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can you tell us what kinds of in the might be contemplation on that front? and you, mr. chairman. rates arerence interwoven into millions of financial transactions on a contractual basis. we need to have reference rates that are reliable and not subject to manipulation. is not in that status at some point, we need to have an alternative to go to. working with the international financial regulatory agencies and working with market participants in developing an alternative is critical because do not -- even if you

have to ultimately move to another reference rate, there needs to be another one available. >> the time of the gentleman has expired. our chairman emeritus is recognized for one minute to speak out of order. >> thank you. today, the staff of the house of representatives loses one of its most valuable staff members. i think we all know and love boring try and who served as the , a very diligent and informed individual. in tribute to him and all the valuable work of our staff, both on committees and our personal staff, i would like war up andarren to stand take about. -- a bow. [applause]

i appreciate that, mr. chairman. the chair recognizes the chairman emeritus for his five minutes. lew, the gao and many press reports and articles have criticized the secrecy of the fsoc. there was an article in the washington paper where one gentleman heading up a nonprofit with liberal leanings said the proceedings made the --itical euro -- po9litiburo politiburo look open. the council does not transcribe its meetings. is that correct? >> minutes are kept. >> would you commit to

transcribing the meetings at the gao as recommended and releasing those transcripts with appropriate reductions after a certain time, as the fed does. >> mr. chairman, i think the fsoc matters that range from company specific proprietary information to broad policy. >> i understand appropriate reductions. the fed read acts -- redacts confidential information. moved andhey have policy areas, it has been open in taking comments and giving notice. in the area of the money market rule recommendations to the ftc, they have been open for comment, -- >> would you commit at least two following the same thing that

the fed does about relation those transcripts? >> i would have to go back and look. >> thank you, take a look at that. that is all i am asking. fsoc does not keep transcripts, and i do not even think they keep minutes of their staff meetings or subcommittee meetings or the committee meetings. that is where most of the work is done. would you commit to transcribing those minutes -- transcribing those proceedings and keeping minutes of those meetings. of practicesare were meetings like that are normally transcribed. the challenge of working in comforted areas involves many meetings. i'm happy to follow up with you on concerns you have. >> i think most minutes -- as you know, this is one of the most important committees or in response to

financial crises. i think it is important from unrestored basis. >> congressional staff need to draft important legislation. there are not minutes of that either. i think it is a competent a question. >> take a look at what the gao recommends and the statutory in which which encourages transparency. see if you cannot give us some assurances. thank you. let me ask you this. you have been questioned about this irs thing. a be onknow there was the lookout list that included tea party, patronage groups, and 9-12, which was glenn beck's group. it was maintained since 2010. in 2012, the report -- quite a bit of press reports about this. it is my understanding inmate that several people were

briefed. but then as chief of staff at the white house, you were briefed in june and alerted by mr. george. >> my first conversation on this with russell george was march 15, 2013 after i became treasury secretary. >> are you aware last friday he testified that he briefed you? >> testified that he briefed me in march of 2013. >> he says the talk about may and june of 2012, "i alerted commissioner douglas shulman on may 30 and subsequently alerted the general counsel join forces and subsequently alerted the deputy secretary neal wolin about this matter. and then upon the assumption and into the position i mentioned it to secretary lew." >> that was march 2013. i was confirmed on february 27. it is important to note that the fact the ongoing audit was not a

secret. it was publicly posted on the inspector general's website. >> it was the subject of numerous newspaper articles. >> there was just the fact of the audit being undertaken. >> there was specific information that even democratic legislators have leaned on the administration to conduct investigations. >> the time of the gentleman has expired. the chair recognizes the gentlemen from new york. >> thank you, mr. chairman. i want to finish off where i attended on my opening statement, because we've got to make sure that we tighten up. i want to make sure that we don't lose the fact that some people abuse their tactics and status. i stated i had a specific example in mind and i talked about not only the 501 (c)(3) exemption required to be tax- exempt under section 501(c)(3) of the internal revenue code, an organization not attempt to influence legislation and may

not participate in any campaign activity or against any political candidate. 501(c)(3) is supposed to be more confined. i of a fund-raising letter from a 501(c)(3) organization. it's as a " i'm writing to ask for your help. we want to finish him off. let me explain why this is important. barack obama is president. the democrats controlled congress. your gift would allow us to show that the empress nancy pelosi has no clothing. soon barack obama will have to take a stand. your gift would help us expose the bureaucracy of barack obama. so is this ok for 501(c)(3) organization to send a fund- raising letter like this? i hope that in the face of the very real need to prevent any future overreached in targeting by the irs that we don't lose sight of the important role of the irs in answering questions like these that are also at the

heart of public trust. with that i will go to the issue at hand. i just wanted to make sure to let people know that the irs has oversight over this and it's important for all the people to make sure that once you get the 5013 c or 501(c)(4) designation, they should still oversee those organizations to make sure they don't overstep their bounds. going to fsoc and the issue and hand, as i stated in my opening, i am encouraged to hear that while you have stated that there's a need to and implement dodd-frank quickly, you also mentioned the need to look at the system as a whole. that by crafting rules that are more tailored to institutions rather than a one-size-fits-all regime. so i am asking what are your thoughts on bifurcating bisal 3 in order to make community banks more secure by establishing a single cap ratio applicable to community banks in order to

allow them to operate more effectively for our economy? >> congressman, i think that the rules that are being worked on now by the federal reserve board will in all likelihood, based on public statement being made by members of the fed, reflect the differences in risk in some ways. so there are capital surcharges for very large institutions already. i don't know where they are going to set the rates, how they are going to address it. but i think there are important differences between small and large institutions. the thing we have to keep in mind is small and medium-sized banks are not without some element of systemic risk. and we are all focused on the financial crisis of 2008, and the 1980's the financial crisis was a savings and loan financial crisis.

so i think we have to look at risk of not just as a question of size but as a characteristic of the activities and exposure. we are very much aware of the fact that community banks play an important role in all of our states, in all of our communities. i think that the law reflects that. and i think the regulators are attentive to it as they are writing their rules. it is difficult for we to address how they will not exactly be taken into consideration, but i know there's an effort to do so. >> also, yesterday you mentioned that 3 would be a force as opposed to a ceiling. how will the implementationit pull up global standards everywhere, thereby reducing the risk that the united states faces by undercapitalized

institutions around a role? >> we have made a lot of progress since the financial crisis in terms of putting liquidation authority and resolution authority in place. there's a lot of work to be done. our financial stability is connected to the financial well- being of institutions that are regulated in other parts of the world. it has a lot to do with our ability to address some of these cross-border issues. we will not lower our standards to some other standard. we're going to have to have the world standard at a higher level. we're working in the g-20 and in other bodies to try to bring world standards up. basal 3 is a piece of that. >> the time is expired. the gentleman from texas. >> thank you, mr. chairman. secretary lew, welcome. in your previous life as the chief of staff to the president, i'm sure you are where the president was not fond of the citizens united case.

he is quoted as saying the supreme court reversed a century of law that i believe will open the floodgates for special- interest. you may also be aware that some of the senate democratic leaders wrote in 2010 that, including chairman baucus and senator schumer, a call for the irs to investigate conservative 501(c)(4) organizations. at that time, did you or the president think that was a good idea, with the senators suggested, that the irs look into those organizations? >> congressman, i was not familiar with that statement at the time, so i cannot comment. it was a letter sent to the irs. you're not aware of that?

>> as chief of staff, i would not get a letter. >> i think it was rarely fairlyzed. -- publicized. let me ask, had you known about the letter, would you think you and the president would think it's a good idea for members of the senate or the house to ask the irs to investigate or to audit organizations? >> my position is that the irs will always have to be beyond political approach. there can be no question of bias or political motivation. that's why we said it is so acceptable that these practices thesecceptable that practices happened. the question is how to fix this. we are committed to fixing this. there are legitimate questions

as to who qualifies, but it has to being under a politically neutral manner. i've said that the democrats and republicans and i have said that before this set of facts became available. >> i would say that how america will be watching how you handled this, because i think it will define a lot of your service in that capacity. i want to move to another question. as the secretary of treasury, you are governed by laws including a provision set forth in dodd-frank. you are also one of the three representatives on the financial stability board, which i understand is about to finalize their designation of what we call [indiscernible]. given the policies that will be determined by this board versus what we will do with them, which many of us are very concerned in particular that some of our u.s. insurance companies could be disadvantaged by this designation because it would be a lot less transparent process

than what is going on in the u.s. can you comment on what you can assure us that we are not going to disadvantage domestic companies with a process that is going on that is not as > ansparent? >> congressman, as we go through the review of whether or not to make his determinations, we are working with all the firms and understanding will have every opportunity to comment. there will be a full visibility into what we are doing. we have worked at the international level to try and to have as much as we can common approaches. it's more complicated in an international setting, obviously. it's important that we strike the right balance of protecting

the u.s. economy. sometimes that means taking actions that may be higher levels of credential concern that other countries are taking. what we are trying to do is convince them to raise their standards, try to level the playing field, because it is in their interest and in our interest for us all to be comparable in taking steps to make sure we don't have financial crisis. the questions we're asking for these non-banking institutions get at their interconnectedness to the broader question of the financial stability. so we are not stepping into the role of being a state insurance commissioner. we are looking at whether or not there are levels of risk that aren't the designation. -- warrant the designation. >> having different capital requirements for the people that are inside the box versus the people outside the box will cause some competitive disadvantage, would you agree? >> i think we need to make sure we are addressing the statute's requirement that we do the review based on whether or not there's a material risk to financial stability.

>> the time of the gentleman has expired. the gentleman from massachusetts. >> thank you, mr. secretary. and thank you, mr. chairman. i want to associate my remarks with the likes of mr. meeks. the only difference this is we are willing to give you the benefit of doubt that you are willing to do the right thing, but you know the country is watching. all of us are watching. i have faith you will do the right thing as we move forward. it strikes me as not surprising that had you not fire someone, today you would be criticized for not having done so. it is interesting box of tricks to play, but i think it's worth pointing out. either way, you would use that argument. -- lose that argument. i'm not point to participate in that. i will try something else. mr. secretary, i want to talk about what fsoc does. all the money almost given out in the bailout and in difficult

times has been paid back. almost all the money. most glaring example of who has not is fannie mae and freddie mac. $187 billion of taxpayer money went to them. none of that has been technically paid back. $65 billion has been paid. another 66 is about to be paid, which would represent 76%. but that money is not allowed to go towards payment of principal. it's my understanding that treasury or fsoc could simply change the way that is accounted and allow them to pay off their debt like everyone else was every bank, every private company was allowed to pay off their debt with interest and dividends. every penny that has been paid back, the government has made a very good profits. i am not suggesting we should not make one on fannie and freddie. i'm simply asking as you will

forward to take a look within your own shop now to make sure that we allow fannie and freddie to be credited as they pay back for that payment. if that happens, it's the right thing to do. no. two, it is reality. reality is they pay back almost $130 billion of the money or about to do it. almost $130 billion of the money we have loaned them. they should get credit for at least some of that. it's my understanding that could be done internally at treasury. i would like you to get back to us. if you can, please do it. tell us what action we need to take. similar to the fha, the fha right now is probably about to have to take a draw on treasury. even though they have $30 billion sitting in the banks and no thoughtful person thinks there will have to access taxpayer money, the law requires them to do it because it's below certain percentage of the outstanding members.

that's ridiculous. the fha should be allowed to draw when they need the money but should not be required to draw when they do not. i wonder if that's a move you would like to see amended? i have one more after this, but go ahead. >> i'm happy to get back to you on both issues, congressman. briefly, the treatment of fannie and freddie was set up so that all the profits go to the taxpayer until they are out of conservatorship, until they have discharged all their obligations. that is a very high priority. i'm happy to follow up with you on the other question. >> as currently done, they will not be able to get out of conservatorship because they will still owe us $187 billion at any given time. >> on the fha drawdown, i'm happy to follow up with you.

we are following prudent practices of the role to make sure fha is able to continue functioning. >> i totally agree. but it distracts us from the real discussion of fha. derivatives, i know you had a discussion on the libor issue. libor issue might involve a 500 trillion dollar market. there's an international review going on. i have read recently about another potential scandal that is interest rates and in the interest rate swaps category, another $400 trillion market that may be the exact same thing in the exact same place. close to $1 quadrillion, which is ridiculous. that is 15 zeros.

i've never used the term quadrillion in public before. i hope to never do it again. i'm not a scientist, i don't get to count molecules'. [laughter] i would like to know what fsoc will do about the scandals that are brewing. >> the time of the gentleman has expired. gentleman from california, mr. campbell. >> mr. chairman, thank you. i will say quadrillion just so it's a bipartisan term. secretary lew, getting back to the irs issued, the i.g.'s audit determined whether or not there was targeting and they determined there was targeting. you believe it is important to know why that targeting occurred? >> congressman, i think it's important to hold accountable everyone who is accountable. that process is under way. we have a new acting commissioner who has taken over

today. that will be his first order of business to make sure we know who made what decisions, and xavier warrants' accountability. >> should they not know why this occurred? >> it's very important that the ig's report noted there was no evidence of political pressure being brought to bear. i can tell you -- >> mr. secretary, because the investigator did not present any evidence in that report, does that lead you into conclude that there was no political involvement in the saddle? >> that report came out just a week ago. there are ongoing efforts with a new commissioner coming in to take review of the personnel involved and to take any necessary action. we have multiple hearings underway at.

the department of justice is undertaking a review. there's an awful lot going on. >> including to determine white? -- to determine why? >> their review is to determine if there was any criminal activity. >> have you asked? >> we have said it is unacceptable behavior. those who participated will be held accountable. the fact that there's no evidence of any political involvement is very important. it does not make the actions and less acceptable. >> just because there's no evidence now does not mean there's no evidence we have not found, correct? are you trying to find that evidence? if somebody robs a bank, mr. secretary, it's reasonable to conclude they did it for the money. you cannot assume they did it for the money, but it's reasonable to conclude they did it for the money. when someone target organizations entirely of one

political bent, it's reasonable to conclude that it was the reason for doing it. >> when concerns like this arise -- >> should you not be trying to find that out? >> the place you go is to the inspector general to do an investigation. that is what has happened. that is what is ongoing. >> so now it's out there. it's in the irs and you are the secretary of the treasury. don't you want to know why these people did this? >> congressmen, i have said many times and will repeat, i am committed, the president is committed to making sure we figure out what happened, hold people accountable and make sure it never happens again. of course i care, but i also believe it would be inappropriate to stand betweenan ig and an investigation. have you spoken to anybody

treasury or the iris about this since you found out about it how much in terms of why these people were doing this, what were they trying to accomplish? have you had any conversations like that, it's a simple question. >> since the ig report came out, i've had many conversations about what steps we needed to take. step number one was getting the resignation of the commissioner. step two is getting a new commissioner. i will meet after this hearing with the new commission. i will meet with him on his first day. >> have you learned anything about the motivations of this? >> i think we all have the same set of facts in front of us at this point. we will cooperate with investigations because we want to know the facts. what i will not do is put any sort of political intervention into the review of an ig, and i will not put clinical intervention into the administration of the tax

system because the cure is worse than the disease. we need to find out if there was political intervention then. ig's report has shown no evidence of political pressure. if there is evidence, that would become significant. i cannot respond to evidence that has not been uncovered. there will be much time put into figure out what happened. >> thank you, mr. secretary. >> the chair recognizes the gentlelady from new york for five minutes. i would like to thank the chairman and ranking member and welcome secretary lew from the great state of new york. the residents of that great skate are very proud of your public service. congratulations on your appointment. in god-frank emma there were a noble -- number of regulations that we call upon the agencies to come forward with. could you bring us up-to-date

with how quickly we are going to get these regulations into effect? i'm interested in three areas, the non-bake designation, the volcker rule, and the capital role requirements. i for one do not favor legislating capital role requirements. i think it is dependent on many changing factors. could you comment on the basal required 3.5%, which fluctuates, but also the new bill that has been put in the senate, with mr. bitter and others, that would 15%?re 18% -- congratulations on your service. >> thank you very much, congresswoman. from literally my first day as treasury secretary, i have been putting an enormous amount of my time into stepping on the excelerator in the implementation of diaphragm --

dodd-frank. i shared my first meeting within an hour of being sworn in. i have met with fsoc. i have met with many regulators independently. i believe the role of the secretary of treasury is to keep the pressure on for action. i have made the case to them, and i have made the case publicly that we have to measure our progress in weeks and months, not years. we have to get to the end of implementing regulations. i think it is important to take a step back and remember that one of the reasons for delay was there was applicable fight over repealing dodd frank. there was an industry fighting with everything it had to slow down the implementation. i think we are beyond that. i think there is no consensus in the industry and certainly from the view of myself and other regulators that getting dot- frank implemented is a top is a top-- dodd-frank

priority. i think that will give stability in terms of knowing what the rules of the road are. like everything else we do, it will require fine-tuning as we go along. one of the problems we got into was between the great depression of 2008 is we took more than half a century without taking a hard look at what we had done. this will require constant attention. the financial history involved too rapidly to take 60 years off without taking a look at whether the tools we had were affected. on the non-bank rules, we hope to make a determination soon at the fsoc level. on the volcker rule, we have five agencies working together trying very hard to come out with a common approach that would be the best way to have clarity in the marketplace. on capital requirements, the fed is looking at working on finalizing regulations, from statements made by the fed members in the last weeks, i think they're working on trying to create a system that get as close as possible to meeting the concerns of small financial institutions while being able to say we have ended the big to fail.

we are encouraging them to get to a conclusion as quickly as possible. >> on the volcker rule, the institutions i have the privilege of representing have already implemented the proprietary rule. they have moved out of their major headquarters in the proprietary trading into a different organization or stop it completely. could you speak a little more on the market-making rule that they are working on, on how we maintain liquidity in the market but at the same time have financial stability and safety and soundness? many people are very concerned about getting that rule right in order to keep our competitive edge. >> it's very important to get the roll right, because what looks like the same activity may

be a very different activity. if you are market makers and if need to have an inventory in order to play the role, it's very different from taking a bet and buying with proprietary capital a stake for yourself. so the rules are going to after distinguish between the different reasons that financial institutions hold assets. they're working very hard on this. the definitions matter. the coordination amongst the agency's matter. i will be reconvening those groups to make sure all five agencies are talking to each other. >> produce stand on gse reform where do you stand on gse reform? [laughter] my time has expired. >> the chair would like to yield a few minutes for the witness to speak on the matter, but he will not. the chair recognizes that gentleman from new mexico for five minutes, mr. pierce. >> thank you, mr. chairman.

thank you, mr. secretary, for being here. in college i had a professor of statistics who was making the point that you put an incident number of chimpanzees with their role in an infinite number of typewriters and they would eventually write the work of shakespeare. you are asking us to believe that you have an infinite number of irs agents conducting an infinite number of audits and they all just happened to be conservatives. that is more preposterous than my statistics professor. the fact that i got an e-mail before the story broke from a gentleman in new mexico who had been singled out andy did not know why he was singled out and there was nothing in the audit that said what it was about.

but he noticed a handwritten name on the outside of the folder at the end of the interview after no significant questions on his practices in his business was asked if he knew that name. he did not know the name at. all the way home he said, by golly i think that is the guy i went to that meeting three years ago. the tea party had not yet organized, but it was the same guy who will eventually organized the albuquerque the party. went to one meeting, wrote a check of $25. for that, three years later he is picked out, and you want us to believe there are no political overtones. you don't find any political nuances to the situation, and i find that to be an incredible situation. we have been told, as we have in many other scandals in this administration, that the administration had no knowledge.

to run a few, fast and furious, the administration had no knowledge. we had an american border agent killed with rifles sent illegally to mexico. crime was committed. no one has yet been held accountable. jon corzine took $1.5 billion from segregated accounts. 2011. i hear you saying things like i don't want to get in the way of the investigation. the facts will come out. at what point, sir, are you going to be suspicious the facts will not come out? in 2011 jon corzine has yet to be charged. it's a crime to take out money from segregated accounts. we could take a look at the gsa conference. the doj tapping of ap telephones. doj tapping of mr. john rosen's telephone and his parents.

they said he is a co- conspirator. the co-conspirators says guilty. i wonder what his parents were accused of. we are sitting here today understanding that this administration had no knowledge of any of these circumstances, not even of benghazi. we are to sit here -- i think one of my colleague said we are us to sit here and take the artful answers that you give. myself, i don't know what i'm calling to ask about is the war on the poor that this administration is engaged in, and driving interest rates to zero. you are decimating the people who have no financial sophistication.

these are people eight times more likely to have money in just bank accounts, the aging, the elderly. they are the people who come to my town halls and say i live my life correctly, i bought my home, i have a savings account, i was expecting that i could live on my savings and now i'm having to dip into it because i get no interest every month. this administration continues to have its war on the poor, the elderly at the benefit of wall street. you are doing so much for the 99%, you said, when the case is opposite. so i don't have any great impression that you are going to answer any of the questions today. i don't have any great impression that you will stop your war on the poor. new mexico, $31,000 is our per capita income.

i yield back. >> the time of the gentleman has expired. the gentleman from georgia, mr. scott. >> thank you very much, mr. chairman. welcome, secretary lew. good to have you. i think that you have expressed your concern over this issue, the administration's concern. we certainly look forward to you helping to move to a speedy conclusion of this irs situation, for there is no more penetrating agency that penetrates into the personal lives of the american people as the irs. let me say that this concern of this investigation goes for democrats and republicans as well. this is not a democratic or republican issue. this is an american issue. and the american people are

expecting us to get to the bottom of it and not politicize it. one of the things i do want to mention to you is yesterday in the senate finance committee, former commissioner douglas shulman mentioned that he knew about this investigation, that there were facts shown to him, but he did not take that information to allow the higher- ups. he was a bush administration appointee. he served as the commissioner of the irs from may of 2008 until october of 2012. my question is in getting to the facts of who knew what when, would you not think, since irs

is the agency of the treasury department, that the agency head should have brought this administration to the treasury department when he knew of it? should he have not done so? >> congressman, i think that the first line of responsibility is the irs commissioner. the commissioner is in day to day contact with all the different departments of the irs. fixing anything that is wrong in the irs is a fundamental part of the irs commissioner's job, making sure the system runs well is part of his job. we're bringing in a new acting commissioner today and we are charging him with first making sure we find out who is accountable and second finding out what went wrong and third making sure anything that needs to be fixed is fixed going

forward. >> the point i wanted to make is because everybody is looking at where this goes, does it go all the way up to the president? it's very important for the record to show that this commissioner, who was the commissioner during that much of the investigation and what was going on and testified before the senate finance committee yesterday, that he did not take it to be higher-ups. let me ask about basal. >> one additional word. i did not even know there was an audit until march 15. i did not know the results until it was final. the president did not find out until the report went public. is there any sense of political involvement in any way interfering with this investigation, that would be a real problem. and it did not happen. so it's a good thing we did not know about the investigation. >> let me ask about basal 3.

what would you say are the likely effect that the differences of the implementation between the u.s. and other foreign jurisdictions of the derivatives credit evaluation or judgment capital requirement might have on american financial institutions and end users of these derivative products? do you share the concern of implementing basel iii requirements? >> congressman, we are concerned with basel and with other areas of implementation of dodd-frank and other financial rules that we do what we need to do to protect the u.s. economy from the kind of risk that we never want to see again but also to work with our international partners to where we can harmonize standards and reach a level so there's a competitive level playing field. we have made good progress in

the g-20. we're working with our g-8 partners. i've already been in many meetings with my counterparts at finance ministry level and with central bankers. it's going to be a complicated undertaking. we have different legal systems, different standards. the thing we have to be clear about is our first obligation is to make sure that we make the u.s. financial system sound. and then work with others to bring their standard tire. >> the time of the gentleman is expired. the gentleman from florida. >> thank you, mr. chairman. mr. secretary, how long was left on the term of the commissioner whose resignation that you sought? >> he was an acting commissioner and is a career employee, so there's not a term limit. >> you expect he would have been commissioner forever if not for this event? >> there was a limit of how long you could have the title.

>> how long remains on that timetable? >> it was coming up sometime in june. >> on the have five minutes. >> he would have remained in the position he had with all the authority afterwards, unless he resigned, which he did. read your written testimony. it says, the strength of the financial system depends on the strength of our economy. you said sequester has hurt the economy. i think everyone knows that spending more money than you make does not do anything to inspire confidence either. proposing budgets that never balance is not do anything to inspire confidence either. in plain english, you might have recommended we try to do the budget process and not [indiscernible], and they send that message to the senate. you mentioned job creation and

economic growth path to be a top priority. next to obamacare, the biggest impediment to job growth in this country seems to be over use and overstepping of administrative rules that are killing more jobs than this administration could never begin to put in place. last year the treasury wrote a rule that would require all banking institutions to submit to them the names of all non- resident alien depositors. they said that could have an impact of over $88 billion. it the department of the treasury never did a cost- benefit analysis, which is required of every agency invites a rule with an impact of shafting the public of more than $100 million. can count on you to at least to a cost-benefit analysis before that rule takes effect. and before we add further financial harm to our country? >> congressman, i will have to get back to you on that specific rule. and i'm happy to do so. >> how long before you can get back to us, because we would

like to stop this in its tracks as soon as possible? >> in two and a half months i've been involved in a lot of different matters. i've not work on that specific matter. i will take a look at it and get back to you. >> any idea how long it? >> i will take a look at it and get back to you. >> in regards to mr. pearson's question, and mr. campbell's from california, said there's a lot you would have to look into to answer mr. campbell's question, but when the gentleman from georgia ask you, you had no hesitation in saying there was no knowledge of the talk about what was taking place. how do you make the distinction between the two dancers? -- two answers? >> i know when i heard about this for the first time. i did answer with great confidence on that. >> there's a pattern. admit nothing, denied everybody everything, and blame everybody until it blows over.

i think that would be the proper answer to your question, mr. pearce. my time is up. i yield back, mr. chairman. >> time has been yielded back. chair recognizes the gentlemen from texas. >> thank you, mr. chairman. i thank you and the ranking member for the hearing. thanks to the witness for appearing today. i also thank the witness for making notes of those who are victims in oklahoma. it is important that we not forget, notwithstanding all the other things on our agenda, we should remember what has happened. i assure you that at the appropriate time i will cast my vote for aid to the victims in oklahoma. i would also like to remind us

that dr. king called to our attention that on some questions we have to do that which is neither safe nor political or popular. your not interceding in the audit may not have been safe, may not have been political or popular, but it was the right thing to do it. and you don't need validation when you are doing the right thing, secretary. it was the right thing to do. let us move to page 5 of your testimony or your statement that you provided. on page 5 you indicate under the impact of fiscal policy, "to guard against future threats to our economy and financial stability, policymakers should avoid using last-minute resolutions to fiscal policy matters such as debt ceiling and deficit reduction as a negotiating tactic."

i would like for you to elaborate on this, because we will again confront a debt ceiling and deficit-reduction question, as you know. would you elaborate on how this adversely impact the economy, given that you have indicated that the economy needs confidence, the consumer's need confidence, businesses need confidence. would you elaborate on how this impacts the confidence factor? >> happy to, congressman. in 2011 we had a series of crisis-driven, deadline-driven negotiations that created a broad sense that there was dysfunction in our government.

that undermined confidence in the business community in the united states, confidence in ratings agencies who saw a downgrade in the u.s. credit rating for the first time, because of our economic conditions but because of our political condition. i talked to people around the world in positions of authority. it makes them very uneasy, whether they are in businesses or making economic policy decisions when the u.s. looks like it is in constant crisis. i think if you look at 2012, there was some progress made. we saw less of the brinksmanship in 2012 than we did in 2011. we saw issues getting addressed and an attempt was being made to avoid having that kind of anxiety which makes it harder for businesses to invest and harder to get the economy moving. we got to stay on a path where we do our business, where congress does its business. on the debt limit, the president has made clear congress has the responsibility to raise the debt limit. every bill that we owe, whether it is interest on treasury bill or a patent for the rent in a building that we are leasing,

it's an obligation of the federal government. for our entire history, the u.s. government has paid its obligations. the way to control spending in the future and to reduce the deficit in the future is to make sensible tax-and-spend policies. it's not to say we will not pay the bills we have already obligated. that's why congress needs to pass the debt limit. >> let's move to an additional topic. you talked about how we have to concern ourselves with the ability in terms of the oversight council. i would like for you to just explain briefly how important it is to maintain fsoc, given that you have made a comment about too big to fail. how fsoc will help us to maybe not eliminate but help us keep taxpayers off the hook on too big to fail issues? >> fsoc is unique.

it has some areas of direct responsibility but mostly it is a coordinating role and it is to pull together the different actors in our complicated financial regulatory system to act in a decisive way and coordinated way. i think it is important. if you have five regulators going off in five different directions and it could cause massive confusion. i think there is analytic work being done and shared 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. one of the problems being in the lower part of the totem, a lot of the questions have been asked. let me clean up some questions

that were brought up in my mind. in regards to the investigation -- >> i apologize, cannot hear you because of the door. >> there we go. one of the questions i hope this afternoon when you talk to your new commissioner and discuss his investigation is not only to have him 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 lots of 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 in 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 risk in the activities they take should be taken into consideration. do you have a preference, whenever you look at designation for banks, whether that should 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 winnow out some of these unnecessary and very actually obtrusive questions with regards to getting into the private lives of individuals? >> i think that in terms of the facts we have seen in regards to this set of determination on the 501(c)4's they 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. >> will you take him this 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 -- >> correct, 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 one thing of concern to me regarding fsoc. your organization has the responsibility to respond to

emerging threats to the stability of the united states financial system. i fail to see in the report recommendations on things that happened 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 ever even 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. mr. secretary, it is kind of like a doctor waiting for the cancer to take over the patient. if we don't start something pretty soon on some of these things, it's not going to happen at all. >> briefly, mr. secretary. >> i think if you look at the

report and the recommendations, it identifies the areas that fsoc believes of greatest risk. it lays out in the next year things we should be looking at and it should be in evolving 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 involve human beings, things go wrong. something went wrong with this situation. as a person who is probably on the liberal end of the political spectrum, i don't like the idea that some tea party people got more scrutiny. i want it even. but i will say this, the president denounced this, you have publicly disapproved of it.

there has been an apology issued, 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. 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 sure that if you are a 401 c4 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.