in the year bank of america has provided more than 106 billion fossil fuel in the past three years making it number four in the world. i want folks -- don't say you're committed to clean and sustainable financing because your company's words are not consistent with your actions i would call this gaslighting, that's kind of what we call it in the neighborhood. but for the sake of this hearing i'll say you are green washing your own track record and duping the american people into believing you're helping address climate change on the record, will any of your banks make a commitment to phase our your investments in dirty energy and align your investments with the goal of the paris climate agreement to help protect our planet and the

communities i grew up in that goes to all of you, if you can answer that. >> we have -- we are in the business of supporting fossil fuel companies many of which are u.s.-based companies. we have put out significant programs in fact, we've financed $150 billion of clean projects in recent history and we keep raising the bar on ourselves. you know, continuing to evolve with our companies toward better and cleaner practices. >> for jay morgan chase alone we are going to be green. our data centers and people where we work, et cetera we also finance something like $200 billion a year green. we have a thorough risk committee that makes sure we do things right under the law and we help some of the communities make a transition so to the a greener future if you want to fix this problem, you are going to have to do something like a carbon

tax/carbon dividend. >> we weren't one of the institutions you named, but i'm happy to answer the question we're obviously the trade off is finding the balance between a viable economy and reducing fossil fuel at the same time and replacing it with clean energy >> the gentleman from ohio, mr. gonzalez is recognized for five minutes. >> thank you, mad m chair. thank you for your attention today, everybody i think we've well-established that the companies you gentlemen work for play a tremendous role in the daily lives of constituents and the business operations for all the members of congress today. collectively you're responsible for 42.5% of total lending by banks to businesses and households responsible for more than 80 billion in small business loans. >> that's where the bank ceos are on the hill today. that's appearing to continue for at least a little while longer here markets meanwhile haven't made

too much of it one way or the other. the dow remains in the red only by seven points right now the nasdaq is now up by about 40 just under 40 points the s&p is up by 6 that's a half percent gain for the nasdaq energy, technology are leading tech might close at a new all time high. utilities are lagging because the ten-year yield hit a new low of around 2 .54% dragging on the dow, home depot. i'll have more to dig into right after this we'll take a break and see you back here on the exchange. don't go anywhere. with all that usaa offers

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emerson. consider it solved. welcome back just minutes ago you heard the treasurety secretary explicitly say in his interview he thought it would be appropriate for hermann cane to be confirmed by the senate to a position on the board of the fed he said there's no reason to be concerned about the fed's independence and he didn't feel like he picked the wrong person in powell. republican senators seem to be

polling support for cain fed minute is about to be out. all right. thank you very much. welcome to "power lunch" i'm tyler mathisen we have breaking news from the fed. literally just seconds away. the markets slightly lower right now. yields on the 10-year. let's go to steve liesman with the latest >> they say the majority likely warranted say the interest rates unchanged for the rest of the year the majority thought that the economic situation warranted leaving interest rates unchanged for the rest of the year several participants say the target range was close to the long run neutral level and several note tharg view on the right target range could shift in either direction. some, those expecting better growth say it could warrant a late hike later this year. the majority says unchanged but some think it could warrant a rate hike later. there's no comment from any group saying they have to cut intere