responsibility but mostly it is a coordinating role and it is to pull together the to act in a decisive and coordinated way. i think it is important. we have five regulators going off in five different directions and it could cause massive confusion. i think there is analytic work being done that is very helpful and i hope as chair i will play the role and help drive the process toward sensible decision-making in a timely manner. >> thank you, mr. chairman. i yield back. >> the chair recognizes the gentleman from missouri. >> thank you, mr. chairman. thank you, mr. lew. -- of the parts being in the disadvantages being in the lower part of the total ball, a lot of the questions have been asked. let me clean up some questions that was brought up in my mind. in regards to the investigation

-- >> i apologize, cannot hear you because of the door. >> there you go. one of the questions i hope this afternoon when you talk to your new commissioner and discussed his investigation is not only to have them investigate what ms. lerner and her group were doing regarding the conservative folks in the tax-exempt department but also the request that was made by folks with regards to liberal groups and not investigating those. i have sent you personally about 3000 documents in a request to investigate one and last week to ask for the investigation to take place, and that was three years ago, and was never given anything but a stonewall the last three years. i think this investigation should be broader instead of just looking at conservative groups but the lack of action investigating liberal groups. as the gentleman from new york said, the oversight that was

supposed to be provided with regarding -- regards to those activities. one of the questions that came up in terms of civic designation -- i know the definition is very concerning to them from the standpoint that a while ago you made the comment -- and i think it was in your testimony yesterday also -- with regards to size. you also made a comment that perhaps the risky activities they take should be taken into consideration. do you have a preference, whenever you look at designation that shouldhether be size or whether it should be based on the risk of the activities? i think size is one of the characteristics that suggests risk but certainly not the only one. you could have a large institution that is very well capitalized and entirely safe and you could have a medium- sized institution that plays a role in the financial

marketplace that is far in excess of its size and creates more risk. i think it has to be a balanced approach. >> i appreciate that, because i think that is the direction we need to go. following up on the chairman's question, regarding the kinds of questions the irs should be able to ask the citizens with regards to compiling tax returns and investigating their activities. are you intending to go through the types of questions that are on some of these forms to try to win no out some of these unnecessary and very actually obtrusive questions with regards to getting into the private lives of individuals? of theink that in terms facts we have seen in regards to this set of determination on the -- they's political it clearly went to an unacceptable place and i make clear we need to fix it. it will be the job of the irs

commissioner to take the lead on that. something i will continue to pay attention to, being respectful of the line between treasury and irs and not reaching into the administration of the tax system because i do think it would run the risk of politicizing things in the way it should not. thisll you take them message this afternoon when you talk to him to say this was brought in our committee today, that the kinds of questions you ask are more than intrusive and there needs to be a streamlining of this process to get back to your finding out the facts -- , i will share the message, and my own view is we should only ask for the information that is necessary, and not more. >> thank you very much on that. following up on a thing of fsoc.n to me regarding your organization has the responsibility to respond to emerging threats to the

stability of the united states financial system. i fail to see in they report recommendations on things that to actually minimize those threats or find a way -- in the future. the london whale, i fail to see where they promulgated new rules. the qe program, nothing that mentions that. at what point are you going to support winding it down? are you going to continue to support the quantitative easing program? my concern is, in response to some of the questions, you said it needs time. ofthe secretary, it is kind like a doctor waiting for the cancer to take over the patient. >> briefly, mr. secretary. >> i think if you look at the report and the recommendations, it identifies the areas fsoc believes of greatest risk. it

lays out in the next year things we should be looking at and it should be in involving list. take wholesale funding. that is a big risk. i think we do identify the big systemic risk. >> the chair recognizes the gentleman from minnesota, mr. ellison. >> thank you, mr. secretary, and the chair and ranking member. i just want to make a comment. first of all, whenever you are dealing with institutions that involves human beings, things go wrong. something went wrong with this situation. probably onwho is the liberal end of the political spectrum, i don't like the idea that some tea party people got more scrutiny. i wanted even. but i will say this, the president announced of this, you have publicly disapproved of it. there has been an apology issue -- which is shocking, because

you never see that. i think somebody ought to at least say there has been an apology and the president has promised to make sure steps will be put in place to not have it happen again. i just want to say that because i think that the truth is, you can't take the politics out of politics. no doubt somebody will try to turn it into election gold, no doubt. but i think it should be our interest in this body to make 401c4hat if you are a organization that you are in fact are a social welfare organization and if not you cannot get the exemption. there was more scrutiny on some of the tea party groups, but as i read the record in the press, they all got it. that does not excuse anything, but it does mean to me that there are groups of various persuasions that are applying for this kind of exemption that should not be getting it because they are not actually

social welfare loops and are political in nature. i am hoping -- that you ensure that is not a political test, but anybody actually trying to election year should not get this as a nation. just want to say that. >> congressman, i totally agree be no bias, there should be an even standard. i am not aware of any bias in favor of groups on the other side. if it were the case, it would be wrong. has to be an evenhanded unbiased system of administrating our tax code. you just want to say that all said you are going to do something and i trust that you will. please, keep it up. i have a question of kind of a particular nature. president obama's last three budget submissions, the treasury department requested congress to enact legislation service businesses to

share information. are you a where -- aware it is happen? >> i am generally familiar. -- unanimousimous consent the financial crimes budget request for fy 2014-20 -- with no objection. last month, mr. paulson, my good friend from minnesota is no longer in the committee, i introduced the money remittances improvement act. it incorporates the request. i am eager to see the bill passed. my hope is it increases availability of affordable remittances to people in somalia, because i have a large community from that region. in minnesota, we have about 33,000 somali americans and they need to send money home. of course, we want you to protect the public from people who inappropriately used the money system.

but i believe there is no better foreign aid than remittances and i hope the treasury recommendation -- recommendation can recommend and help streamline the regulatory system. i just want to add this. some bankers in my district have told me that the accumulation of regulation makes it expensive for them to facilitate these wantactions, that they do to facilitate. u.s. bankers have agreed to try to make a way to do it. at the end of the the day, streamlining and consolidating some of the auditing would be helpful. without objection, the gentleman's materials will be entered into the record. >> we would very much hope some form of the provisions we proposed, similar to the proposals you have made, are included in the legislation. adding the balance right is very important. making sure we screen out , fornts for bad purposes

terror finance, is critical. but having a system in place that remits legitimate remittances, either state or federal law that ensures that, would be very important. the chair recognizes the gentleman from wisconsin. >> thank you, mr. chairman. mr. secretary, thank you for being here today. when did you become aware that allegations the irs was targeting conservative groups, when did you become aware that targeting was going on? >> congressman, i testified several times a day yesterday on this and i am happy to do it again. i learned of the fact of an investigation was underway march 15 but i did not know any of the details. >> i want you to try my question -- you are aware there is a scandal going on right now in washington about the irs

targeting americans. you are aware of the scandal? >> i have been testifying on it for two days. >> regarding the scandal, when did you become aware that the targeting of groups was going on? >> i just answered your question. >> you did not. >> i first saw the report a week ago. >> i am not talking about a report. when did you become aware, and your capacity as the chief or any other capacity, that there was targeting going on of americans? not asking about a report. not asking about the ig. when did you become aware there was targeting of americans from the irs? , i had no fax that i was in possession of -- >> i did not ask you that. when did you become aware of the irs was targeting americans? >> i was notified -- >>-- >> that there was an investigation underway. lew, i am not asking you

about an investigation. i don't care. i know you find out about the ig investigation on march 15. everyone knows that. that is not my question to you. my question is, when did you learn that the irs was targeting different americans because of political views? congressman, i had no knowledge until the date i was describing. people can make new all the allegations, but i had knowledge only -- >> the first time you knew about the targeting of americans from the irs is when you read the ig be bored. that your testimony? >> you asked me when i knew, and i answered when i knew. >> you did not answer the question. i am asking a specific question that you and our president has dodged. the president's testimony, he received the same question and

what he said, let me answer specifically. i learned about the rgb port on this date. i am not asking you or the president when you heard about the ig report, but i want to know when you learned the irs was targeting americans? when? >> i am telling you when the facts were available to me. >> outside the ig report, that i amhe first time -- asking you when did you learn that the irs was targeting americans? when did you learn it? not asking you a specific fact, not about the ig --when did you know the targeting was going on? >> you are not going to like my answer, because i learned about it when i learned about it. >> i did not know about the investigation -- >> i am not asking about the investigation. belongs to the gemini

wisconsin -- >> i would ask the witness not be bad to. >> i would ask the witness answer the question. >> i am answering the question. >> you are dodging me. the bottom line is, you knew before the ig report came out that the irs was targeting americans? that is why you are answering the question the way you are and that is why the president -- >> mr. chairman, regular order. >> the time belongs to the gemini from wisconsin. >> let's try it again. when did you learn that the irs was targeting americans? >> congressman, i said so many times that it is unacceptable behavior and i learned march 15 that there was an investigation without facts and i heard the fax friday. >> i reclaim my time. it is evident you knew before march 15 because you keep

answering my questions as you do not want to lie to congress -- that you knew about an investigation. >> i did not have any fax until the date -- >> i am not asking you about facts. lew,did you learn, mr. that the irs was targeting americans? give me a date? >> i learned about this in the dates i told you about. >> that americans were being targeted or the ig report? >> i am not aware of any of these facts until the date i told you about. >> the time of the gentleman has expired. the gentleman from california. >> secretary, take a deep breath, you have earned it. >> i want to focus on a different tax gamble since, different tax scandal, our failure to collect taxes from a multinational corporations. s, just the apple

on top of the iceberg. it appears as if they have less than four percent of their assets, less than four percent of their sales and less than four percent of their payroll and the republican national public of ireland but have 65% of their profits attributed to the emerald island. tax is damn effective accounting. forward by the chamber of congress is we are just never going to be able to tax multinational corporations, u.s. corporations that earn money abroad are just never going to be paying taxes in the united states. and we should not even try, just let them repatriate the prophets, because we do want the profits repatriated. -- and i doproach not know if you are familiar, the approach california took for many decades, the worldwide unitary approach.

i wonder if i can count on you and your staff to take a look at that. you can be hated by the chamber of commerce, but you may achieve that on your own. and others. but it is actually a system that evadeannot even aid -- and will allow us to collect taxes on the appropriate percentage of worldwide income of all the multinational corporations that do business in the united states. >> congressman, if i could, and briefly. when we laid out principles of tax reform last year, we tried to address this issue in terms of -- approach. we see business tax reform as being very important to lower statutory rates and make the united states a more place to have

businesses call home. but it is also a way of addressing this issue. what we would do is we would put a minimum tax in place -- somewhat of a hybrid system, you pay a minimum tax, then you can repatriated with no tax above that, if you pay the minimum tax on your foreign earnings in the first instance. .here are some other ideas we have something of a hybrid system now and this would make it a little bit more closer to what you describe. unitary systeme is completely different, i think, than what you are is -- describing. it is a system that california ultimately made optional because we face such incredible pressure from the worldwide business community. -- more influential and this auditsliminate the 482 and shenanigans and

substantially increase -- i think the best deficit -- estimate is $1.2 trillion the next several years. i know you spent last year trying to produce 1.2 trillion dollars from many sources over a 10 year period. tax issue that is being discussed here -- i always wanted to be on ways and means end the 10 day hearing voted -- on tax issues. 501(c) four can spend unlimited amounts of secret money influencing federal elections but they are subject to certain limitations. will ande that we force those limitations as the law requires no matter how politically difficult. at the same time, we've got to do it, obviously, impartially. now, when a ship sinks out of negligence, you might be in quat -- inclined to fire the admiral of the fleet, but the captain of the ship and even the officer of the deck should

have affect on their careers. do you need additional narrowly crafted legislative tools so that those who are not presidential appointees of the irs, which is everybody but two, can face appropriate personnel action for the mistakes made in this case? , obviously the rules that governed the treatment of federal employees are the same for most agencies of government. it is a broader question than just -- just change -- only in the irs that you have a circumstance that many top managers are civil service. the question is -- i askedf the things the new acting commissioner to do is to look at questions, structural organizational issues, to see what changes we need. i do not want to jump to a conclusion not having had the view but i am happy to look at that. >> the chair recognizes the gentleman from north carolina, mr. mchenry. >> thank you, secretary lew, for

your service to the government. back to the irs question, a few more questions. when you are white house chief of staff, i assume you are just as then as you are today. is that fair? returning to the scandal within the irs, the irs targeting conservative groups. >> i was not aware of the issue -- of this investigation or of the facts we have come to know. it was not on my radar at the time. >> you are not aware of the ig audit at the time. auditearned about the march 2013. >> were you aware of an internal investigation of the irs prior to that? >> no, i was not. >> you as chief of staff, did you hear news reports about the irs targeting conservative groups? >> i was not aware of any facts

at the time -- >> i am asking a separate question than you are answering. i have heard the answers given prior to that. i do not want to talk over you. what i do want to restate the question. at the time you were chief of staff, did you read or hear of the allegation that the irs was targeting conservative groups? >> i do not recall paying attention to this issue -- >> no, no, i understand. paying attention is one thing. -- i do not recall any articles that i read on the subject. >> ok. ok. you don't recall anything. could not have pursued any allegations. >> if i did not recall having done it -- obviously one has to have -- >> imf in -- i am asking a question --

>> if i were aware of there being something being investigated in this way at the agency, i would have stayed out of it as chief of staff. >> just to be clear, you would not have picked up the phone and called chicago and say, by the way, just to put it out there, we are in a presidential election here, we have a scandal let meirs -- hold on, finish -- you would have picked up the phone and say, this might be a political issue that the president might have the answer, and i don't know, a presidential campaign. this is something fairly common to where the chief of staff communicates with the campaign, i assume. to ask this question is not absurd, sir. andf i was not aware of it had no conversations at the time, you are creating a narrative that does not exist. >> but you did that on other issues as a good chief of staff. this is not new. , many deal with many

topics with many, many people, but you are asking me about a specific subject. >> if i could just say -- >> you created a narrative -- >> my time is limited, sir -- >> you should give me at least 30 seconds to respond. >> sir, you have not actually responded to any of these questions in a meaningful way so 30 seconds will not actually apparently mean anything because you are reciting the same lines over and over again. while you were chief of staff, did anyone at the white house or in executive office of the president suggest the irs or treasury, that irs should focus additional scrutiny to conservative groups? >> not that i am aware of. >> ok. we are just asking to understand how things pan. while you were chief of staff, did the white house or executive office meet with or communicate with members of congress regarding these letters that members of congress sent on the left is a target conservative groups on the right, raising

concerns about the targeting of conservative groups? >> not that i am aware of. .> not that you are aware of to remind you, sir, in march of 2012, the associated press and "the new york times" ran stories about this allegation. you were then chief of staff at the white house. it'd your testimony here today that you were never aware of those allegations raised in those two news organizations? >> i already testified, i have no recollection of it. shulman ofmissioner the irs testified before congress in march of 2012 and these questions were posed to them -- him he said "there's been a lot of press about that." your testimony today at white house chief -- chief of staff is you did not know. is it malice or incompetence? >> if you just give me the 30 seconds i think i deserve to respond. >> it would be inappropriate --

i asked unanimous consent the gentleman cap -- have 32nd. seconds.0 >> the time of the gentleman has expired and the chair will take the liberty of without objection offering the witness 30 seconds. >> thank you, mr. chairman. objected.an has the chair recognizes the gentleman from massachusetts, mr. lynch. >> mr. secretary, first of all, thank you for your willingness to -- why not i yield you 30 seconds and you can finish? >> i think the fundamental issue here is, there is a separation in the administration of our tax system so it is supposed to be insulated from political involvement. it would be inappropriate as white house chief of staff and

secretary of treasury to try to put any little pressure on our tax system. i never did, i never would. that is why i did not pay an awful lot of attention over questions about the taxes because it is not something i would have intervened in. there is intentionally a separation so the the tax system will not be biased. i think what the president has made clear and i made clear is this behavior is unacceptable, we have to find out the facts, we have to take action and we have to make sure it never happens again. but, please, let's not get into a world where we start having the white house jumped into the administration of our tax system, because that would be h you're well worse than the disease. >> thank you. just think the circumstances here have sort of politicized it anyway. when the irs conceded the fact that they did use political terms such as tea party and patriot and any group critical of how the government is being run.

those are the standards they were using. i guess the circumstances invite the kind of accusation. moreld like to ask you about what we have been doing in this committee. two weeks ago, this committee passed a set of bills amending title vii of dodd-frank. i believe those provisions undermine the reforms to the over-the-counter derivatives market we achieved in in dodd- frank. gao report estimated the cost of a financial crisis was about $22 trillion and the ok can largely unregulated derivatives market was at the heart of the crisis. aftert even five years the dark days we are in this committee, i believe, planting

the seeds of the next crisis. and before any of the regulations mandated under dodd- frank to reform the derivatives market have been finalized this committee has passed what are being car technical fix bills to prevent the reforms from ever happening. that the former chairman sheila bair talked about the original push-up commission -- provision of 716, and mr. secretary, i know you sent a letter prior to the committee's markup urging us not to advance the legislation, calling it premature, disruptive, and harmful to the implementation of key derivatives reform. and you explain why these bills, in your opinion, are disruptive to our economy and meaningful wall street reforms? >> i think it is important for

regulators who have been given authority to implement the provisions and for that process to be completed. some of the concerns are actually going to be addressed to him as i understand, as roles are forthcoming. is all, but the legislation premature because we have not yet had the opportunity to complete the process. the first two years of dodd- frank's history, the fight was should we repealed or implemented. it slowed down the implementation process and then at the end of two years there were concerns that there was uncertainty because the roles were not yet in place. our first responsibility now is to make sure we get all the rules in place, get the certainty and we are now at the point where the financial industry that actually like us to complete the legislation. we just need to finish the work. regarding the

entire implementation of dodd- frank, really keeping the pressure on all of the different 40s -- parties as chairman of fsoc to keep making progress. i cannot say exactly when is completed but well underway and we will make progress this year. >> i see my time is just about expired. i yield back. >> the time of the gentleman was about to expire. the chair now yields to the gentleman from michigan , mr. huizinga. >> i appreciate, mr. chairman, and being here. maybe we can use a slightly different section of the briefing book and hit a few other issues. i was hearing your answer to my colleagues about implementation and the uncertainty being out there. i got to tell you, i don't buy it. that thisty clear

administration would veto any attempt -- as much as i would like -- i would desire and nominating dodd-frank and starting over and fixing it in a different way, it seems to me this administration would be pretty clear on a veto message on that. how in the world it would stop you all from implementing the rules. is probablyit because this monster is so massive and has so many problems with it that you realize you cannot go in and implement it the way it is currently written and frankly two weeks ago we had nine bills that moved through and all but one were on a bipartisan fashion fixing derivatives. last year i had a bill signed into law by the president that was fixing an issue with the cfp bm privacy. cfpb and product -- privacy. we had a hearing on conflict minerals. these are bipartisan fix is

trying to address this problem. and i will know that you sent a letter opposing all nine of those bills that were passed. again, eight of those nine were passed in a bipartisan fashion. how you could blame congress or one side of the aisle or the other for a lack of progress seems to be a stretch to me. you had mentioned on libor, and your quote, you i wrote it down, you said a tremendous violation of trust. i think you are sensing a lot of frustration, not just here but the general public, there is a feeling and frustration that there is not trust and things have been politicized in the budget process, and the regulatory system. one thata specific just came to light to me that i thought was interesting. not underow it is your current bailiwick, but give

me insight, if you could. fasb, all the regulatory advisors and those kinds of things, they are subject to sequester. under section 10 nine of sarbanes-oxley, it distinctly says these are not federal dollars. these are user fees that are coming in and fees paid into these organizations him and the frustration is it seems as if any time of this administration has come to a fork in the road and the one direction is making some very tough summit difficult decisions -- i understand it. we are having to do it in our own personal officers -- offices, personal lives. every business in america i am aware of is having to make the tough difficult decisions, making it work, or politicizing it and trying to make it painful. it seems like the administration is gone but the painful route. setting down the white house for spring break them faa, what ever it might be.

just to give you a little sense, that is the sense of frustration. i know it is sort of an archaic element and you may not a specifically aware of it, but andtheomb would come in tell these organizations they are somehow subject to sequester? >> i can't address the specific facts around those decisions, but i do know omb has been calling the issues on a straight basis. you either do or don't get covered. the real problem is the sequestration was designed to be a bad policy to force congress to act. so, no one should be surprised -- >> by the obama white house -- point out some of your colleagues section 109 of sarbanes-oxley. my background is real estate. i, too, am baffled as to what fha continues to work

with a cold is. there has been radio silence, other than the white papers, on this administration of what we are going to do and what direction we will go with our gse's. that, in my mind, needs to change. take 15 seconds if you want to address that and what we are going to do. >> i do not know if i can do it in nine sections. -- in seconds. it is an important subject. >> how can you claim you have been working with us, when you have not been? saved by the bell. ok. also curious.s the time of the gentleman has expired. i wish to alert all members that an agreement with the secretary's schedule, i believe we will be able to clear for more members and then we will excuse the. the gentleman from colorado is recognize. >> thank you, mr. chair. thank you, mr. lew.

you stayed cooler under fire than i was a moment ago. i want to thank my friend, mr. lynch, for granting you the 30 seconds to explain your position because i would have given you the 30 seconds. i think this committee is that her than the badgering i have seen you undertake or you have had to face today. so, let's just talk, since we talked so much about 501(c), i think we ought to read what 501(c) 4 says. an organization described in section c or d shall be exempt from taxation under this exemption isuch denied under section 502 or 5034. civic leagues organizations not organized for profit but operated exclusively for the promotion of social welfare. local associations, employees, membership of which is limited

to the employees of a designated person or persons in a particular minister pahlavi. net earnings of which devoted exclusively to charitable educational or recreational purposes. so, the irs has an obligation to look at exemptions that people request. most people are paying their taxes. most americans are out there paying their taxes, but there are certain people who seek exemptions under 501(c) 4, but they have to be scrutinized. they have to be scrutinized impartially, but they have to be scrutinized. there was an article this weekend on the "denver post" saying the colorado conservative targeted isd to be operating without any tax- exempt status and spent more than $1 million last year against the democrats, public records show. i was one of those democrats. that was the recipient of some

of the ads apparently of this organization. by "the post" this weekend by curtis hubbard, i want to read one section. so-called 501(c) four social welfare groups have increasingly been -- been putting money into political campaigns. spending increased from about 40 million in 2004 to upwards of $150 million in 2008, according to the central -- center for responsive politics. but the real boon came after the supreme court's citizen united ruling in 20 10, as the group's campaign spending soared beyond the 300 million in 2012. much more is believed to have been spent of the groups are only required to restore it on spending in the 60 days leading up to the general election in 30 prior to a primary. 4 nonprofit social welfare organizations are

simply friends for political operations that provide anonymity to donors and with anonymity comes a lack of accountability. so, the irs, in my opinion, whether an exemption for this or some other kind of exemption, has the responsibility on behalf of the taxpayers to look at these things. do it him partially, obviously. that has been much of what the conversation has been about. but this typically here, when it talks about civic leagues or organizations operated exclusively for the promotion of social welfare. not for political purposes. so, despite all of this tempest we are in right now, sir, i would ask the irs continue in an impartial way to look at these particular exemptions. point onis just my that. i think one of the reasons we are so off on this subject is because since barack obama took office the stock market has doubled them a unemployment has dropped, inflation is low, real

estate is selling, so let's not talk about those things, let's talk about this, this potentially to people in cincinnati in the let's devote all of the time to that. one of the things that came up last week that particularly disturbs me is a bill the republicans are pushing which prioritizes the country's debts. the country has, since its inception, paid everything equally. start want to prioritizing, which means we are not going to pay somebody. i hope, mr. secretary, under your watch, we pay everybody. i would like you to comment on that bill. ,> i could not agree more there is no distinction between the faulting on one or another obligation. if you are in default, you are in default and prioritization does not solve the problem. you need to extend the debt limit. >> thank you. >> the time of the gemini

expired and the chair recognizes the gemini from new york. -- the time of the gentleman has expired. >> thank you, chairman, mr. secretary, for being here today. i know it is contentious and not an easy day for you. but i am going to start with going back to it and let the area and then will move onto other substantive issues. -- when is the last time you spoke to the four individuals testifying in the other committees today -- russell george, rolen and showman? with loisnever spoken met with russell george several weeks ago and i -- my deputy, i see him every day. i have not seen doug shulman since sometime before he left the irs. >> the few conversations, was anything about the testimony or the situation, the scandal? >> i have testified already

and for mel george there was an audit underway so i spoke with him about it then as he reviewed a number of pending -- pending matters. he did give me a heads up it could be troubling but i did not know in what way. i have not spoken with him. he may have been in a staff meeting after that, but i have not spoken with him since. >> you clearly testified you did not want to get involved in an investigation, and i think that was the proper and work -- prudent policy to have. , there were people in the white house that knew there was an investigation, knew there was a problem. there were people in treasury that new prior to you and the president finding out. in retrospect -- again, not saying you had to take action -- but do you think you should have been notified that there was a problem? >> congressmen, i really believe

that on a matter like this, the general practice is the right one, which is the secretary is not brought into the conversation on an ig report until there is a final report. >> if i may, mr. secretary. but prior to the ig report, wasn't there an internal investigation at the irs? obviously while i have been a treasury there has not been anything -- >> i am asking in general, now that you are secretary, what is your policy going to be? you have a new commissioner you spoke about. >> i will be meeting with the new commissioner this afternoon. >> would you be telling the new commissioner that if something like this arises, you want to be notified? >> just to be clear. the general matter, the

secretary needs visibility of the general management of the irs but the treasury secretary for all kinds of appropriate reasons does not intervene in the administration of the tax system. there is a fine line. it very important to honor the line. >> i am specifically asking you that if there is a problem, something that arises -- this is probably one of the biggest candles in the history of the irs -- are you going to advise your commissioner that it is your policy that if there is a major problem going on, you want to be advised? does not mean you take action because maybe for political reasons you would say, just as the paternal -- attorney general did with mr. corzine, you re-create -- recused himself, but he knew what was going on. >> if i or the president had known some of the fax earlier, you would be asking what did we do? it would -- it is a fine line -- >> i agree. >> i think we will have to work our way through an agency like the irs, a delicate balance being part of treasury and

--ependent >> i am just asking you. i am not saying whether it is good or bad. i am just asking what your policy is going to be now that you have a new commissioner. in light of what happened, what would your policy would be? accountablethe irs and make sure the irs holds people accountable for their behavior and to make sure we find out what happened here in terms of the break down and management and communication of the irs, and to look to see whether there are's -- systemic problems. i will work with the new commissioner to make sure i have visibility into that which is appropriate but i will stop short of intervening in the administration of the tax system. move on, but again, intervention is different than knowledge. i asked if three or four times. you just will not answer the question. that is fine. we will move on. i am hearing about the treasury is thinking about floating variable rate notes. i have a big problem with that. is that true, first of all, the treasury is considering floating variable-rate notes?

i just wanted to double check. there is a proposal that is out from several weeks ago. >> my time is expired. >> the chair recognizes the gentleman from delaware. , mr. chairman. thank you for having the hearing and thank you, mr. secretary, for coming in and for your answers to the questions. i am going to try to focus -- first, a comment about what you said. as a former secretary of finance at the state level, the responsibilities include taxing the station and i appreciate your hands off approach to that administration of taxes and understand why it is necessary for the political appointee in a place like treasury where i served. i would like to ask a few questions about your role as chair of the fsoc. the first one is, we hear a lot -- we hear it in the committee and from folks on the other side of the aisle and from

people who come in the mud that too big to fail still exist. what would you tell folks who say that? think thesman, i challenge we have is to be able to get to the end of the implementation of dodd-frank and answer the question by saying too big to fail is over. that is what the policy of dodd- frank, our policy in implementing dodd-frank. we are not yet at the finish line. take aenge -- if you snapshot today and look ahead. if you look at the debate that has taken place over the last number of months, there are different approaches to what additional actions are needed. there is authority in dodd- frank to turn the number of dials to different levels in terms of capital requirements, leverage requirements and until that process is complete it will be a little challenging to answer it in the present tense. i certainly hope and intend the answer to be too big to fail is over. >> our former chair and ranking

member, mr. frank, would argue orderly liquidation authority effectively and too big to fail -- >> it makes it so we do not have the authority to do it. .> right second question, you have been after little bit about housing finance reform, and your report talks about allowing the gse's to wind down and tried to get more private capital into the mortgage market. we a few weeks ago had a presentation here in committee by a guy by the name of jim milstein whose work with on the details. there was a paper reported to the committee about a year or two ago that described at a very high level three options. put the meatein on the bones of what was option number three, a hybrid where there would be more limited guarantyaw, specific

reinsurance actually like the fdic. have you seen that proposal question mark if you have, what did you think about it? myi have seen it and asked staff to do an analysis of it. we are in an ongoing process working through what the next steps should be, and we welcome the contributions. >> i would love to see your staff analysis of the concerns and issues of -- raised. it is very intriguing to me. i met with mr. milstein and his staff, he was here in front of the committee, and it seems to work out. basically option three, included in the treasury white paper a couple of years ago. >> the challenge as we go forward will be to strike the balance so we maintain access to mortgages, 30 year mortgages, and avoid having -- back in the place where they fell back on an implied guarantee created the financial crisis. ,> that was exactly his advice

to be careful about the transition to where we are today. more than 90% of mortgages being federally insured, which is a really had situation. >> indirectly -- .> lastly last congress, i sent a letter signed by other members encouraging treasury to be a little bit more aggressive with foreclosure prevention programs that you have. the one most affected in our state, the state of delaware, is hamp. our local officials at the state housing authority have used it, and it has been very effective in helping people keep -- key people in their homes. i would encourage you to do that. resend the -- to lever -- r talk to your staff on your approach to foreclosure prevention. havengressman, i think we made progress but we still have a lot more to do. harp haveth hamp and

done a lot of good directly but also indirectly created a set of practices that the private sector has stepped into. millions of homeowners be able to refinance or restructure. we have more work to do. we've got to take advantage of this time a when interest rates are low to make as much progress as we can for middle-class homeowners. >> thank you very much. look forward to hearing more about it. >> the last member to be recognized will be the adjustment from indiana, recognized for five minutes. >> iq, mr. chairman, and thank you, mr.lew for being here today. -- thank you, mr. chairman, and thank you, mr. lew for being here today. this audit started a multiyear ago. you were chief of staff at the time. i hope that you will give us confidence as we move through this and as more details come out that as the leadership of

the white house -- that if this is one of the biggest scandals that this administration or the irs is dealing with, that you should have known about it. leadership expects to know what about these things, and if you say that you only knew of the facts on march 15, i hope that you are asking the people below you why did and i know about this? thatse i read in a report you said you were outraged when you heard of the fax. if this is the biggest scandal this administration is facing, you should be outraged, and i would hope that somebody below you is going to face the consequences because leadership really should step up and find out why i didn't know. now, i would like to talk a little bit about what we see on .he wall here on the debt clock mr. secretary, march 13, the president said we don't have an immediate crisis in terms of

debt. in fact, for the next 10 years it will be in a sustainable place. under president obama's budget proposal, can you tell me how long it will be until the budget balances question mark , i think, as you know, the budget does not balance in the 10 year window and it is not what he went -- meant by sustainable place. it would bring the deficit as percentage of gdp and debt as a percentage of gdp act in a sustainable range. if anything, we are overachieving on deficit reduction right now given where we are in terms of the current year and immediate economic needs. so, the goal should not be to balance the budget right now. the goal should be on a path where we have sustainable -- >> what year should be our goal? isi don't think the year most significant. i think the path we are on is most significant. ,> for my 11 and seven-year-old when can they expect the federal government to balance the budget? >> i think the test is are we

building an economy for the future, are we running our fiscal policy so that we have a deficit and a debt that is sustainable and are we addressing it in a fair and balanced way. the president has put together a budget proposal to do that -- >> are you suggesting we raise taxes to balance the budget? of spendingx reductions and loophole closings that would give us the ability in a fair and balanced way be on a long-term path to fiscal sustainability. >> we have already raised taxes that i want to talk about what really i think is holding up the economy, and that is the health care law. as i talk to folks around northeast indiana, they consistently say i don't have any certainty. i don't know what is going on. it lays right back into irs issue because of the irs -- it is going to be one of the main agencies of administering the healthcare law. is that correct question mark, it is one of many -- is that correct? >> it is one of many but hhs

will be the main. be involved. will do you think the confidence in the irs -- as they administer and start to roll out the healthcare law, will it be increased at all or more skepticism? and over said over again that it is a top priority to restore confidence in the irs -- >> the you know sarah hall ingram? "washington journa >> she was head of the taxes and office during where we understand the targeting of americans and now she will be the head of the rolling out of the healthcare law. should you know her? >> typically i deal with treasury staff that deal with others with the irs and policy matters. but if i can correct the fact that just described, my understanding -- and fax matter and we have to make sure they are correct -- her response abilities at the time during

awareness when this was known was working on the affordable care act. >> so you know of her then. >> i know of her. >> do you think it would be appropriate for her to remain in the position as now head of the rollout of the healthcare? >> if the facts are she was not in the position -- the vision taking day-to-day responsibility of this at the time in question, then the question is, is she doing her job on the affordable care act effectively. the new acting commissioner i am sure will look at that. >> i can tell you, the american people are not trusting of this administration right now. >> the time of the gentleman has expired. i would like to thank the secretary for appearing today. thank him for testimony. without objection, all members will have five legislative days in which to submit additional written questions to the chair, which will be forwarded to the witness. i would ask our witness to

please respond as probably as you are able. without objection, all members will have five legislative days within which to submit extraneous material to the chair or inclusion in the record. before adjourning pursuing to the -- mr. ross is transferred from the subcommittee on oversight and investigations to the subcommittee on housing and insurance, and in pursuant to the organizing resolution mr. rock is appointed to serve on the subcommittee of oversight and investigations and subcommittee on financial institutions and consumer credit this hearing stand adjourned. [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute] >> up next on c-span, "washington journal" as life. then live in the house. ,nd about a half-hour

congresswoman niki tsongas, member of the house armed services committee. and in the chairman of the house judiciary committee, bob goodlatte great -- bob goodlatte. ♪ four americans have been killed by drone attacks since 2009 according to attorney general eric holder. the president will address drone in a counterterrorism speech platforms.on c-span we want to hear your views this morning on u.s. drone policy. this morning on the "washington journal." (202) 585-3880 four democrats, (202) 585-3881 for republicans, and (202) 585-3882 for independents. you can also make, and on our facebook page, facebook.com/c- span