>> there seems to be a notion afoot that you can cut cut the corporate tax rate which doesn't mean you're necessarily cutting corporate taxes that if you do this, you're going to get more money in the revenue. automatically. does that automatically the corporate tax rate because there's an effective tax rate you have the corporate tax rate, so cutting it, will that automatically bring in more revenue? >> not in a material way. most economists will say if you sensibly designed rate lowering tax reform, that may have small effects on improving economic growth. the chair recognizes the gentleman from michigan. >> i appreciate that, mr. chairman and mr. secretary, i

appreciate you being here. i just want to head in a slight live different direction regarding some of our debt and our debt structuring. but first, i did want to address something. i wanted to correct when she indicated that europe is our largest trading partner. and, in fact, as canada, i've checked on the -- double checked on the u.s. census bureau website dealing with foreign trade and year-to-date canada accounts for 16.2% for all of our trade, both exports and imports. china is at 14.2% and all of european nations singularly are in the single digits collectively, much more significant than that. i had run out, actually, to meet with the gentleman who is the chair on international trade who is a member of parliament. rob maryfield from canada. and we had a little conversation about this, we talked about what's happening in canada and with -- with their budgets, they

are actually going to be introducing an austerity budget. they have lowered their tax rates. they believe that they are on firm ground and certainly prime minister harper who has been here and other places around the world is looking for those trade partnerships. so we know that when we're talking about america, we're actually talking about an expanded north american envelope of influence really and canada being so tied directly to europe, they are also affected by that. and i wanted to talk a little bit about you were starting two things. you were starting to head down a path and i believe we had run out of time, but the brits separating the retail versus institutional spending, and you had said it was much more radical and i wanted to give you a brief time to, expand on that. >> i'm not sure i can do justice to the reform. what they propose to do over

time is to separate the retail deposit taking activities that are big banks. require them to be very substantially capitalized and leave the wholesale parts of the banking system separately managed with less regulation. and they have to choose what's right for them. but i don't -- i could not conceive of why we'd want to adopt that in the united states. we just went through a crisis in '08 and '09 where it was caused significantly not by traditional banking activities, but because of what happened in the wholesale markets where there were much weaker capital requirements and much more funding risk. and it was that collapse of the shadow banking system in the united states brought a wholesale system that brought so much pressure, so much trauma, so much damage to the innocent here. so i say this with respect to them. but theirs is a much more sweeping separation, and i do not think it makes sense for our

country. >> and i'm not saying that it does either. i think the point that you were making earlier, and certainly i track with is there's a number of solutions being talked out there and whether it's discussions in what england is doing and others. and we know there's great differences between greece and germany and france and italy and others within the eu. the very specifically, though, it had been brought to my attention looking at our debt structure and looking at the british debt structure, there is a -- there is a chart out there that i saw that indicated the amount of debt that great britain has and when that debt is coming up to be renewed. and they have much more effectively in my mind back loaded this. their ten-year debt window is very different than our ten-year debt window. we have gotten and maybe you have the exact figures, but it's somewhere around 60%, i believe,

or 70% of our total debt that is going to be needing to get refinanced here in the next 36 months at historic some would argue artificially low interest rates. and, what is going to happen with those. it seems to me we need to expand this out. i talked to former state treasurer in michigan about this exact issue and that is how so many, whether they're states or countries or whatever have gotten themselves into trouble, we need to lock into these longer term lowered interest rates. obviously that's going to have an impact on our day-to-day budgeting. and if you could comment on that, please. >> you're right, and thank you for raising that and extending the maturity of debt is a sensible, smart, prudent thing to do in this environment, and we're doing it quite aggressi aggressively. we've moved from 49 months to, i think, 67 months today, and we're going further, expect to go further. and it -- as you said, it makes sense to do that because we're

at a time of exceptionally low long-term interest rates. so we'll keep moving, we'll do it in a carefully balanced way, and you're right -- >> will this administration be willing to take a short-term higher payment interest? >> the gentleman's time has expired. >> of course, and it makes sense to do it. >> chair recognizes gentleman from minnesota. >> how are you, mr. secretary? thank you for being here. i have a question about the somali remittences. i know your office has been working on this and i want to thank you for it. you guys have been very responsive. can you just talk a little bit about what the department, the treasury is doing and might be able to do to help facilitate and come up with a permanent solution for somalis in america to be able to remit money back to relatives at home? you're aware of the scenario. but just for the record, there have been a number of banks that have refused to facilitate the remittences, perhaps you could take it from there.

>> you're right, and i appreciate you drawing attention to this issue and we're working on it and working with you closely on it. be you're right to say it's hard and we're not having enough impact yet. the basic problem is that banks are reluctant to do business in parts of the world where they cannot satisfy their obligations under u.s. law to make sure they're not facilitating the activity of terrorists or other people working against american interests and that creates challenges and particularly acute in the context you cite. it's very important to try to do it, we're not making enough progress and -- we'll keep at it. >> i'll be continuing to work with you on the issue and just to just make the point for the record, you know, estimates that i've found show that american somalis send about $100 million in remittences that basically are lifeline to their families and so, you know, at a time when we're worried about foreign aid and staving off, you know hunger and starvation, these

remittences actually help fill the gap. and i think it's in everybody's interest to come up with solutions. >> i agree. >> can you talk about switching to the housing context, can you talk a little bit about what fannie and freddie might do given they own or guarantee 60% of residential mortgages to look at principal reductions on some of those mortgages in cases where it's advisable? at this point, the agency that's the conservator for those two gses has pretty much said we're not doing that. and my question is, you know, could we be doing it? and if we could, when can we? >> we think they can, and we're working to encourage them to do it. and they're working with us. they have to meet a very tough standard, the law set, they have to make sure they're working for the interests of the taxpayer and have to be careful about how they do it. we think there's a strong

financial case for doing it. in some cases, not all cases, and we're trying to make that case as convincing and compelling to them. and i hope that we'll have a better feel for what they think they're prepared to do in the next couple of weeks. >> good. well, i'd like you to now talk about the volcker rule. it passed through, they're in the rule-making process, but as people debate it in the press, in congress, there seems to be a strong emphasis on the -- on all the reasons why it can't work rather than the essential importance of recognizing that perhaps a bank that wants to buy, for example, a mortgage-back security shouldn't do it with government guaranteed money. and then when things go wrong look for the taxpayer to bail them out. can you talk about the essential importance of why the volcker rule is a good thing? and why maybe we should have an eye toward making it work than

figuring out why it can't? >> well, we have a crisis caused by some institutions taking too much risk, taking advantage of the safety net where it existed. and it, you know, as you know it's caused a huge amount of damage, we're going to be living with the legacy of that damage for a long time to come still. so it's very -- it makes a lot of sense to try to make sure we're doing things to protect against that risk. and the volcker rule is part of a broad set of reforms congress passed to achieve that objective. but the law essentially does says banks shouldn't be able to run hedge funds that take a huge amount of risk because that could put us in the situation where their failures caused too much damage to the innocent. now, the law also protected, i think appropriately so some exemptions for market-making and for hedging things they need to do for markets to work well. and i'm -- i'm reasonably confident that the rule writers in this context are going to find the right balance. we want to be careful that the

exceptions don't undermine the broader safeguards, but we want to make sure those safeguards achieve what they're supposed to achieve and don't cause other damage to other interests. we have to get the balance right and we'll take the time necessary to get that right. >> thank you very much. i yield back. >> gentleman from wisconsin, mr. duffy's recognized. >> thank you, mr. chairman. >> just quickly so i'm clear, it is the role of the secretary to implement the policies and priorities of the administration, is that correct? >> yes. >> yes. >> and i come from the neorthwet corridor of wisconsin. and one of my concerns is the skyrocketing oil prices of late. they've nearly doubled since the president has taken office. and i guess to you, is it your position that the administration has supported policies that would actually lower energy costs? >> i do. i think so over time. as the president said many times, there's no quick fix to

this. and you know, you said prices have doubled, but that's really unfair to history because they were really low in 2008 because -- >> but i don't have a whole lot of time. your position is, yes, the administration is supporting lower gas price policy. and i want to run through quotes that you may recall and in 2008 as the president was a candidate, in san francisco, in regard to cap and trade he said, "if somebody wants to build a coal-powered plant, they can. it's just that it'll bankrupt them because they're going to be charged a huge sum for all that greenhouse gas that's being emitted." that was from the president when he was at candidate. which would lead me to have some concern about what his role is in regard to energy. in regard to his -- energy secretary, mr. chu who also is implementing the policies of the president, in 2008 with an interview with the "wall street journal" he said, "somehow we have to figure out how to boost the price of gasoline to the

levels of europe." and as you know, they pay $9 a gallon, implementing the policies of the president in 2012, february 29th, he was questioned where he asked if it was his overall goal to get our prices of gasoline lower to which mr. chu responded, no, the overall goal is to decrease our dependency on oil to build and strengthen our economy. also, doesn't sound like rhetoric of someone in energy that wants to lower the cost of energy. and then quickly to give a quote from you on march 4th, 2009, in a budget hearing, you said to mr. grassley, the cap and trade would increase the cost of energy for those types of energies that are particularly carbon intensive. it doesn't increase the cost of energy -- i'm sorry, it does increase the cost of energy, and that's necessary if you're going to change how people use energy. so we have you, mr. geithner, we have the energy secretary, and we have the president all making

comments that would lead american people to believe that you're not supporting lower energy costs, but policies that will actually increase the cost of energy. >> i don't think it would lead them to believe that. i think the question you asked in the beginning, the policies that the president is promoting are helping to facilitate a huge expansion in oil and gas in the united states, a significant reduction in our dependence on foreign sources of oil, and the big expansion -- our ability to use other sources of energy over time. >> let's talk about the change of oil production in the u.s. okay. i don't want to talk about private lands or state lands, i want to talk about federal lands. it's fair to say that from 2010 to 2011, there's actually been 11% decrease in oil production on federal lands, is that correct? >> well, as you know, i'm not the secretary of energy, but i'd be happy to give you their view, his views on those basic questions if that would be helpful. i'd be happy to do that. >> you don't contest the fact

that actually federal land production on oil has decreased? >> it's not my thing. i will say that overall, that overall production is rising quite substantially. >> right. you had just said it's rising substantially, and i would agree with you it's rising because of private land and state lands that are being opened up to exploration instead of federal land. >> but it wouldn't be happening. it wouldn't be happening if the regulatory tax policies were having a significant percentage -- >> switching to our budget or the president's budget, you've indicated he's supporting tax increases, is that right? >> only on the top 2% of americans. >> and just quickly, i had a chance to review his budget, when does it balance? >> it does as the cbo pointed out last week is over the next five years, it reduces the -- >> when does it balance? >> hold on, i'll answer your question. to -- >> when does it balance? >> hold on -- >> what's the year. >> the level -- >> what year -- >> roughly 2016 or '17. >> what year?

>> i said the primary balance in '16 or '17, to primary balance. that's making sure that revenues cover expenditures except for interest, and that's important because -- >> when does it actually balance including interest? >> it doesn't balance in the ten-year window and that's what we budget for. >> and don't we think we should have some kind of plan that's going to bring us -- >> not in the next ten years. >> no responsible way to achieve balance. >> time of the gentleman has expired, the chair observes there are three more members in the hearing room who have not asked questions. it's our intention to clear these individuals to keep our chairman on the schedule. the chair now recognizes the gentleman -- >> and the bipartisan disinvitation. >> the chair now recognizes the gentleman from california, mr. sherman for five minutes. >> as to gas prices, i will

comment that about six months before bush left office they were as high or almost as high as they are today. the collapse of the worldwide economy in late 2008 dramatically reduced gasoline prices. i don't think that's the strategy we'd want to employ as noble as that goal is. in addition, natural gas prices are lower than they've ever been. there's a north american market for natural gas. so production on this continent actually can cut prices and has. and that allows us to displace the coal while still generating electricity. and finally, oil is traded worldwide, there's a worldwide price for oil and a slight increase in production in north america's not going to change the worldwide price. couple of issues about funding a small business. if we had member business lending for the credit unions and if the credit unions had

alternative capital, then without washington risking taxpayer money, we'd have capital in the hands of small business. i thank the secretary for nodding, but i hope that we get nodding here in this committee because it is a matter that congress needs to deal with. now as to iran, as you know, mr. secretary, i was disappointed early in the administration where we augmented the imf with $105 billion but did not demand the suspension of iran from the imf. and in effect created $1 billion of special drilling rights as the imf was supplemented. i would hope that before we do anything else to help the imf, we insist at a minimum that iran not be given any additional special drawing rights. perhaps you could kmept on that.

comment on that. or better yet that iran would be suspended because it's the purpose of the imf to help member states when they face a financial crisis and it is the policy of the united states to create a financial crisis in iran. so it strikes me as odd we would participate -- that we would be both setting the fire and funding the fire department. >> good point, and well said, and i share your view on this. and i would just point out that the cumulative impact of the range of things we have done to iran has been overwhelmingly powerful. we have some more to do, but -- >> you do have some more to do and that brings to the next question, we've acted to -- sanction the central bank of iran and a certain other designated banks, wouldn't it be far more effective if we designated all iranian banks if you forced me to go to change

from bank of america to wells fargo or even some lesser known institution that would not caus. so, shouldn't we be designating all banks and then working with swift to exclude all iranian banks from the swift program? >> excellent question. and it's something we're going to be keep taking a look at it. if it makes sense to do it, we're going to do it. we have to get the rest of the world to do it. >> well, the journey starts with us, us designated them all and then trying to persuade europe to designate them all or secondary sanctions, which i realize is not the first choice of the administration. >> i agree. if it makes sense to do it, we'll do it. but at the moment, i don't think that remaining gap itself is particular material to our objectives. if it becomes so, we'll take a look at it. >> well, i would hope you answer for the record how many banks remain unsanctioned by the united states or remain participants in swift and that

is a question i have for the record, how many iranian banks are part of swift. i'd like to shift now to housing and i guess this might be a question for the record, because my time is ending and that is, fannie and freddie are streamlining the sort sale process and reduce the response time to the consumer, do you agree it would be prudent for the gses to pursue short sales instead of allowing the property to fall into foreclosure? and can you speculate as to, or inform us as to why the gses have taken so long. and then the second quell for the record is, does it make any sense to hit the gses with a 10% dividend rate when we have to lend them to money to pay us the dividend and they are not -- i believe in high dividend rates when it's a private institution. but taking money from our right pocket to our left pocket.

and finally, does it make sense for us to use the gses as a pay for for non-housing related programs by increasing the guarantee fee at fannie and freddie. >> time of the gentleman is expired. the secretary can submit his answers in writing. chair now recognizing the gentlelady from new york. >> thank you, mr. chairman. mr. secretary, you -- referring to the conversation, the exchange that you had with the honorable member from mtexas mr green a moment ago, discussing taxes and the fact that it soublds as though you are of the opinion that certain amount of raising taxes will actually have an net benefit for the economy, for growth, you know, we look across the country, obviously we have 50 states that have all their own economic climates, in a sense, and they have their own

state tax structures. can you point to an example with -- among our states, in which a higher tax structure or heavier tax structure has resulted in greater economic growth in those states with lower tax structures? i can give you a better example, which is that -- it's not exactly true but basically what the suspect proposing to return the effective tax rates to the level that prepailed in the second half of the '90s. we have a great national experiment of how well the american economy did in that. that was a period of enormous growth for the american economy. very high rates of productivity growth, profitable time for american business, individuals. no material evidence from that period of time that those tax rachlts at that time were damaging to economic growth prospects. i think that's a best example. another way to think about this and we're having a national debate about this, it's a good debate to have. what would you do otherwise?

because we can't borrow the trillion dollars we need to sustain them. it's unfair to ask people to take that out of medicare benefits. hard to imagine we should ask other americans, middle class americans to raise their taxes, to protect the rich from higher tax rates. i don't see the basis for doing it. can't meet the defense needs of the country. really realistically, with those tax rates for the richest americans. so, it's that reluctant conclusion and the evidence from the '90s that we think it's better than the alternatives. >> well, i would say with all due respect, you know, we don't have an example among our states that suggests that higher taxes work. i agree with you, we have a tremendous challenge that faces all of us. but i think the solution that meets with praise from both sides, because, you know, certainly i'm one of those whon't whats very much to work with you and with all of our colleagues, is growth. if we -- i don't -- as a republican, i'm not against

greater revenues for the federal government but am against higher taxes. we need to bring more participants into the tax structure. and of course we've just hit a milestone, as you know. our corporate tax rate is now the highest in the developed world. so i think that -- i hope that the administration is giving careful consideration to the budget proposal that chairman ryan is introducing today that does reduce substantially those tax rates. i know the administration's talked about reducing corporate tax rates and making the tax code fair and flatter. and i thank you for that consideration. on a accept rat tseparate topic secretary, you referred to reforms in europe, basil three is going to effect our banks. there is concern that agency mortgage back securities will be

considered level two capital instead of level one, those in this country they have been considered equivalent to sovereign debt. can you assure our participants that you're going to be working with the regulators to try to make that playing field even, if you will? >> again, i can say that i know they are taking a look at it. it's the felt's authority, not mine. i don't -- my sense is 23r a fr distance that those concerns have a material adverse impact on, say, the price of mortgages, i don't think those are justified at this stage. i know we'll keep looking at it. >> mr. chairman, i yield back. >> thank you. the chair recognizes the gentleman from delaware. >> thank you, mr. chairman. i appreciate your managing the hearing today, because otherwise i wouldn't get a chance to ask a few questions of the secretary. secretary, thank you for coming. i'd like to first publicly thank

you that the work one of your assistant secretaries did on the on-ramp, the ipo on-ramp bill. imtried to point out, as we've discussed the bill in this committee and on the house floor that it was really out of an effort by the treasury department that these ideas emerged and we appreciate her work on that. i also want to thank you for your work on the housing issues. i was part of the letter that was led by ranking member frank to you encouraging treasury to implement hamp more like harp. i understand that's happening, no need nor commenmore comment. i would like to go back to two questions. the first is the sustainability the solution for greece. it is hard for me -- you said in your testimony that this is just the initial phase, that severe austerity steps are being taken. economic reforms and budgetary reforms in these countries.

and so it seems to me greece has the worst of all words. they can't devalue their currency. they're attached to a currency that is really reflective more of a german economy than their own. so, they are going to kind of continually, as you pointed out in your testimony, i think, get into this downward spiral, that's forced by the solution. could you comment further on that? >> you are exactly right. a member of europe has two disadvantages to the choices many other countries face. they don't have their own currency and they can't set their independent of the rest of europe. butch they don't have a mechanism for fiscal transfers that makes the united states work, for example. they don't have that peace that hamilton put in place, to allow transfers to cushion the effects of downturns that effect just part of the continent and not the rest of it. those are big dils advantages. and you're right to emphasize that, you know, greece is making progress towards sustainability,

but if they get there is going to depend if they can -- >> politically, right. i don't know how -- >> but i think that, you know, there's no good choices available to them. >> right. >> so one choice might be exit. what happens in that kind of a situation, where they opt out of the eu? >> i know they spent a lot of time looking at that question. and it's true that the rest of europe has, too. they looked at it and concluded it would be much more costly economically for them. and i think, well, that's their judgment to make. so, most of the things they are doing, most countries would have to do in their circumstances. most countries, even if they had their own currency, they dug themselves that deep a hole, they would have to do a lot of these things to bring the government down to earth and fix the financial system and make it easier to start a business. those things would have to happen no matter what. so, they are doing things that