profit and publicly traded. this would emphasize need for reform, but countering the exchange evolution, it is cited that indirect participation is available through advisory committee membership. with that said, advisory committee members are most often given little actual voice, citing among other things the fact that much meaningful business is done in executive sessions from which i know you are aware advisory members are excluded. the sec has the ability to positively affect the governance structure already separate from broad reforms. congress will continue to weigh in. .. we have time for another question or two. i will start. just wanted to -- you and i talked last year about fsoc and

one of my concerns has always been the transparency involved in the designation as a reform to say there are financial institutions designated as such they have additional burdens etc. and it seems initially the goal was to designate institutions to mitigate the risks involved in the institutions so the first one would you agree with me that it would be more important to mitigate the risk to the system than simply that you want to judge the success by the mitigation of risk as opposed to the number of designations made? >> you want to look at the most meaningful metric. fsoc is to identify and address risks to financial stability is better found.

one tool is obviously the designation tool. is that based on their size or based on their activity. hispanic it is before my time but it defies designation for them. it's outside of the banking context. it's been well taken nonetheless into fsoc is sensitive to that and other members are, too which is to be as transparent as one can be in the particular factors i think that is often a business model. so it's not like you can change this piece and you wouldn't be considered under the analysis

that it's systemically important that the more that one can advise as to what the factors are it's not to have the systemic system. so whatever tools or information fsoc and others can give to bring that about is what they should be doing. >> last year and the full committee there is an amendment i want to be sure everybody on the committee got to look at and discuss. some people call it off ramp, particularly the asset manager companies. it didn't preclude fsoc from designating them but they gave them an opportunity, here is a problem in your business model. can you tell them how you might cure it. but in a broad sense, and still if fsoc felt like that doesn't solve the problem it doesn't mitigate the risk enough, the

designation could still occur and that seems like a common sense approach. i wonder if that would simply have some flexibility because again i know there hasn't been haven't been that many designations but it's not to collect to designate them. it's to keep the financial system safe, secure. did you see that language and what is your thought about that kind of flexibility? >> i think that there is increased engagement between the bronx fsoc staff. we've had a number of designations where the reasoning is quite detailed and what's provided to the company's.

it's a business model that would be analyzed as they were presenting to fsoc so i would hope if that is realistic again a lot of these are intertwined in the factors that lead to designation that isn't doing this or less of that. you wouldn't be systemically risky or important but i think the exchange of information off to occur. and you know i think it is getting more exacting and a

better process, becoming a better process. >> it's good to hear the process is becoming a little more transparent in particular when you get into the question is based on size or activities, when you move away from large bang some asset managers are very large but in terms of activities. it manages buying somebody else's money you may lose it or gain it. but i think we will continue to have the dialogue because as you pointed out even at the end, to say if maybe we mitigate enough risk they don't need to be designated to sifi anymore but it may be appropriate for what the activities are with what the size is and before that designation occurs.

bringing you back to this issue and the 26 years i've been here i've never seen all of the focus on something so quickly on both sides of the aisle with something that is a humanitarian issue. with that in mind, i'm an original cosponsor of the investor protection act. it's in the u.s. territory from coverage by the investment company protection act for 2015 and we thank you for your technical assistance. could you please speak to the effect of the bill and the health of the situation? i know you told us before. >> this one is at least in some

aspects taking a formal position on the bill, but i think i discussed my views and aspects on this publicly which is that exemption was born in another time and another situation where the exemption from the investment company act into the requirements and participate on the theory that the government didn't have the resources or the ability to sort of travel to back to the tories including in puerto rico to do but they needed to do so it is a loophole and about to be plucked. just for the rack or you don't see it more clearly in this committee usually it is whatever is left over. i have stories that would make people laugh if they were not sad that they think they can travel to the territories.

i remember i asked them how come there is no satellite radio in puerto rico yet come of a habit now, but he said the satellite will get their. borrow one from the cia and you will be able to get there and elsewhere so now they have it. some people like me and some people don't like me. but let me ask you something. you have so many new responsible buddies now and i know you've been asked this but i just want to stay on this because it is important to me and a lot of people are you keeping up at this point because it seems to

me we buy it and in the office and silver effect we have all this new equipment and a year later it's not that good anymore compared to other agencies, so the banks have much better stuff. what can we do about it other than keep pumping money? >> it is a significant resource component with some of the largest registrants but it's a matter of expertise and keeping that other government agencies so you will you'll never be able to pay them as much but one of

the things i found since being at the sec is particularly in the it area how attractive they are too coming to the sec because public service number one, number two they have access to the data that they find fascinating that they don't have outside because we have access to some data to the public the public doesn't have and again you will see how we are with market experts but it's a challenge. but it's also the talent of the people. i mentioned the software application which has been

tremendous developed in-house, so what are the big resources? >> one of the things i noticed it's so true we have young people in this country, not that i'm knocking the experts but we haven't found a way in the of the government to attract them to bring them in. i remember either sarcastically or very profoundly during the obamacare rollout that created some problems i said why don't you just go to a college dorm and it will be resolved in a half an hour and i think we are missing a disconnect between the fact we have a younger generation that understands and comes up with incredible

ventures they sell for a billion dollars and we rely only on what we think we know. it might sound simplistic but it's something we are missing so i'm glad to hear you say what you said. let me follow up on something mr. bishop said. there've been some questions recently about whether investors have enough information on the composition of the board of the publicly traded companies. numerous letters have been sent asking if the act requires to disclose the disclosure of information pertaining to the board. do you think more needs to be done in this area and if so, what sort of timeline is the sec looking at?

>> i spoke about this in late january were basically some of stuff that concerns our sec has a pool and they have now for years of requiring companies if they have a diversity. if they have a diversity policy to say that and how they monitor it for effectiveness and so forth, but there's also a fairly recent study that shows how few companies have been disclosing anything in that space. the current rule doesn't define diversity so we at least include in the definition of diversity race and gender and ethnicity along with other kind of skills of may figure into diversity when we nominate the committees how to optimize the board and so

i have directed the division of finance to look at those that have occurred over time with concerns we need you -- to provide information about how gender and race and ethnicity so what do you do for example with board members who may not wish to have that disclosed but it's something that my personal view is we should proceed and basically i'm quite focused in terms of reaching that conclusion on my part to move it along. >> i want to take this opportunity to thank you for your service. november is coming soon. we don't know where we are all going to be after november. but i want to thank you and ask you a personal favor on behalf

of everybody. that is to try to continue to do what you've done as a watchdog detective cop on the beat, if you put it on its role that might be difficult for people to undo it in the future although some will try to get back to the days when we didn't care what wall street was doing but just try to get it on the road and i know you are the person to do it >> mr. bishop is recognized. >> talking about flash crashes. in august of last year, fears of a slowdown in the market prompted volatility in the u.s. markets. some investors were surprised to discover that they were trading at lower prices than the underlying investments on the morning of august 24.

prior to this resulted in delays of opening stocks in the market while they were immediately available for trading. it's been partially blamed on the application of automated investment tools on the large-scale without a safeguard against panic zoning and august 24, 2015 was nowhere near the turmoil. it demonstrates the era is largely unpredictable. what is the sec doing to prevent flash crashes and the artificial instability in the markets? >> quite a bit. what happened august 24 wasn't and i welcome stress test but it

showed the resilience of the market structure so i would take issue saying that it was a crash compounded by the different errors however the staff put out a note on this late last year that it's useful data and analytics and we've requested information from to see what measures should be taken to deal with the phenomenon that did occur and they are under the microscope so to speak after the crash in 2010. how do they operate?

you have the phenomena departing from the different share values so that the adjustments made and there are issues under consideration to make sure the issues that did occur that didn't reflect fundamental values fast enough of the stocks are dealt with some people see some measures taken and we look at the thought of time to increase the resiliency of the critical market infrastructures when an incident does occur so we can take actions. we are constantly dealing with issues like that with a great deal of seriousness. you want to optimize the market in terms of the functioning making sure they are reflecting

and serving the capital. >> we want to thank you for your service. everyone appreciates the work that you are doing. we know how seriously you take that so thank you for that and we look forward to continuing to work with you to have the resources to do your job so thank you very much. this meeting is adjourned.

>> [inaudible conversations] [inaudible conversations] house speaker is calling for loftier hopeful politics in the chaotic presidential campaign. the ap writing that they told the audience on capitol hill

it's easy to get disheartened about the state of politics. but he says it didn't used to be this bad and it doesn't have to be this way. his remarks came at an event today where he took questions from capitol hill interns. we will show you that tonight at eight eastern c-span.

programs include author bruce hillman who discusses his book the man who stopped einstein how not see scientists changed the course of history than professor of women's studies at the university of georgia. i would r. roosevelt in the struggle for social justice. the cofounder of the national organization of women and first lady eleanor roosevelt. she speaks with author and historian now irvin paynter at the house in new york city. sunday beginning at 1 p.m. eastern from the virginia festival of the book including kelly karlin, george carlin's daughter that talks about her life coming up with the canadian in her book a home companion.

the making of america's first woman president. she looks at the political leaders and the advances they're making in the political arena. the center for women and justice. >> for a woman to be at the head of the most powerful country in the world when one of our key allies don't allow women to drive and the most significant enemy at the time of isis is literally executing women and girls for being women and girls i think this sends a powerful message from the bully pulpit about what america stands for treasury secretary jack lew says the analysts are working to find financial leads in the brussels terror attacks.

before the house financial services committee chaired by the representative jeb hensarling. >> the committee welcomed order without objection the chair is authorized to declare a recess to the committee at any time. the hearing is entitled the annual testimony of the secretary of the treasury on the state of the international financial system. before we begin today's hearing we need to keep in our thoughts and prayers the victims of the attacks and they'll jump as well as their loved ones and first responders working to care for the injured and to bring justice to those responsible. i ask that we pause for a moment of silence.

thank you. i will now recognize myself for three minutes for an opening statement. we welcome the secretary for his testimony on the imf and the international financial system. it faces serious challenges brought on by spending driven debt in the monetary policies around the globe. fortunately for hard-working american taxpayers, needed reforms were passed by congress in december even if they weren't reforms the administration wanted. notwithstanding the congress reduced the contribution for the first time in its history sun setting sunsetting over $40 million in the credit lines. congress also be stored restored

over the administration's objections a rule that limits of the large loans to countries with unsustainable debt. this was first put into place in 2002 but was altered by the treasury in 2010 when they improperly bailed out of greece, it has led to nothing but additional bailouts. what remains certain for the system though is that the imf will never be able to be allowed the united states if we remain on the current spending trajectory. as the monitors showed the national debt is spinning out of control and is undeniably unsustainable. during the time in office, resident obama presided over the five largest nominal deficit in history. he's piled up more debt than any president from george washington to bill clinton and the debt that leaves every american family owing $153,000. although the witness the secretary secretary and other administration officials

constantly attempt to change the subject of the declining to the declining deficits the facts remain. the deficits have only declined relative to the historic highs set by this administration. every deficit declining or not actually increases the national debt and number three under the president's policies, deficits will soon begin rising again despite a $3.4 billion tax increase in the approach to the 1 trillion-dollar threshold before the end of the decade. that means the legacy will be so large that at the end of the budget we will spend more on the death service annually than we spend on national defense, medicaid, education and transportation infrastructure only spending on medicare and social security will be larger than on the national debt. according to the office the legacy may very well compromise our national security and increased the likelihood of a fiscal crisis. as we all know it is the poor

that will suffer most when this occurs. that's why the national debt and the debt ceiling remain serious matters. inexcusably the treasury department for over two years snowballed and misled congress for the investigated contingency planning for the debt ceiling three that's why we issued a report entitled the administration's debt ceiling subterfuge. it reveals the treachery sought to withhold the congress and american people about their contingency to acquiesce to the administration's position that there would only be a naked debt ceiling increase without any reforms or fiscal discipline to the national bankruptcy. we know the legacy will include accounts for the decline and the debt in the documents continue to be withheld but us us hope that this option will not be added to the risk. the chair recognizes the gentle lady from wisconsin, the ranking

member or the monetary trade committee for two minutes. welcome back. i think i ought to begin my comments of bashing my republican colleagues in detaining them in the worst way they know and that is to thank them for working with you and the administration to pass the imf quarter reform. i give the chairman hensarling a hard time but i've enjoyed working with the chairman on chairman on the monetary policy trade subcommittee and recognize that he and others had a big part in making this reform happen. i know that you have worked hard getting this over the line and i think that it's really going to benefit us in the long run.

it was the right thing to do for the world and certainly for this country and i'm pleased that she will again be adding the imf and is doing a tremendous job. ranking member waters and i joined the ranking member urging the capital policy in the tpp to be harmonized in the guidelines and i was very pleased that it was included in the final agreement. looking forward to the conversation today, i hope that you might talk to us a little bit about money laundering and your efforts to combat that. but at the same time the other side of that is of course trying to make sure that we get remittances in the hands of those that are very needy. i look forward again to your testimony and i yield back.

>> the gentleman from michigan the chairman of the monetary policy subcommittee for two minutes. >> i'm going to make quick that i give quick but i appreciate you appearing with us today and there's a lot of important international issues that need to be addressed. one of those i am concerned about is the problem of the role in the future lending to greece they received a bailout under the access rule provided in the three-year assistance package showing 40 million or more than 3200% of the country's quota well beyond any limits that have been in place. a new 37 billion-dollar program superseded the bailout. under normal access to countries can borrow up to 200% per 12 month period were up to 600% total with exceptional access the borrowers can exceed the limits so that it is considered sustainable with a high

probability of paying off the debt. it's important to note greece didn't meet the criteria for access lending and the imf made mistakes bailing out grease. as you know the funds evaluation found that internal assessments have permitted them to take part in the access framework or inaccurate resulting from the orderly optimistic forecasts of debt sustainability access and commitment to reforms. although i'm pleased with the systemic exemption was repealed earlier this year and very concerned earlier this month just in january actually, the imf board replaced it with a significant loophole that will allow that fact by the director, they decided that the countries like greece can receive assistance even when when there just isn't sustainable with high credibility providing that there is a b. profiling of that debt. this new profiling seems to violate the spirit of the reforms that were included in the 2015 on the bus of congress

eliminated the exploitation by greece. as stated before the treasury department shall resist the urge to push towards many bailouts in greece and i will be introducing legislation today that will prevent future bailouts of countries that fail to meet the traditional roles and i would let them know they are aware of my concerns in the legislative initiative as well so i appreciate the opportunity. >> the chair recognizes the ranking member for three minutes. >> thank you very much mr. chairman. i would like to thank the secretary for coming before us to testify before the international financial system. the quarter reform package that was adopted after a five-year delay is part of the omnibus spending bill is an important achievement in reflection for the officials and democratic leaders to get this deal done. previously the failure of the congress to approve the coda had

the reform in serious jeopardy with ratification now complete what is it essential to the interest is to restore some emphasis on the ongoing reform and to repair in part what has been done to the u.s. reputation for leadership. the price the administration paid included a commitment that it achieved to seek to eliminate the systemic exemption of the role that since 2010 has allowed lending even when there was a risk risk that the death was unsustainable and was used to support loans for the countries of europe. many believed they should revert back to its original access rule. i am perfectly fine using such as one of many guides for thinking about policy and i agree it should be transparent and systematic as possible.

but i'm also sure that in a complex and ever-changing global economy, policymaking cannot be trusted to a simple instrument rule. the funds should recognize the problem with the predetermined threshold is that they will inevitably cause unpredictable circumstances of reality and exceptions are going to be inevitable in some cases. finally, before closing time i want to take a moment to acknowledge the senseless loss of life caused by tragic events unfolding in brussels today. the attacks on the innocent server is a painful reminder of how important our efforts are in countering the financing of terrorism. i know you are deeply committed to this and you will share more about the increased resources and enhanced authorities in this issue. i look forward to your testimony and yield back the balance of my

time. >> today we welcome the testimony of the honorable secretary jack lew who's testified before the committee so i believe he needs no further introduction without objection, your written statement will be made it harder for the a part of the record and you are now recognized to give an oral presentation of your testimony. thank you. >> thank you ranking member for the opportunity to testify today. before i begin i would like to say a few words about this morning's event. the united states condemns the strongest possible terms the act of terrorism in brussels. our thoughts and prayers go out to the civilians targeted india's attacks. to identify the financing networks in the weeks of attacks we work with them even more so especially closely with our counterparts around the world right now analysts are reviewing information to uncover and we've

offered our assistance. our hearts go out to the victims of today's events to stop the flow of the funds funds to the perpetrators of these kind of attacks that remain steadfast. since my testimony last year the committee has continued its streak of private-sector job creation which has reached more than 14 million jobs. over the last two years we have experienced the greatest creation since the late 1990s at 4.9% the rate is half of its 2009 peak and we continue on a sound fiscal path from the 2009 to 2015. the deficit of the share of gdp fell by almost three quarters to 2.5%. the facet of the omnibus spending bill has helped to build on this momentum contributing to the economic growth and helping to strengthen the international leadership or even includes a critical reform that has helped preserve the

role of the united states and international economic system and advance the economic national security objective. that's demonstrated that we have a capacity to find common ground of difficult issues and lays out the foundation for some of our long-term challenges. but more work remains to strengthen critical investments in the domestic and international security priority is. the international financial institutions to muddle multilateral banks into trust funds are in pertinent part of the president's approach to bolster the national security and drive long-term prosperity. our investments in these institutions promote a strategic interest in the international stability. they help unlock the next generation of markets for america's businesses and workers while fostering private-sector development and entrepreneurship and they are some of the most cost effective ways for growth at home and to respond to challenges abroad. the imf remains the foremost international institution for promoting global financial stability. there are three main activities,

surveillance, technical assistance and lending and it promotes economic stability and hopes to resolve the financial crisis when they occur. this promotes global growth and enhances the national security and alleviate poverty in the member countries at the time when increased uncertainty the imf is actively working with countries vulnerable to the low prices, the volatility and other external shocks to provide policy advice and financing when appropriate area to the united states plays a role in shaping the policy through its position and the largest shareholder. over the past year we supported the creation of the debt relief facility for low-income countries headed by public health disasters like the virus and encourage them to help develop countries mobilized in the domestic resources for development. at the direction of congress the united states championed reforms in exceptional champion reforms in exceptional act of lending framework to tighten the requirements on the debt sustainability. our investments in the multilateral banks like the

world bank also supports national security objectives to increase economic growth and reduce poverty. over the years, the assistant has nurtured the economic reforms infrastructure and social investments that have driven the growth of some of the more strategic trade partners. they play an important role building sustainable transparent economic growth in the emerging countries and more and more we come to see them as vital partners in helping to address national security threats. in addition to meeting the current commitments it's urgent we work with congress to address the commitments which now approach $1.6 billion. at the world think of the world think this is urgent failure to meet this year will result in the loss of u.s. shareholding that could impact the power of the damage the credibility and weaken weakened the ability to shape the policy priorities. successful development depends on good governance and the well functioning state. for over 25 years the treasury offered technical assistance and provided advice and training to

officials developing transitional countries so they can build effective financial institutions. they help countries improve government operations across several areas including planning and executing budgets, managing debt, developing sound banking systems and combating corruption we've particularly been helpful with our foreign-policy security economic priority is in ukraine and the central america, africa, asia and other regions. the international partners are the most cost effective ways to reinforce the growth at home and respond to critical challenges abroad. specifically u.s. leadership and international financial institutions enable us to influence how and where the resources are employed on the scale we cannot achieve through our bilateral programs alone. it's crucial that we continue to have bipartisan support for the institutions to ensure the influence remains strong today as it has been over the past several decades three and we look forward to continuing the dialogue on the important role

that the international financial institutions play in the global economy especially as we implement the reforms legislation and negotiate the replenishment of several of the windows that serves the world's poor countries. thank you very much and i look forward to your questions. >> i now recognize myself for five minutes for questioning. one thing we can agree on is that tens of millions of our fellow countrymen are unhappy. one of the reasons is too often they see an administration that makes up the law committed bars or lives above the law and they see the congress that they think is hopeless or helpless in dealing with the fact. in that context mr. secretary i. think i think you know for almost three years, this committee has been seeking documents regarding the debt ceiling contingency planning and information shared in the justice department regarding what some call too big to jail and i think as you are aware the committee subpoenaed the

documents from the treasury and the next time we have yet to see the documents. you are asked about this last week in the appearance before the appropriations committee and you said lawyers are working through the document request. mr. secretary, it's been almost three years for these requests. you also mentioned in your appearance before the appropriations committee that you will provide us with appropriate material but mr. secretary, with all due respect, article one of the constitution there is long-standing supreme court precedent that this branch of government has the oversight role we get to deem what is appropriate for the investigation with all due respect, sir. it isn't you. it has everything to do with checks and balances and separation of power. thus my first question do you understand the subpoena imposes

a legal obligation on the insured requested records are reduced? >> we recognize the important role congress plays and take seriously. >> do you understand a personal legal obligation is that your understanding backs >> they've taken steps to respond to each and every one. >> do you understand you have a personal legal obligation if you don't then i would commend for your study to 192 to 194 in 18 usc 1505, i will ask for the last time do you understand you have a personal obligation to ensure the requested records are produced? >> of the approach is a long-standing executive branch of the policy set forth by president ronald reagan -- >> you've had three times to answer the question. has anyone directed you not to

comply? may 11, 2015. >> mr. chairman, the other day we responded in detail to the inquiry from the committee and layout -- >> i question has anyone directed you not to comply with the committee subpoena yes or no answer. >> the letter we sent to the committee indicates that we have been reaching out to the committee responding -- >> has anyone directed you not to comply with the subpoena? spirit and try into get you to answer a simple question. it's a simple yes or no question. have you been directed not to comply from the yes or no. >> we have been trying to respond to this, that's what i'm trying to make. >> for the third time you didn't answer that question. next have you directed anyone at the treasury department to withhold documents pursuant to the committee's subpoena of

may 11, 2015? >> if you will give me a moment to answer the question, we have been -- >> i will give you a moment for context, but we need to start off with a yes or no. >> these are not yes or no questions. if you want an answer i'm happy to give. >> i don't know how much more simple it can be. have you been directed may 11, 2015 if you will give me a yes or no -- >> in my direction, the department staff has been reaching out to the committee trying to seek an accommodation and hasn't followed up with any meetings to try to work through that. it's been three years on some of these document requests. >> we don't know what the committee is even looking for. >> if i need to provide you another copy of the subpoena, i would be glad to do it. are you preparing to certify

that you are in compliance because so far you have failed to do so. you can't tell me that you are trying to comply -- >> what we suggested in the letters going back they should sit back and talk with each other, go through the details. i've seen diplomatic appropriations committee the other day this committee hasn't responded to the offers to meet at the attorney level so we have been trying to be responsive. >> what do you think would have happen to an ordinary citizen as a schoolteacher or factory worker if they decide to -- if they refuse to comply in the subpoena. >> we have been working to comply in the request. >> with all due respect, that doesn't have credibility. >> the ranking member is recognized. >> thank you for being here mr. chairman. the chair just talked about the american citizens distrust with the government and how angry

they are with government. mr. secretary, if there is anger and distrust it is because of the way that we conduct ourselves here and buy an secretary is battered then i think they see that more as the congress of the united states not being able to work with each other more than some so-called demand for the response to the pages that have been sent or questions that have been sent or depositions. as i understand we have received over 3,000 pages from the treasury since may 11, 2015 and as i understand there were four more depositions that were issued yesterday and i want you to know, mr. secretary, we are

not consulting at all by the opposite side of the aisle on these depositions. we don't have the kind of cooperation here in this committee that would lend itself to seeking information from you or any of the other secretaries. this has become a game of we are going to overwhelm you with subpoenas and questions so we will be able to say that you haven't responded. i am hopeful that of the important issues of the treasury are being worked with every day. we are in a situation the economy is performing and since 2008 we have made advances but we are concerned about the volatility of the markets and we want market and we want you to concentrate on the real issues.

i would hope that your office wouldn't be tied down trying to respond to unreasonable requests from this committee. i do not believe they are legitimate and i apologize for the way that you are being treated here this morning at not being able to answer a question, being interrupted, not accepting that you are willing to have an explanation. it shouldn't work that way. i want to get on with dealing with the issues that you are confronted with. since the free-market reforms of 1978, china has been one of the fastest economy is averaging 9.7% of gross domestic product growth annually from 1979 to 2015 and lifting 660 million people out of extreme poverty. over the past few years however,

the economy has slowed. the gdp growth was 7.3% in 2014 and 6.9% in 2015 and is projected by the imf to fall to 6.0 by 2017. what are the implications of a slowdown in china for the united states as well as a global economy more broadly? the >> thank you congresswoman. the economy is one of the largest in the world along with our own and it isn't as integrated in the way that ours is in terms of financial systems and the interlocking relationships of the financial institutions but it is the purchaser of the vast amounts of input from around the world. so understandably there's able to focus on a lot of focus on the economy because it has a lot to do with what global growth will look like in the future particularly in the emerging economies that provide so many inputs to china.

china is in the middle of a reform process that's important to the global economy as they move towards a more market-oriented system it's going to be bumpy and there will be more volatility. they have to learn how to tolerate some of those disruptions the way that some of us more experienced due. but if they don't open their market and if they don't make changes that will have market systems become the more powerful drivers they will be left with an overhang of overcapacity that will wake them down and make it so that some of the doomsday scenarios would become much more meaningful risks. i think china has a lot of tools and capacities but the question to me isn't a question many have asked. they have $4 trillion in hardware and they have enormous resources within their governments to deal with policies. what they need to do is not back away from the program.

>> thank you mr. secretary. >> time is expired and we recognize the gentleman from michigan if of the monetary policy trade subcommittee. >> thank you mr. chairman. i'm going to take a slightly different direction on my questioning bus because i don't believe what the chair man has been saying that i am concerned as well about the responses of the simple letters that have bought into the data march 18, 1 dating back as last year like in may so the speed hasn't exactly been the treasury and though. but my question and you addressed this on page three and four they started on the highest unemployment rate in the past five or four years in the public debt gdp ratio to gdp ratio to 110% as planned and they witnessed the ratio climbed to over 175% despite major

restructuring in 2012 clearly the imf involvement has done little to improve the lives of the citizens in in part because they have been slow for years and last december between a mr. was on the pot he needs to -- was unapologetic and the imf should stay out of any future bailout. on page four you mentioned that at the direction of the congress's testimony the united states championed reforms in the exceptional access lending framework to tighten the requirements of the debt sustainability. but i'm just curious and confused why he would go to a directive and if they don't want to medicine and of the medicine has been so ineffective anyway why should we insist on giving

them more taxpayer dollars? >> let me start with the reforms that remove the provisions that allow systemic risk that would allow lending is the issue you describe. >> it remains very important. it's been the way we've seen is it provided to many important countries. >> why would we introduce more loopholes? they must possess the political and institutional capacity to ensure success at the access loan in short government must be confident and committed to the reforms. the defense and foreign ministers when sure you are aware threatened to flood europe with migrants including potential terrorists if the country didn't get what it wanted him to bailout the negotiations into minister said,

quote, if europe leads us in the crisis we will flood with migrants and it will even be worse for berlin if enough wave billions of economic migrants or will be some some g. hottest islamist state, too. if the european creditors strike us we will strike them. we might have seen that today isn't it true? >> i think that's a conclusion that i have no basis to comment on and we shouldn't jump -- >> i hope not but for the defense minister of greece threatening europe, our nato ally, how in the world can we allow them to even qualify for this? >> on the financial end of a larger set of issues on the financial side of the many important reforms enacted over the last year. i'm not going to disagree that the process was very bumpy and messy and the whole world was watching it but after an opening set of conversations the

government in greece settled down and enacted more reforms than anyone thought possible. why is it important to remain engaged? this is principally a european challenge and has been all along to have the imf partner. >> we have the defense minister and others making outrageous comments. why would you lead the parade to leave the parade to try to include loopholes. >> if i can be geopolitical for a moment on the financial side of the u.s. can remain involved if there is an ability to do that sustainability review double the based on the debt forgiveness restructuring if it is sustainable and consistent with the imf rules and if they do that then that will keep the european commitment together. and why is that important to us?

at the time of instability it wouldn't be a good thing for europe or the united states if we were to see tension breaking apart. this is why an going to be introducing and dropping the bill today to tighten those loopholes. i would suggest the treasury not go against congress again on a bipartisan manner and that you need to work with us in this oversight. so thank you mr. chairman. the gentle lady from wisconsin for the trade subcommittee. >> thank you so very much mr. chairman. mr. secretary, you have indicated that our economy is growing very slowly at 2% and of course our colleagues here are fond of reminding us.

they've all been paid for on top of the war we didn't pay for. so we are now over the next couple of decades to trillion dollars more in debt from this policy. the solution is more austerity. let's block grant medicaid and voucher medicare and cut the social service block grant. let's take the entitlement status away from the pell grants and food stamps, and i guess as

the secretary secretary of the treasury i'm wondering if you think austerity is the solution to the deficit problem. >> congresswoman, i think that we have to make sure that our economy is growing and part of that means we have to maintain a fiscal policy that keeps growing and we also have to take a long-term view to have a sustainable fiscal outlook. if you look at where we started in 2009, there was an economy that was crashing. there is a debt that was skyrocketing and completely out of control growing to over a trillion dollars

helps grow the us economy by roughly 20% and with the head wind coming from international slow growth i'm glad we have that extra energy in the us economy. >> thank you. to be clear, you think long-term challenges of social security, -- i mean, 70% of our economy is pending, so if you take money way from people is it possible to grow the economy without folks having money in their hands? >> the challenge in the long term has been to the right balance of revenue and spending to deal with structural issues. i think if you look at what we have done in the last seven years, we did that the cost curve on healthcare. some people don't like it, but no one can deny it has cost from going up and had enormous impact on federal budget.

we have taken tremendous strides to reduced spending, i think too much so i'm not discretionary-- >> 530 seconds, do people need have money? do you agree our economy depends on people having money to spend like raising the minimum wage and not cutting-- >> if you look at the power of the us economy, it is driven by consumer demand and that is important in all levels of income spectrum and people who work full time should be above the poverty line which is why say we need to raise the minimum wage. >> thank you so much and i yield back my two seconds. >> the gentle lady yields back and we recognize that joan and from new jersey. >> thank you, mr. chairman. after listening to the secretaries responses or non- responses, mr. chairman, i think anyone viewing today's hearing would say, secretary, that you are that a pity me of what

is wrong with washington today. the disdain that you have for the american people, the failure to answer the simplest a question is what is wrong with that-- washington and why the public has been view of the bureaucracy and bureaucrats such as yourself your today. >> you know, the questions we put to you are basic ones and simple ones, asking sometimes for long answers and sometimes simple answers. i got a new phone other day-- curious question, do you use a cell phone or iphone? >> i carry it, but i hardly use it. >> there is almost a simple answer. so, in your communications with people whether on your phone, iphone, e-mails, letters, phone calls, other things the chairman asked us of a question, has anyone from the administration ever directed you to not comply with the subpoenas? is a simple question of whether through these communication devices you may have one way

shape or another, has anyone directed you to do that, yes or no imac i answer the question. >> no, you didn't. >> we are trying to comply-- >> excuse me to the question is not whether you are working to comply. that is your answer appeared the question was has anyone communicated this to you has anyone communicated that to you, mr. secretary, yes or no? >> congressman, you have , you can make this seem like a yes or no question and i'm not aware of any communication telling me on what-- >> thank you, mr. secretary. the answer is, no then, no one has ever communicated i think that was the answer you are trying to get. i have been trying to get answers from you as well for a long time. nine months ago i contacted-- well, both in committee and through letter asking you to respond to concerns i have regarding applications of something else, the isdn protocols and what they would have on non- big

institutions. i have not heard yet. over nine months. my simple question now since i have not heard back, will you assure us if any proposals come out you oppose plans to require us companies to basically give up come away their protections to us law and sovereignty? >> congressman, i will need you to give me a bit more detail of what you are asking limit i guess since my time is limited-- >> i am happy to respond. are not sure what you're asking. >> we directed that to you back and-- last year, nine months ago and i guess if you are happy to respond we would ask you to respond back then. as far as trying to get information from you is one thing, to you is another. here's the 10-dollar bill and there's a whole discussion right now going on who should be on the 10-dollar bill. you are familiar with this issue and i know you have done a good thing and solicited the american public opinion here quite a bit. you are not in your head.

how come than when you're dealing with international bodies such as the fsb you do not solicit for public opinion and the stakeholders in the same manner when you get into negotiations regarding financial standards and international bodies? will you commit going forward to do aspirin put just like you did on the change of the 10-dollar bill, as you would when dealing with international bodies? >> we do reach out to stakeholders as we do our work domestically and internationally and will continue to do so. >> great, good to hear. will you engage in a formal notice and comment period? >> i'm not going to comments on notice and comment for international proceedings? >> why not? >> because i'm not aware of appropriate notice, process for international proceedings. >> do you have the authority, power to establish formal notice? >> i think that we have a lot of mechanisms for

consulting with both public and private sector stakeholders. >> would you commit to doing this? >> i don't think noticing, is the answer to everything. we are not doing notice and comment on the 10-dollar bill either. >> this is a little more important than the 10-dollar bill. >> you asked me if i would do the same thing. >> would you commit to doing formal notice and comment period imac i don't think that's the answer to everything. >> it may not be for everything, but on this area i'm asking you if you would commit to doing so? >> the work that is done-- >> the answer is no? >> it does not make us policy-- >> what so when you submit-- he said you do solicit input, you are just soliciting impact from who you want to hear from as opposed to all the americans. >> i dare say when we solicit input we get input from many that do not share my view, not just those who share my view. >> i yield back. >> time has expired and

the judge chairman recognizes the chairwoman from new york. >> welcome, secretary. on i know that this hearing is about international finance, but i would first like to ask about puerto rico as it has a very pressing economic issue facing the country and impacts on hours. it in a severe financial crisis, which could really explode into a humanitarian crisis and we know that it now has roughly 72 billion in debt outstanding and additional 43 billion and unfunded pension obligations and to make matters worse puerto rico does not have access to chapter nine banker to. or to any restructuring process that would allow it to renegotiate debt and creditor, it's operation and now i have been told treasury is

working with the natural resources committee on crafting a legislation to address this financial crisis. but, as you know there is a supreme court case taking place right now, literally their hearing arguments in court today and that case it addresses whether puerto rico is prohibited by section 903 of the bankruptcy code from enacting its own state level municipal process and regime. other states are also prohibited from enacting their own minister both bankruptcy codes, but they have access to chapter nine, access to bankruptcy. puerto rico does not have access to chapter nine. so, it's unclear to me as why we subjected them to the same prohibition on enacting their own municipal necropsy code,

so when i do that i feel is worth pursuing and considering simply carving puerto rico out of the section 903 man on states enacting their own municipal maker to codes, that wave congress could authorize puerto rico to enact its own restructuring regime for all of its municipalities and this has precedence in that the supreme court upheld new jersey's state level municipal bankruptcy in 1942. it was congress that enacted legislation prohibiting states in the future from doing so, but we could likewise enact legislation allowing or carving out the ability of puerto rico to so ask-- act. about, my question really concerns the impact that the economy and puerto rico and the restructuring would have

on our very important municipal bond market that finances so much of the improvements in our urban areas and a lot of critics are arguing that allowing puerto rico to restructure their debt would have a terrible terrible consequence in the bond market here in america. that it would drive up borrowing costs for their states as well even though they are not affected by puerto rico's restructuring. i would like to know what your responses to these arguments and also, do you think that a territorial bankruptcy regime for puerto rico went from the broader municipal bond market that is so successful in america? >> senator, there is a media crisis and puerto rico. it's not a future crisis they are in default because they are not paying some of their

bond issues and they had big payments doing may and july at whittlesey@see a path for them to make the statements. the need for action is immediate. i don't believe it will solve the problem if there is restructuring of does a small piece of order because that. the restructuring will have to be inclusive of all poor because that in order to address the crisis that they have. i think the work being done-- i have not seen the work product of the natural resources committee, but the work being done is very important and time sensitive. we think there needs to be an oversight authority that is the gatekeeper. we think that there needs to be the ability to restructure all up puerto rico's debt because even some of their general obligation has to be a minimum reschedule in order for there to be a solution. we don't think it's a one-time that's all approach. in terms of the impact on other municipal bonds , three of the leading bond analysts

that the studies that contradict the notion that will have spillover effect on other municipal bond markets. in fact, what we know about the municipal bond market is that each issue is looked upon independently based on the risk and the quality and threat. i believe the worst thing for the municipal bond market would be disorderly unwinding of puerto rico which is what will happen if congress does not act. >> time as is expired in the chair recognizes the german from wisconsin, mr. duffy. >> thank you, mr. chairman. right over here. >> i can't see you. i'm sorry. >> i went to revisit if you questions asked by the chairman. again, you understand you have a legal obligation to provide the documents subpoenaed by this committee; correct? >> i asked that question already. we are working to respond and i will clarify one thing i said

report. i say we did not get any response-- >> my time is-- i don't mean to be offensive, but do you have trouble hearing today? >> i hear you just find. >> okay. let's try again. do understand you have a legal obligation to provide documents-- >> as i said we have been responsive and we continue to work to be responsive. >> you are not answering my question. in regard to anyone directing you to not comply with our subpoena -- >> i responded already. >> what is the answer? >> are not aware of any instruction of what i'm saying today. >> as the secretary of the treasury have you asked anyone at treasury not to comply with document request? >> i could not hear that one. >> have you directed anyone at treasury to not comply with the request? >> no, our staff has reached out and been-- >> have they complied with us? >> you have told your staff to comply with our document request?

>> i told them to-- >> let me express my concern. we have a subpoena that is almost a year old. the document request that we try to do nicely with you goes back to a half years and you have failed to comply with those document requests and i think anyone sitting in this room listens to the response you go to the chairman, they gave mr. garrett and me coming your not compliant. we ask very simple questions and you say i'm not going to answer questions. when you come in and say -- listen-- >> will the gentleman yield? >> i will not. you say you are trying to answer questions when you don't even answer simple questions that this committee poses to you. >> coniston, can ask you a question? did you read the question-- the letter i sent you-- >> are you aware you sent me march 18, a document dump last night

are you aware that? >> we have been providing documents on a regular basis. >> okay. so you provided 1035 pages; correct? >> i did not count the pages. >> does that sound about right? and you are trying to comply with our subpoena; right? >> we sent thousands of patients. >> let's talk about those thousand pages. in that thousand pages that were sent to our committee this week, you can look up at the court, 664 pages were news clippings, letters to members of congress, hearing transcripts and public information. another 223 was private-sector research. another hundred nine pages was from the bipartisan policy center and then 39 pages was a memo on the 1985 debt limit impasse.

this isn't the documents we requested. this is public information you are throwing our way to try to say we sent you thousands of pages, though the thousands of pages are not compliant material and one of the e-mails you sent us is consistent with all of your compliance and your testimony today, at the very top-- top you will notice it says spam. you are sending us spam e-mails from treasury and try to tell this committee you are compliant. so, let me ask you this, we have asked you to provide employees of treasury. you have refused to allow them to come and be interviewed by this command; correct? >> congressman, we have tried and repeated communications with this committee to arrange meetings-- >> mr. secretary-- we asked for documents and as those that you receive you should

comply or assert privilege. >> in the processes responding involves-- it involves give-and-take. >> have you asserted a privilege and why you haven't complied with our document request? >> we have not yet had the conversations we should have between counsel and hopefully that will begin immediately. >> look at the answers you gave us today. does anyone here believe you will actually comply with our requests that are to a half years old when you cannot evening knowledge understand that you have a legal obligation-- >> mr. chairman, unanimous request. >> you are everything that is wrong with government. >> i have a unanimous request. >> the gentle lady will stick her request. >> unanimous consent for a recess spivak-- >> object. >> thank you, chairman

for holding this hearing on the annual state of the international finance system. welcome, secretary jack lew. this hearing gives us in this community the opportunity to discuss the north american development bank never known as the next bank in san antonio, texas. as you know the bank was created in 1994 as part as nafta to alleviate the environmental concerns and economic problems that would be created. since this creation over 20 years ago the bank has made a tremendous improvement in some of the most impoverished communities in both nations including towns and colonialists in my congressional district and along the us-mexico border from brownsville to el paso and all the way to california mexico -- california

mexico border. the banks investments have brought life-saving portable drinking water to millions of people, many of whom face health threat in conditions due to unsafe sources of drinking water's. so, that leads me to the first question. at january 25-- 2015, during the height level dialogue they agreed to double the bank's capital from its current $3 billion to $6 billion split evenly between the two nations. can you tell us why the bank is seeking to double its capital? >> congressman, the administration is looking for this capital increase because it will allow the united states to continue supporting these kinds of infrastructure projects on our border that are so important and deepens our relationship with mexico, addresses environmental issues and it is an important

aspect of our economic life to have those issues addressed and only we mexico are the parties of interest, which is why the next bank in the us-mexico relationship is so different. >> in june 2015, moody's rated the bake as aa one reflecting the banks strong capitalization and liquidity position as well as noting the support of the bank receives from both the united states and mexico booties rated the banks outlook as stable, so you'd do you expect the bank will maintain that strong financial position moving forward? >> the rating agencies have changed their methodology in a way that could have an adverse impact on that bank. they are looking at whether there is concentrated activity

and when you're talking about two countries, only two countries being involved in all the activity on one border, by its basic nature is concentrated activities. most of the international financial institutions are diversified and i think that importantly there are no nonconforming loans, so if you look at the core quality of the credit it is very strong. i don't know what reaching agencies will do. >> i like that response on how strong it is. since 2010, the banks lending portfolio that issuances have grown significantly. has the increased when had a negative impact on the bank's financial position? >> as i say, there are no nonconforming loans and i think the egg remains in a strong financial position. >> what steps has the bank taken to ensure its debt issuances do not become a oversized liability for the bank? >> i think that the key is for there to be

careful review of projects to make sure that each project is funded, can't sustain that that go into it and given the amount of work that needs to be done on the us mexico border there are a lot of good projects before you get to anything that will be questionable. >> there are a lot a good projects on both side-- north american act allowing the bill to extend its mandate beyond the environment extra-- and the structure project. will the treasury support efforts to extend the banks this year, 2016? >> i'm not familiar with the expansion. comics-- happy to look at it. i think the definition as it is permits some expandability because transportation is part of it, reducing emissions, so things like transportation,

water, renewables are all part of it, but i would be happy to look at the proposal. >> the chair now recognizes the gentleman from missouri, chairman of housing and insurance subcommittee. >> thank you, mr. chairman. i have a couple questions on a different subject. with regards to designations, you testified last week for the appropriations committee with regards to arbitrary thresholds for designations and i would like clarification or do you believe-- you are responsible to raise the bank threshold-- >> i'm sorry. i could not hear the last thing you said. >> last week your response to arbitrary threshold asset threshold was that you oppose raising the bank threshold of 500 billion; correct? >> i commented on the issue. i mean, last year there was a proposal to go to

500 billion. that's a large financial institution in the numbers and 50. there has been debate should go from 50 to 100 and i said there's a big difference between 100 to 500. >> the question then becomes, assets is one thing and i think we need to look at this based on the risk and the asset makeup, liability makeup of what -- each one of the institutions. >> i think there are a lot of different criteria aside from size that raise questions of risk. i think that size is important because the larger and institution the more likely it is-- [inaudible] >> with regards to non-bank facilities, we have two companies that sold off major books of business in effort to escape designation. and yet they have not been deducted or don't you think it would be helpful to have an offramp of some sort to do that so that these

businesses know how and what they need to do to get de- designated? >> i don't think the reason that those decisions are made is to get de- designation. i have talked to the ceo of one of those firms that said it was a business decision for reasons sticking to the core business of technology and manufacturing companies. there is a process for de- designation with an annual review and if a company sheds risk and comes in for review on an annual basis that is the way to get de- designated and we look forward to seeing applications that reflect that kind of change. >> with regards to another issue. insurance international insurance route-- legislation. we are working on mike need to guard rails with regards to conversation taking place that would require the us to notate our system of regulation. do you have objections to that? >> can you clarify which

provisions, which proposal you are talking about? >> we have not dropped the bill yet, but we are trying to put guard rails on the discussions -- >> i'm not sure which discussions on what subject cannot capital standards. >> for insurance? >> yes. >> we have been working, negotiating-- i assume you're talking about insurance? >> yes. >> we have been working to negotiate a covered agreement to make sure we don't end up in a place where other countries can set standards that would require-- >> uris support what we are doing? >> not to get into a situation where there is conflicting capital standards. in any action in this area should be actually taken united states. >> i think we are putting the cart before the horse and we need to make sure we have the ability to protect our

folks first before we engage in agreements. appreciate the comments. with regards to pain and nations bills, the new york fed service-- >> correct .. my understanding of the exercise is that they were checking to see if the pipes would work. >> a problem then is to separate occasions october 10, 2013 and may 7, 2014 you appear before the senate and before the house.

indicated something contrary to that. >> what i said at the time and what i believe now is we've never gone into a world where congress has failed to extend the debt. we've never been in a world where there's been a question on whether -- >> you fail to acknowledge -- >> i know what i said. what we have learned since then is that the technical capability is there. we don't know if the works. it's never been tried. i don't want to be one who finds out. >> i yield back. the time of the gentleman has expired. the chair recognizes the gentleman from georgia, mr. scott. >> thank you very much, over here, secretary lew. it might be appropriate for us to examine the impact and what you were doing in terms of the financing of terrorists. particularly in view of what has happened earlier this morning i guess over in brussels. and the treasury department has this authorization.

but before i get to that are you aware, mr. lew, that have been documented 73, i think it's 73 individuals working at america's airports with ties to isis? >> congressman, i know that there's been work done to identify risks in this area. i couldn't -- >> let me just suggest this. cox media, wsb particularly, did a story. cox media house outlets and newspapers and radio stations, television stations all across this country. i would like to ask if you might contact them and get the full report on that report. just contact, it's cox media of usb television is the local

affiliate in atlanta, georgia. and we did an interview on the. model point is this. in his financing of terrorism, we've got to start look at the other end of it. in other words, there is the money laundry and there's that going, but there's also the dend for it. and such a thing as this come at this particular too many of our airport have these private contractors that come in and help to sort of subsidize the workforce at the airport. this was the same incident that happened abroad not too long ago where baggage handler came and put the bomb right on the plan. i'm sure you're familiar with that. the reason i'm saying that is that this evil, this terrorism, has no greater target in mind than our nation's airport.

our greatest tragedies have been because of that. we've got to do everything we can to let the american people know that our airports are safe. so on that end if your staff would come in my staff could assist as well, but i think it's in portland for you to have that report -- important for you -- -- >> i'm happy to look at the. the department of homeland security works digitally. >> but my point is it's not, you have the money. i'm not talking about that end. i'm talking about, we are failing in our efforts. now, we passed a bill that i sponsored called the international financing hezbollah act. are you familiar with that would? >> yes. >> in that act we directed the president to direct and to

identify, to investigate, to use treasury, to use the fbi, to use all of our brilliant, the cia, investigative powers to identify sources of funding the dummy companies that trails only. so with that in mind let me just ask you your application of the law, and would issue a report on how isis and these other terrorist organizations are getting their funding? >> i have less than a minute so i'm going to do my best. we have an extensive operation, the best in the world to track terrorist financing. we support u.s. operations. we support friends around the world when they are trying to track down financial ties. we are drilling into every lead we get. we work extremely closely with the intelligence community and the homeland security department on leeds. we have the ability to track

when we get identification of individuals who need to be tracked. it all flows from the intelligence that we get. we are working on hezbollah to identify potential targets. on isil commits a slightly different case on isil because it's a very integral financing system and unhappy, 14 seconds i can't answer it. if i could get another minute i would be delighted to. >> kind of want to ask you this. the iran's agreement makes available to iran a huge cache load of over $100 billion. they are the number one sponsor of terrorism and particularly to hezbollah -- >> try to these questions about isil finance at a red upper import. >> please give a brief answer. >> on isil financing the structure of it has changed as isil has grown. it started out that they seize territory, to the money out the vaults when they had it.

that is not going to stay. they have too much territory, too much meat and we've been too effective at getting some of those faults. what they do not be as they try and use local resources like oil and to extort money from the people who live there. we afford with the government to shut down banks and to limit money exchanges. we've worked with the government of iraq to stopping peaceful in isil controlled territory. we are using military operations to blow up every aspect of the oil industry weekend. hasn't been 100% successful? know, it's hard to get into but it's been successful enough that some areas they've had to cut in half with a bigger fighters. we know it's working. we've got more work to do. we work every day to find every lead we can. on iran if i could just take 30 seconds am happy to. >> please, mr. secretary, go ahead. >> the notion of the amount of money going to iran has been greatly overstated in a lot of places. at some level it looks like there's $100 billion that goes to iran. we know more than 50 can go

because of limitations and encumbrances on the money to the government of iran says they think and make it access to $30 billion. what we know is that hundreds of billions of dollars of domestic needs and we will take action against funding of terrorism, regional destabilization, human rights violations. we will do our level best to make sure -- >> but my point is there any mechanism in place to make sure none of that money goes into the hands of groups like hezbollah, the houthis? >> we've ongoing sanctions in those areas ever continue to work on designating and enforcing co-sanctioned. >> thank you, secretary lew and thank you, mr. chairman. >> those are topics of great interest to members on both sides of the aisle. the chair recognizes the gentleman from texas. >> thank you, mr. chairman. i'm interested in a line of question you initiate in your questioning and so i would like to see maybe if you could get

more answers than to cut the first time around. around. >> if the gentleman would yield to the chairman. so, mr. secretary, let's go back to document production. used energy fear you believe you have been reasonable in this process. i accept that. but hope you understand there is a level of frustration for document requests that have been pending in some cases two to three years. a subpoena which is almost one year old. we've had over a dozen questions for the record that were produced from last june's hearing that we have yet to receive any information from your department. you saw the chart that was placed by chairman duffy on the monitors that showed that basically when we had requested documents, most of what we received were newsclips and speeches so yes, there is a level of frustration here, here

a question that chairman duffy asked, would you do not believe you answered, and if you did then forgive me. i wish to know, i am unaware, i am unaware that treasury has asserted any executive privilege with respect to any of the documents that have been subpoenaed. so i am unaware that treasury has invoked any executive privilege. are you aware of any executive privilege has been asserted with respect to any of the documents subpoenaed? and if so do you have a list of those documents? >> congressman, we have tried to reach out to have conversations to clarify what's requested, to seek accommodation, to work in the spirit of president reagan's direction to executive agencies on how to deal with congressional oversight and respectful and responsibly. we wrote in december, in january, we wrote again last

week or it was only after for additional subpoenas were delivered that we got a callback to try to set -- >> i will accept what you were saying which are not answering the question. are you aware that executive privilege has been asserted? i am unaware. >> i'm not aware of any. >> thank you. that was the question. >> that's the end of the process, not the beginning. >> when you see the end of the process, it's a process that's been going on for almost three years. >> the process of accommodation requires conversations that haven't even begun. we've reached out to we've initiated conversations but we've seen no response. >> mr. secretary, i assure you the subpoena would not have been issued had we not had to wait years. this isn't a matter of -- >> in december we offered -- >> this is a matter of days to weeks, mr. secretary. this event going on for months and years. >> maybe we can get a better place with these conversations take place and we can find a path to accommodation which is always our goal.

>> mr. secretary, he testified before our committee on may 7, 2014, that the administration never made any decision to prioritize debt payments. you agree to testify to that? >> that's correct. >> pull-up chart number six, please. as i think you are well aware we are in possession of a number of documents that have come from your fiscal agent, the new york fed, various e-mail communications amongst and by federal reserve officials. this one dated september 17 states treasure is adamant they will make p5 die as i assume principal and interest payments not answering possibility of missing debt payment. number seven please. this one dated friday september 20 treasure continues to be adamant they will make principal and interest payments on the debt. this is a slightly different position than prior exercises of debt payments was not specified.

chart eight. as you may have heard this was dated monday september 23. as you may for unlike the 2011 planet around prioritizing payments and growing maturities, the treasury has said they will make all principal and interest payments this time around. so you were unawar aware of thee tabletop exercises, correct? >> mr. chairman, the tabletop exercises were not in pursuit of, pursuit of a decision that had been made. they were exploring how to answer the question you have asked me. is it technically possible. >> the documents, have you seen these documents of? >> only in recent months. i was not at the time. i was -- >> pull up chart number two. >> if i could just respond to your question. the real point here is we should never be in a position where we have to make decisions about what to do when you default.

if you default on social security or medicare instead of principal and interest you are still in default. the president, only the president could make a decision what to do and what not to bank. >> i agree with that assessment but i think you know that roughly half the times that congress in the modern era has vote on the debt ceiling it has included some type of spending restraint to take us off the path to bankruptcy as well. last chart, number two, the memo dealing with federal reserve governor powell, two interesting comments. he understands why treasury wants to maximize pressure on congress by limiting communications about contingency planning. mr. secretary, did you direct somebody to maximize pressure on congress by limiting communications? >> no. what i said to this committee and other communities of congress is yes, we look at what is technically possible. we don't know if it works. we believe that it would be a grave mistake at a disservice to this country to ever default.

that is my viewing up it was my view then and it will be my even if you did and it will be a mistake if congress goes down this path again. it will hurt the country. >> the gentleman's time has expired. the chair recognizes the gentleman from missouri. >> thank you. thank you, mr. chair, and thank you, mr. secretary, for your appearance today. you know, we must not forget that this administration brought this back from the brink of an economic collapse in 2008. that was not brought on by this administration, but this administration help repair the budget and and economy that was on the brink of collapse. i wish my colleagues on the other side of the aisle wouldn't

forget that and recognize that good that's come out of it. mr. secretary, how would you assess the effectiveness of the financial action task force in identifying key terrorism financing risks and the issuing universal recommendations for addressing them? >> i think that's an important information that establishes norms and practices that it followed around the world would create the ability to do what we do in the united states more broadly. candidly, we are far ahead of many other countries in terms of having the capacity to take those authorities and implement them effectively. one of the things i think we have to do and the imf has a big role to play in this is to provide the kind of technical assistance to make sure we build up the capability around the world so the countries that want to be cooperative have the tools that they need.

we had a meeting at the u.n. in the summer where for the first of in history of the u.n. security council, finance ministers met. i chaired the meeting and we had a unanimous vote to designate isil in the same category as al-qaeda which exposed anyone having even an intermediary role to sanctions. it's all rooted in the belief to see it and act on. fada was at that meeting, followed up with countries to build the capability. but i don't want to exaggerate or other countries or. we are even ahead of our most sophisticated colleagues, and we offer a lot of assistance, for example, in western europe. >> and in light of what happened today in brussels, i'm sure there is a need for expansion of fada. >> we have reached out to offer assistance as we did after the bombings of france and we do on an ongoing basis sharing information in between when it is appropriate.

>> they do so much at this time i would like to yield the balance of my time to the ranking member, ms. waters. >> i would just like to give an opportunity to share with us to attempt to cooperate and your desired to work with us in a reasonable manner. >> thank you, congresswoman waters. the range the request of the committee have been many. we provided thousands of pages of material and has been noted we provide an additional thousand pages of material just this week. in december, january, we invited committee staffs to meet to discuss what other information the committee needs. on the debt limit although we provided the committee over 3800 pages of documents on this topic. and over the last three months we've tried to reach out to the committee to find out what

further materials would be useful. in the intro we did identify some additional materials on our own. i have a great deal of respect for the oversight function, that congress place and is appropriate for congress to play. we seek to find accommodation to provide information and would only ask for those kinds of conversations that are necessary to go through the accommodation process to proceed. >> had he received a response from this committee when you've reached out to them to attempt to come together and have some discussion around these issues? >> only yesterday evening but that was after four people on the treasury staff received subpoenas for interviews. we did have conversations that would help us work to before that. >> i think whatever today you're still offering. >> we remain available and anxious. >> you and your staff are available to? >> the right level is for counsel to counsel. that's a visa been worked out for four years that i have been a part of. >> her house before you leave

you can speak directly to the chairman and reinforce your desired to be responsive and to talk and to have these discussions. perhaps that would be helpful. her house there's some misunderstanding about what efforts you have made to try and accommodate the many, many, many requests and the subpoenas and all of that. i do appreciate your willingness to do this and again, perhaps maybe a conversation directly with the chairman might help. >> thank you, congresswoman. >> the gentleman's time has expired. the chair recognizes the gentleman from south carolina, mr. mulvaney. >> secretary lew, i want to continue the conversation about the debt ceiling, not because of what to beat a dead horse but most of because i continue to be amazed in my eyes at an administration that i perceived as wanting to create the threat of a financial crisis. we've established in your previous visits here that your comments to the contrary

notwithstanding that the technical ability to prioritize did exist and does exist. that issue has been put to rest. >> i testified to that effect to this committee last year. >> i'm giving you the benefit of that doubt. when we're going to agree you might as well let me give because it will not happen that often. i want to talk about something else if we could bring up the first slide. you have said on several occasions that no decision had been made to prioritize. this isn't enough september 17. we got these from intravenous at the new york fed. treasury is adamant it will make pii payments. treasury treasury continues to be adamant they will make principal and interest payments on the debt. unlike the 2000 planning around protestation payments, the treasury has said they will make all ei payments at the same time, september 23. next slide. even to the trade has direct reserve banks they intend to make all pmi payments et cetera. at september up 2013.

two weeks later you into the senate and said no decisions had been made to prioritize. in may of 2014 several months later you came to this committee and brought a letter from the previous day. he testified, we stress that no decision regarding what to do with such a situation was made during the recent debt limit impasse but i believe it to others to speak to the truthfulness of that statement and the truthfulness of which is set to this committee. it's not what i want to focus on today. i want to focus on the next piece of the puzzle. >> if i might -- >> i will ad add on to other fos a chance to try not to take the whole five minutes -- >> the truthfulness of the state but i think i'm permanent -- >> that's not what i want to talk about. >> you mischaracterized what i said. >> point of order mr. chairman. >> the gentlelady will point of order.

>> the clerk will stop the clock. >> thank you. >> i have a point of order that the committee is not exercising proper decorum. >> may i speak to the point of order? >> mr. chairman, if i may, when it is implied that the treasurer is not being truthful, he should be given an opportunity to respond to that. it should not be left saying i have accuse you of not being truthful, but i want to move on. and i would say that if we are to comply with proper decorum, you would allow the treasurer to respond to what has been said as he is being untruthful. >> may i speak to the point speak with any other member wish to be heard on the point of order? the gentleman from south carolina. >> i've already indicated to the witness i intend to leave and i'm at the end of my five minutes to respond. i do intend to do that.

i would like to get through my presentation first and given the opportunity to respond to all of my point. in addition no one is stopping them from receiving time from the opposition, the other side, the other party to speak to my point which we regularly do in this committee. >> her house, if no other member wishes to be heard, i would like to ask unanimous consent that the secretary be given 30 seconds in which to address the issue that he wanted to address and then we will go back to the gentleman from south carolina. if so, with the gentlelady with stronger point of -- >> mr. chairman, i appreciate your offer. i hardly think 30 seconds is sufficient. if the chairman would reconsider the amount of time to be in compliance with decorum, i certainly would agree to that. i hardly think 30 seconds is sufficient.

>> mr. secretary, i will simply by unanimous consent yield you as much a reasonable time as you may consume. and if the gentlelady cares to withdraw, and we will give the secretary a moment to address the issue that was raised by the gentleman from south carolina. >> thank you, mr. chairman. i withdraw. >> thank you, mr. chairman. i'm from new york so i talk fast. all i wanted to say is when i testified on a number of occasions, i stated what was correct then and is correct now. the decision has never been made by the only people who can make the decision, that's the president on the advice of the treasury secretary what to do. that decision was not made. i can't tell you what different officials at different organization said. said. i can say the decision wasn't made. we should never have to make a decision about how the u.s. government default. which is what happens if congress fails to raise the debt limit. i don't think evolving a payments to veterans is any better than defaulting on payments to foreign bondholders.

>> i think we're getting a little far afield of the question. now we will go back to the question -- the gentleman from south carolina. >> let's get to the question that i wanted to ask which goes to the next slide. which is why no one ever treasury wanted to tell us, the next slide is on september 24, another internal new york fed document, the close hold dear is crazy, counterproductive and at risk to an already risky situation. this is an integral document. next slide, please. the last sentence says it's also totally unclear whether trs solutions to sure this thing with effective business areas especially given the request that i refrain from sharing this document. a request time ago because i think it's outrageous that keeping such a close hold on this type such a late date. it's what if you're into working groups. next slide, please. another internal new york fed

document, he understands why treasury wants to maximize pressure on congress by limiting communications about contingency planning. >> this speaks to the very heart of why we've been beating you up on this for the last three or four years. this is a quite awkward ask from the very beginning. who at treasury made the decision to try to maximize pressure on congress by limiting communications about contingency planning? >> the decision that we made was to make sure congress and the american people understood the risk of what happens if the debt limit is reached. that was our decision. we do not believe that there is a path towards prioritization -- >> you said that 100 times. >> it's becoming -- >> i'm not asking you about informing us about the risks of a debt ceiling. i'm asking specifically about the comments within the new york

fed which is your agency. and with -- >> congressman -- >> let me finish. it is clear from all the documents we received from them for youth that they were involved as far back as 2011. clearly people within the new york fed thought that you were withholding information from congress about contingency planning. and i want to know who told them that and why. >> i can't speak to what other people thought. i can tell you -- >> if i ask mr. powell that, what would you say? >> between 2011-2013 there were serious questions about whether the pipes could even handle this speed we've covered all that. >> we know you can't do that with all -- [talking over each other] >> who made the decision not to tell congress and to make the decision not to tell the public speak with congressman, i'm telling you we decided to share with the congress and the public what we knew which was that if there were no debt limit its -- >> you never shared with us. >> it would be a terrible thing.

>> or the public come to contingency planning for the prioritization. the gentleman's time has expired. >> there is no time to manage through a default. >> the gentleman's time has expired. the chair recognizes the gentleman from missouri, mr. cleaver, ranking member. >> mr. secretary, is there a plan speak was as osha's trying to say, congressman, these are questions about technically could you choose to pay bondholders, including foreign bondholders and not pay american citizens things that they are do. i acknowledge to this committee there's a technical capability to pay principal and interest, including to all of the foreigners who own u.s. bond. i think we have to pay our bondholders to i think we have to pay our veterans, a medicare, we also have to pay for the lights to go on in this room and in veterans hospitals around the country. i think the notion there's a workable plan for the government of the united states to default is the highest form of irresponsibility. that's what's really the issue here.

>> thank you. i came here with, interested in oil more than anything else. there was a time when we said we've got to produce more oil, to reduce our dependence on imported oil from the middle east because of the chaos. i'm wondering now today, aaa does this daily, gasoline price deal and to date average the country is $1.99. i'm wondering what is the impact on the world economy and on those here at home of the almost unprecedented drop in oil prices? ..