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foreign foreign foreign [Applause] thank you the committee will come to order without objection the chair is authorized to declare a recess of the committee at any time this hearing is entitled the annual testimony of the Secretary of the Treasury on the state of the International Financial system without objection all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record I will note if the outside of this hearing that we have a hard stop as a courtesy to the secretary at 1 pm this afternoon we will strictly observe it now I'll recognize myself for four minutes to give an opening statement welcome secretary Yellen I appreciate you being here today today's hearing is about the state of the international financial institutions but I do want to take a minute and talk about the debt ceiling crisis that we narrowly avoided first we're all glad that this is behind us no one wanted default no legislative branch official no executive branch official your statement says waiting until the last minute hurts American credibility I agree Madam Secretary this could have been dealt with by the president speaker Pelosi last year in the last Congress or the president could have engaged sooner with speaker McCarthy when they met on February 1st but nonetheless that is Mr Biden signed into law an effective compromise that said there's a lot of frustration particularly about the lack of transparency on when the treasury Department expected the debt ceiling to be breached Otherwise Known colloquially as the X date at the end of February the chairman chairman McHenry wrote you requesting information and your projections and calculations simple enough the response was lacking to put it mildly this Committee in Congress as a whole did not hear from you again until May 1st after the house passed the debt ceiling limit save and grow Act two different X dates June 1st and June 5th were subsequently released zero explanation zero transparency we all have to have confidence in the fiscal analysis of our government now I'd like to turn back and focus on the issue of the day international financial institutions let's start where we agree with the nomination of World Bank president AJ Banga Banga is a serious competent leader who has the capacity to right the ship at the World Bank and continue the improvements and Leadership from the former president Mr malpas the World Bank in the IMF should be laser focused on eliminating poverty and helping countries overcome crisis but unfortunately the international financial institutions seem to think about everything except economic growth they've fallen into a bottomless word salad of empty rhetoric that serves Western ngos not the interest of developing countries no wonder China has become the world's largest official creditor even though its lending terms are often more burdensome than those of the international financial institutions Africa is a helpful case study your recent response to our letter regarding energy was helpful well you're grateful for that uh letter but treasury is opposing virtually all fossil fuel and nuclear projects in the multilateral development Banks even though half the continent of Africa doesn't have access to electricity how does this make sense who is eager to build infrastructure there China meanwhile the IMF has completely failed to bring that country into compliance with International Norms that country being China the fund must get serious about standing up to Chinese government if it takes its Mission long term seriously if the fund keeps letting Beijing drag out restructuring talks with borrowers there won't be much of a case for additional IMF resources at the end of this year there's no doubt that China poses a generational threat to our national interest but as long as we remain committed to our values the U.S will compete and out-compete the Chinese Communist party I look forward to your testimony and I yield back the chair now recognizes the ranking member of the full committee the gentlewoman from California for four minutes for an opening statement thank you very much good morning I'd like to welcome secretary Yellen before our committee today I want to first start out by noting that after the failures of Silicon Valley Bank Signature Bank and First Republic Bank it was the leadership and Swift action taken by secretary Yellen and our banking Regulators that prevented a banking crisis protected our economy and ensured that depositors in the United States remain safe that's not all after months of Republican brinkmanship over our nation's debt secretary Yellen did a masterful job of blocking out lies coming from extreme Mega Republicans by keeping Congress appropriately updated with the latest estimate of the X date and ensuring our bills were paid on time it's this level of leadership that secretary Yellen has also demonstrated on the world stage right now climate change Global pandemics and food scarcity pose major threats to the global economy now after years of hostility and Ignorance by officials appointed by the prior Administration secretary Yellen is helping to restore the image of the United States all around the world and among our allies by pushing the World Bank I am F and other multilateral institutions to take Serious action to tackle these existential threats before they get worse not only that but under secretary yellen's leadership the United States continues to impose severe sanctions against Russia has increased Financial Resources for countries in Need by authorizing additional IMF special drawing rights and is promoting a strong and vibrant domestic economy by implementing transformational pieces of legislation like the American Rescue plan and the infrastructure investment and jobs Act and the inflation reduction Acts Republicans on the other hand are failing to lead they are actively denying that climate change exists dismandering the government's ability to respond to pandemics cutting off food Aid to struggling countries blocking their own legislation in the house and threatening to drive our global economy off a cliff it's telling that on the same day that we are hearing about the secretaries and treasury's efforts to bolster the global economy Republicans will also bend over backwards to defend the twice impeached and indicted form president former president Trump who has been arranged for a leisurely stealing and sharing some of the nation's closely guarded secrets and willfully undermining efforts to protect those Secrets the contrast between Democrats and Republicans is clear after nearly tanking the economy Republican infighting has ground the house floor to a halt make no mistake their extreme Mega agenda is not extreme enough for their extremists thankfully under Democratic Leadership the United States is stronger than ever we now have 28 consecutive months of strong growth and during Biden's tenure created a record 13 million jobs all while cutting inflation by more than half compared to last summer based on the latest consumer price index numbers index numbers out of this morning will further progress expected in the months to come the Biden Administration and Democrats have shown that what happens when you deliver legislation that puts work in families first I now look forward to today's testimony and I yield back John Williams back the chair recognizes Mr luftemeyer the chairman of the subcommittee on National Security illicit finance and international financial institutions for one minute thank you Mr chairman good morning Michelle the international financial institutions were established to address economic challenges in distressed countries and cultivate economic growth around the world however it's becoming clear that these organizations are neither capable of nor interested in meeting these goals the world bank's unrealistic and harmful green agenda is preventing some of the poorest nations from obtaining the cheapest MSO reliables most reliable energy sources such as nuclear and natural gas ironically the world's largest polluter China continues to receive sweetheart deals from the ifis that no no other wealthy nation is allowed to receive the country with the world's second largest economy continues to receive more than a billion dollars per year from the World Bank and China remains one of the bank's largest debtors sadly but not surprisingly is our money that is largely paying for these horrible policies secretary I look forward to hearing your ideas to stop them or that Mr chairman I yield back gentlemen yields back the chair recognizes the ranking member of the subcommittee on National Security illicit finance and international financial institutions Mrs Beatty of Ohio for one minute thank you Mr chairman and ranking members for holding this hearing Madam Secretary I'd like to thank you and the bite and years Administration for your leadership in preserving the strength and power of the United States on the global stage it was under your leadership your guidance and most importantly your advice that we avoided a bank crisis we imposed economic measures in support of the Ukraine averted a disastrous default and promoted a strong and resilient domestic economy further we have preserved our status in the global economy through your voice and vote at the IMF World Bank and other ifis a task that is increasingly critical as we see foreign adversaries seek to replace Us in Africa and the Caribbean and around the world having traveled to the Caribbean with congresswoman Waters particularly Bahamas and Barbados I have seen firsthand the destructive nature of Chinese relationships and recognized our significance thank you Madam Secretary for your leadership I look forward to your testimony gentlemen yields back today we welcome the testimony of The Honorable Janet Yellen the Secretary of the Treasury secretary Yellen we thank you for taking time to be here you'll be recognized for five minutes to give an oral presentation of your testimony without objection your written statement will be made part of our record secretary Yellen you're now recognized for five minutes thank you Mr chairman and ranking members Waters thank you for your invitation to testify before this committee today in my capacity as chair of the national advisory Council on international monetary and financial policies I'm looking forward to discussing treasuries oversight of the international financial institutions the past few years created the importance of these institutions as part of our broader economic and foreign policy toolkit since 2020 Global shocks such as the pandemic and Russia's legal war against Ukraine have had significant impacts on American families and businesses in the face of these shocks the international financial institutions Advanced U.S national interests by fostering a more resilient global economy they enable us to mobilize Swift responses to mitigate Global risk to the U.S economic Outlook and they help Drive U.S economic growth by expanding Global demand for American products and services that's why there has always been a robust bipartisan consensus around strengthening America's leadership at these Global institutions over the past year these institutions have continued to make smart and cost-effective Investments to meet urgent needs they leverage our dollars to mobilize additional funding from our partners in the private sector for example the IMF approved a landmark 15 billion dollar economic program for Ukraine earlier this year this program combined with direct budget support provided by the United States and our partners will help Ukraine's immediate financing needs it will also underpin its government's good governance and anti-corruption reform efforts the World Bank and other multilateral development banks have also provided essential support to Ukraine that includes facilitating the responsible and accountable disbursement of funds to help stabilize its economy our leadership at these institutions is one of the core ways of engaging with emerging markets and develop developing countries the ifis provide real resources to tackle the challenges the world faces from weathering economic storms to spurring long-term economic development in 2022 alone the development Banks provided over 150 billion dollars in funding to developing countries these institutions reflect American values assistance from the ifis come with strong requirements for governance accountability and debt sustainability serves as an important counterweight to non-transparent unsustainable lending from others like China as an example the multilateral development banks are a leading source of financing to close the infrastructure Gap in developing countries these infrastructure projects adhere to robust Technical and other standards that are aimed at achieving sustainable and inclusive growth in our partner communities the United States is not a passive shareholder we actively shape the priorities of these institutions as a leading shareholder in nearly all of them major product project over the past few months has been to evolve the World Bank to better deliver against Global challenges as part of its poverty reduction and development Mission we've already introduced reforms that will stretch the world bank's balance sheet to unlock as much as 50 billion dollars in additional lending capacity over the next decade and we've made preliminary updates to its Mission and operations I'm looking forward to working with the New World Bank president RJ banga to build further momentum for our Evolution initiative looking ahead the Biden Administration seeks to bolster U.S leadership in these institutions to that end we request authorization to renew our participation in the imf's new arrangements to borrow a critical backstop to IMF resources we also seek authorization to lend to two key IMF trust funds the poverty reduction in growth trust and the resilience and sustainability Trust these actions will help the IMF address economic crises with a particular emphasis on supporting developing countries amid heightened risks we would also like to boost our involvement in idb invest in the African Development Fund these investments will bolster our engagement in these regions at a time of geopolitical competition I want to end by discussing the debt limit I'm relieved that with the president's leadership Congress took action to address the debt limit in time but while we were able to avoid default the United States once again became dangerously close to the line this cannot be normalized as the way we do business in Washington waiting until the last minute Hertz our Global Leadership and credibility on the world stage we are a nation that keeps our word and pays our bills and we should never give anyone any reason to think otherwise thank you we'd like the system secretary for her testimony I now turn to member questions I recognize myself for five minutes for questions Madam Secretary I read with interest the the G7 statement on Ukraine from your meeting in Hiroshima last month which reiterated a commitment to stand against Russia's illegal war in Ukraine G7 leaders called on Russia to pay for the damages at long-term reconstruction costs of Ukraine and while the U.S has made major contributions thus far I agree that ultimately Russia should bear that responsibility that's why I'm working on a bill called the Ukraine Reconstruction Act which would ensure that the United States has the authority it needs to take title to Russian Sovereign assets and transfer them to an international escrow fund to pay for war damages this would be fully in line with International Norms conventions and precedent and also be done in coordination with our allies in Europe and elsewhere it's also in line with both the G7 and the United Nations which call for the establishment of a quote an international mechanism for reparation for damage loss and injury close quote and pointed out Russia's Frozen Sovereign assets held in central banks around the world I want to thank the treasury for their technical assistance and particularly the engagement of your deputy secretary do you agree that this is the right approach in that legislation of this nature is necessary well let me start by thanking you for your engagement on this important issue from the outset of versus a legal invasion of Ukraine we've taken decisive steps of immobilizing Russian Central Bank Reserves and working alongside our allies and partners we've immobilized jointly about 300 billion dollars worth of reserves as you noted we're committed with the G7 to ensuring that these assets remain immobilized until there's a resolution of the conflict in which worship pays for the damage it's caused and we're working with allies and partners also in the G7 and the so-called repo task force on this issue now however it's the case that most of the assets Russia's Sovereign assets are not in the United States um and for that reason it's critical that any next steps we take be done via careful consultation with allies and partners in a coordinated approach we are engaging in those discussions we're working first more accurately map exactly where these assets are and we're examining a number of options including some that we may be able to take under existing authorities but we do look forward to working with you and members of Congress on this important issue I think that's important I thank you for that and I do think you're you're right in each of the respective legal systems among the G7 Nations and Allied Nations they need companion type legislation thank you for that you chair the financial stability oversight State Council the fsoc and his chair I assume it's fair to say that any report fsoc puts out you put eyes on and have taken a look at is that true that's fair last October fstock released a report called the digital asset Financial stability risks and regulation report and it says and I quote digital asset businesses do not have a consistent or comprehensive regulatory framework and can take advantage of gaps in the regulatory system and engage in regulatory Arbitrage we couldn't agree more many of us on both sides of the aisle and I think FTX just showed just as long as these entities are outside the United States and outside some sort of a framework Americans are continue to be at risk until we establish a regulatory framework protecting Investments and innovators but also that Innovation web 3 distributed Ledger innovation in our in our uh in our country so F Scott report recommended that Congress passed legislation to provide Regulators authority over spot markets for digital assets as well as legislation to give Regulators more authority to have visibility into or supervised digital asset companies we're working on that here in Congress are those recommendations from last uh fall or late Summers f-stock report still the recommendations of x f stock that's still the view of fsoc yes um That Remains the view of fsoc that there are some gaps like spot markets for crypto assets that are not Securities we would like to see your regulatory framework over those markets and there are gaps in regulations I would point out specifically stable coins and I do believe that we need a comprehensive Federal Prudential framework and would be pleased to work with you with Congress to see if we can develop such a framework thank you Madam Secretary my time's expired and I'll now calling the gentlewoman the ranking member of the full committee from California Mrs Waters is recognized for five minutes thank you very much secretary Allan I would like at some point in time to really talk about Haiti uh and the lack of attention I think from anywhere dealing with that crisis there but I know that it is important for them and Civil Society to get together to you know plan a vote uh and get into government and there's not a lot that a multilaterals can do the um the World Bank IMF Etc but I'd like you to keep an eye on it so that as soon as we can get you know government re-established Etc that the funding that's going to be necessary will have our support so having said that we'll talk about um we'll talk about Haiti at another time I'm working and will continue to work to see that Civil Society is involved uh in getting something done let me just turn to something that is a recent announcement that is by the PGA that the PGA Tour may be purchased by live golf which is owned and controlled by Saudi officials including the Saudi Crown Prince as chair of the committee on foreign investment in the United States of cephas you know that in assisting the president in overseeing the National Security risk of foreign direct investments in the U.S economy the committee is permitted to consider quote whether any foreign person engaging in a covered transaction with a United States business has and has a history of complying with United States laws and regulations well that's a quote I believe that this consideration is a substantially lower bar than the serious crimes committed by the Saudi Arabian government and its officials Saudi Arabia has an aggressive repressive government known for chilling dissident jailing dissidents and in acting Draconian punishments the Crown Prince himself has been implicated by our own intelligence community in the brutal kidnapping torture murder and dismemberment of an American resident Washington Post journalist Jamel khashoggi further as shared by 9 11 families United the families of the victims of the terrorist attacks on September 11 2001 in response to the news of the merger the kingdom spent their billions of dollars before 9 11 to fund terrorism spread their vitriolic hatred of Americans and finance Al-Qaeda equator and the murder of our loved ones these same 9 11 families are still waiting for justice in their lawsuit against the Saudis as a Saudi government obstructs Court processes and obscures the truth dragging out the family suffering and restitution for over two decades can you share what scrutiny this particular deal between live golf and PGA core uh tour may receive incipius looking into their Investments by the Saudi Sovereign Sovereign wealth fund and general given its historic and continued failure to comply with U.S law and regulation so what I can say is that cepheus is a very important part of treasury's National Security Mission and the committee is very well positioned to review transactions that do involve National Security concerns regrettably because there are very strict rules of confidentiality I'm not in a position to be able to comment on any specific matter or potential case but certainly whether a national security concerns cepheus is in a position and does review transactions thank you for that clarification in essence what I've heard is you cannot comment on what is going on now but there's a possibility because they have the responsibility to review these kinds of transactions that's correct to determine whether or not it's in our best interest or our security is somehow compromised because of the transaction and I thank you for that because I do believe that and hope that situous will take it up thank you very much and I yield back the general lady yields the gentleman from Oklahoma Mr Lucas is now recognized for five minutes thank you Mr chairman the United States has some of the best Capital markets in the world and are critical to the strength of our economy during the challenging last several years our Capital markets were essential in facilitating capital and managing risks for U.S businesses investors and even the government while we don't yet have the details of Basel III proposal coming from the FED Vice chair Barr has indicated it will impact the Capital Market activities of large U.S institutions I'm concerned about adding punitive Capital charges to U.S banks is counterproductive to promoting liquidity and efficient markets this will come at the same time the SEC is engaged in dramatic and transformational Market structure changes at an unprecedented rate since treasury's mission is to maintain a strong economy and promote economic growth and stability are you confident that these policy changes will not undermine the resilience of the U.S capital markets that support the economy Madam Secretary um I I certainly agree with um the goal that you mentioned of maintaining strong Capital markets I'm not really in a position to comment on these regulations um I don't believe they've been released yet and um I haven't been fully briefed but we will certainly review carefully um think about the implications that of forthcoming changes could have for the functioning of our Capital markets and particularly for the treasury market where we have a particular responsibility just to reiterate it is concerning that U.S banks will have to implement both significant Market structure changes including to the U.N affecting the U.S treasury markets and increased Capital requirements associated with Market activities I'll ask this are the fed and the SEC coordinating with treasury on the economic analysis necessary to understand potential consequences to both markets and end users and will you commit to this analysis well I believe this is um likely to be a Fed um set of regulations and proposals the treasury is not involved in reviewing those but um I'm assuming that the Federal Reserve would possibly jointly with the FDIC put out in notice of proposed rulemaking and um that we would certainly have the opportunity to discuss you see where my concern is the potential impact is so dramatic if the entities that are engaged in these various elements of dramatic change aren't cross-referencing their actions the possibility of unintended consequences that just concerns me question number two in the European Union the corporate sustainability reporting directive went into effect in January of this year the csrd will require companies to disclose a host of far-reaching ESG information these requirements will also apply to non-eu companies that have a significant EU presence which could have a substantial impact on Industries here at home for example the agriculture sector companies that do business in Europe are navigating through how to comply with this disclosures required to climate change scope 3 emissions water usage biodiversity ecosystem data secretary Yellen is the treasury have an estimate of how many U.S companies will be impacted by the Cs Rd and the difficulty these companies could face well I I don't have such an estimate but let me say that while we're supportive of the high-level aims of the Cs triple D we are concerned that it has extra territorial scope and potential for unintended negative consequences for U.S firms this is something that we are discussing with the European Union and will certainly make our concerns known I just have to note for the record that it is important that we do not allow Europe to become the standard Setters for the United States U.S Regulators should be diligent in protecting U.S interest and in defending U.S sovereignty that's your job in mind secretary agree I think that some of the requirements um could affect the global activities of U.S firms um where there is no clear Nexus to the EU and um that certainly concerns us because Brussels seems to be playing for keeps on everything that involves economics with that I yield back Mr chair the gentleman yields back the gentlewoman from New York Mrs Velazquez is now recognized for five minutes thank you Mr chairman ranking member secretary Yellen in July 2021 the IMF board of directors found that climate change is an existential threat that poses critical macroeconomic and financial policy challenges that will confront all its members in the decades to come how is the treasury Department working to integrate the macroeconomic effects of climate change into the IMs core activities will we are concerned about integrating it into both the imf's work but also perhaps more important the work of the multilateral development Banks um the the multilateral development Banks um we think need to evolve um the work that they do to move from focusing purely on Country specific challenges um that affect poverty to responding better to Global challenges including climate change and pandemics as well as fragility and conflict and we have spearheaded a process to evolve the work Mission operating modes and and strategies of of the World Bank starting with the World Bank to be able to better address these challenges this is something that the new president of the World Bank will be deeply involved in and you know it's the IMF addressing climate change is not the core Mission but they are certainly involved in evaluating climate changes it impacts a country and its possible macroeconomic stability thank you and secretary yelin I have been concerned about the rapid speed at which Silicon Valley bang grew in size and complexity and I'm considering legislation on the issue the fed's review of the bank's failure notes a similar concern as chair of the fsoc if this concern you as well well it certainly did concern me the set of um banking problems that were touched off by the failure of this bank and um the the FED produced um quite quickly a report on its supervision of Silicon Valley Bank that did point to deficiencies after all this was a very rapidly growing bank and it had a unique structure that potentially made it vulnerable to runs so that is a matter that it is appropriate to address by the banking banking supervisors thank you as chair of the fsoc do you believe Regulators have all the tools necessary to ensure that as a bank grows in size and complexity particularly over a short period of time heightened Regulatory and supervisory standards are able to be quickly applied I believe that the regulator is the bank Regulators do have the authority to put in place um effective regulations and supervision to address these issues um some of the supervisory standards were relaxed and we think it's appropriate the president thinks it's appropriate and I think the Federal Reserve thinks it's appropriate to revisit some of the changes and also to shore up Bank supervision I too believe it's appropriate thank you for that answer cdfis are critical to our LMI and underserved communities recently I have heard concerns from cdfis about a new certification proposal from the cdfi fund that could make it difficult for cdfis to lend in the communities they serve and would undermine the ability of cdfis to effectively inject funds into communities that desperately need support are you aware of the proposal from the cdfi fund and I I'm aware that the um there's a plan to update the cdfi certification process that's something that hasn't been reviewed for about 25 years and um you know the potential importance of the cdfi designation Madam Secretary the generalized time is expired you can answer the rest for the record the gentleman from Texas Mr sessions is now recognized Mr chairman thank you very much uh Madam Secretary thank you for being with us today your presence here allows us to not only engage with you on your thinking but also helps us articulate policy that we believe uh Madam Secretary uh almost effective with the president taking office President Biden taking office the FED began loaning the United States government about 100 120 billion dollars a month and then tapering about a year later took place well that was reduced to about 105 billion dollars could you please tell me the current amount of money that the treasury I'm sorry that the FED is putting in to the United States economy that we take loans out for so this is chair Powell rather than myself but that's that's a question of anybody that's on top of financial interests of the United States because today we're talking about the state of international finance systems and if the entire world sees where America cannot even stand on its own two feet without taking a loan out that we pay interest on and the Secretary of Treasury won't even answer the question I'm sorry I'll answer the question thank you um I mean the FED is engaging in what's sometimes called quantitative tightening which is a reversal of its long-term Treasury and mortgage-backed security purchases it's now reducing its Holdings by redeeming Principle as it comes due and um reducing its Holdings over time of these assets and it's something that they deemed appropriate in is part of a monetary policy that's aimed at having a more normal size of TR of fed portfolio and is part of their strategy to address inflation well I just heard you address one side of the equation if you please answer my question how much money does the fed put into our economy that we take out a loan for not how we change out those loans and change them based upon the interest rate how much money every month does the fed put into our economy to to prop it up I'm sorry I'm not sure I know what you mean by money the FED puts into the economy the FED does not loan the federal government any money that new money that we take an interest take interest out on is that your testimony the FED provides reserves to the banking system and in doing so uh purchases treasury assets and mortgage-backed securities guaranteed by Fannie and Freddie and it does that to serve a monetary policy purpose Madam Secretary I believe you're entitled to your own opinion this Administration is that when the United States of America takes out loans that we receive from the FED that we pay interest on it is a message to the world that we cannot stand on our own two feet with our own vibrant economy and it sends a huge message that either we cannot manage our own spending habits or that we are allowing our own people to stay at home and not to produce and grow our economy this economy that we have I think that we have seen produced a doubling in the amount of money that came in to the treasury from 2010 of about 2.1 trillion to about 2021 or 22 of about five point a 4.9 trillion dollars we doubled the amount of money that comes into the treasury your testimony today is that you were suggesting that we are not taking out any loans from the FED that we would pay interest for and I appreciate your time before this committee today Mr chairman I yield back my time the gentleman yields the gentleman from California Mr Sherman is now recognized Madam Secretary we deal with investor protection in this committee the SEC is looking at swing pricing rules dealing with mutual funds that will undermine investor protection and the word is out that it is the best sock yourself and the FED that somehow believe and are pushing the SEC to have these regulations to prevent a precipitous sell-off in U.S Securities should there be a crisis I just want to ask I'm not going to ask you a question at this point but but I'd hoped you'd re-examine your position there because telling the American people there's a crisis we don't want you to sell your stocks we're going to impose a penalty on you for selling your mutual funds is one way to get them running toward the exit so it's bad investor protection it's bad systemic regulation uh I do hope that you'll leave it to the SEC what they do on swing pricing your testimony talked about the IMF uh Pakistan is engaged in uh negotiations right now this is a unique opportunity to help the people of Pakistan but also a unique opportunity to focus on human rights democracy and timely elections in Pakistan and I hope that the U.S voice is being used there to uh to push Pakistan toward democracy and human rights um Iran has special drawing rights at the IMF and uh I wonder how we as a Congress can reauthorize IMF and leave that untouched IMF May ultimately have to decide do they want American participation or do they want Iran to have special drawing rights in March of 2000 uh in 23 this year this secretary blinken identified that the amhara force Regional forces in Northern Ethiopia were engaged in ethnic cleansing and war crimes the Human Rights Watch has identified two particular individuals that are responsible for those uh war crimes and I hope that the treasury would look at sanctioning those two individuals uh believe it or not I have a question um we have a capital gains allowance that costs us tens of billions of dollars that is Justified as encouraging people to make investment that helps an economy grow and maybe that makes sense unless the economy you're growing is China can you think of a reason why we use the tax system to subsidize U.S investment in Chinese companies sorry in what way do we well if you buy the if if you work hard and earn money you pay the full ordinary income tax rate but if instead you invest in Huawei and the price goes up and you make the same amount of money you pay a much lower rate and if you die while holding that you get a step up in basis and you pay no tax at all so the full panoply of investment incentives built into our tax code is there for China is there a reason why we're incentivizing investments in Chinese stocks well we have policies about how we tax capital gains on assets and can you think of why we provide these subsidies apply these to Chinese stocks except that we got lazy and we wrote them up for all stocks and we forgot China we um this is the policy that we have for all assets I look forward with you to come up with a policy that makes some foreign policy sense um if finally the the chair um talked about crypto and said we need a regulatory scheme I want to say we have a regulatory scheme we have the Securities laws thank God Gensler is enforcing them but we also have recently adopted tax laws dealing with crypto the uh inflation reduction act said you've got a report on form 1099 uh in December of last year treasury announced the crypto broker Brokers however wouldn't have to report um until final regulations were issued these final regulations have been um approved by the OMB but remain un uh unissued uh Mr Lynch and I sent you a letter um just recently urging you uh the SEC has proved they're not afraid of the crypto Bros I know you're not afraid of the crypto Bros I hope the IRS is not afraid of them when are we going to see these regulations so that if you make a profit on selling your crypto you at least have to pay taxes on it we will get back to you on that shortly thank you gentlemen's time has expired the gentleman from Florida Mr Posey is now recognized uh thank you Mr chairman Madam Secretary given this trajectory of the Russian oil revenues uh has the administration sanctioned on oil from Russia been a failure um we have taken important actions of course the United States is is sanctioned we're not allowed to purchase Russian oil and by and large the G7 is not purchasing Russian oil and we have taken very important steps to reduce the revenue that Russia is able to earn from its oil production and sales by placing a price cap on sales of Russian oil that make use of any G7 service including insurance or shipping and the Russia's revenue for but we also want to make sure that the oil Market Remains the global oil Market remains well supplied so that oil prices don't spike is a consequence of Russia's inability to sell any of their oil rushes Rivers why are the Russians Revenue going up Russia's revenue is roughly halved over the last year Russian authorities have indicated that the price cap that we've placed on Russian oil has had a very serious negative impact on them reducing their revenues their budget has gone from large Surplus to deficit and they've had to change the way in which they tax their oil companies to drive revenue from oil sales something that's harming their long-run ability to invest in the oil industry I think our policy there has been quite successful all right why hasn't the administration acted a progressively to impose sanctions on China for the apparent human rights violations such as those experienced by the uyghurs we have placed we have put in place sanctions for human rights violations and continue to examine further sanctions that we can Levy well the president vetoed my congressional review act resolution aimed at stopping the Commerce Department's solar panel rule that allows China's solar panels to evade our tariffs by permitting them through third world Nations why do you support giving the Chinese the exemption so I'm you know what we do with treasury is we focus on sanctions on um xinjiang for human rights abuses and I'm not familiar with the Commerce Department's thinking on this issue well so you weren't consulted on it at all I mean you have no clue about what's going on I haven't been involved in that um aspect of policy toward China you know you're you said you aimed to to do something about human rights violations and you just seem totally unconcerned about this I am concerned about human rights violations I think that's a core principle of U.S policy toward China is that um we will not do business with China in cases where there are human rights violations and have put in place meaningful sanctions yeah do you have any idea why he vetoed the legislation that would put to slave labor at a disadvantage instead of an advantage over American Products sorry I'm not familiar with the legislation in detail what is the Biden's Administration strategy to use our participation in international financial institutions to address and mitigate the threats posed by China to our financial and economic well-being and to the geopolitical stability um so we we have taken the position that the multilateral development Banks particularly the World Bank should graduate China and cease lending to China and um we are working very hard to try to get China to meet its responsibilities when it comes to debt restructuring and debt relief and we've had some success in those efforts China's played a constructive role in Ghana and Sri Lanka but there are other the gentleman's time is expired the gentleman's Tom has expired and the secretary can answer the rest on the record the gentleman from New York Mr Meeks is now recognized thank you and Madam Secretary I want to thank you for your tireless effort to ensure that the United States Financial system remains as strong from your role role in helping us to avoid a catastrophic default to containing spillover from the recent bank failures to ensuring that the United States remains a global leader through our International policies and Partnerships and I know very much so we are fortunate to have you at the helm uh let me uh ask you uh and you know I'm not in favor of sanctioning everything and everybody but I do believe we need to be judicious in picking sanctioned targets but there are a couple of energy companies in different parts of the world that are crucial sources of funds of this despotic regimes and I keenly focused on Rosa Tom um erosa Tom for Russia's State nuclear company not only is it a major source of funds for the Putin regime and one of the only largely unsanctioned Russian company energy companies but they've also been playing a major role in courting a nuclear disaster as apparega nuclear plant in Ukraine and I really believe that this company needs to be fully sanctioned to keep funds from Putin's Army and to support our friends in Ukraine and I've drafted legislation to that end so I'd appreciate your thoughts on Rosa Tom and further I would invite you to speak about your leadership in coordinating and leading the international support effort of Ukraine and the importance of our continued support well I believe strongly and we President Biden has said and I've said that um we stand with Ukraine and will do so for as long as it takes and we're using our sanctions Authority and our export controls and um other authorities that we have to do all we can to support Ukraine um in its fight against uh what's been a brutal Invasion I'm afraid that I can't comment specifically on Rose Adam but I would say that we have taken steps to designate a number of subsidiaries of that firm to degrade the firm's activities in some key areas and we've designated officials from the company as recently as February and let me just say that we continue to take further sanctions actions as we can justify and in situations where we think we're able to mitigate um unanticipated or unwanted consequences and well I can't preview specific sanctions actions that we're going to take we continue to take sanctions actions to degrade Russia's defense and Industrial sectors thank you let me let me jump to another question that I I'd like to address and that's dead relief for the developing World on the one hand many countries owe funds to the World Bank and other International financial institutions but on the other they often owe even more in opaque loans to China I simultaneously believe it is crucial to the United States won provide necessary debt relief to Star Wars Hunger and abject poverty to countries in Africa and South Asia but two to make sure that debt relief from Global institutions is not used to pay off debts to China can you talk about the administration's approach to this dilemma well we're very concerned about the growing the large and growing number of con countries that require debt relief in order to restart economic growth and um these countries come to the IMF in order to obtain help put in place structural reforms and gain funding and to qualify for those programs they have to have a sustainable debt trajectory and we've devised the so-called common framework to help firms manage their their debt situations and to restructure debt and we're Disturbed that relatively few countries have signed up for common framework debt treatments and among those that have some have waited years and not been successful in being able to bring all the creditors to the table to restructure debt and zambi is a country that I'm particularly concerned about and recently Revisited it has a government that really wishes to restart growth and to be able to borrow to invest to promote economic growth and it can't do so without that and China is not coming to the table we're working very hard to change gentleman's time is expired the gentleman from Missouri Mr Luke tomorrow is now recognized thank you Mr chairman I thank Mitchell and for being a secretary of being here today statutory you're required to be here before the financial service committee to talk about International Financial system we appreciate your willingness to do that I wish you would be the same attentive to as attentive to what you're supposed to be doing with the small business committee as well you're well over two years since you're supposed to test that surely have been there and subsequent visits have not been taking place either so I hope you attend to your statutory duties and that committee as well um one of the things that I'm concerned about and we've talked about a little bit here in the last few of our my colleagues this morning was sanctions and had all structured with China and that sort of stuff and I asked this question to be the last time you were here with regards to the possible invasion of Taiwan we learned from Russia when it invaded Ukraine that we didn't really have a plan put together on how to put a group of sanctions together on different entities whether it be oligarchs the country itself and we had to sort of after the fact get up to speed and get it done I asked the question last time you hear if you're putting together a plan with regard to China and it's possible invasion of Taiwan at that time I got no response indicating to me that there is no plan so since then as the treasury worked with Commerce anybody else to begin to put together a plan should China invade Taiwan so the National Security Council works with the interagency to make sure that it is in a position to address threats to our national security and so I'm not in a position to be able to provide any details at all about what the response would be to hypothetical um events pertaining to Taiwan but I will say that this is something we work we work with other agencies to make sure that the United States is okay you understand you can't tell me anything more than just a yes that's that's what I want to hear thank you um you know you addressed a little bit uh about this next question with regards to China having access to the World Bank you know it's kind of interesting um second largest economy in the world and yet in order to be able to qualify for the loans you've got to be a low and moderate income country I would assume you would agree that they are not a low and moderate income country um certainly I don't think that they should qualify okay for World bank loans I had a discussion today with the president of the World Bank and I discussed this issue with him how and why China continues to have access to this and why we can't stop this from happening uh you indicated in your earlier discussion with some of our members here that you're working to try and stop that can you tell me exactly what you're doing to stop then well we we will not support or vote in favor of any World Bank lending to China so we use our voting to oppose it and we have certainly worked to convince other countries in the world Bank to cease cease funding and you know while there is some it is a very small part now with the world bank's activities basically my understanding is we we participate about 17 percent of the total and China is roughly two something like that is I believe it's much lower than that but I I can get you a number I think it's a significantly different in the amounts of participation yet they have been accessed to it and because of our overwhelming participation the amount that we have in there we have an outsized voice on that commit on that in that board is that correct so we need to be we need to be exerting our authority to be able to um our opposition on the board to put china back in its place and that's what you're going to try and do correct yes okay a minute ago you said that you're seeking authorization to participate in uh some other International financial institutions you need to have identity be reauthorized every year is that correct I guess what I said is we would like permission to continue participating in the new arrangements to borrow and we also seek permission to um lend up to 21 billion dollars to two IMF funds the poverty reduction in growth trust and the resilience secretary if we're going to be loaning money to these Finance foreign financial institutions and the kind of money you're talking about do you not believe that we need to have more control over them to make sure that entities such as China don't have access to them well we we have substantial control over them we have made sure that this structure of these they cannot lend to China the poverty reduction in growth the gentleman's time is expired for very low income the secretary can answer for the record the gentleman from Georgia Mr Scott is recognized thank you very much um chair Yellen I'm very worried about China and I want to ask you something should we consider prohibitions for U.S private Equity investment in private sector firms which have ties to the Chinese military and the Chinese State surveillance apparatus now you are very much aware of the reports that China is trying to establish a military base operations just 90 miles from our Shores in Cuba what what is your assessment of this are you taking this as serious as I am and what do you propose we should do for any private Equity Firm that would have connections with their military or surveillance operation this is very serious you know I mentioned this in an earlier uh session we had when we failed to shoot down that surveillance balloon and I said then that this was a mistake by the Biden Administration it was a mistake because that showed weakness to China and it showed uncertainty to our own friends so tell me what did we do about this situation what is your assessment about this threat and should we not prohibit any Investments to any of these Chinese companies that have connections and are involved with Chinese military and surveillance apparatus so um we are looking at potential restrictions on outbound investment that could concern could pertain to private Equity firms that invest in Chinese firms with connections to their military and we are worried about potential National Security risks so it would come let me ask you this in my time what is your assessment of it I have great respect for you you've been our leading treasury secretary on two terms and I've worked with you and I respect your broad Intelligence on Far matters how serious are you taking this effort to put a military surveillance 90 miles from our Shores well we are concerned about China's role in the Caribbean and in Latin America more generally but as secretary I want what you feel do you feel like I feel that this is a serious attack on the United States now if you remember about 50 years ago they tried to do something similar but John Fitzgerald Kennedy acted promptly what are we going to do well I don't have an answer for you on what we're going to do but certainly protecting our national security is a core concern and with respect to China we're carrying that out in a broad range of ways from export controls to entity lists to in some cases sanctions and potentially restrictions on outbound investment do you feel that this may be a primary move that would precede their intentions over and Kuwait and in Taiwan I I I really can't comment on that either all right thank you secretary gentleman's time has expired and now the gentleman from Michigan Mr hyzinga is now recognized for five minutes thank you madam chair and secretary Yellen good to see you again um I'm going to uh touch on a couple of things uh real quickly I wanted to make sure I heard correctly though I think you would answer to an earlier question the PGA and Liv um agreement uh is something that treasury is planning to look at I know you're not going to get into specifics of it but is it something that is going to be subject to siphius review well again I'm not allowed to talk about any specific matter before cepheus there are very strict rules about that but but let me clear let me clarify uh it does it seem to fit the general parameters of what cepheus typically is reviewed if they're in National Security risks then the answer is yes and the definition of national security risk is well vetted and well understood I believe it is yes okay all right I'll leave it at that for right now um I did want to touch quickly as well on the debt ceiling um something you had brought up in the close of your opening um it was June first deadline that you initially gave congress and and everybody else uh to reach the borrowing Authority um that when you were going to reach it that then moved to the fifth uh others who have been involved in treasury speculated that it could have been well beyond June 5th um I'm curious was there actual analysis done by the treasury to determine the state and what changed or was this artificially manufactured I mean in in all fairness you you took Congress to task about not taking this to the brink uh and in all fairness the White House and specifically the president ignored Kevin McCarthy the speaker for nearly 100 days after he said he was going to have negotiations with him so it would just seem to me that if the White House recognizes that that's not a good brinksmanship trying to apply that to Congress why didn't why didn't the president take your advice I'm sorry there's nothing political whatsoever about the information and advice that I have given to Congress about when our resources would be exhausted so do you have anything else early January I indicated that we felt confident our resources could last until the beginning of June okay all right I'm going to move on I did read I did reclaiming my time I did I did read the the statements you had said you June 1st or the following weeks at which then tightened up and that's fine that's not what we're here today about the um assistant with that side reclaiming my time on this uh because I do want to hit on the International Development Finance Corporation as well but I am also uh going to say something repeat something to you that I've repeated to every other uh person from this Administration frankly the last Administration congressional oversight is vital to the work that we do I happen to chair the oversight and investigation subcommittee this particular Congress and it is necessary to reiterate our constitutional requirement and standing and obligation that we ask for and receive information that uh that uh is going to help us do that job um I to we have sent this committee and my sub committee specifically sent you four requests to provide specific documents and information with respect to the March 2023 bank failures as well as treasury's role in the digital asset space I know the ranking member brought up the bank failure so it seems to me fair game the first set of requests are important to help this committee understand both Treasury and fsoc's role in the bailout of both Silicon Valley Bank and Signature Bank and specifically a use of systemic rest exception to date we have received what I would generously call limited uh information from your staff for example in response to our March request we received a copy of the fsoc meeting minutes from March only after they were publicly published on treasury's website frankly we don't need your help we've got that and frankly it's a waste of your time and whoever's reviewing this and your staff's time and it therefore Madam Secretary wastes our time so let's get beyond the games of sending back and forth publicly available information and actually get to our constitutional oversight role will you provide and commit to me provide the underlying records of the published meeting minutes including draft minutes and notes from the March 12 and March 24 fsoc meetings regarding the bank failures this is what we had been asking we've provided there are now minutes in the public no no yeah the minutes that are in the public and you didn't send them until after they were available in the public I want to know the draft to be approved by the committee the gentleman's time is expired the gentleman from Massachusetts Mr Lynch is now recognized thank you Mr chairman uh welcome Madam Secretary and I may I say thank you for your your wonderful leadership and your service to our country thank you appreciate it I want to revisit uh the the aftermath of the Silicon Valley Bank collapse and the exercise of the uh the exception that we allowed to be uh exercised instead of operating the or allowing the least cost resolution practice to go into effect uh I know there are five requirements statutorily that must be considered by you and and the FDIC and SEC um and there's a consultation requirement with the president but um in the aftermath of all that all of that some of this is is is Monday morning quarterbacking but there are some that say that perhaps uh exercising that exception the the the risk exception that we may have been able to resolve this situation without exercising or reverting to that exception um in your own mind and and look this this collapse happened in a matter of two days yes I asked this same question to chair gunberg of the FDIC when he was before the committee can you think of any uh any alternative in retrospect that might have existed other than uh the financial other than using the Financial Risk exception well we all of us involved in making those decisions were tremendously concerned that the failure of these two banks in a matter of two days created a huge risk of contagion to Banks throughout the country there are large fraction of uninsured deposits at many banks and we were concerned that depositors would be terrified by these rapid and unanticipated failures and that we would see contagion and runs on many banks and we felt that we needed to insured depositors broadly that their deposits were safe and this was a way of doing it and I believe it succeeded while there was a first Republic uh later failed we have not seen I believe these actions plus the creation of the new liquidity Facility by the Federal Reserve I believe it stopped contagion and stabilized our banking situation system and it was a very dangerous moment yeah the the problem that I see is that the least cost resolution uh preference was meant to lower the costs of of resolution that's right and and it's hard for me to imagine a similar situation ever arising where you know a systemic risk exception uh would not apply and I'm just wondering if this exception has swallowed the rule rather than rather than going with a low-cost resolution we're going to fall into the same uh scenario over and over again um I don't think it would fall into the same situation over and over again hundreds of banks failed in the aftermath of the global financial crisis the FDIC resolved most of them and they used the least cost method of resolution so this is a very unusual situation where this exception had to be invoked let me let me ask you public was resolved okay and it was also done in a lease cost resolution okay okay well my consider concerns still remain let me ask you another uh question about uh JPMorgan Chase and and their assumption later on in a different process um isn't it always the case that the biggest banks will seem to be the the sturdiest and the best able to absorb another bank that is failing or or in receivership well not necessarily I mean Silicon Valley Bank and uh signature were um soon merged into smaller Banks not nearly that size but when the FDIC resolves a bank it is required by law to take the best offer the gentleman's time in this case it was JP Morgan secretary I yield back the gentleman the gentlewoman from Missouri Ms Wagner is now recognized I uh thank you Mr chairman secretary Yellen over here last month the G7 leaders of which the United States is one agreed in a joint statement on an economic approach to China that would focus on and I quote de-risking and rebukes calls for decoupling from China's economy however I have to say I think it's it's appropriate and in fact essential that we decouple from Chinese Industries and entities that are actively participating in Unthinkable human rights abuses including the ccp's genocide of uyghur Muslims so please tell me how does treasury plan to de-risk the U.S economy from this appalling tragedy well in the case of human rights violations and xinjiang there there is no business we we have sanctions in place that prevent Americans from doing business with entities that are involved in humans that's how you're de-risking you say you have sanctions I'd like to see those sanctions and and what companies have been sanctioned for doing business with China as they exploit the human rights of the uyghur Muslims if you could provide that please well we've sanctioned Chinese individuals and entities for human rights abuses there and um so please and and I do need to move on with respect according to Arisa Bloomberg report Chinese purchases of Iranian crude had jumped in March by 20 percent month on month totaling 800 000 barrels imported a day in March Iran said it is now exporting more oil today than at any time since the 2018 reimposition of sanctions current Law requires treasury to Target foreign financial institutions that are involved in these sales ma'am how many foreign financial institutions have you sanctioned as a result of these sales well we certainly are doing everything in our power now my question how many foreign financial institutions have you sanctioned as a result of these sales and this huge 20 increase by Iran so don't know the answer if you could would you please provide me the answer because this is unconscionable and I do not believe that treasury is is following the law and it is a law that requires treasury to in fact we have an exceptionally tight sanctions regime in place I don't know what your plan is to further tighten enforcement of these sanctions regimes against Iran um as the country continues to make alarming progress on nuclear Armament but I am very interested in finding out next secretary Yellen it has long been U.S policy to support taiwan's membership in international organizations where statehood is not prerequisite the international monetary fund has no conditions regarding statehood the financial services committee unanimously passed legislation supporting taiwan's membership at the fund earlier this year Taiwan already belongs to the WTO and the Asian development bank if it's not it being Taiwan membership at the IMF would treasury supported we would have to look at that I'm um it's not a member of the IMF if they sought it after this unanimously we have we have done that we have passed that as a committee yes I would like your response on that specific this is three in a row now that I've asked for specifics that you don't have answers to ma'am and it's unacceptable let me ask another following up on um some of my questions from my friends on the other side of the aisle I want to ask you about the SEC sweeping proposal on mandatory swing pricing hard close and liquidity risk management chair Gensler has said the proposal is needed to combat dilution but I've seen no evidence from the SEC that dilution is a significant problem for mutual funds in fact I've seen some commenters offer their own economic analysis showing that dilution is minimal and far surpassed by returns for long-term investors if implemented the proposal would add significant costs and damages why is this I mean I guess I'd like to get your perspective on this misguided SEC proposal well it's a question you should be asking to chair again I know but I'm asking you but you can't answer this question what if I'm sorry I'm I'm going to answer the question well I'm on this time you'll have to answer this question in writing too four questions that you'll have to answer sorry the general Eddie's time is expired but the uh the secretary can answer in writing for the record uh the the gentleman from Texas Mr Green is now recognized Madam Secretary you won't have dance in writing I yield time to you to answer you may answer now ah on the last question on the last question yes answer now please yes well the the financial stability oversight council is um discussed risks in connection with open-end mutual funds particularly Bond mutual funds where there can essentially be runs in in situations where those who move First In These open-end funds are able to get better pricing than those who wait until later and this creates a financial stability risk similar to the kind of risk that exists with money market mutual funds that is long been a subject of fsoc attention and the fsoc has not been involved in advising the SEC how to address those risks but swing pricing is a way to reduce or eliminate first mover advantage and to diminish the odds of runs that can lead to fire sales of assets that can have contagious effects throughout the financial system and we saw this occur when the pandemic struck in March of 2020 and it was a reason that the Federal Reserve created a facility to try to stem Those runs I I think I think my friend thank you madam I think my friend very very much and she's and used far too much I'm going to have to continue with my yes thank you very much unless the chair is willing to Accord me additional time the gentleman has three minutes left thank you Mr chairman a Madam Secretary thank you for your service to the country and I also thank the president I believe the president working with you you've done an outstanding job I'm not ashamed to say it I'm not ashamed to associate myself with you or with the president Madam Secretary in your testimony the written testimony you indicate that while we were able to avoid default the United States once again came dangerously close to the line you indicate further that this cannot be normalized uh you're saying here that waiting until the last minute hurts our Global Leadership and credibility on the world stage could you in about one minute give me some more information on how we are harmed on the world stage by waiting until the last minute to deal with default credit yes I mean the United States has the world's deepest and most liquid Capital markets and U.S treasury Securities are The Benchmark for pricing of virtually all Securities that are traded in financial markets and the dollar is of course the world's key Reserve currency and all of that rests on an assumption a belief that the United States is committed to paying its bills when they come due that we are a creditor that deserves a triple A rating we lost that rating in 2011 when Congress went right up to the wire in failing to raise the debt ceiling and even in this situation one rating agency has put us on negative credit watch and this is some something that threatens our position as a global leader in financial markets and it threatens the well-being of American households that can see long-lasting increases in their cost of borrowing that come from this and of course if we actually did default on the debt the consequences would be catastrophic thank you I happen about 30 seconds left let me say this Pakistan is a case study on the effects of climate change as you know Pakistan has suffered greatly from the flood that took place beginning in June of 2022 I'm going to ask if you would to use your good offices to help Pakistan it it clearly is in dire need of some aid from the IMF and the World Bank as well this global warming is something that we may deny but Pakistan is still suffering it emits about one percent of the global greenhouse gases we emit more than 10 percent yet Pakistan suffers please do what you can to help I yield back the gentleman's time has expired but in the interest of Comedy because the gentleman yielded time for Mrs Wagner's answer I'll let the secretary briefly respond to the Pakistan question thank you Mr chairman we're supportive of the imf's work in Pakistan and there is a program that is helping them deal with the devastation from the floods and their pre-existing fiscal and monetary problems and we're certainly supportive of the imf's work there the gentleman's time is expired I now recognize myself for five minutes Madam Secretary in a March 12th interview on face of the nation you said quote the American banking system is really safe and well capitalized it's resilient in an April 14th interview on CNN you said quote our banking system is well capitalized and liquid in a May 12th Bloomberg TV interview you said quote what I see is a banking system that overall is well capitalized do you still believe that the banking system is well capitalized overall yes uh the Prudential Regulators as you know are preparing sweeping changes to the bank Capital framework which reportedly could raise required Capital by 20 or more in what you concede is an already well capitalized system do you support such a large required Capital increase which would have effects immediately on the U.S economy sidelining capital I have not seen the details of the proposals that the FED is considering we did agree with Basel III and commit to enact those proposals and um I will have to have a closer look at the FED proposal I think you've answered my question already in these interviews the banking system is already well capitalized whatever instability there may exist in the banking system I would ask treasury to consider your already well informed view that the banking system is already well capitalized as you review the fed's work let me follow up Mr Luke Demeyer and Mr Scott's line of questioning on China in addition to this committee I also serve on the select committee on the strategic competition between the United States and the Chinese Communist party in that capacity I am concerned about Western Capital flows and U.S investment in Chinese entities that threaten our national security U.S Holdings of Chinese equity and debt Securities have surged to over 1.2 trillion dollars which means scores of millions of Americans could have a vested financial interest in opposing any future sanctions or other penalties against China I appreciate your testimony that the Biden Administration is working to finalize an executive order to restrict outbound investments in China that threaten our national security but this is an area where I believe China where I believe Congress needs to act and to that end I've introduced the Chinese military and surveillance company's sanctions act which would direct ofac to impose full-blocking sdn sanctions on Treasury designated Chinese military-industrial complex companies the Commerce entity list the Commerce a military and user list and the dod Chinese military companies list would you commit to pausing any outbound investment executive order pending the Congress putting forward that legislation and so that treasury can coordinate with the congressional action you know that's something that's up to the president and I can't make a well commitment about it thank you Madam Secretary and just for the administration's awareness uh this committee and the select committee and the Foreign Affairs committee are working collaboratively in a bipartisan way on a outbound investment screening legislative package and we would ask the administration to work with the Congress in coordinating whatever executive order they're that you're working on with this legislative proposal I know that we have had conversations with Congress and um we can we can pursue conversations and look forward to working with you and and uh Mr uh adeyemo on this uh China and and the Taiwan Straits scenario in our select committee work we did a tabletop exercise and in response to sanctions against a Chinese scenario where there will be an invasion of Taiwan the scenario was that China the second largest foreign creditor of U.S treasuries would dump that 859 billion dollars in treasury Securities how are you working with our allies internationally and also the Federal Reserve uh uh to deal with a situation where China would dump that volume of Treasury Securities overnight so we are not engaging in specific um exercises to address address such a risk um but the United the United States the National Security Council is certainly concerned on an ongoing basis matter of fact I would encourage treasury to to make preparations and and and be be on the ready uh for that scenario and work with the FED on that and our allies finally a follow-up to Mr Lucas's question on the European commission's corporate sustainability due diligence directed I'm glad that you share our concern about the extra territorial scope of that but can you discuss specific steps that treasury is taking to prevent this rule from applying to us-based firms we're certainly expressing our concerns to the European Union um in explaining the concerns we have well my time is obviously expired I'll be in Sweden with a bipartisan delegation this week and we will raise it as well there uh to the European Union uh with that my time is expired and the gentleman from Missouri Mr Cleaver is now recognized my name is Chairman thank you Madam Secretary for for being here you know we we have way too many uh acronyms in Washington it's just it's gone wild we need to get a select committee to deal with them uh but uh because every time I think GTOs I think about my first car out of college a green GTO with a green vinyl top uh Mr Williams probably uh can can speak to that being an auto dealer uh has nothing to do with the purpose of this hearing I just wanted to say it because it's I missed my car but um I do want to talk about GTOs however and um because I'm concerned for a variety of reasons I how maybe fencing has to answer this question but how did how were the covered areas selected um for uh the implementation of the uh three hundred thousand dollar threshold for for uh cash payments um was there something about the the the the 14 areas from the District of Columbia uh to Miami uh day uh Broward or Palm Beach and Palm Beach I mean how did we come to those areas I'm sure you're you're talking about the graphic a geographic target areas for what target areas for what for fences yes for we're talking about uh uh real estate purchases ah for Real Estate purchases they I mean they've proposed a rule um on real estate purchases that um would enable us to have better insight into areas where there may be illicit Finance we think that an area that is being used to channel illicit funds I agree but I'm trying to find out find out uh why the areas that have been selected were selected the 14 areas where oh I'm sorry you're you're talking about geographic targeting orders yeah um I I I don't know that there were four I think 14 areas that were were selected and I I need to get back to you with the logic of of why those areas were selected well and I'm maybe even more concerned about the areas that were not selected because it seems to me that it would you know uh if if we're if we're uh dealing with these 14 areas um if I were a bad actor I just simply moved to another I mean I Target another area so um they have proposed a broader real estate rule that would would go beyond those universities yes um thank you thank you very much uh the the other uh question about that is in in 2021 fencing put forward an advanced notice of a proposed rule to consider how best uh to focus its regulatory attention on residential and Commercial uh real estate transactions uh if you if you have that information I'm interested in the timeline uh for the rulemaking uh and uh and whether treasury is is going to uh address both residential and Commercial uh real estate uh sectors in the same rule um Vincent is very actively working on those on those rules trying to get them out to um to um make the the database available and I can't give you exact timing on it but it is a very high priority item for fin Sim thank you Madam Secretary thank you for being here today gentleman yields this time the gentleman from Texas Mr Williams is recognized thank you very much and thank you for being here today um over the past few years businesses across the country have struggled to maintain necessary inventory to the global supply chain and strains as a small business owner and auto dealer I have dealt with these supply chain challenges firsthand and making matters worse businesses using the last in first out or better known as the lifo inventory method are facing significant recapture tax liabilities due to their inability not not this it's the Factory's inability to replace inventory Levels by the end of the year which is out of our controls we we as small business owners can't control that given the current supply chain disruptions so treasury has the ability to alleviate this financial burden on small business and provide relief through Section 473 of the internal tax code and this recapture tax as we call it relief would allow business owners to spend funds on replacing duplicated inventories they wouldn't have to be laying people off they could invest in their employees and maintain business operations instead of succumbia the unexpected tax burdens from uncontrollable inventory shortfalls is totally beyond the ability for the small business owner to control so while I have been working with my colleagues to pass the supply chain disruption Relief act which is the legislative fix to provide the lifo tax relief secretary Yellen could you explain if the department treasury is really interested in helping Main Street and helping people have been laid off they've lost their job can't pay their bills because of this can can are you ready to uh help provide the lifo tax relief that you can do through gaining section 473 which is going to be relief for businesses struggling to Global Supply Chain disruptions that the small business or cannot control and so I would be great if you could jump in which we think you have the ability to do and fix that right now so I'm aware of this issue um but I'm I'm not able to give you a definitive response on this and I will ask our office of tax analysis to ask them to do that because it's bipartisan there's people in here that we've all agreed this needs to be done this is not a partisan issue it literally is going to save Main Street it's going to save small business and they'll pay tax when they need it and not pay tax when they don't need to so I would appreciate if you would check into that and maybe get back with us on that and we'll try to do that thank you I'm also concerned with Vincent's proposed beneficial ownership rule that expands the information required under the corporate transparency Act and the effect that these expanded requirements will have on Main Street the CTA was intended to ensure easy compliance for businesses however this proposed rule goes beyond the simple statute and lacks of clarity on compliance guidelines this will impact 32 million small businesses that will be expected to comply come 2024 and acting director Das has done little to inform the businesses on the new responsibility of reporting so when talking to business owners back in my district and frankly all over the country they've expressed their frustration with the insufficient information coming out of Treasury on how to comply and file returns properly and they fear they'll be liable for the non-compliance of the Boi rules so secretary Madam Secretary what actions is treasury taking to educate small businesses like mine in Texas on their upcoming obligations to file beneficial ownership information with fincen and when can we expect fencing to lay out a clear plan for in we for engagement we want to know the rules so Vincent is working to finalize the rules that are necessary to make this a very important transformative database available and understand that there are some burdens on small businesses to comply with this and we'll work we'll work with them to provide information that's necessary well that's important small business wants to supplies just like lifo we need to know the rules let's get it fixed so we can move on and in the short time that I have I'll cut my question back but fentanyl is coming across our Border's alarming rate flooding our communities and killing thousands of Americans each year in future Generations we know law enforcement has found cartel members working directly with the Chinese money laundering organizations to Outsource cartel operations and facilitate movement through the United States so quickly as Madam Secretary can you expand on what treasury is doing to combat China and the role they play in cartel financing is the administration considering tougher sanctions it's killing future generations of our young people we we have put in place some sanctions and we're working we're we're looking to try to discourage and sanction the provision of precursor chemicals that um are critical to the manufacturer and sale of fentanyl through decree it's a critical critical gentleman's time for us gentlemen Thomas expired the gentleman from Connecticut Mr Himes is recognized thank you Mr chairman and thank you Madam Secretary for being with us this morning um very quickly I just want to say you mentioned the New World Bank president AJ bonga and your testimony um I'm delighted that you've done so and uh the World Bank obviously has had a turbulent uh recent past and I think that Mr bonga offers an opportunity for a real reset and I hope that you'll really double down on the government's interaction and encouragement to the World Bank to be what it should be through Mr Bunga uh what I want to talk with you about though is China um it's evident in this hearing and generally evident that the Congress has whipped itself into a frenzy with respect to China I think this goes back to the Trump Administration when China was the all-purpose stick scapegoat along with immigrants for all of the nation's problems um and there are proposals there for it to cut China off from Global Capital markets basically to devastate their economy and I understand the emotion uh we obviously are appalled by the Chinese treat of the uyghurs we we are appalled by their stealing of our intellectual property the list goes on and on um but this is a moment I think that calls for close statesmanship with respect to China we are trading more with China than ever before we are invested in China more than ever before they own a trillion dollars of our sovereign debt um I was pleased to see you and I'm going to give you the remainder of my time to elaborate on this say in the context of the G7 and I'm quoting you here my own view is that this that is to say UF U.S economic efforts with respect to China should be National Security focused not focused at under mean undermining say China's economic competitiveness or ability to advance economically um Madam Secretary is it in the National or Economic Security interest of the United States to impoverish the Chinese people no I certainly do not think it is in our interest to um stifle the economic progress of the Chinese people um China succeeded in lifting hundreds of millions of people out of poverty and I think that's something that we should applaud we'd certainly do have legitimate concerns regarding China first and foremost National Security where we absolutely have to protect our national security interests and not compromise on that human rights is critically important and strongly believe the president believes in sanctioning um human rights abuses and beyond that we have legitimate concerns with China's behavior in some areas that are related to trade where we think China absolutely let me let me this institution gets that and I sit on the intelligence committee so I have a closer than normal look at some of the just outrageous activities but again I'm just trying to find so I'm trying to get at what you said policy that is Statesman like in its orientation so so let me drawing on your experience as an economist and not yeah I'm sorry go ahead let me let me focus on the positive then I think um we gain and trying to gain from trade and investment um that is as open as possible and it would be disastrous for us to attempt to decouple from China de-risk yes decouple absolutely not what would be the effect on American consumers uh let's just imagine that we cut the hundreds of billions of dollars of trade that we have with China if we cut that in half or eliminated that trade what would be the effect on the American economy in American consumers will we benefit greatly from access to cheaper products a wide array of products and products in some cases where China has a technological lead and in turn China benefits from its purchases from us and we benefit from our ability to export from China our competition from with with China uh healthy competition uh just as in a domestic case where firms compete with one another leads to faster Innovation faster technological progress that benefits everybody concerned with better and cheaper products over time and so this is very valuable interaction and while we surely have concerns that need to be addressed decoupling would be a big mistake thank you um so I'm almost out of time so I just want to add I think that your concept of attacking the National Security side of this without damaging the economic growth that comes from the two things absolutely what we need to do I hope you'll work with it the gentleman from Minnesota Mr emmer is recognized thank you very much and I want to thank chairman McHenry for holding this important hearing today and I want to thank you Madam Secretary for your testimony this morning the National Bureau of economic research is the official recession scorekeeper according to the White House pre-pandemic or before the pandemic the definition of a recession was pretty easy it was two consecutive quarters of economic contraction however somewhere along the way in this new uh Biden Administration President Biden's tenure the administration seems to have changed the definition of recession in the National Bureau of economic research a research that a recession is now quote a significant decline in economic activity that is spread across the economy and lasts more than a few months close quote this has had a bit of a gaslighting effect on the American people so I'd like to drill into it just a little bit secretary Yellen does the National Bureau of economic research give any weight to real personal income when determining if we are in a significant economic decline they look at a wide array of statistics and the second definition that you gave of a broad contraction that lasts more than several months that is how the NBA reclaiming my time the answer is yes does the National Bureau of economic research directly consider inflation when determining if we are in a significant economic decline inflation is not part of an economic decline okay well the National Bureau of economic research well it doesn't directly consider inflation inflation is embedded into real income and spending variables that attracts so American families pay an average of 864 dollars more per month today than they did when this Administration started that's an extra 126 dollars on food per month an extra 159 on shelter per month and extra 123 dollars on energy per month just to name a few this is since the Biden Administration took office unless Americans have gotten a 15.3 percent pay raise in the last two years they've effectively gotten a pay cut Madam Secretary is the average American Income increased 15.3 percent during the Biden Administration we have the strongest job market and the answer is just claiming my time I thank you Madam Secretary the answer is easy it's no since uh President Biden took office the average real personal income has only increased 2.4 percent that would have been the answer so while it costs nearly nine hundred dollars more a month for American families to afford the same quality of life that they had in 2019 Americans aren't getting paid anywhere near that much uh more so how is it then that the National Bureau of economic research thinks it's appropriate to exclude inflation as a primary factor when determining the state of our economy it's a rhetorical question Madam Secretary because we all know that the bureaucracy Cherry picks the factors that yield the most convincing numbers for whatever narrative they want to assert much like you were starting to uh deflect and say we've got the greatest whatever Americans know better this Administration is telling Americans the economy is strong but Americans certainly feel like things are worse today than they were before President Biden took office secretary Yellen I'm asking these questions because throughout 2021 you along with several members responsible for fiscal decision making in this Administration it could be incredibly assertive that inflation was quote transitory perpetuating a fallacy the government could keep spending money it didn't have and everything and everyone would be just fine well it's not fine as a result of misrepresenting Real economic conditions trillions of dollars were printed injecting cash into a shutdown system which Skyrocket rocketed prices when we opened back up now in order to tame runaway inflation the fed's only tool is to rapidly raise interest rates the FED is on its 10th consecutive rate hike which are intended to purposely increase unemployment make it harder for Americans to find jobs make it harder for Americans to buy a home or a car these decisions which unfortunately seem to be the only solution at this point have harmed low-income Americans and Americans living on a fixed income the most we should have never delayed implementation of monetary policy this long under the fallacy that inflation is transitory the administration made a lot of decisions that crushed Americans and clearly the fiscal decision makers of this Administration are only concerned with cherry-picking favorable data for political purposes it's time this administrative state becomes serious and gives us an accurate depiction of the economy and American suffering on the hands of an account unaccountable government rather than Gaslight their wheel their way out I yield back gentlemen yields the gentleman from Illinois Mr Foster is now recognized thank you Mr chair and Madam Secretary um when resolving failed Banks there can sometimes be a tension between lowest cost resolution and the bipartisan desire to discourage further Bank consolidation into a smaller number of very large Banks so my question is is this an area where further guidance from Congress might be useful you know for example by providing some uh you know well-defined wiggle room on lease cost resolution or are there more effective levers that we might operate to discourage further Bank consolidation well I mean in general the largest banks are not allowed to seek mergers to get to get bigger and there is broad-based recognition that having a diversity of banking organizations Community Banks Regional Banks um and the this problem occurs at all levels of Bank size as well very often it's possible in failing Bank situations to resolve an institution without merging it into the largest banks I know during this I'm just wondering if there's some useful way to sort of tilt the playing field on that you know some something annoys to the buy American preferences but not mandates that we put into Federal something that we could look at I certainly so if you have time for a sort of thoughtful response for the record on this I'd appreciate it will do okay in regards to the debt limit there's been some uncertainty expressed as to how the exact language of the limit law applies to the different forms of debt that have historically been issued by the treasury in particular since the limit appears to only apply to the face value of certain types of bonds it's been suggested that the the debt issuance limit might not apply to for example interest-only consoles or the interest stream of premium bonds or um or the separate auctions of the so-called strips of interest payments that are currently traded in the secondary Market you in the run-up to this last crisis our office made increase of Treasury on this and I understand you were busy and we didn't get a response but um would it be possible to get a you know definitive response to this question because if this represents a safety net against defaulting on our payments we want to know whether it's real well I'll try to give you a response on that yeah thank you now on Ukraine you mentioned the importance of anti-corruption reforms and you know these will obviously become much more important when the internationally Community starts dispensing hundreds of billions if not trillions of dollars to reconstruct a reconstruction assistance to Ukraine and as you know one of the big issues with Central Bank digital currencies is their potential traceability of transactions by the issuing entity but it seems to me there's a potential role for that traceability in Ukraine assistance in providing the Ukraine reconstruction assistance in traceable digital Euros or digital dollars or some kind of reconstruction accounts that would remain traceable to to identify corruption for a period of time until the Ukraine reconstruction is completed and the corruption is faded as a concern it's an interesting suggestion I mean Ukraine doesn't have a central bank digital currency it's a major Enterprise to introduce such a thing um you know in the case of the United States we're looking at it but it's something that can take years we are very focused on corruption and traceability and accountability for funds that are transferred to Ukraine right now usaid is being tran is being handled through the World Bank that has very rigorous standards for verifiability and accountability that's still a struggle I mean you look at all the money we attempted to inject into Afghanistan and it just disappeared in in corruption well I honestly don't believe anything like that is happening and we've hired the usaid is hired a U.S accounting firm to do independent checks and to review World Bank records the IMF program for Ukraine focuses heavily on corruption and putting in guard safeguards and structural reforms to make sure that corruption is um yeah I understand it just seems like there may be a an acceptable bargain here that yes we will provide a tremendous amount of assistance for those who are willing to go back to Ukraine and rebuild the country but the price for that will be a heightened level of visibility to the International Community that's providing the funds I believe that's absolutely right that certainly we demand accountability requires on Ukraine's part the gentleman from Ohio Mr Davidson is recognized I thank the chairman secretary thanks for your testimony today last month it was announced that the treasury Department hired two economists to study the facts and unintended consequences of sanctions uh I think this is welcoming development given the expanded use of sanctions since the law passed governing law passed in 1975 to create ofac the office of foreign asset control how do you anticipate these economists will evaluate collateral damage that comes from sanctions do you see any Implement implications for status of the dollar is a world Reserve currency the payment system around the world kind of the rivals that are confronting uh you know macro economics today well we wanted to make sure that we do have experts who are consistently focused on analyzing the economic potential economic impacts of sanctions since when we impose them we always want to understand what the economic ramifications of them will be do you think there's a real threat to the payment system that you know we dominate today so our the fact that the dollar is used as a reserve currency and place such a a huge role in international transactions does enable our sanctions to be much more effective and it's not surprising that countries that are fearing they can be affected by our sanctions are looking for alternatives to the dollar it's something that we simply have to expect but the dollar plays the role it does in the world financial system for very good reasons that no other country is able to replicate including China and that is we have deepened liquid open financial markets strong rule of law and an absence of capital controls that no no country is able to replicate it will not be easy for any country to devise a way to get around the dollar thank you as the founder of the sound money caucus I certainly appreciate efforts to preserve the role of the dollar as the reserve currency and frankly I am concerned about the role of uh money being corrupted as a tool for coercion and control rather than a means of exchange and a store of value and you know frankly that seems at the heart of Central Bank digital currencies but it kind of transcends down to you know one of the big developments globally where the United States dominates Capital markets uh in terms of invested capital in the space of fintech and cryptocurrencies um you know 75 to 90 percent of the liquidities offshore and you know it seems like there's an effort to not trust American citizens in this which is if you can't really stop it all together you at least want to keep it account based because you can control uh third parties you can use them as intermediaries that seems to be a feature to some of the people's thinking um are you familiar with in December 2022 fencing uh you issued a a request for comment on a potential rule it would ban self-custody which is essentially the ability for individuals to own their own assets and have a permissionless payment system so I'm not familiar with the details of that rule but um certainly we are concerned about the use of cryptocurrencies and digital assets for illicit um I I think we're all concerned about illicit activity but the question is are you trying to stop individuals from having self-custody uh because there seemed like that that was an effort that was underway under the you know the end of the mnuchin time as secretary so is that something apparently hasn't risen to your level of concern oh I haven't haven't had discussions of that thank you and I just say as chairman uh housing insurance I'm concerned a little bit about um you know do you consider cidfi fund as a regulatory agency what's the role here for cdfi fund um it's it's not a regulatory agency but I I know it is in the process of reconsidering certifications for cdfis but it is not a regulatory thanks thanks for that point of clarification and look as the as as we look at the conservatorship of the gses one of the reports that was long overdue was due in September of 2021 is the Department's plan to get them out of conservatorship I'll submit that for the record but would you commit to responding to to that in writing we want to work with Congress to do that the thing that Congress the gentleman's time has expired and thank the secretary can answer for the record the gentleman the gentlewoman from Ohio Mrs Beatty is now recognized um thank you Madam Secretary um let me uh start with this opening remark since several of my colleagues on the other side have criticized you for your handling of the debt ceiling issue in your calculations of the X day they've also placed the blame on the Biden uh Administration for not solving this problem so let me be very clear my colleagues in my opinion across the aisle and no one else dragged us to the brink of default by using the debt ceiling as a weapon and a political tool to further their political agenda even the prospect of defaulting is harmful to the United States economy we heard other Witnesses experts tell us defaulting would be harmful and so what they did in jeopardizing our role on the political stage in creating opportunities for China and other foreign adversaries to weaken our power and influence so I want you to know Madam Secretary thank you for consist consistently providing a political advice to Congress because you did it as you said for what was best for the United States of America so I wanted to be on the record uh saying that now let me turn to us I'm sure you're aware of the number of countries paying a surcharge to the IMF has increased from 9 to 16 since 2020. that figure is estimated to increase to 38 countries in the coming years I have a bill that I am a co-sponsoring that would require an immediate review of surcharge policies at the IMF with the requirement that the surcharge payments be suspended during the review process do you have any thoughts on this is it worth taking a closer look at this consequential uh policy whether it's effective or whether there are unintended harmful consequences so I really have to say that we're supportive of the imf's surcharge policy it is part of their risk mitigation framework and what surcharges do is provide incentives for borrowers with large outstanding balances to repay their loans promptly and that's in keeping with the nature of IMF lending for the poorest countries there aren't surcharges that apply through the poverty reduction in growth trust window and these surcharges allow the IMF to build precautionary balances which protect all the IMF members in case there's non-repayment so I'm I'm not in favor of um chain you know try to work with you and understand the concerns but I'm not in favor of changing the imf's surcharge policy okay thank you I appreciate that now I'm going to take a 190 degree shift but I I think it's uh in relationship to the state of international Financial System since I believe our money is international in many ways and a couple weeks ago we had some International dignitaries here from Canada and one of the things that they were most proud of they had a female on uh their uh twenty dollar bill and so you know where I'm going with this in our last year's hearing you indicated that you do everything within your power in a very bipartisan way uh you know over the last three Congressional sessions we've had people in your position uh look at what we were going to do with the 20 it came up that it was going to be Harriet Tubman we were all in agreement that and so I have reintroduced my bill woman on the 20 Act of 2023 so here's what I'm asking I understand all of the security and how we have to design the money but could we not have a bill that simply puts in place the likeness of Harriet Tubman just that part then you put it into the process that gets us to 2027 when I will not be here and that we could get this moving comments so I want to see Harriet Tubman very much on the twenty dollar bill and I've promised and I'm doing everything I possibly can to expedite that process it essentially froze we lost four years during the previous administration when secretary Liu proposed this in 2014 the scheduled date was 20 30. I know that's a long time but that's what it was and we're still and we've gotten it back on that nobody's time is expired but it is not thank you the gentleman from Tennessee Mr Rose is recognized I want to thank chairman McHenry and ranking member waters for holding the hearing and thank you secretary Yellen uh for being with us today secretary Yellen on November 4th the community development financial institutions fund released a new proposed cdfi certification application using the paperwork reduction Act why did the cdfi fund use the paperwork reduction act instead of the administ administrative procedures act for that change I'm not sure I assume because the paperwork reduction act requires examination of forms um and but I would note that the paperwork reduction Act was enacted to minimize the paperwork burden for stakeholders the cdfi fund won't meet with interested parties while the proposal is pending because of a blackout period And as I'm sure you are aware there's significant concern that the change will make it very difficult and in fact potentially exclude many current cdfis from participation in that program secretary Yellen what is this statutory justification for this blackout period I can't tell you about the blackout period but I know that what the cdfi fund is doing is attempting to update a certification process that hasn't been really reviewed in more than 25 years and I would submit that may be appropriate but the administrative procedures act I think would be the more appropriate pathway for that and certainly would allow the kind of comment that I think the current proposed changed really uh is screaming out for secretary yell and Jody Harris has recently stepped down as director from the cdfi fund given the mismanagement of the fund someone with more expertise on the regulatory environment and safety and soundness expectations inside the cdfi fund would be incredibly helpful could you speak to treasury's perspective on appointing a director with meaningful experience with insured depositories and consume finance and what other considerations you think are important to finding the right person to head up the fund going forward well we will certainly do a thorough search the director of the cdfi fund is a career SES position and in filling that job um we're governed by the civil service reform act so it has to be based on Merit and there needs to be a competition with multiple candidates considered so um you know well thank you I just hope you understand the the turmoil that this has created among cdfis across the country and the attendant impact that that's having on communities that are supposed to be being served by these important institutions I want to shift gears on Tuesday March 21st you suggested that deposits would be covered by federal insurance quote if smaller institutions suffer deposit runs that pose the risk of contagion close quote before for the Senate the next day you said you had not considered quote Blanket Insurance or guarantees of deposits close quote but a day later before the house you said the treasury quote would be prepared to take additional actions if warranted close quote secretary Yellen can you clarify treasury's position on any sort of expansion of Deposit Insurance I'm sorry I never I never intended to suggest that we were proposing expanding Deposit Insurance um over time that might be something the FDIC is issued a report and it might be an appropriate topic to look at but what I said was that I was prepared to work with other Regulators the FDIC and the FED to take actions similar to those we took in the case of Silicon Valley Bank and Signature Bank to protect depositors when there was a risk of systemic contagion of Bank runs and that those tools would be available and it could be the case that with a community bank that that run on a community bank if it were judged that it could trigger broader system make runs on other sound Banks it could also be appropriate to use those same tools well I will just say as the board member of a Community Bank I hope you keep in mind how important our community banks are to our rural communities and small communities across the country thank you chairman I yield back gentlemen's time has expired the gentleman from New Jersey Mr gottheimer is recognized thank you Mr chairman uh thank you Madam Secretary this year we have seen turmoil in the banking system as you're talking about and I'm concerned that our regulatory response hasn't focused enough on our small medium and Regional banks that provide important competition in our banking system and obviously lifelines to American families and small businesses in our communities Madam Secretary do you believe that our response to recent failures and our broader regulatory approach ensures the health of small medium-sized Banks so we don't we don't end up having a situation where we only have a few large banks that are simply too big to fail I I believe strongly that uh Diversified set of financial institutions is best for America and provides a differentiated set of Finance services that are appropriate for different borrowers thank you I'm particularly concerned that the current regulatory environment disadvantages some of the small and medium Regional Banks specifically most recently with first Republic's receivership I'm concerned that the largest banks were given preference in the bidding process just enabling the biggest banks to grow even bigger my understanding is that the FDIC kept certain Regional Banks from even bidding on First Republic Madam Secretary do you believe that well situated small medium and Regional Banks should have the same opportunity to bid on failing Banks as their larger peers do I I believe that there should be a process with multiple bidders it's up to the FDIC to run that process and I know that there were multiple bidders in the case of First Republic my understanding is that the regional and mediums I think were left out and not allowed to many weren't allowed to bid who were interested do you know about that I'm not sure that that's the case I believe that there were multiple bidders and they were not all large Banks so no one was excluded if they wanted to under in your understanding if they actually were interested in bidding that they weren't told sorry you can't bid I can't I can't give you every detail of what the FDIC um did in this case but I do know that there were multiple bidders and that included some smaller Banks uh certainly some Regional Banks the the FDIC is required to accept the lowest cost Bid And it did that okay and I've just heard a lot of of there's of stories that Banks were literally told sorry you can't even apply you can't even try to bid for this so but I'll come back to you if I learn more about that um Switching gears shifting Focus to digital assets following the collapse of FTX last year Financial Regulators have obviously ramped up scrutiny of digital asset firms in a recent interview you said that you quote see some holes in the system where additional regulation would be appropriate end quote do you mind elaborating a little bit on that statement where do you see the holes where do you think additional Clarity is needed for digital assets please well one hole pertains to the supervision of uh spot markets where digital assets are not regarded as Securities so there needs to be regulatory Authority there and then I would say that stable coins is um a type of digital asset that really requires a full-blown Federal regulatory framework and would very much I think this is an area where Congressional legislation is appropriate to create an appropriate Prudential framework thank you so much when you spoke before this committee last Congress you agreed with me that the state level tax deduction cap has led to disparate treatment of American taxpayers I'm concerned that the cap is pushing Americans out of States like mine in New Jersey as they seek lower tax states that are subsidized more heavily by the federal government the house Ways and Means Committee is currently marking up tax legislation that noticeably does not not address the burdensome salt cap it leaves it out completely which I I think is is outrageous in your view does the saw cap favor states that are heavily subsidized by the federal government and disrupt America's decisions on where they choose to live have you seen that at all in your work and how you study where where finances are moving around the country I mean it certainly does have a disparate impact on different states the Biden Administration has generally taking the view that it's up to Congress to decide what to do about that so you think it's probably good idea for us to be handling addressing the saw cap well that that is the view that we had taken in recently last quick question I'd like to get in on the national debt obviously higher interest rates make our debt grow faster what options is the department considering to address the fact that our country will be spending more money to serve as a national debt in the high interest rate environment so um President Biden proposed a full-blown budget that contains substantial deficit reduction three trillion dollars over the oh for 10 years at the same time it invests in America and um time is expired thank you thank you Mr chairman uh the gentleman from Wisconsin Mr style is now recognized for five minutes secretary yellin thanks for being here today as we approach the debt ceiling the treasury delayed issuing uh new U.S treasuries uh now that the debt ceiling has been increased there's significant discussion that the treasury May issue hundreds of billions maybe a trillion dollars of new treasuries in particular in short order um do you hold the concern that others do that this may alter the interest rates the United States would receive on the issuance of those treasuries and if so what mitigating measures are are you and the treasury taking uh to avoid additional costs on interest rates so it is Our obligation to rebuild the treasury balance up to uh safe and appropriate level but we've consulted widely with Market participants about what the best way is to do that to minimize the cost to the federal government and to avoid Market disruption to the maximum extent possible and as we build our balance we will certainly be careful to see if there are impacts or Market disruption and what are those techniques and measures you're planning to implement to reduce volatility or increased interest rates well we we will be issuing um substantial quantity of treasury bills and cash management bills in the coming months and um we'll try to design those offerings um to really be most most attractive to Market participants thank you I'm still really disappointed that the administration refused to negotiate with House Republicans for as long as they did forcing the treasury into this position rather than settling the debt ceiling debate much sooner which we could have done if the president didn't move forward on his path of my where the highway refusing to negotiate with Republicans in the house let me shift gears if I can I want to dive in on the rush Iran Alliance that we're seeing taking place a Russian Iran have established a defense partnership Iran supplying weapons to Russia reportedly potentially developing a drone facility inside Russia and this has implications Beyond Ukraine it has significant implications across Europe and throughout the Middle East could you outline some of the steps treasury has taken response to this defense partnership and do you believe that the measures have been effective well we are certainly attempting to um make sure that our sanctions on Russia when it comes to acquiring military equipment are not evaded and we are looking very carefully at ways in which evasion is taking place and attempting to address it jointly with our partners but should anything be done specifically regarding the the Iran piece of this puzzle that has not been done to date or do you feel that the sanctions in place on Iran and working with our partners are currently sufficient we're constantly looking and reevaluating our sanctions especially when we see evasion to I mean we have the strongest regime of sanctions against Iran is against virtually any country and we're constantly looking to strengthen them it's not something that's forever fixed where when we see evasion we are looking to strengthen them understood a very Dynamic environment not a static environment appreciate your attention to the matter let me let me shift gears pretty significantly here we've seen the European Union aggressively push regulatory standards beyond their boundaries impacting U.S capital markets and U.S based companies I'm concerned if we fail to push back American businesses will find themselves subject to European regulation um are there EU regulations that this Administration is planning to adopt or mirror any of you determined separately that these regulations coming from the EU are in the best interest of the United States um we're looking very carefully at the eu's corporate sustainability directive and we are concerned about the impact that it could have on U.S firms um we're Consulting with the EU and making clear that um we are concerned about the directives extra territorial scope yeah I think we should be incredibly concerned the US has about four percent of the world's population but about 50 percent of the the capital markets reside in the United States I'm concerned that the European approach regulation actually negatively impacts their ability uh to be a leader in the capital markets recognizing my time I yield back Germany yields back the gentleman from Texas Mr Gonzalez is now recognized for five minutes thank you Mr uh chairman and ranking member uh thank you secretary for being here uh with us today uh we really appreciate having this conversation I'm gonna um continue on an issue that's been a concern for this committee on both sides of the aisle as you know adversaries like Russia and China Iran North Korea and others have been working to replace and circumvent the and undermine the US dollar for decades now but now we're also seeing calls to reduce the dependence on the US dollar from corners of the of the globe including allies of ours like France and maybe India and others um more recently from your perspective what is the biggest risk to the U.S dollar is it uh Global geopolitics or is it concerns here in the U.S Capitol of not being a of U.S politics not being able to pass a debt limit for example this past week well I have have previously and will again express my concerns about the debt limit um the the dollar is used widely as a reserve asset um because of the depth and liquidity of U.S capital markets the safety of treasuries Securities and the long-standing um practice of the United States to honor its obligations and it's that commitment that we can be trusted to pay our bills um that um that is the foundation for our high credit rating and for the Dollar's role as a reserve currency so when we have episodes like the debt ceiling episode um that concerns me of course our sanctions are in part enabled by the important role of the dollar and U.S banks in the financial system we work whenever possible with other countries should we be more concerned now in slapping sanctions on countries around the world and taking that into consideration and be more thoughtful uh as we may be creating a paranoia around the world where people are looking for other currencies to do transactions it is true that when we impose sanctions countries that are afraid they can be the subject of those sanctions are motivated to look for other tools other than the dollar to engage in transactions so but even our first thing we have to accept it it it is much more difficult to find other tools to make payments so their currencies when we work jointly with but we even have our friends like France also looking for other currencies and pushing it you know France and some of our allies were not happy when we pulled out of jcpoa and imposed sanctions and um the but there I I would say there is virtually no meaningful work around for most countries for using the dollar is reserve currency very well and I understand your earlier you made it you made some statements about it's being the most stable option with the rule of law and liquidity and all this but isn't it the fact that the use of the dollar has diminished and and gone down against competing currencies over the years there's been some increase in Holdings of other Reserve assets but that's something to be expected in a growing World economy where we should desire to diversify but so we should expect lessons of the dollar is what you're saying we should we should be interested we should expect in over time gradually in increased share of other Assets in reserve Holdings of countries it's a natural desire to diversify but the dollar is bought Far and Away the dominant Reserve still a huge concern for us here in Congress and just changing gears uh briefly under the new minimum tax system lawmakers permit companies to reduce their taxable income by the amount of their depreciable uh deductions companies in most Capital intensive Industries with high value of tangible property can claim these depreciation deductions and use tax deferral to invest in their business this provision was included in the inflation reduction act to protect companies from the potential impact of book minimum tax by not capitalizing investment however these deductions are not accessible to oil and gas producers because of their Capital expenditures uh are classified as intangible drilling costs within the different section of the tax code due this designation oil and gas producers are unfairly targeted we're hugely concerned and we'd love for you to to be able to address this to our office and the secretary is welcome to submit for the record thank you uh the gentleman from South Carolina Mr Timmons is now recognized for five minutes thank you Mr chairman um secretary Yellen thank you for being here today you and I have disagreed on the best approach to address a number of challenges facing this country I'm going to briefly highlight two areas where your policy proposals ultimately were quite simply deemed bad for the American people but but then I'm going to end on an area where I think we're going to find agreement first you spent much of 2021 saying that inflation was transitory and likely to Abate once coveted specific factors subsided these talking points were then parented by various officials in the administration in Congress to justify trillions more in additional spending all the while Larry Summers President Clinton's treasury secretary and director of President Obama's National Economic Council aggressively warned against such spending warning it would further exacerbate inflation then a year ago almost to the day you were quoted saying that you failed to anticipate how long elevated inflation would continue to plague American consumers finally on July on June 7th of this year you said that you expected inflation to side over the next two years so simply put you you got wrong in a number of places and that error and judgment caused immense damage to the American people it cost the cost of goods to soar salaries be reduced in relative value it denied the American dream of home ownership just overall hardship in general and so I just want to point out policies coming out of Washington have very serious consequences and it it seems policymakers often forget that second I want to go 18 months ago we had a back and forth somewhat heated where I criticized your proposal to collect America's bank account balances I said it was not a serious policy proposal and only designed as a way to let Democrats justify spending more money we don't have the Senate wisely sidelined this proposal and the American people are better off because of it again policies coming out of Washington have consequences and we must be thoughtful in our policy proposals and actions they do have real consequences for the American people now on to an area I think we're going to agree and I was pleasantly surprised that my colleague across the all Mr Gonzalez who just brought it up and I'm going to just pose a question to you it's fairly simple do you agree that is it is important for the dollar to remain the global Reserve currency is that a priority of yours yes I think I think it is important for the dollar to be the world to reserve currency I agree with you thank you um I guess maybe could you just highlight why you feel that way what are the factors that that go into that policy decision of yours well is the safest and most sought after asset um the dollar is reserve currency means that our interest rates are at the lowest of really any borrower around the globe and it lowers our it lowers our cost and makes it easier to trade it makes it easier to compete in the global economy it builds our allies abroad if you agree that it is important to push this policy forward and to maintain the dollar as a global Reserve currency I guess why has President Biden nominated Jared Bernstein to be the chairman of The Economic Council advisors he is on record in numerous op-eds stating that we should actively take steps to remove the dollar as a global Reserve currency it's a burden and not a privilege and we should end the dollar as the global Reserve currency why would President Biden who I'm assuming you worked very closely on these issues with Place someone in such a position of trust and Authority that disagrees with his own treasury secretary I'm not going to speak to um Jared Bernstein's views on this particular issue well your views are diametrically opposed and he disagrees with you and so I guess just please make sure that you continue to push to maintain the dollar as a global Reserve currency I guess let's go back to debt debt to GDP ratio in April was 119 percent um I have serious concerns about our spending our unsustainable spending and that it will further erode our ability to maintain the dollar as a global Reserve currency we saw that Greece at 180 percent uh Deputy GDP went into austerity measures and had to get the EU to bail them out Madam Secretary nobody's going to bail us out the American people are not able to so what do you think about our unsustainable spending and is is our debt the GDP ratio a concern of yours as it relates to maintaining the dollar as the reserve currency it's critical that we remain on a fiscally sustainable Course and there are different did you say remain we are not on a physical fiscally or sustainable course of secretary well the president presented a budget with three trillion dollars of deficit reduction over the next decade and what I regard as the most important metric that's shooting a bullet time is expired thank you uh yield back Edmond yields the gentlewoman from Massachusetts Miss Presley is now recognized for five minutes secretary Yellen for joining us today I represent the seventh congressional district vibrant diverse Dynamic unequal and I'm sure my colleagues have grown tired of my enumerating these damning statistics but imagine how tired people are of actually living them in a three mile radius from Cambridge to Roxbury median household income drops by fifty thousand dollars Federal Reserve Bank of Boston Federal Reserve of Boston rather put out a color of wealth report which cites that the average wealth for a black Boston family is eight dollars whereas for a white family it is 250 000 dollars so I'm going to use my time with you to discuss uh an issue that is uh Paramount that we tackle it's a national problem and that is the racial wealth Gap the racial wealth Gap in the United States is over 10 trillion dollars that's trillion with a t truly a shameful reality for the American economy secretary Yellen do you agree that we have a colossal racial wealth Gap in our country of course you cited statistics that show has significant that is and President Biden is committed to doing all that he possibly can and I'm committed as well to take meaningful steps thank you thank you and of course we know that this racial wealth Gap didn't just appear out of nowhere black Americans in this country have been systematically stripped of our wealth first there was nearly 250 years of enslavement followed by a century of Jim Crow segregation economic exploitation State sanctioned violence and to this day black Americans are still being excluded from and facing barriers to public programs that promote home ownership and higher education along with a discriminatory home appraisals persistent redlining only bold transformative precise economic policies can address the impact of compounded racism and exploitation we are heading into uh Juneteenth grateful that that is now a federal holiday but policy is my love language I believe we need Federal reparations to close the racial wealth Gap once and for all secretary Yellen under your leadership you have established a treasury advisory committee on racial equity truly represents a historic opportunity to Center racial Justice and our economic agenda can you speak to some top lines of the work of this committee we formed as you said t acre is an advisory committee to help us evaluate every area in which treasury has responsibility where we need to recognize if discrimination may take place and we should be changing our policies to make treasury itself more diverse and more responsive to be able to address structural racism and thank you secretary I'm running out of time so I did want to just bring to your attention and I'm grateful for the work of the committee I look forward to learning more about that but myself and Senator Cory Booker have introduced the American Opportunity accounts act if passed into law this would represent the most ambitious Federal effort to directly address wealth inequality at Birth every child would receive one thousand dollars in a savings account managed by the treasury Department children from low-income families receive deposits every year and once they reach the age of 18 they can use the funds they have saved for specific purchases purchase purchases such as buying a home pursuing higher education this there's growing momentum around the country for our baby bonds legislation from Massachusetts California Connecticut New York Washington DC do you agree that the treasury Department should further look into baby bonds as a tool to address wealth inequality in our country well certainly this is a key priority of the Biden Administration and not just a treasury matter but um I think it's a very constructive um suggestion as as you know President Biden has proposed many policies that would be complementary including extending the child tax credit and making sure that it's refundable which did Succeed In cutting poverty by 50 percent absolutely thank you secretary Yellen I do see baby bonds as the kind of Investments that will break cycles of generational poverty and systemic economic oppression and put us one step towards closing the racial wealth Gap thank you generally yields a gentleman from South Carolina Mr Norman is now recognized for five minutes thank you for appearing here Missy Allen um Ms Alan your statement that the president is working on a path of cuts that will I guess get our economic house in order you said three tree and over the next decade is that not like saying you're going to drain the ocean a teardrop at a time we're on we're on tap uh where the interest on the debt will exceed our military whole military budget how does that square with his statement he wanted to clean debt ceiling well short-term interest rates have gone up substantially but longer term interest rates are lower and most economists and fed officials um believe that over the medium term real interest rates which is what's important to our debt burden will decline I mean not not be this President is on tap to spend four trillion dollars uh and I find it astonishing that in your position you make that type of statement now the debt limit X date um it's changed it moved from June 1 to June 5th and maybe in July was this did you get with and we had a president who's missing in action for over a hundred days didn't want to negotiate was this a strategy to ramp up the press to just move the date I want to insist that there was nothing whatsoever about the advice that I gave to Congress that was political so you didn't get with this Minister reclaiming my time Michelle I'm trying to ask you a question did you not get with this Administration to move the dates to ramp up the pressure that the media was was daily uh saying this country let me finish and I'll let you hopefully get some time in if if you will not filibuster but so you didn't get together with the president or the administration to just move dates because that's very critical uh to if it was really July or later why didn't you tell us well the answer is an unambiguous no I did nothing of this sort and the very first letter that I sent to Congress in early January indicated that June early June was a time that we were concerned our balance based on what be sufficient based on our forecasts of spending and revenues we could see that early June was a matter of concern we waited until our tax revenues came in after the April 18th that was fluid Ms Allen that was fluid yeah California who I think 51 counties were exempt from getting the timeline that the tax revenues in uh what's we wrote you two letters to explain what your um what's your metrics were that you used to determine that the country was going to run out of money and not pay the well I'm sure sorry but on June 2nd the day after Congress raised the debt ceiling the treasury balance declined to 23 billion dollars which may sound like a lot of money but it's absolutely a complete you never responded insufficient Michelle and you never responded to two letters to give to give us the metrics of how you how you gave those dates out let me I'm running out of time let me let me cover one other subject I'm reclaiming my time Miss yellow I'm proclaiming my time uh you've mentioned several times about the the sanctions that this Administration is putting on Russia was enabling the north stream pipeline a a sanction to the the this Administration put on Russia or what did it enable Russia to get the revenues that they are today the Administration has long been opposed to Nordstrom too they're the ones that opened it up president Trump discontinued it are you saying the the this this Administration did away with the enabling the north stream pipeline to being to be built I believe that the president made clear his opposition to the pipeline then why did it why did it get put in use under under this Administration it's being built now well it's it's no longer um Germany is so nothing has changed from the Trump Administration to the Biden Administration on enabling the north stream pipeline to be in existence to be to remain in section to be built if you could I'm out of time if you'd respond in writing I sure would appreciate it thank you so much gentlemen yields gentleman from Nevada Mr Horsford is now recognized for five minutes Madam Secretary would you like to answer the final question so that the record is clear on your position regarding the debt ceiling date regarding the debt ceiling date based on the questioning from the previous colleague yes my my very first letter to Congress indicated that while we had we had confidence that we could pay the government's bills until early June but that highlighted that we were concerned that we might not after early June we waited this considerable uncertainty about what our resources will be months ahead it was critical to see what incoming tax revenue was once we saw that we realized that early June was an even more serious problem than we indicated and in several litters I highlighted that June 1st that we we felt our resources would expire in early June possibly as early as June 1st and our final I just wanted you an opportunity June 5th clear the record she's awfully close to June 1st thank you and to be clear it was all because of a self-inflicted manufactured debt limit crisis that my Republican colleagues caused which had Democrats not delivered the votes in the house would have caused a default causing our economy to spiral out of control would across the U.S globally and affect millions of jobs now at the same time we also have heard from my colleagues who've demand demanded more for fiscal austerity and a balanced budget now as if without a second thought for their vigorous push for the government to tighten its belt here we go again with another round of ill-advised cuts to vital Revenue house Republican tax cut scam will cost the United States taxpayers upwards of 1.1 trillion dollars I find that outrageous again as they work towards deep cuts to essential programs like Social Security and Medicare their extreme idea of fiscal restraint is another tax giveaway for big corporations across this country now house Democrats and President Biden have fought hard to protect American workers and ensure we lead the clean energy transition into the 21st century yet instill the House GOP are siding with their wealthy backers and the fossil fuel industry the folks in my district in Nevada deserve more investment in our people in our health in our environment and on our clean energy economy and yet the recently introduced and misnamed tax cuts for Working Families act accomplished none of these priorities that's why it should be called the Republican tax scam 2.0 secretary Yellen do you have any indications as to the consequences of the proposed 1.1 trillion dollars in Lost tax revenue and how that would stem from these proposed cuts the ones that are now under consideration correct well they would benefit wealthy individuals and and corporations and do nothing for working families and um and is it paid for no it's and so that will add to the debt correct of course it would exacerbate and so they will then have to pay interest on the debt for tax cuts for the very wealthy while balancing the budget on the backs of working people that I represent yes additionally could you discuss the macroeconomic cost associated with stripping away the recently passed tax incentives for clean energy production and clean energy vehicles with a specific focus on the harm to American domestic Manufacturing in the Green Technology section we have seen Renaissance in manufacturing in the United States as a consequence of the inflation reduction act there is tremendous investment that is taking place in our clean energy economy it's creating good jobs all across the country and not just on the coast but in parts of the country that really have seen a decline in manufacturing jobs and it would bet have a very harmful effect all I'll say in in closing is the American people are watching they're very smart they know that the Republicans are not for fiscal austerity not when they're giving tax cuts to the very wealthy working Americans uh secretary has graciously agreed to stay so that representative Garcia and I may ask questions we thank you very much for that secretary I now recognize myself for five minutes thank you um I want to go back just and cover the cs3d relatively briefly because you've been asked about that a few times the corporate sustainability due diligence directive coming out of Europe where U.S businesses could be sued by the EU for simply doing business with so-called high impact companies such as natural gas and and that's a real big concern of mine as well as coal um Madam Secretary Cole as you very well know is is essential for the production of Steel and every company is is producing steel particularly anthracite steel which I have an abundance of in my district so if the EU were to pass something like this it could and there were there were analysis on this effect the stock prices and the in the valuations and The Business of over 63 percent of the S P 500 and really set a precedent that that Europe can regulate the United States and certainly the EU is in high demand for LNG so I'm really asking you as a governor of the IMF uh are we pushing we're not just the IMF but in general in your in your role are we are we pushing back strongly on this are we doing an analysis are we really taking this very seriously to uh related to the cs3d I'm sure Odysseus the corporate sustainability due diligence yes that's an EU initiative and I I've indicated that we have concerns about it that um it can impact our our firms in ways that would have unintended consequences right that concern us and it did indicate that but but doing just say 150 million dollars in business in Europe if a company does a billion dollars here that regulation would be mandated for that company as a whole that that's why we have that's why we have concerns I agree significant concerns I I would hope uh Madam Secretary so uh did you do any are you doing a cost benefit analysis of this um what its effect would be is that part of your I don't think we have to do a cost-benefit analysis but I think we do have to express our concerns to the EU and try to see that they're addressed okay I'm hoping we can keep you be kept updated on this uh secretary because again this is a real serious issue that I'm not sure too many businesses are are fully aware of being regulated by the EU it's not yet final legislation it's draft and uh okay it's hard to know exactly what its impact will be on the EU firms but um we we advocate for it to be addressed by the EU um I do want to ask you this more of a broad question does the treasury your department obviously the fed the White House do you have conversations where you look at the economy as a whole and say look with all these the FED stimulus with this excessive spending let's face it uh that took place um a Slowdown of American Energy which had a lot to do with the spiking of gasoline prices which obviously attributes to inflation a rise of interest rates which is it doing uh awful things that I want to talk about on the service to our debt but do you have the conversation say let's take a holistic view here and maybe we should have some some pro-growth initiatives we certainly take a holistic view of many discussions of the Outlook and what's appropriate and I will say that when President Biden was elected and the ARP was passed the unemployment rate in the United States was exceptionally high and there was a real risk that we would have a generation I'm secretary I don't mean to interrupt but we we had coveted and that we deliberately shut down the government and it's the same interest it's the same unemployment rate that we had in 2019 and yet they're still close to 2 million people uh not working so it's not that's like it's not working we've got all this inflation we've got we've got uh debt as far as the eye can see and you know what's unbelievably alarming secretary is that in 2021 when the administration came in our national our service on our debt was 275 billion dollars I'm sure enough to tell you these numbers in 22 is 385 billion this year it's going to be a staggering 660 billion dollars next year it's likely to be higher than our defense so it's not it's not working is the only it seems to me the growth strategy is to spend more I mean is that considered a a growth strategy well a growth strategy does involve investing in America and President Biden is put in place um proposals and legislative legislation that does feed our growth thank you secretary my time has expired the gentlewoman from Texas now miss Garcia is recognized for five minutes thank you Mr chair and uh thank you secretary Yellen for joining us here again today secretary Yellen under your leadership and in collaboration with President Biden the treasury Department has done excellent work promoting a strong and vibrant domestic economy in assisting countries in in need internationally I want to thank you for that I want to quickly just follow up on a couple of the questions before I get to one of my own you've you've consistently said that it's important that the dollar remains strong and be the the currency of the world um I I've been troubled by the number of of businesses small retailers even at airports and coffee shops that are beginning to not even take the dollar anymore they don't take cash there's a bigger Reliance on credit cards what does that do to to our economy into the statue of the dollar if in fact cash is king and the dollar is the Emperor or the king what does that do and and how are we doing with with the the interest rates on credit cards and the transaction fee charges using credit cards we're still using the dollar as a currency it doesn't have to be um physical currency we want an efficient payment system and um electronic payments are becoming faster and cheaper and um it's we're still using the dollar even when we make payments using plastic but credit card fees do remain remain very high and um it's it's important to Foster innovations that will improve and reduce the costs associated with making payments the FED is bringing into operation a system called fednow that will make 24 7 real-time payments a reality in the United States and I hope that they that that's a system that will promote cheaper and faster and safer payments right so where are we on the development of a digital dollar um the White House is running a task force that is includes the Federal Reserve and other agencies to look at whether or not it's in the United States interest to develop a digital dollar is Central Bank digital currency it's a complex situation where there are both benefits and costs and we continue that work and hopefully we'll be able to consult with Congress and recommend a Way Forward yeah thank you and I I heard you say that there was three three trillion was it three trillion in Cuts in the next decade in the president's budget and that would be that cuts in the deficit yes and um the number of jobs that have been created under President Biden in just what is it now 28 months so while there may be some Americans who are unemployed the reality is that there's been 13 million jobs created and we have almost the lowest unemployment rate in 50 years in this country now inflation is too high and needs to be brought down and that is a top priority but the drug Market could hardly be stronger right and I hear reports that the supply and chain issues by and large are getting getting resolved that yes you're getting back on track excuse for a few items would you agree with that yes and inflation has come down five percent from its high so well it is too high it is still moved down considerably well I actually will submit another question or two for you in writing because I'm running out of time but again I just want to thank you for your leadership and your steadfast commitment and passion and ensuring that the not only that the dollar is always King but that Cassius King thank you so much thank you very much gentle lady yields back we would like to thank secretary Yellen very much for your testimony and for your extended time without objection all members will have five legislative days within which to submit additional written questions for the witness of the chair which will be forwarded to the witness for her response I ask you secretary Yellen to please respond no later than July 14th if you would please 2023 for purposes of the second hearing we will begin at 2 pm today or immediately following floor votes whichever occurs earlier this hearing is adjourned foreign thank you