latitude they have without having to come to congress for this oversight. so i thank the gentleman from georgia for offering the amendment. i join him. >> i think senator kaine has an amendment to offer. >> i do, mr. chair. i will be brief. i believe it has some good solid bipartisan support. two of my colleagues here on this committee, senators baldwin and portman, are together with me, the co-chairs of the senate career and technical education caucus. this amendment is a deficit knew ral reserve fund to support legislation encouraging more cte innovation to prepare students for the 21st century work force. i'm the son of an iron worker, and i ran a technical school in honduras for a year and learned there. since the power of cte, it was kind of put into the shadows of american public education for a number of decades, but now it's back strong.

and there's some wonderful programs around the country, about 30% of jobs by 2018 will require some kind of technical training. so i'm establishing a deficit neutral reserve fund to advance this priority, and i believe both senators baldwin and portman are co-sponsoring. >> i don't see any rebuttal. there is a vote in progress. so we'll recess now until 1:30. at 1:30 we'll begin the vote process. you can go and vote, get some lunch. for republican senators, we're going to meet in the ante room out here at 1:00. recessed. [inaudible] [indiscernible] [captioning performed by the national captioning institute, which is responsible for its

caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2015] >> the senate budget committee completed its work in approved its budget on a 12-10 partyline vote. at of a two-week recess, the house and senate will focus on the 2016 budget this week. here's more from a capitol hill reporter.

how different are the past they are taking and how much will he add to defense? >> they both at about $40 billion to defense next year. the reason the paths are different is because the senate proposes offset the increase by reducing defense spending later in the decade, starting about 2022. the house has a different plan. it would offset some of the increase but it is possible the plan would be changed and they will remove the requirement to offset that. >> the increase is all through the overseas contingent operations. explain that to us.

quite they are sticking with these caps but are using basically funding the war on terrorism. and sticking with that. i am not sure they resolved it yet. the plan from house leaders was to add a couple hundred billion dollars more to defense spending and remove the requirement that the defense spending the offset. some of those in the house are

concerned that it might be impossible to offset it in and they might not have the money to spend. so it looks like they are contemplating putting something in the role for consideration of a house budget, which would remove the offset requirement. >> on another issue in terms of domestic spending, you tweeted about the supreme court ruling that if the gop wants a great public budget. how would it do that? paul: the supreme court is expected to rule in june about this challenge to the health subsidies in the affordable care act. if they rule of those are illegal, then the republicans are going to want to have a plan to temporarily will face those subsidies. one way they could pass that is through the budget

reconciliation process. the reconciliation instructions in these budgets which are very general, and will give them the flexibility to write a replacement plan to the supreme court decision. host: how will this into the plan for decrease -- increased domestic spending? paul: they don't. both plans keep nondefense spending, domestic spending at the statutory cap levels. the president proposed increasing both defense and nondefense. the republican plans do not increase nondefense spending. host: the preparations chair is quoted as saying he would absolutely like to see those cap's legislative he lifted -- cap's lifted legislatively. paul: there's a good chance that could happen.

what a lot of republicans foresee is that after these solutions are passed, a republican president later in the year could reach another agreement on a budget deal similar to the one that was together by paul ryan and patty murray which would actually raise the cap for defense and nondefense. you have to pass a law to do that. host: in a best case scenario, the house and senate finish the buzzer rose illusions by the end of the week. what is the deadline to get a final version out of congress? paul: they are shooting to meet the deadline, but they do not have to because they could pass it after the deadline as well. host: read more at cq.com.

thank you for the update. >> coming up next, former -this is-very shaky. we should not be surprised. you cannot undo a decade of soviet era stuff with eight years, especially when you taught on a modern -- a model where you have u.s. partners with him. if afghanistan, we currently have about 10,000 troops there. draw down to 5000 year and down to almost zero after that. i would warn we would probably see a similar result to an we saw in iraq when isis attacked. that would be very shaky without u.s. help. >> tonight daniel on iraq and

afghanistan. what we should have done differently. >> jack lew testified tuesday before the house financial services committee giving a testimony on the state of the international financial system. secretary lou was also asked questions about his knowledge of whether hillary clinton had sent e-mails from a personal account when he was a senior official at the state department. this portion is just under two hours. >> the committee will come to order to declare a recess to the committee at any time for the purpose of receiving the secretary of treasury's and newer -- annual report on a state of the international financial system. i recognize myself for three minutes to give an opening statement. the committee welcomes back secretary for his annual report on the larger, international financial system.

one of the greatest threats to economic stability today could clearly be seen on monitors to my left and right. that is a real-time national debt clock or no president in our history has indebted our nation more than barack obama. more debt in six years that in our nation's first 200. the last talk is with both official and arriving reports this is totally unstable. the testimony contains scenario word about the threat of the unsustainable national debt to our economy and to forward working middle income families. in fairness, the obama administration is not alone in helping put a sovereign nation into solvency. a number of practitioners as well. when europe runs out of money, many turn to the imf, whose major for -- source of funding

happens to the u.s. taxpayers. americans who clearly see the impending debt crisis and rightfully suffer from bailout fatigue or strategy -- or scratching their heads, are being called continually to institutionalize too big to fail on a global scale. the activities of the imf must be carefully scrutinized. what calls for greater scrutiny is the role of the financial stability board and the role of their cousin, the financial stability oversight council. they wield immense power over our global economy and operate largely without transparency as part of a shadow regulatory system. as i assume all members of our committee know, a member of the fsb. the financial stability board.

a secretive coalition of bureaucrats to export its fuse on regulations to the united states. it one-size-fits-all mandate imported to washington, they typically do more harm than good. we tried that. think greek sovereign debt with mortgage-backed securities. seemingly rubberstamped decisions made by the board when it comes to deciding whether large, u.s., non-bank financial institutions should be designated as too big to fail. this does not appear to be coordination. it appears to be capitulation. since the designations are tomorrow's tax funded bailouts, they are particularly disastrous consequences for the american

people. one global standard of financial regulation by this ministration will undoubtedly harm american innovation and economic growth. it can in page on u.s. sovereignty and by packets the check and balance of united states congress. americans will find themselves paying more to ensure mahone -- to ensure that homes and families to save for college educations and retirements are fought -- will find their awarded less and ministry will suffer the sources of long-term capital begin to dry up. we must not allow this to happen. i yield three minutes to the ranking member for an opening statement. quite thank you very mr. chairman. i would like to welcome mr. secretary. after four failed attempts by the obama administration to win congressional approval of quota and governance reforms we may

have to recognize a new and difficult reality. the case is supported by democratic administrations in which the u.s. maintains its power and the year -- europe loses its seats on the second report, which seems open and shut. let the most of critics congressional republicans, not agree. they weaken american's influence , that claim is wrong. the u.s. would retain its veto power and the quota in greece would be fully offset, resulting in almost no new costs to taxpayers. the real risk to the u.s. lies in continual congressional inaction. that is infuriated many other countries. in fact, last year, the g 20 group of leading economies issued an ultimatum to the u.s.

to prove the deal by years in or the imf began to weigh options while moving forward without the u.s. in early january, the board began to study options. the decision by congress to ratify ims reforms was seen as a weakening of u.s. commitment to multilateralism. spurring about our leadership on global, economic issues. in response, a number of development countries have begun to act independently to challenge in the world economy. last year, the nations announced plans to launch a shanghai-based bank of their own which they hoped would rival the world bank. china is also moving forward to create an infrastructure investment bank.

a world in which countries such as china and russia are increasingly acting outside the established multilateral system is one that could easily go beyond control. that is some of the reasons republicans have no actual consequences of not supporting the package. the more immediate question is whether the voice will -- resonate at a time where we alone allowed a fundamental government reform language into the institution. i look forward to hearing more about what is at stake. i yield back the balance of my time. >> the chair recognizes the german from michigan, chairman of the trade subcommittee for two minutes. question thank you, mr. chairman, and secretary lou. the important, international financial, issues to be

addressed, the european union minister on financial services has pointed out that moving from a regulatory environment to a growth agenda, as was noted, as he rightly points out, we have got to have courage and self-confidence to make changes where we see those necessary. i want to focus on a specific concern of mine which focuses on international monetary fund. it hundred million dollar commitment was authorized to an account. the past five years, the administration has 3 million of that to be transferred. i would like to explore today why hard-working tax dollars -- dealing with fannie mae, freddie

mac, and a number of others. shouldn't we be focusing on encouraging these other countries to better manage borrowing and spending? brazil's representative of the imf stated according to a memo that has been lead from 2010, may 10, that went to wall street journal, they clearly stated the imf program is a bailout of private sector bondholders and rather than require private sector creditors like european banks take the lost company ministration chose to bailout the european banks. representatives from several other nations including canada and australia warned the bailout package contains immense risks. the ministration chose to support the bailout. how do taxpayers know this? not because of transparency, but because of information shared

with them only way five-year-old memo was taped from may 10. a lack of transparency is sadly something we have come to expect . it is my goal to change that and i appreciate that today. thank you. >> the time has expired. >> thank you so much. top of the morning to you secretary lou. welcome back to the committee. there are many international issues that are outstanding. it must be good to be sitting here with good domestic news, 69 months of private sector growth private sector growth of 2.8 seven 9 million in 2014, the most since 1997. i think your stewardship in the debt ceiling debate has been a powerful voice of sanity. i think that puts us in a good position to have the united states be the world reserve

currency, which i think is extremely important. i want you to punish banks and bank employees involved in these tax avoidance and money laundering schemes. those activities to facilitate global terrorism and crime. i would also like for you to double down on being more surgical, so as to not cut off legitimate remittances, an issue mr. ellison has been championing. i heard from my own constituents that the relatives are literally starving. so we need to do that. i have also heard from insurers they are increasingly concerned about ongoing international

associations on standards that may impact u.s. insurers. i hope you will be a strong voice internationally for u.s. companies. last, i concern -- i am concerned about the imf. it supports jobs and financial markets and national security p reich ruth with you on that and i yield back. >> today, we welcome the testimony of the honorable jack lew, secretary of treasury. he has appeared before this committee on several previous occasions. i do not believe he needs a formal introduction. your written statement. >> thank you members of the committee p share the opportunity to testify before you today.

as we meet here today, the united states economy has continued to make progress. a long way since the depths of the worst depression since the great depression. over the past five years america's businesses have created 12 million jobs, sustained private sector job growth in our history. our economy keeps expanding and forecasts are for a buck trend vote. our fiscal deficit, which has fallen by almost three quarters is forecast to decline even further in the past year. achievements underscore america's and during strength. we could build on this progress with the right policies and bipartisan cooperation. international financial institutions, which include the international fund are a critical -- a critical part of the effort.

these institutions are some of the most cost-effective ways to reinforce growth at home and respond to critical challenges abroad. it is essential, to that end that congress pass the quota. the reforms will put imf finances over's is just stable footing in the long-term. more broadly, as the leader of the international finance a -- financial institution. as international community waits for congress to approve the reforms we helped design, emerging and developed economies alike are looking to other alternatives as a means of driving the global system forward. our continued failure to improve the ims reforms have had other allies questioning our commitment to the institutions we worked so hard to create. until the reforms are replace the nice its runs a risk of

creating the role that these eroded, especially when establishing new in parallel financial institutions. the imf reforms will help convince emerging companies to remain angered that the united states helps design and continue to lead. the reforms are a win-win for the united states. they do not increase our financial agreement. we continue to work with congress to get these reforms passed as soon as possible. a clear example of the imf's role in promoting security and economic interest, the imf is providing ukraine with a critical financial and technical support it needs. the imf is the cornerstone of a broader international effort to support ukraine amid some -- extraordinary circumstance. it recently improved and augmented longer-term programs that will allow ukraine to pursue the same set of economic

reforms. similarly, our investments in the world bank and the regional development banks are the key to advancing american economic interests. my full statement i submit it for the record lays out the detail of how they helped grow export market, increase opportunities for businesses, and protect our national security. let me highlight quickly a few of the areas where these institutions have recently advanced our priorities. in ukraine, there stepped in to address the crisis increasing their commitment to nearly $5 billion. in central america, they're working to spur stronger economic growth, which will help address the root causes of the flow of migrant children to our border. in africa, they have taken significant action to fight the threat of ebola. to be sure they are essential to global stability. whether it is fostering inclusive economic growth,

promoting food security, or increasing national disaster paradis, they're making a difference. note to prize that through our nation's history, both democrat and republican presidents have made it a priority to invest in these institutions. as you can see from our budget request, we are using what we have learned from the specialized funds to launch a well-designed and cost-effective supply. they help cut carbon pollution globally and help advance global a jet -- objectives. the world is looking to the united states for leadership. it is as essential as ever for the united states to demonstrate leadership across all the international financial institutions. this will require bipartisan cooperation and i look forward to working with all of you to make that happen. thank you. i would be glad to answer any

questions. >> i yield myself five minute for questions. mr. secretary, i think you know many of us on the committee have concerns about exactly where the fsb are headed. we know we have spoken before about the financial stability board. you said previously it is a group that asks -- acts by consensus. a new total loss absorbing capacity standard, and can i assume since it is a group that act by consensus that treasury has consented to the new standards? >> i would say the united states played a leadership role in pushing towards having it

adopted. this is a preliminary set. >> you consented to the standards. i think you know fsb after creating the standards, issued an exemption to three of the largest banks in the world three chinese banks, one of which is the largest bank in the world, the industrial and commercial bank of china with over 3 trillion dollars in assets. if the u.s. consented to those standards, to treasury also consent to the exemptions of the three chinese banks? >> mr. chairman, the provisions that have been agreed to our preliminary. they require considerable additional action to be implemented. i have to check. >> i understand that. you do not know the answer?

classes chairman, the fsb acts by consensus and i am not familiar with the specific nature of the action you are describing. i would have to check. >> if you would get back, it has been supported -- reported in the press already again that the three chinese banks have been -- it is just curious to me treasury would not have consent. i will let you get back to me, mr. secretary. classic requires implementation what was put forward was a preliminary document that i think would very much strengthen the financial stability of the global commitment. could say understand and i guess

it would be curious because you have also testified in the last committee that the fsb "does not make rules for any of the national governments. every country has the vulnerability to make decisions for itself. i am just curious if these are preliminary suggestions and not roles, why has the fsb not found it necessary to grant exemptions specifically to the chinese? >> it raises the goal to a high level for global standards. we work to try to get the kinds of standards we think are appropriate in the united states to be adopted around the world so the whole world world -- will have high standards. chris if you would get back to me on that specific thing.

>> owes going to try to give you an answer to the question. i sigh have been waiting for several minutes. you said he didn't know. >> the design of the preliminary approach of tlac is something we drove forward. we just consented we drove up for it. >> the question had to do with the exemptions. that's the essential question. mark carney who chairs the financial stability board recently issued a memo i believe last month where he declared he expected quote full consistent and prompt implementation unquote of the agreed fsb reforms and he went on to say fsb will support the determined efforts of its members through enhanced monitoring of implementation in its efforts across all jurisdictions. we will regularly report our key findings to the g20 so you again have stated that the fsb does not impose rules however in following their lead in designating non-bank sifi's sounds like a fait accompli to me so did treasury consent to the issuance of this memo and very aware of the memo from the

chairman of this financial stability board? >> mr. chairman our effort on tlac has been something we have record. i was engaged with a number of countries because we think they largest financial institutions of the world have deeper serves so taxpayers are not held accountable if their failures in the future. i'm happy to give back to on the specific pieces of action. obviously i'm not sitting there in the meetings myself. >> are you aware of the memo that i just quoted? >> mr. chairman i have read a lot of memos from the fsb and on tlac and i would have to look at the specific memo.

>> my time has expired. the chair recognizes the ranking member for five minutes. >> thank you very much mr. chairman welcome again mr. secretary. first a world cup -- a word about the world bank and i have questions on the domestic agenda here. you made reference in your testimony to the world bank's ongoing safeguards review which will result and revise policies that will govern world bank lending for years to come. i welcome your statement that

you're working hard to ensure that they revise safeguards will strengthen the protection provided by these policies having read the first draft of the sacred heart was the bank management that i must tell you you have to work cut out for you but i think the banks credibility takes a hard hit on the current draft is broadening and strengthening of existing policies. it doesn't strengthen them and nobody outside the bank believes that they do. it is wanted to share that with you. on the domestic front as you know unregulated mortgage credit oftentimes offers predatory features to vulnerable households without the sophistication to understand the terms as the key cause of the 2008 crisis. fortunately the dodd-frank at two key steps to address this problem with the creation of the financial protection bureau at the same time the cfpb has taken actions to tailor its rulemaking

when it comes to small banks and credit unions and has the authority to amend regulations of access to credit especially for our most vulnerable population become too constrained. even though the cfpb has been exceptionally reasonable in their approach last year the house pass number bills to provide additional exemptions to consumer protection citing lack of credit for low-income borrowers. can you tell us what data the treasury has on credit availability since the crisis and whether you think congress needs to pursue legislation to create more exemptions from consumer-protection rules? we need some help. >> congresswoman waters i think if you look at the current experience in the mortgage market it's a little bit too hard actually for people to get credit in some -- if you look back to what we are trying to stop after the financial crisis it was to stop people from getting in over their heads with mortgages they can understand and with hidden fees and all kinds of charges. i think if you look at the way the regulatory agencies have been looking at this they have been trying to be clear and giving guidance to financial institutions. to have that anything been

tighter in their credit standards than might have been intended. on the other hand they're not going back and saying we should go back to the kinds of policies that let people get into mortgages they couldn't afford him to do it in ways they couldn't understand through all kinds of hidden fees and charges. i think it's a balance and the regulatory process is very attuned to this preview are seeing discussions and fha and fh eight -- fh age. my view is that as part of a larger trend where they are getting more conservative in some ways and in some areas than was intended. that will come up in terms of other questions this morning. we need to be clear about what we are trying to do and why. it's very important to maintain the regulatory structure so we don't go back to a system where lenders can get mortgages out there so people are over their heads and highly likely to default rate on the other hand if people are creditworthy they should have access to credit.

>> so we are witnessing this inability of our constituents who certainly can afford to get mortgages being shot down and not being given credit by many of our banks as you have stated. at the same time we still see actions by banks that are similar to what we have got. we were stopping following the 2008 crisis. we had a long discussion about everything from no-doc loans to other kinds of exotic products are being put out there and it seems like the banks want to have some kind of way to continue these efforts and at the same time put us all in a bind by shutting down on credit

until we basically agree with them. >> i actually think if you look at the rules that have come out, the cfpb rules for example that i think very clearly make it impossible to issue the kinds of dangerous products that were issued before. it has made our system safer. that's not the problem. the question is for people who are getting mortgages, applying for mortgages that are straightforward, english-language document mortgages with fees and charges that are clear and cost that they can afford are the credit standards so tight that people who are creditworthy or not getting credit. we are very much of the view that people who are creditworthy should have access to credit and we are opposed to the idea that we should go back to loosening the rules to allow the kinds of mortgages that helps create the financial crisis. >> so do you believe that what the cfpb has been doing and the

approach that they are taking is certainly the right approach and somehow that's going to help open up credit opportunities? what do we do about opening up access to credit? >> i think they have made a lot of important changes that reformed some of the basic problems. i think to the extent that the financial institutions are concerned that they want to be even more constrained than was intended it is sensible for agencies like fha and fh to try to clarify. >> the chair now recognizes atonement for michigan mr. hi singh air for minutes. >> verse i want to discuss international insurance and some of the trade negotiations the imf as we talked about in my opening statement. i want to start up with the insurance situation. coming out of the state legislature and familiar with

the state regulatory-based oversight that we have there are states but in the latter half of 2014 we saw treasury representatives and federal reserve voted the international association of insurance supervisors to shut down the transparent process and eliminate the formation of these international insurance standards. accordingly how does treasury justify the fact that in international discussions it has undercut and not supported a state regulators even as they had requested formally oppositions to closing those meetings and their opposition to the one-size-fits-all global capital standards in math. how do you encourage

transparency in these international meetings and negotiations? >> congressman i think that if you look at the review of insurance rules there has been a lot of give-and-take, a lot of reviews from industry and state regulators and national voices. >> i don't see that now though. >> there is a lot of back-and-forth. >> but you don't deny that iai booted them out of the process. >> they are still very much taking comments from outside parties. >> taking, and is very different than being at the table in discussions are happening and my question is and i know this has come up repeatedly as you have appeared here what is the active role the treasury is taking when we are going into these negotiations and my suspicion is this is a longer conversation and i would love to have a written response from you in a timely fashion on this specifically because i think this is something in my committee monetary policy and trade and i want to dive deeper

into. >> i'm happy to pursue it outside of the hearing in greater detail. >> and you will give me a written response in a timely fashion? >> i will answer any questions en masse. >> i'm mostly concerned about the time part. >> i would just say we do have history as you say of state regulation of the insurance industry and we also have to have ability to look at these issues nationally. we have tried to strike a balance where we have been respectful of the regulatory process but to international bodies speak with a firm voice. >> i understand. they certainly feel a bit cut out. as ttip negotiations continue it seems to me the u.s. position on financial services has been to negotiate on market access but refused to engage on the regulatory side. i understand the i understand that u.s. put forward a proposal and

regulatory issues to u.s. negotiators. why does treasury refuse to engage on this topic? >> we have been very clear with their european counterparts that we think market access is an appropriate issue in a trade negotiation. we do not believe prudential standards should be subjected to trade processes or remedies. >> isn't there a way to discuss religion or proposals that doesn't undermine postcrisis? >> i think in the fsb and the g20 in the oecd a lot of international conversations where we try to reach high standards that are as harmonized as possible in a national responsibility. what i don't think is appropriate is to permit our prudential standards for example

to be challenged in the trade context. >> going back to my first my first question doesn't sound like you've are engaging those people are going to be there trying to make sure working with our treasury. >> i have engaged in an ongoing basis. i met with laurie hill a month or so ago. >> in my remaining time i want to hit on the i. you agree is secretary kerry that there is no permanency to the united states line of credit at the i met in these resources are not permit but expiring in to quote them it has to be repaid within five years if it's not renewed? those comments of his were made more than five years ago. >> what i believe about the imf as we very much need to ratify the imf reforms so our commitment to the new arrangement can be converted into a capital contribution in a strengthened system that has the resources to deal with the next financial crisis. >> you don't believe we should deal to close down this line of credit? is a special line of credit that five years ago ago now secretary kerry had shepherded through

endless touting saying in five years this is going to be repaid. >> i think we have made clear that the imf reforms are the best way to have a strong imf that has a leadership role we need for national security. >> that is a signal to both of us but i appreciate your commitment to get back to me in a timely manner. >> the time of the gentleman's has expired and the chairman recognizes the gentleman from massachusetts mr. lynch. >> welcome mr. secretary, happy st. patrick's day. nice try. let's go back to the issue that mr. huizenga base. as it stands now does this do

anything to the voting weight of the e.u. with respect to united states? i now sometimes these can shift over time and i'm just concerned about whether or not we have in the government's respect the same way to end the same influence that we have today? >> congressman the thing about the imf reforms is that preserves the u.s. position and it provides for a reallocation of representation basically between europe and emerging economies. it was a difficult negotiation. it was critical to us to maintain the u.s. position in the imf and the reason it's so important to ratify the agreement is that we are the last country to step forward. we are the only country standing in the way of having imf reform become the policy of the imf. the impatience around the world is becoming extremely high.

it is as if the united states said we recognized emerging countries need to have more voice but now we take this step even though it doesn't hurt the united states or the country. strengthens our position. it's critically important for leadership not just i met the more broadly for us to get this done. >> and you feel comfortable that -- i can understand if we were reluctant to engage in a deal where our loss was everyone else's gain. i totally understand taking the pro-american position on that but you are quite sure that we are not giving the store away? >> i have to say ronica we are being criticized on both sides by the countries they gain in the countries that lose standing in the way of reforms. >> let me go to the iis issue of the international association of insurance providers. we are trying trying to work out for performs as well and adopt standards.

i understand the need for this and i understand the aig issue is probably hanging out there on behalf of some of our international neighbors but i have got a lot of big insurers in my district and we do -- have a lot of insurers that do a good job united states. i'm concerned about whether the integrity of the insurance system is being maintained during those negations -- negotiations. mr. huizenga was concerned about the lack of pay our people at the table. who is at the table and how vigorous is our representation? >> congressman treasury is at the table. the bank regulators are at the table and i think the real question is do we have the right kinds of standards for insurance companies? we have made clear we think insurance companies should be having an insurance company type of standards. it was signed into law that permits are regulators to take account of that as they impose capital requirements and insurance companies. it's now being implemented domestically. we will control the united states policy there are regulatory agencies soap we

designate an institution united states the fed will make that decision. fundamentally it's a national authority. >> are right. in my last minute let me try to drill down on that issue a little bit more. there is concern regarding con frame. they are trying to compel our site to basically adopt this calm frame so i haven't read it i confess that it seems to have the attention of our insurance industry and i'm concerned about that. secondly we have g-sib's which is globally -- something or other. obviously that brings enhanced supervision on our insurers in the united states vis-a-vis our

international neighbors. >> ultimately the only thing is there a qatari actions taken in the united states. the international process is trying to drive international standard to a high high-level but each national dority contains the responsibility to regulate its own and we are the national authority doing the designation. if the firm is designated the fed will be the national authority. >> i'm concerned about a follow-on effects. >> the time of the gentleman has expired. the chair recognizes the gentleman from north carolina mr. mckinley. >> mr. secretary we had said chairwoman yellen in a few weeks ago and i asked her about the cumulative costs of regulations at the fed and fsoc were proposing. she referred to a study by the basel committee as a reference point that i pointed out that

it's five years old and i read her mind you obviously in long before we fully implemented or got this far in the process of new regulations. but as chair of the fsoc has there have been an study done on the kimmitt of cost. >> congressman the regulators are attentive to the cumulative impact of the steps. >> so attentive but is there some point of reference for the cumulative cost of these new regulations? >> each one for example -- the. >> you can say no, it's okay. i'm just trying to get straightforward answer. >> i'm happy to answer the question.

i'm trying to. if you look at each of the steps taken you can look and see with the capital requirements are and you can add up the burden as it were. it has been very clear that there was a goal of internalizing risk and firms which does increase some at of the cost to firms of their activities. we think it's appropriate because it should be the burden of the firm and not the burden of the public if anything goes wrong. having things like more capital as part of addressing the risk that causes the financial crisis in the first place. >> not simply the requirement

for additional capital but is there broader review you could point to? >> i would have to go back and check if there's a conference of review but the cost that are the most significant to firms are the ones i'm describing. >> which you commit to sending the information to the committee. >> i'm happy to go back and look a woolly hat. >> back in june he testified that it was premature in your words to evaluate the effects of government regulation on market-making activities which is in some regards causing liquidity to vanish in certain marketplaces. is it your view that still premature? >> i think it's as a practical matter volcker is not in effect so firms are asking what is done in anticipation and not because of requirement. i think that there has been some movement by firms to get ready for the poker rule. i think that's a good thing because they have had fair notice and there's extension of the deadline to be sure they can prepare an orderly way. if we are sent to financial institutions that they should exit the proprietary trading business to do it in that instance is not the way we do it. i think it's premature to evaluate what the full impact is

what i think it's a good thing the industry is preparing for it. >> there is pretty good significant volatility last year and some government bonds. did you follow that? >> i followed it, yes. >> you think that is all connected to diminish the quiddity provided by institutions that have gotten out of prop trading in anticipation of poker? >> it was a complicated set of things. there was a lot of news going on so there was generally an off risk kind of mood in the market that day. i think there are many who jumped to conclusion prematurely that it could all be set at regulatory practices. i don't think, there is no evidence i've seen that suggests that was the predominant factor. >> wasn't a factor though? >> there were many things going on.

>> you said there were many things going on but you think that volcker requirements in anticipation of volcker some of the shock absorbers out there in the system. >> the evolution of the market is driven by a lot of factors at the same time so i'm are reluctant to contribute costello costello -- causality. many are not covered by volcker so this is something that requires a lot of analysis. i'm happy to share with you the analysis. >> in many regards i think fsoc is creating more problems by diminishing liquidity in the marketplace which will create future problems potential in the marketplace. is that a concern to u.s. chairman of fsoc? >> we are all concerned about making sure we maintain the most

liquid markets in the world. i do think it's a mistake to attribute to revelatory policy what happened on october 15 and i would be happy to follow up with you. >> the time of the gentleman has expired. the chair now recognizes the gentleman from california mr. sherman. >> one comment for the record in the materials for this record we talk about preserving our veto at the imf. we don't have a veto at the imf. i talked to the number to two over there saying could we prevent loans or economic aid to iran and he made it very clear that was not the case. i remember when prior administration urged us to put more money in the world bank because we had a veto there and iran got over a billion dollars in loans from the world bank over our objections. we can devote more resources to the imf but we still don't get

it veto. i want to focus on currency manipulation. the administration wants to -- wants once trust and a fast-track on tpp but they told us they are not going to include currency manipulation in that. they bought into because of this idea that somebody in the world says we are manipulating our currency because we have an interest-rate policy therefore we had better not talk about the deliberate and true and actual manipulation of other countries. every time i raise this question the answer i get is china as to why we are not sanctioning china for currency manipulation. i'm told china is cheating less. i haven't been married as long as many the members of this committee but i have been advised by at least a few not to

use the line but honey i am cheating less. the law is clear, if china is manipulating its currency you are supposed to designate them. other than the fact that would make them really mad and they are cheating less why haven't you carried out existing law and currency manipulation? >> congressmen we have engage directly with china in their aggressive play on this question of currency policy and we have made enormous progress. >> getting them to cheat less but you are not following the law. >> congressmen if you look at what the goal of the currency report is we have been a bright line on practices that need to change. we have been aggressive in international bodies and bilateral negotiations to push hard to get change in with china in the last year we have gotten substantial recognition of that.

>> mr. secretary you are not following the law but you have persuaded them to cheat less. >> if i could say the consequence that comes from the designation you're describing is an intensive consultation. >> what about the consequence to our constitutional system when the executive branch takes the attitude that congress doesn't know what they're doing so they're not going to follow the law? i would say that damage the t.a.r.p. is done to our social contract the damage and attitude that we shouldn't follow the law because it will have consequences goes to the nation's social contract is very significant. >> if you look at the record. >> mr. secretary have to go onto the next point. the last time in the time before that i asked you to take a look at worldwide unitary so we could finally tax international

corporations in a fair manner. you asked me to talk to your assistant secretary for tax policy and you told me you personally would look into it. he said he wouldn't bother to look at it. he's too busy so i'm going to stop asking you about it. if you are serious about taxing multinational corporations we would not be looking at seriously. we are told some the giant banks are too big to jail. we now have large financial institutions abroad inspire with u.s. taxpayers to deliberately intensely and this is just cheat on taxes millions of dollars. all these people are rich taxpayers. are they too big to jail, too well-connected to jail? do you have been given the records of thousands of those

who have conspired in a premeditated manner to cheat on their u.s. taxes. is anyone going to jail? >> congressmen -- >> is the treasury department put together criminal case? have you called the attorney general and said you have to give a high priority to persecuting because if we don't our "voluntary" tax system doesn't work? >> we been clear that our policy is -- >> yes, but no one is in jail. i yield back. >> the chair now recognizes atonement from new jersey mr. gary sherman of our capital markets subcommittee. >> the administration follows the law. mr. secretary have been in government for most of her professional career.

he spent from september 9,2010 as deputy of state for resources and that serves as the chief operating officer for the department and the principle adviser to the secretary on supervision and direction of resource allocation and management activities of the department. you were the department's chief operating officer during that period of time under secretary clinton responsible for devising on resource allocation. while you are the state were you also responsible for enforcing the department's policies regarding the use of personal e-mail accounts and record retention and if not who was responsible? >> congressmen i was in the states during during that period and responsible for a vast array of responsibilities in terms of managing the department. >> were you responsible for the enforcement policy regarding e-mail's? >> that were called having any conversations that i remember. >> said lewis was lockable? >> i would have would refer to the state department. >> you would achieve operation office so the policy was not your responsibility? >> clearly the functions that did it in a straight of at the state department reported on the line.

i didn't spend a great deal of my time. >> were you responsible are not? >> i take responsibility for the operations reported to me. >> were personal e-mail accounts part of your responsibility? >> personal e-mail accounts are not part of the state department. >> were you responsible for enforcement of policy regarding personal e-mail accounts? >> congressmen i don't recall being involved in policymaking. >> did you discuss with the secretary where federal law prohibited her from using government accounts? >> i have no recollection. >> did you approve of her request to use personal e-mail accounts? you >> not to my recollection. >> were you aware the secretary was using personal e-mail accounts to conduct state department business? >> congressmen the state department is going through all this material. >> i know but you are right here i>> i know but you are right here so i'm asking you the question. were you aware she was using at a the time? >> i was aware that she was e-mailing with people. i didn't pay a lot of attention to what e-mail she was using.

>> i just you mount my staff and as soon as i e-mailed them even though it's an old blackberry which is terrible service otherwise and i'm not happy with it as soon as you e-mail the person has their name and account right on top of it. i assume you're in contact with the secretary on a regular basis. >> my normal communications with her were in person or on the phone. >> you were no contact with her through e-mail? >> occasionally. see that during the course of two years you have never noticed where her account was coming from? >> congressmen i'm telling you at that time i was mostly paying attentions to the substance i was communicating with her on. >> i did too but i notice where the e-mail accounts are going to because i know what the rules are. in him are you telling me you never

made inquiry when you were e-mailing with people in the department of status to where you were e-mailing to? is that wages that? >> congressmen. sven are just a question? when he e-mail someone on official official business to do make notice of who you are e-mailing to or as you indicated you did not pay attention to you were e-mailing to? >> when i put someone's name and my blackberry and e-mail it just pops up. >> did you make notice of where you were e-mailing her? >> i just don't recall. >> i'm not asking you whether you recall. as secretary of secretary to make notice of where you are e-mailing to? >> our treasury at policy -- policy treasure is clear. >> do you disregard that? >> certainly i'm looking to make sure it's the right person. >> excellent. were you doing that under that

capacity there? >> will know you put a in a minute sometimes you get a name and we want to make sure -- to. >> did you check when you were e-mailing secretary clinton? >> when someone's name pops up it doesn't automatically pop up. i don't know how your e-mail system works but often the name pops up without the full e-mail address. >> you were telling me when you e-mail people on official business as treasury secretary you did not ever check to see where it was going to as long as the name was out there and that was satisfactory to you? he did not make an inquiry as to who you were e-mailing? >> in my address book i have official address and that's where i e-mail.

>> so you never made a further check, thank you. >> the time of the gentleman has expired in the chair recognizes the tillemann from georgia mr. scott. >> it amounted roughly 24 $.5 billion. my state of georgia share was $39 million. as a part of the agreement in the legislation that we passed we put a sunset date that said if the states do not use what ever the balance is by the end of 2016, it returns to the treasury department.

my question is, how are we doing ? do have a system in place in the treasury department where you are engaging these states? the need is tremendously great and continues to be. according to the legislation, we have only 21 months before the end of 2016, when the balance of the money not used comes back to you. do you have a report how the states are progressing from our indication and a hard hit state like georgia. non- of that money should be coming back. much of it goes to help homeowners to pay for their mortgage up to 24 months is desperately needed for our veterans. and many are facing mortgage problems. how are we doing on that and you

have a system in place to gauge how the states are doing it to make sure they are doing that to help the american people? >> we do lot to hit the allocations for the purposes designed we tried to be flexible to make sure the fund could be used not just for the more obvious purposes but like in michigan the destruction of housing that is a blight on the community. i have to go back with the state-by-state numbers. >> if you could i am sure other members want to know how they are but i am concerned particular to know what is the balance left in the states of georgia so that we could light the additional fire to make sure

the money stays in georgia? now let me ask you about isis . what steps does the treasury department taken to engage with allies abroad to disrupt the ice -- isis terrorist funding? in particular with the countries across europe coming together behind a common strategy to disrupt isis financing. >> we work very closely with our allies in europe and in the region to do everything we can to stop the flow of funds to support isis. >> specifically? >> there are different countries with different degrees of visibility into where money is flowing so we have of bilateral , basis to make sure they put

their resources to bear to look at questionable entities and individuals. i have had many conversations at a very senior level to get that commitment. the reality of isis funding is that it is not principally coming from pulling outside of the country. the way it has been funded is to conquer territory to take the bank vaults -- to take the money in the bank vaults. it is to pressure people to make payments to support isis. >> have we been able to increase our participation with turkey for example? in terms of the oil? >> we work closely with pressure to be attentive and control the flow of oil and those military actions have disrupted that and

they have pledged to be a cooperative, but it is a long border with very informal means of contraband across the border but we very much engaged with them to stop them. >> thank you. >> the chair recognizes the gentleman from texas. chair of our financial institutions of committee -- institutions sub committee. >> thank you. as you know, you serve as chairman as the financial oversight council. in 2010 the dodd/frank act said institutions above $50 billion in total assets would be considered systemically important that it poses a risk

, to the financial stability unfortunately there wasn't anything or analysis of factors of what is a systemically important feature. so arbitrarily that number was set at $50 billion. today, quite honestly there is a bicameral proving to increase this number. they did not take the time to analyze whether it should be another amount. as you know, number section 115 authorizes fsoc that the $50 billion threshold be raised. unfortunately i cannot find any evidence where fsoc takes any efforts to analyze the appropriate level for the designation. so has fsoc completed a review

under section 115 to raise thresholds for application of standards? yes or no. >> fsoc and the members of fsoc have been very attentive to the difference between small medium or large. >> that isn't the question. have they taken a detailed analysis under section 115 to determine whether an additional threshold could be raised? >> the question of formal versus discussions is the issue. >> i am talking formal sow is that no? >> i am not aware of a formal review but with the development of regulations there is a lot of flexibility for the standards should be for institutions of different size. nobody has confused $50 billion. >> but we could not ascertain

that. they gave you a vehicle. maybe there is a discussion that nothing formal has been done to address a that is too low? >> i am not aware of a formal review. >> are you aware that the ofr release a report to examine those systemic indicators with the free-market of the categories created and -- under the basil committee. it had a huge variation between systemic importance are you familiar with that report? reuse surprised at the results? >> i have to go back to look at the details. >> did you find any flaws in an analysis? did you think that was a fair analysis of the factors -- is your report.

>> i don't review the reports before they put them now would give you a thoughtful comment on it. i am not surprised they looked at the issue. no. >> since you have that authority under section to do that and 115 there has been some discussion about that, and even in bipartisan bicameral support i am surprised why fsoc has not taken on the features to do that. >> what i focused on the two years i have been the chair to make sure reemployment the provisions of dodd/frank and i have encourage regulators to take note of the difference of small and medium and large says -- size financial institutions. they are continuing to do that too is the extent they have flexibility it is appropriate to , use it. i've not ruling out the use it

is just a question first getting through implementing love paul -- the full dodd/frank. >> have you seen that report and the wide range? would you agree that the process needs to take place with that $50 billion threshold? >> i don't think there's any question that a $50 billion institution has different characteristics. and i don't think the only solution is to see whether you doing to make sure you are appropriately looking at institutions? >> than all the more reason to do that 115 analysis. >> we're trying to make sure those burdens on medium-sized institutions are appropriate. >> the gentleman has expired.

the chair recognizes the gentlelady from new york >> thank you. i would like to ask you to help me understand this chart. it shows the economy, begins in 2008 when president obama was elected to show the economy was hemorrhaging losing a bundle thousand dollars per month to track that job growth in the picture begins to improve five straight years of job growth told william private sector jobs over the past 60 months what factors do you think are the most important with the turnaround with grown 12 million private sector jobs the and a positive job growth for our country is never good enough and tell every american has a job is a vast improvement to what do you attribute this fast turnaround?

>> i recognize that charge. -- chart. >> i am sure you have seen it many times. what's the economy was in freefall when the president took office. that is what the red on the left-hand side of the chart shows. our government responded quickly and aggressively to deal with the causes of the problem and to get the economy moving again. look around the world where was the response? it was the united states. we did financial reform to fix the problem. we went into the business to

jumpstart the economy with the recovery act, which made a big difference. then gave the additional boost to the economy and then with low interest rates. so with fiscal policy and monetary policy effectively to use them as they might but one thing that they should teach the world you need to use it at the right time. >> this committee has been critical of your role on at sock -- fsoc. your role has not been transparent enough but it seems fsoc is accountable and i will give one example from my own experience. last year i sent you a letter

suggesting four improvements to the process of designating the of systemically important, and fsoc adopted all four of those reforms to the designation in process. it seems to me that fsoc is willing to engage constructively with congress so for those that put forward. can you describe the process they went there to identify the reforms? and do you think these reforms strike the right balance providing companies with a fair and thorough and transparent process to preserve the fsoc ability to identify and mitigate? by the way thank you for that , fsoc decision.

>> we thank you and other members of the committee for offering devised. -- advice. fsoc is a young organization that is roughly five years old , and as with any organization remains open to do even better in the future. then with those sources of input to open in that process and with outside parties and what the changes demonstrate is we want to cover process with the flow of information back and forth. i just note that before the rule there was a great deal already change there was a great deal already, back and forth. it was not that we went from a world that there is an but there is but this is a good clarification.

>> i would like to ask you about germany and france and italy's decision announced last night to join the asian infrastructure investment bank. >> can i take a minute to respond? >> very briefly. >> the issue about the asia infrastructure investment bank is an important obviously there one. are vast needs not is there going to be an investment with the rights of workers and the environment. but my point all along is anyone joining need to ask a question at the outset. to make sure the government's.

>> now recognizing the gentleman from missouri. >> i see you have your green tie. my wife is half irish. we have touched a little bit on some of the issues this morning. so what i want to talk about this morning especially with regards to the capital standards how they are implemented i met with insurance folks as 40 gore very concerned. that they should be held to insurance companies' standards. i assume from the comment they you want to regulate, even companies not big enough to fall under the international standards.

is that correct? >> the only companies that i'm referring to are those that we have designated under the fsoc process with federal oversight by the fed. states are doing that on a day-to-day basis. >> basically what you are saying you don't want to regulate at a federal level with capital standards? >> the standards that i am describing are those that are subject to the terms. >> you are going to regulate them differently? >> as i have heard from the regulators with the state regulatory process with those insurance standards a think the concern was with that federal designation with insurance standard to the designated firm. that we will do so. that is developed now so i cannot tell you specifically

what those will be. sova to know what did say product of insurance could or other financial activities. >> it is sure intent for those insurers that are not regulated. yes or no? >> the process of insurance regulation is done at the state level. >> therefore you will not? >> state regulators aspired to

best practices. my hope takes place with you a. >> of a quick question that we have three companies into understand how this systemically important. but economically how can never bring it down? since your the chair of fsoc what is the criteria used to say they are systemically important? to the point where you would bring the entire economy down. do you have some criteria? >> there are transmission channels where the failure of one of those firms could lead to broader financial problems. in the case of that designation

, we reached the conclusion the designation is appropriate because that is the case. >> if you have designated them is there a way to designate? >> it is hard to answer in 30 seconds. >> do you have a set of criteria were you go down the list? >> would be happy to send you those public documents why those transmission channels would present the list. and the second part of your question the core activities of these businesses it is the scope of the activity. >> time is almost expired. this morning in one of the political papers there was a

headline that says the secret service wants $8 million to build a fake white house for training. mr. secretary please tell maybe will not spend $8 million to build a fake white house when rehab movie sets and military bases around the world we can't build virtual reality video games that can do this. please tell maybe will spend $8 million to build a fake white house. >> i cannot comment on the proper training practices of the secret service. >> are you going to raise their budget ate million dollars to do something like this? >> i don't have the responsibility it was moved to homeland's security a break from treasury. >> the time has expired. >> hello mr. secretary. happy st. patrick's day.

i have one issue that i want to pick a bone with you on. did you ever read it secretary clinton's regular mail? to see who was raking her? chemical there she needed me to look at something. >> did you talk her into night? did you make sure she brushed her teeth? >> do you really want me to answer those questions? >> i just thought we would go to the extreme of absurdity. i will get off of that i made my point. has 47 members of congress to knock one branch over the other , have they ever written to the fsb to say don't talk to you? >> i am not aware.

>> have 47 members of congress written to those insurance supervisors to say don't talk? >> i am not aware. >> have they ever written to isis to say we cannot believe secretary of treasury is trying to do something to contain you? >> not to my knowledge. >> if they do, let us know. because maybe you should not be doing their job to talk to people on an international basis but i do want to talk about , fannie and freddie and had this discussion briefly before before the when into receivership the federal government brought $187.5 billion from the taxpayers. but since that time they have paid back $225 billion that is about a $40 billion profit ever -- give or take a 20% rate of return. what have you done with that? >> as you know, it becomes part of federal receipts and general

funds. >> and then they can spend it any way we want? >> as a practical matter it helped us reduce the overall. -- overall deficit. >> by a understand i think the other side has problems but i get that. but basically it comes into the general fund and we spent it on whenever we wanted. that is fine. that is a different debate but that 40 billion is only the beginning. what have freddie and fannie been allowed to pay down on what they originally borrowed? >> i think the idea they're out of the woods. >> i did not say that. i am asking what is happening with the money. >> there is still a federal guarantee. >> i understand that which i actually like.

my colleagues don't but i do. >> but that exposure the taxpayers have until there is finance reform. >> fair enough. what type of capital reserve >> they have not. >> because we're sweeping it out to put it into the general fund? american telly move to a system beyond the current one taxpayers. >> that has been the case since the 1930's taxpayers on the hook and then they have stepped in as we promised we put have for 80 years, and now we have been paid back. my question is when are we going to stop using this as a piggy bank? when will we talk reforming fannie and freddie? what is the proposal to move forward? >> the import question is how you move forward on reform. we have wanted to move forward we think it is an important part

of their proposal be have not seen? began have been engaged to think through with others. >> but that is not moving forward. >> i don't disagree progress has been slow. >> how long will you keep holding them hostage? it is about homeowners by holding them hostage not allowing them to capitalize or any funds to go to the housing trust fund and basically were submitting homeowners to additional tax for the purposes of general revenue. general revenue should be paid for by the general people. >> i don't agree with that analysis in terms of the impact on homeowners but i do think , there is a very serious question as long as they are in conservatorship -- >> you will >> you will not let them out you will not let them pay off their debt. >> there is the need for housing finance reform to move beyond.

>> one of my constituents wrote to me -- will be many not allow me to pay back what would you call that? >> the time is expired we now recognize the gentleman from wisconsin. >> good to see you secretary lew as a follow-up on the question international insurance advisers are not speaking nuclear weapons are they? >> and in regard to make sure hillary clinton brushes her teeth, you are not the tooth fairy. but in regard to emails you were secretary of state. >> deputy secretary of state for management. >> maybe we can put up an organizational chart of the department of state you actually reported to hillary clinton? >> correct. >> it is fair to say that there are many modes of communication and one of them was e-mail.

>> correct. >> is it your testimony you never noticed she was not sending e-mail or corresponding with her from the .gov account? >> i can answer the same question again. >> i would like that. >> my general mode of communication with secretary of was phone calls. i did e-mail time to time and i don't remember exactly how which showed up. >> i will be patient but president obama has indicated it would be the most open and transparent governments we have ever seen, and as one of his representatives, i would ask you to respond to the question. did you ever notice your corresponding on an account that was not the .gov account? >> congressmen. >> yes or no.

>> i always made sure i was corresponding with the right person. >> you are very good at not answering the questions, and i appreciate the way you cap dance. everybody understands the question you're not answering it. did you know that you were corresponding with secretary clinton that was not the .gov account? yes or no. >> i remember giving it thought. >> that is not the question. did you know that you were corresponding with her with the e-mail. >> it was a long time. >> you don't remember? >> is that your testimony. >> i am saying when i emails. >> if you don't want to answer my question because you know the question i'm asking, and you are refusing to answer it. i am assuming that you knew your corresponding with her on and the account that was not offical . and i understand you don't want to lie to congress were be part of the news stories so i appreciate that but all those understand here the you are saying i a understand it was not

official i don't want to tell you here is that right? >> i always endeavor to do my business in an open way. >> do you use for official business your offical account, a strike that -- have you ever used to account for their business? day macau use it for offical business. >> can you every tuesday non-government account? >> deal which time i use my personal account of i cannot access it. >> have you used a non government account for government business? >> on occasion consistent with common practice but it is not a regular occurrence state --.

>> i think this is an important issue. anyone who authorizes the disclosure of classified violation and compromising national security and national defense requires sensitive of -- information be maintained in confidence to protect citizens democratic institutions, and our homeland. protecting information critical to national security is the responsibility of each individual who was granted access to classified information. do you know who gave that quote? >> i do not know who gave that quotation. >> that was you. it was yours. i would hope that we have laws in place that apply to everyone in government not just a few. >> to be clear classified information can't be communicated over offical e-mail. >> do you suspect that the hillary clinton e-mail.com is is less secure and as the .gov system?

there are experts. >> i will not comment on something i cannot acknowledge. >> on the eggs of form that every state department employee is to sign, were you pretty certain they would sign that >> i assume it is normal appropriate documentation? >> i assume it is normal practice. >> i yield back. >> the chair recognizes the gentleman from new york. >> mr. secretary i was at another hearing and i walked end -- in here and i am confused. you are the secretary of what? >> the treasury. >> and you came here to talk about the treasury in the economy? correct?

>> to make international financial issues from the fed is significant to the people of the united states? the record think that is very important. by the way may be because every economy has recovered since 2008. >> it has recovered substantially. we are on the right path we have more work to do but now we are an example how you bring yourself back. >> unemployment rate now? that must be very high. >> well, in the mid-fives. >> so maybe they don't have anything else to talk about about what your job really is so they try to talk about something else since they have nothing of substance that affects the economy to discuss with you mr. secretary of the treasury. >> i am happy to discuss the economy for as long as you would like. >> let's get to what i think you are here for.

i think we were here for to affect the american people is substantial. for me i want to ask questions , that could be relevant and i know that the ranking member was very involved and concerned about it. it is about anti-money-laundering issues. number of banks have faced heavy fines and mr. secretary what do we make of those banks to be deemed in noncompliance with anti-money laundering regulations? >> those rules are very important. it is the way we make sure that illicit activity is caught and stopped. we have been aggressive to make a lot well understood to -- and underscoring the

importance of having compliance programs. what we have seen in recent years is a risk aversion developing where financial institutions have been, if anything have been going beyond what may be required. they're not required to stop doing business in a country where there are problems. they are required to have the kinds of compliance programs to catch problems to prevent having problematic transactions. so what is the part the control -- and we control, what is the part that financial institutions control. and we work hard to communicate those with counterparts abroad to make sure systems are in place to have very tight standards to stop the with set -- stop the illicit money activities but also a system , where financial transactions can continue.

>> do you think that the banks are putting enough efforts and resources into this? >> i think they put resources into it. i think they need to look at the proper compliance program to remain engaged in important areas of congress -- commerce without opening the door to prohibited activities. >> so you use the phrase that you need to know your customer. what about the customers customer? >> they are responsible for where the money is coming from and going to. and banks know what are suspicious transactions to raise attention and to make sure it is clear of what is required. >> with the time that i have

left -- i just came back from asia. i was looking at the president's proposal and there are things that are popping up, and i know you have had some questions already about currency manipulation, and whether there should be a currency chapter and , i did not hear your answer . >> i did not get much of a chance to answer. we are of the view that unfair currency practices should be stopped. we engage in a more bilateral basis to try to bring behavior up to a level which meets the broad international standards.

with the imf and intensely on the bilateral basis to bring behavior to level that meets that broad level of exchange rates only using those to role of domestic purposes not to gain unfair advantage but it is separate from how aggressive we are to push back on practices that our unacceptable. >> the time is expired. >> now we recognize the gentleman from california. >> secretary lew good to see you again. we're just back from a trip to india and china and taiwan i would give you make a quick lead with those issues we're working on and working with the prime minister the momentum there is headed in the right direction . last thursday the parliament approved this bill that raises the ownership caps for insurers to 49% and also allows foreign reinsurers to open branches in india that is long overdue. in china the news is a little more ambiguous. it is clear from our visits to

shanghai that american businesses continue to expand in china. just says you can read the headlines here they have that , investment for real-estate like lift or snap chat that continues to rise but u.s. -- but u.s. firms continue to compete on the on level playing field with very serious limits on ownership with the regulatory pressures are significant. china recently introduced a technology they say it is on hold but they say it is scheduled into a time so i need to ask you about that. it is definitely a move in the wrong direction. it would force united states firms to use chinese technology and limit cross border dataflow and export intellectual property as a result and you have a lot less access for u.s.

firms. one other troubling aspect is that it would require our technology firms especially financial services to hand over encryption keys with pass codes that help to protect affect. and it would install security backdoors in their systems to give chinese authorities and surveillance access. this is a new challenge. i will -- you about that. i also want to ask you about the progress on the bilateral investment treaty in china. you have 18 rounds of negotiations that have taken place. my focus is what could be done in terms of this arbitration issue, which i think would give us a real chance to make sure we have a mechanism outside of the court system there to resolve differences, if we could push hard enough on that.

so tell us about this ownership caps? >> thank you. i was also in india recently and met with the finance ministry and the prime minister, and was encouraged at the direction they are moving in terms of opening up markets but also making clear , for american businesses our -- how tax issues will be resolved. >> how about the arbitration issue in china? >> you raise the issue of the technology requirements we have made very clear it is a problematic set of proposals i -- they put forward. i together with the secretary of state wrote to the chinese leadership to make clear that we thought that they needed to stop

that from taking effect. i think it is very troubling it isn't the first issue that anti-monopoly of was thus also a troubling issue but we are engaging if you want to maintain that progress and have to hear those concerns freezing just to do it through channels to communicate effectively back and forth. in a matter of days or weeks to provide the first major documentation. it will be there negative list. the businesses -- >>, just like >> i am familiar with that, but i would like to get back to arbitration. you be too strenuously push the concept because of their decided

in the >> in china, that is not a fair way to do it. with arbitration enter of the martial settlements can be handled effectively. is the part of the agreement? >> i have to check but i will say engagements is of the . standards are high enough to enter into a bit hopefully it is a proposition there will rise as standard. >> time is expired now recognize the gentleman from georgia a. -- the gentleman from texas. >> thank you. thank you for this appearance today. let's talk about dodd/frank is an important piece of legislation. would you kindly give some indications as to how well it is performing, and some indication

as how dodd frank could have made a difference when we went through the 2000 a crisis. aig was styled an insurance company. could you police elaborate. >> we have made the enormous amount of progress. therefore, the economy is safer. we have taken action that raises the capital held by banks so that they are able to absorb the risks they are taking on. we have put in place consumer protections that did not exist before to prevent the kind of practices that have metastasized in the free financial crisis days.

i think that if you look at the backend, when institutions hit a difficult time, we put into place practices through procedures like orderly liquidation authority to make sure that insured can manage without having to turn to taxpayers for a -- the kind of support required in 2008 and 2009. internationally, we worked to bring global standards up. i know that this committee asks a lot of questions about the fsb. it is a way for us to drive the conversation internationally, so that there will be high global standards, which are so important. i think we have more work to do.

the idea that you ever finish is probably not attainable, because the financial system does not stop moving, evolving. the next problem not be what the last one was. that's why we ask questions about money market funds and asset managers and other things, not because we assume there is a problem, but because we know if there is a risk, we need to ask the questions in advance. the fact that there is a council that brings together all of the relevant regulators and authorities to ask the question of what we need to think about to protect the financial system. we did not think about that before. i think that the system is an obviously more safe than it was before. >> the consumer financial protection bureau, one piece of the puzzle, would you give some

indication as to how important it is? >> if you look at the work that they have done, how mortgage documents are now prepared, so a working person who is taking out a mortgage can understand the transaction they are entering into. the fact that you can't do things like low documentation or no documentation the cost would explode in a way you did not understand when you are signing onto a loan product. i think they have done enormously powerful work in that and many other areas, and not withstanding the critique if -- in some of the holes here. if you go to the communities there is a lot of respect for the quality of what they have done. >> how important are living wills? >> they are very important.

they give you the ability to know if they were to hit the crisis point, do they have the ability to work out their problems on their own. it is why the review of living wills is such a serious visa business. these are complicated organizations, and the fact that it is taking some time to get them hammered out shouldn't be particularly surprising. having the place will make the system incredibly more safe. >> you have indicated legislation can be improved upon . are you amenable to working with congress to make improvements? >> i have always been open to make the kind of legislative changes that would improve financial oversight the soundness of our system could what i have not been open to his questions about whether the basic approach should be reevaluated reversed. >> time is expired now recognize

the gentleman from oklahoma. >> thank you. we have discussed a wide variety of topics today. >> we always do. >> it is a good use of time and insights are gain. i would like to focus back on issues that i believe affect my district and a lot of the country. rarely do i quote researchers at harvard, but recently a report came out looking at the effect of dodd/frank with a community banks market share, and even before that since 2008th. it was noted that the community bankers market share had actually accelerated, some might even say double in the time , since it was enacted. it was designed to protect all of us from those institutions that almost brought the economy

to its knees in 2008 but with the implementation of dodd frank it seems the small institutions seem to be squeezed the most by what is going on and have the greatest barriers to try to continue their business or enter the marketplace. you could save me a little bit of time. my question to you is, based on what we are seeing happening in the community banking segment of the financial markets, is it time for regulators to use some of the flexibility given to them in dodd frank, or perhaps if that is not possible, it is time legislatively for congress to respond and provide some relief to the community banks? the people who did not cause a problem that dodd frank was the answer to. is it time to save the people we

saved? >> if you look at dodd/frank and the implementation there has been a great deal of attention paid to trading community banks differently than the larger money-center banks. as you have noted in your question, the trend of consolidation proceeded the passage of dodd frank, and i have not red the harvard study but i would be happy to look at it and give your response after i looked at it. you have to look at what was happening to that trend and whether it would have accelerated anyway because it was accelerating before. if you look at it at a smaller level, it's happening also in the larger institutions as well. you have a lot of troubled institutions that had to be taken over. the challenge we have is to be mindful of the fact that you can't treat a main street bank the same as a regional bank of

the same as a moneycenter banks we try not to. we are always trying to do better. >> >> it appears to be a deterioration in the market share, and a reflection of what they're trying to cope with and deal with. that has an effect with less access to credit and at some point you have to respond. >> what less question. another topic simmering along is that one of our