[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
THE ANNUAL TESTIMONY OF THE SECRETARY
OF THE TREASURY ON THE STATE
OF THE INTERNATIONAL FINANCIAL SYSTEM
=======================================================================
HEARING
before the
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
MAY 7, 2025
__________
Serial No. 119-20
Printed for the use of the Committee on Financial Services
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
60-550 PDF WASHINGTON : 2026
HOUSE COMMITTEE ON FINANCIAL SERVICES
FRENCH HILL, Arkansas, Chairman
BILL HUIZENGA, Michigan, Vice MAXINE WATERS, California, Ranking
Chairman Member
FRANK D. LUCAS, Oklahoma SYLVIA R. GARCIA, Texas, Vice
PETE SESSIONS, Texas Ranking Member
ANN WAGNER, Missouri NYDIA M. VELAZQUEZ, New York
ANDY BARR, Kentucky BRAD SHERMAN, California
ROGER WILLIAMS, Texas GREGORY W. MEEKS, New York
TOM EMMER, Minnesota DAVID SCOTT, Georgia
BARRY LOUDERMILK, Georgia STEPHEN F. LYNCH, Massachusetts
WARREN DAVIDSON, Ohio AL GREEN, Texas
JOHN W. ROSE, Tennessee EMANUEL CLEAVER, Missouri
BRYAN STEIL, Wisconsin JAMES A. HIMES, Connecticut
WILLIAM R. TIMMONS, IV, South BILL FOSTER, Illinois
Carolina JOYCE BEATTY, Ohio
MARLIN STUTZMAN, Indiana JUAN VARGAS, California
RALPH NORMAN, South Carolina JOSH GOTTHEIMER, New Jersey
DANIEL MEUSER, Pennsylvania VICENTE GONZALEZ, Texas
YOUNG KIM, California SEAN CASTEN, Illinois
BYRON DONALDS, Florida AYANNA PRESSLEY, Massachusetts
ANDREW R. GARBARINO, New York RASHIDA TLAIB, Michigan
SCOTT FITZGERALD, Wisconsin RITCHIE TORRES, New York
MIKE FLOOD, Nebraska NIKEMA WILLIAMS, Georgia
MICHAEL LAWLER, New York BRITTANY PETTERSEN, Colorado
MONICA DE LA CRUZ, Texas CLEO FIELDS, Louisiana
ANDREW OGLES, Tennessee JANELLE BYNUM, Oregon
ZACHARY NUNN, Iowa SAM LICCARDO, California
LISA MCCLAIN, Michigan
MARIA SALAZAR, Florida
TROY DOWNING, Montana
MIKE HARIDOPOLOS, Florida
TIM MOORE, North Carolina
Ben Johnson, Staff Director
C O N T E N T S
----------
Wednesday, May 7, 2025
OPENING STATEMENT
Page
Opening Statement of Hon. French Hill, Chairman of the Committee
on Financial Services, a U.S. Representative From Arkansas..... 1
Opening Statement of Hon. Maxine Waters, Ranking Member of the
Committee on Financial Services, a U.S. Representative From
California..................................................... 3
STATEMENTS
Statement of Warren Davidson, Chair of the Subcommittee on
National Security, Illicit Finance, and International Financial
Institutions, a U.S. Representative From Ohio.................. 4
Statement of Joyce Beatty, Ranking Member of the Subcommittee on
National Security, Illicit Finance, and International Financial
Institutions, a U.S. Representative From Ohio.................. 4
WITNESSES
Statement of Honorable Scott Bessent, Secretary, United States
Treasury....................................................... 5
Prepared statement........................................... 7
APPENDIX
MATERIALS SUBMITTED FOR THE RECORD
RESPONSES TO QUESTIONS FOR THE RECORD
Written responses to questions for the record from Representative
French Hill.................................................... 62
Written responses to questions for the record from Representative
Frank D. Lucas................................................. 66
Written responses to questions for the record from Representative
Ann Wagner..................................................... 67
Written responses to questions for the record from Representative
Daniel Meuser.................................................. 68
Written responses to questions for the record from Representative
Zachary Nunn................................................... 68
Written responses to questions for the record from Representative
Bryan Steil.................................................... 71
Written responses to questions for the record from Representative
Stephen F. Lynch............................................... 73
Written responses to questions for the record from Representative
Gregory W. Meeks............................................... 76
Written responses to questions for the record from Representative
Joyce Beatty................................................... 77
Written responses to questions for the record from Representative
Rashida Tlaib.................................................. 77
Written responses to questions for the record from Representative
Sylvia R. Garcia............................................... 80
Written responses to questions for the record from Representative
Nikema Williams................................................ 81
Written responses to questions for the record from Representative
Maxine Waters.................................................. 84
LEGISLATION
H.R. ----, the Small Business Relief Act of 2025................. 117
H.R. 2548, the Sanctioning Russia Act of 2025.................... 121
H.R. ----, the Preventing the Escalation of Armed Conflict in
Europe Act of 2025 (PEACE Act of 2025)......................... 152
H.R. ----, the Special Drawing Rights Oversight Act of 2025...... 157
H.R. ----, the No New Burma Funds Act............................ 162
THE ANNUAL TESTIMONY OF THE SECRETARY
OF THE TREASURY ON THE STATE
OF THE INTERNATIONAL FINANCIAL SYSTEM
----------
Wednesday, May 7, 2025
U.S. House of Representatives,
Committee on Financial Services,
Washington, DC.
The committee met, pursuant to notice, at 10:05 a.m., in
room 2128, Rayburn House Office Building, Hon. J. French Hill
[chairman of the committee] presiding.
Present: Representatives Hill, Lucas, Sessions, Huizenga,
Wagner, Barr, Williams of Texas, Loudermilk, Davidson, Rose,
Steil, Timmons, Stutzman, Meuser, Kim, Donalds, Garbarino,
Fitzgerald, Lawler, De La Cruz, Ogles, Salazar, Downing,
Haridopolos, Moore, Waters, Velazquez, Sherman, Meeks, Scott,
Lynch, Green, Cleaver, Himes, Foster, Beatty, Vargas, Gonzalez,
Casten, Pressley, Tlaib, Torres, Garcia, Williams of Georgia,
Fields, Bynum, and Liccardo.
Chairman Hill. The Subcommittee on Financial Services will
come to order. Without objection, the Chair is authorized to
declare a recess at any time.
This hearing is titled: 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 now recognize myself
for an opening statement.
OPENING STATEMENT OF HON. FRENCH HILL, CHAIRMAN OF THE
COMMITTEE ON FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM
ARKANSAS
I want to welcome Treasury Secretary Bessent to his first
appearance before our committee. The President is fortunate to
have a cabinet official of this fine caliber. This annual
hearing is meant to examine the international financial system.
The International Monetary Fund (IMF), the World Bank, and
the Regional Development Banks play a key role in advancing
U.S. interests but in recent years, they have surrendered to
mission creep.
Under the Biden Administration, the IMF management tried to
turn the fund into World Bank light, launching initiatives on
climate change and social policy. If the Trump Administration
wants to pull back the IMF's mission creep, it can start by
scrapping the resilience and sustainability facility and
instead focus on the poverty reduction and growth trust.
Other reforms are just as vital. In 2021, the IMF
management pushed through an allocation of special drawing
rights, SDRs, that gave China over $40 billion in unconditional
liquidity, with another $17 billion going to Russia, and $5
billion each going to Iran and Venezuela. Congress had no say
in the matter. Any future SDR allocations must have elected
lawmakers buy it. Moving forward, we need leadership at the IMF
that cares more about the fund's core mission rather than
hurting the feelings of the Chinese Communist Party.
Think about it. No one can say what the true growth rate is
of the world's second largest economy. No one really
understands how China manages its exchange rate. It narrowly
has a trillion-dollar trade surplus and a Central Bank
controlled by an authoritarian, dictatorial political party.
Its opaque predatory lending to developing countries has seen
no significant restructuring. All this is an indictment of the
IMF's leadership, and we need greater transparency.
Turning from the IMF, the World Bank and the Asian
Development Bank still green-light a billion dollars per year
for Chinese projects. I urge the Trump Administration to end
all World Bank and Asian Development Bank assistance of China
by end of President Trump's term.
At the same time, I commend the World Bank for its recent
openness to financing nuclear energy, which is a priority of
mine and enjoys bipartisan support here in Congress. During the
spring meetings last month, I met with officials from around
the world who agree that nuclear power is an obvious fit for
the development bank's core mission. I was pleased to see you,
Mr. Secretary, echo your importance for nuclear energy and your
remarks at the bank meetings as well.
If we care about back-to-basics approach, the banks can go
even further by recommitting themselves to public health,
education, and infrastructure. For example: 70 percent of 10-
year-olds in low-and middle-income countries cannot understand
a simple written text; over 400,000 children die of malaria
each year; half of Sub-Saharan Africa has no reliable
electricity, but for too long the World Bank and others have
spent more time and more money on climate change and entry
empty rhetoric than trying to tackle these urgent development
challenges.
Mr. Secretary, our committee appreciated your remarks at
the IMF and World Bank spring meetings where you outlined an
active approach to these issues and noted the critical
leadership role that the United States plays in our
multilateral financial institutions.
We should all be pleased that Treasury has a leader who has
signaled that he will tackle these issues in a serious way. I
look forward to discussing our international financial
institutions with you as well as hearing from our members on
the various priorities that are important to them. I yield
back.
The Chair now recognizes the Ranking Member of the
committee, Ms. Waters, for 4 minutes for an opening statement.
OPENING STATEMENT OF HON. MAXINE WATERS, RANKING MEMBER OF THE
COMMITTEE ON FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM
CALIFORNIA
Ms. Waters. Thank you, Mr. Chairman. Since the first day of
the Trump Administration, Members of Congress and the American
public have demanded transparency and accountability regarding
the economic calamity this regime has caused. Instead, we have
been met with flat outright lies, deception, and unfathomable
level of gaslighting by officials like today's witness.
Secretary Bessent, you are about to go down in history as the
man who oversaw one of the most significant economic downfalls
in modern history.
The U.S. economy, which had the strongest recovery from the
pandemic, compared to other large economies in the world is now
falling behind. In the first quarter since Trump took office,
the United States economy shrank without gross domestic
products, decreasing by 0.3 percent. We are falling behind
while Canada, Europe, and China are racing ahead. What happened
to the Golden Age you and President Trump promised the American
people?
Secretary Bessent, you are also the face of what the Wall
Street Journal has described as, and I quote, the dumbest trade
war in history. As a result of this stupidity, U.S. stock
markets had experienced the worst first 100 days of any
Presidential term in more than 50 years. America's CEOs are
sounding the alarm of what is to come. Empty shelves and higher
prices that the American consumer will pay. Companies are
already running out of inventory. Port volume is down and small
businesses are warning that they will not survive this.
Moreover, inflation remains a problem, and housing
affordability continues to be a challenge, with homebuilders
estimating Trump's tariffs will add $11,000 to each new home
they build.
I have no doubt that what I am telling you, I am telling
you stuff you already know. It has already been reported that
you yourself admitted in an April 22 closed-door investor
Summit that Trump's tariffs on China are quote, unsustainable,
unquote, but in public, you have twisted yourself into a
pretzel trying to justify them. You are gaslighting the
American people into believing that this chaos is all a part of
some master plan.
If the plan is to steer the U.S. economy into a recession
as economists are predicting, then it is working. Economists
say Trump tariffs will cost on the average each American family
nearly $5,000 more per year.
Mr. Bessent, because you and your ultra wealthy group of
insiders can afford this, most Americans cannot. The American
people also deserve to know why you handed Elon Musk and his
Department of Government Efficiency (DOGE) minions access to
Treasury's payment system and the Consumer Financial Protection
Bureau's data base.
Today, you need to tell the American people why you are
dismantling agencies that protect consumers from financial
fraud and abuse and weakening ones meant to support the small
businesses struggling under the weight of your policies. You
need to answer for this, and you need to answer for senior
members of this administration who are trying to make a buck
off of this market manipulation and blatant, brazen corruption.
Chairman Hill, if I were you, I would swear this witness in
before he begins his testimony.
Chairman Hill. The gentlewoman yields back. The Chair
recognizes the Chair of the Subcommittee on National Security,
Illicit, Finance, and International Financial Institutions, Mr.
Warren Davidson for 1 minute for an opening statement.
Mr. Davidson.
STATEMENT OF WARREN DAVIDSON, CHAIR OF THE SUBCOMMITTEE ON
NATIONAL SECURITY, ILLICIT FINANCE, AND INTERNATIONAL FINANCIAL
INSTITUTIONS, A U.S. REPRESENTATIVE FROM OHIO
Mr. Davidson. Thank you, Chairman.
Mr. Secretary, thank you for joining us today. We really
appreciate you. As this committee gathers to discuss the state
of the international financial system, your remarks at the
conclusion of the IMF World Bank spring meetings hit the bull's
eye. Your vision to steer the IMF and World Bank back to their
core missions, macroeconomic stability, and economic
development while cutting through mission creep is exactly what
we need. By championing fiscal discipline, anti-corruption
measures, and private-sector-led growth, you are paving the way
for a sustainable global economy.
America is done bank rolling China's gains and their trade
scams. Your call for fairness in U.S. leadership nails it.
Tying our dollars to hard reforms at these international
institutions, that is accountability that we can and should
trust. America first must mean that America's resources advance
America's interest. So thank you for your clarity and your
tireless efforts, Mr. Secretary.
Let us make sure that the global financial system serves
main street Americans, not globalist elites. Mr. Chairman, I
yield back.
Chairman Hill. The gentleman yields back.
The Chair recognizes the Ranking Member of the Subcommittee
on National Security, Illicit Finance, and International
Financial Institutions, Mrs. Beatty, for 1 minute for an
opening statement.
STATEMENT OF HON. JOYCE BEATTY, RANKING MEMBER OF THE
SUBCOMMITTEE ON NATIONAL SECURITY, ILLICIT FINANCE, AND
INTERNATIONAL FINANCIAL INSTITUTIONS, A U.S. REPRESENTATTIVE
FROM OHIO
Mrs. Beatty. Mr. Chairman, Ranking Member, and Mr.
Secretary, first let me start by associating myself with the
words of Ranking Member Waters. Mr. Secretary, hardworking
American families have been struggling--as I am sure you should
know--since the pandemic to put food on their tables and to
keep their small businesses open. Just when the Biden
Administration had started had to provide some relief, the
Trump Administration came in and needlessly say tanked the
economy.
Despite promises to lower costs for American families, we
see the direct opposite. I lay the blame on the Trump
Administration. Inflation is up. Borrowing and housing costs
are rising. The stock market is in chaos, endangering
American's retirement savings, and the United States' economy
shrank in the first quarter since Trump took office.
Just to add insult to injury, Republicans are cutting
Medicaid and food stamps to pay for huge tax cuts to
billionaires. Our constituents deserve better. I yield back.
Chairman Hill. The gentlewoman yields back.
Today we welcome the testimony of Hon. Scott Bessent, the
Secretary of the Treasury. We thank you for taking time to be
with us. You will be recognized for 5 minutes to give an oral
presentation of your testimony.
Without objection, your written statement will be made part
of the record.
Mr. Secretary, you are now recognized for 5 minutes.
STATEMENT OF HON. SCOTT BESSENT, SECRETARY, UNITED STATES
TREASURY
Secretary Bessent. Chairman Hill, Ranking Member Waters,
and members of the committee, I am grateful to join you today.
At the IMF and World Bank spring meeting last month, I relayed
an important message: America first does not mean America
alone. To the contrary, America first seeks to expand U.S.
leadership and international institutions like the IMF and the
World Bank. By embracing a stronger leadership role, the United
States will restore fairness to the international economic
system.
I look forward to answering your questions on this topic
today, and I look forward to providing you with a broad
overview of Treasury's achievements and future plans.
Specifically, I would like to highlight the department's
efforts to boost U.S. economic growth, improve government
efficiency, and target illicit actors that threaten our
national security.
The core components of the Trump economic agenda are trade
tax cuts and deregulations. These are not standalone policies.
They are interlocking parts of an engine designed to drive
economic growth and domestic manufacturing. Tax cuts can cause
savings from deregulation and raise real incomes for families
and businesses.
Tariffs create an incentive for reshoring jobs and fair
trade, and deregulation complement tariffs by making it easier
to invest in energy and manufacturing projects. Already this
agenda is bearing fruit.
In the first hundred days of the new administration,
464,000 new jobs were added to the economy. In April alone,
over 177,000 American jobs were added; more than 40,000 more
than economist predicted. All the while employment remains low
while real hourly wages continue to grow.
As important as spurring job growth is wrangling inflation
and in this endeavor, the administration continues to make
tangible progress. The consumer price index (CPI) for energy
goods declined in March as did the price index for core goods.
The CPI for all items declined for the first time since the
coronavirus disease (COVID) pandemic.
While the cost of goods is decreasing, so are energy
prices. Complementary to our efforts to grow American
prosperity, we are focused on improving efficiency across all
levels of government, but especially the Internal Revenue
Service (IRS). We just concluded a successful tax filing
season, but the IRS still needs significant reforms to deliver
efficient and cost-friendly results for the American people. In
this endeavor, we have successfully cut 2 billion from the IRS
information technology (IT) budget without any operational
disruptions. We achieved these cost savings by eliminating
renegotiating and de-scoping wasteful IT and professional
service contracts and addressing longstanding efficiencies such
as auto-renewed licenses unused for years. This intervention
alone will save taxpayers hundreds of millions of dollars each
year.
We are also taking steps at the IRS to reduce
administrative costs with a particular focus on paper
processing, which has been a longstanding bipartisan goal. Last
year, the IRS spent approximately 450 million on paper
processing with nearly 6,500 full-time staff dedicated to the
task. Through policy changes and automation, Treasury aims to
reduce this expense to under 20 million by the end of President
Trump's second term.
In addition to making government more efficient, Treasury
is committed to working alongside the White House to make
America safe again. To that end, we have launched a maximum
pressure campaign against violent cartels and terrorist
networks. We have assessed tens of millions of dollars in civil
penalties against organizations facilitating money laundering
along the southern border. By leveraging sanctions, we are
choking off the financial lifelines of terrorists, criminals,
and hackers from Mexico and Guatemala to China and Iran.
In the first hundred days of the new administration, we
have set the table for a robust economy that allows main street
to grow. With Congress and the White House working hand in
hand, we expect to see even more positive results over the next
few months.
The key to expanding economic opportunity for all Americans
is making the Trump tax cuts permanent. We are eager to work
closely with members of this committee to pass this bill into
law. Together, we can build a stronger, safer, and more
prosperous America. Thank you.
[The prepared statement of Secretary Bessent follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Hill. Thank you, Mr. Secretary. We will now turn
to member questions. The Chair recognizes himself for 5 minutes
for questions.
Mr. Secretary, as I noted in my opening statement, I was
pleased to see your endorsement of nuclear energy projects
during the World Bank spring meetings last month. On a
bipartisan basis, this committee recently passed my
International Nuclear Energy Financing Act, which would
establish trust funds at the World Bank, the European Bank for
Reconstruction Development, and potentially another
multilateral development banks. Senators from both sides of the
aisle also support this concept.
Would you support the idea of trust funds to benefit
nuclear energy financing at the multilateral development bank?
Secretary Bessent. Mr. Chairman, this administration
supports an across-the-board effort to increase the nuclear
power via for civilian use throughout the world. We think that
the World Bank should make that a key effort.
Chairman Hill. Thank you. I also referenced my work over
the past 5 years with the Treasury and others about IMF
reforms. You also referenced that in your talk. Recently, the
IMF shareholders agreed to a quota increase. I appreciate the
agreement--that this agreement does nothing to increase the
voting power of China or Russia. If Congress were to approve
this agreement, it would allow future administrations, to
green-light more general special drawing rights, allocations
close to a trillion dollars. That would mean $60 billion of new
unconditional liquidity for the Chinese Communist Party, $25
billion for Moscow, and $7 billion each for the regimes in
Caracas and Iran with no sign off from Congress.
Even if rogue regimes Financial Transmission Rights (FTRs)
are rejected by Western countries, which we have seen in the
case of sanction countries, they still could be exchanged
behind the scenes for Chinese renminbi (RMB), for example. I
believe this is unacceptable.
Would Treasury under your leadership work with me to reform
the SDR allocation process at the IMF?
Secretary Bessent. Mr. Chairman, we believe the SDR process
at the IMF should serve the goals of the United States of
America and not other States. As I said in my speech during IMF
week, this administration is aligned with you via in your goals
on the SDR. Furthermore, we believe that the IMF needs to get
back to basics in working with countries when there is a market
failure in financial markets rather than helping large, well-
financed countries.
Chairman Hill. Thank you. We look forward to following up
with you and walking through this. It will not be an easy task
but with international leadership from the United States, I
think we can get there, and I think we will all benefit. That
means countries in trouble will benefit instead of just the
general allocation approach.
The President, since he has been in office has championed
high-profile investment issues involving China. As everyone
knows, he has been negotiating U.S. investors' acquisition of
control, for example, over TikTok. In his State of the Union
address, President Trump announced a major investment would see
Americans take control of two ports near the Panama Canal that
are currently owned by a Hong Kong-based.
I am concerned that recently established outbound
investment restrictions could make deals like this even more
challenging. Under the regulations, U.S. investors do not
actually know which companies are off limits, and Americans
face bureaucratic hurdles if they want to take control from
Chinese owners.
What are your views on revising outbound programs to change
this? Since the President wants strategically to see American
investors take control perhaps of some Chinese-owned entities,
how do we make sure we get outbound rules right?
Secretary Bessent. Mr. Chairman, I want to thank you and
the members of this committee for leadership on this. I had a
very good discussion with two Members yesterday where we talked
about the importance of establishing an either red light or
green light and not having a yellow zone for outbound
investment. The Outbound Investment Security Program is an
important national security tool in our effort to restrict the
People's Republic of China (PRC) from exploiting the benefits
of U.S. investment. We have been receiving notifications from
the outbound program. We are monitoring the market, and we are
trying to ensure that the investment community is aware and
familiar with the program.
We appreciate the answers from Congress. While legislation
will be important and helpful, we would like a bit more time to
process, including the work mandated by the President to inform
legislation.
Chairman Hill. I appreciate that. I look forward to working
with you. I yield back.
I will now turn to the distinguished Ranking Member of the
committee, Ms. Waters, for 5 minutes.
Ms. Waters. Thank you very much, Mr. Chairman. Secretary
Bessent, this is the first time we have met. Is that correct?
Secretary Bessent. No, ma'am. We actually met one New
Year's Eve in the Bahamas. I was----
Ms. Waters. I do not remember that.
Secretary Bessent. You were much better at the Electric
Side than I was, and I was with the Prime Minister of the
Bahamas yesterday. Prime Minister Davis sends his regards.
Ms. Waters. Were you with my husband when he was the
Ambassador to the Bahamas appointed by Clinton?
Secretary Bessent. No.
Ms. Waters. You are not going to like this. This is the
first--I did not remember that, but that is odd because you
have been in Treasury, and I have sent you five letters to ask
about what was going on under your leadership and only received
a couple of cursory replies from your staff. Why did you not
respond?
Secretary Bessent. Ma'am?
Ms. Waters. I guess you do not know why you did not
respond. Secretary Bessent, you have worked in finance before,
right? You will find bipartisan support on this committee with
small businesses and the institutions that finance them.
I worked with Trump's first Treasury Secretary to pass 12
billion in support for community development financial
institutions and minority banks and credit unions. I was
surprised when Trump first tried to eliminate the Community
Development Financial Institutions (CDFIs), but it caught you
by surprise also.
You said that the CDFI fund played an important role in
expanding financial access. Unfortunately, you were not very
persuasive last week. Trump proposed to basically cut all CDFI
funding.
Now, let us discuss your job before becoming Secretary.
Your hedge fund had a secret sauce for how you would make money
for investors; a proprietary trading strategy. As CEO, you
guarded that strategy. You never allowed unrelated persons to
access your firm's computer records, data, personnel files, and
algorithms, right? I am sure you would not have allowed just
anyone unfettered access to copy, change, or to use those
records, right? I suspect not and that makes good sense.
What does not make good sense is why as Treasury Secretary
and acting Consumer Financial Protection Bureau (CFPB)
Director, you would allow DOGE unfettered access to the
government system that handles trillions of dollars in
payments, to the proprietary business records of entities
regulated by the CFPB, or most alarmingly to the tax records of
hundreds of millions of Americans; but you still threw up the
gates of our finance system open to Elon Musk and his ban of
22-year-olds.
Yes or no; do you know the level type or nature of the
clearances and security training required for individuals to
access the information held in the computers of Treasury, IRS,
or CFPB?
Secretary Bessent. Yes, I do, and I think we would have a
disagreement over the definition of the word ``unfettered.''
Ms. Waters. Mr. Secretary, did all the individuals working
with DOGE who were given access to Treasury and CFPB's computer
databases receive all of the required clearances and security
training before they were granted access?
Secretary Bessent. Again, they were granted read-only
access at Treasury. There were two----
Ms. Waters. Let me just say----
Secretary Bessent [continuing]. two DOGE employees----
Ms. Waters [continuing]. please, you cannot filibuster
here. This is not the filibuster playground.
What you did was you let these strangers into our Treasury
with access to all of the data, all of the personnel
information, and you just opened the door. Why did you do that?
Secretary Bessent. No, ma'am. They were Treasury employees.
Ms. Waters. Oh, are you saying today in front of this
committee that all of them were Treasury employees; that the
25-year-old who is being identified who worked for Elon Musk
was not allowed--was allowed into the Treasury? Was that person
there?
Secretary Bessent. He was a Treasury employee as was Tom
Krause, the senior person on the DOGE team. There were only two
people that----
Ms. Waters. There were DOGE employees also.
Secretary Bessent. Sorry?
Ms. Waters. Do you know, or were you aware that there were
DOGE employees coming into our Treasury, getting all of our
personal information?
Secretary Bessent. Ma'am, there is no such thing as a DOGE
employee; there were Treasury employees.
Ms. Waters. I tend to disagree with you based on the
information that I have. Has any information been downloaded by
anyone working with DOGE from any of Treasury's or CFPB's
computers? Answer yes or no.
Secretary Bessent. Not to my knowledge.
Ms. Waters. You better learn. I will yield back.
Chairman Hill. The gentlewoman yields back.
The gentleman from Michigan, the Vice Chairman of our
committee, Mr. Huizenga is recognized for 5 minutes.
Mr. Huizenga. Thank you, Mr. Secretary, for being here. I
just have to note that it is ironic that this has been declared
a no filibuster zone by the same people who walked out of a
hearing yesterday in filibuster.
So--and I just to give you one quick brief moment. Are you
saying that there were no unauthorized or unsanctioned persons
that had access to the systems that you are in control of?
Secretary Bessent. Again, there were two employees----
Mr. Huizenga. Yes.
Secretary Bessent [continuing]. that were very strict
guardrails, and they were there for an Enterprise Resource
Planning (ERP) function.
Mr. Huizenga. Yes, so they were authorized, and they were
sanctioned?
Secretary Bessent. Yes
Mr. Huizenga. So not unknown and Elon Musk was not one of
those two people?
Secretary Bessent. No, to my knowledge, Mr. Musk has never
been in the Treasury building.
Mr. Huizenga. Okay. All right. I have hit on Burma and a
little crypto, and if we have time, China. I want to thank you
for your actions that Treasury took this past Monday regarding
Burma. The KNA, the Karen National Army has become a haven for
Transnational Criminal Organizations that run illicit
operations such all human trafficking and smuggling. The group
has strong ties to the Burmese Army which has targeted
religious and ethnic minorities such as the Rohingya since the
civil war stuff broke out in 2021.
While the United States and our allies continue to impose
sanctions against the military junta, unfortunately the
atrocities continue.
My district, the Fourth District of Michigan is home to
approximately 5,000 of these ethnic Burmese, and I am just
asking you, we need to do more to protect the people of Burma
and to stop the genocide.
Yesterday I reintroduced the Brave Burma Act, a bipartisan
piece of legislation that would require the President to
determine on an annual basis whether to impose stronger
blocking sanctions against the Myanmar oil and gas enterprise,
the Myanmar Economic Bank, and foreign persons operating in the
jet fuel sector of the Burmese economy, which has been a
tremendous amount of their revenue; and further limits the
junta's ability to borrow at the IMF, which I think is one of
the issues that the Chairman was touch being on. These actions
would target the heart of the military junta's revenue.
Can I get your commitment that you are going to continue to
work with my staff and us on a bipartisan basis as we try to
address these issues in Burma?
Secretary Bessent. Congressman, we are happy to work with
your staff on this legislation and thank you for your
leadership on this issue. I share your concern about imposing
consequences on persons who threaten the peace, security, and
stability of Burma. The Treasury has the tools to continue to
take action for the people of Burma and working with you, we
will continue to do so.
Mr. Huizenga. That is great. What is frustrating is that
while some of these sanctions have been put in place, sanctions
are only as good as the willingness to enforce them. We have
seen them receiving financial support from the junta from
around the world, especially frankly as they ramped up
production during the last administration. I will note it is
not just Burma; it is places like Iran that this illicit
activity that has gone around the sanctions has been allowed.
In some cases, Treasury has granted these licenses. I sat on
the Foreign Affairs Committee as well, and we see this all the
time.
I want to touch on crypto. Yesterday, as I had mentioned,
the committee held a hearing with House Agriculture or
attempted to hold a hearing with the House Agriculture
Committee. It turned into a very important roundtable as well
regarding digital asset market structure reform.
Can you quickly explain how important it is to--it is for
America to take the lead here, especially as we see China
leaping ahead?
Secretary Bessent. Yes, sir. We believe that the United
States should be the premier destination for digital assets and
as members of this committee and the Senate are attempting to
do. Create good market structure via around that so that U.S.
best practices are used around the world.
Mr. Huizenga. That is really the point, right, is having
American U.S. best practices to sort of set the pace for others
to follow rather than us trying to fill in the holes that
others--that may be created by as others set that pace.
Secretary Bessent. Yes, sir. Also the digital assets that
are an important source of innovation that will drive the--that
can drive usage of the U.S. dollar around the world. As with
stable coin legislation, there is speculation that there may be
up to $2 trillion of demand over the next few years for U.S.
Government securities from digital assets.
Mr. Huizenga. My time has expired, but I will send you my
question regarding Chinese debt trap diplomacy. With that I
yield back.
Chairman Hill. The gentleman yields back.
The gentlewoman from New York, Ranking Member of the Small
Business Committee, Ms. Velazquez, is recognized for 5 minutes.
Ms. Velazquez. Mr. Chairman, I want to raise a point of
order.
Chairman Hill. Yes, ma'am.
Ms. Velazquez. I do not want the clock eating my time. I
would like for the witness to be sworn in before I ask my
questions.
Chairman Hill. The Chair does not see a need for that. You
may ask your questions. Your time can start--start the
gentlewoman's time over for 5 minutes.
Ms. Velazquez. Secretary Bessent, you were on CNBC earlier
this week, making claims saying we are very close, and maybe we
will see some deals this week on tariffs. Tell us, tell the
American people, tell small businesses and consumers, tell
retirees, specifically which countries are you close to
striking deals with?
Secretary Bessent. I am sorry, Congresswoman, but that
would not benefit the United States.
Ms. Velazquez. No, no, no. I am asking you a question,
based on the statement that you made on CNBC.
Secretary Bessent. I am telling you that it would be
detrimental to the interest of the United States for me to
answer that question.
Ms. Velazquez. Why would that be detrimental?
Secretary Bessent. Because as the negotiations may still be
in process as we speak, as we are not at the end of the week
yet, I am sure that you, through your question, would not want
to compromise U.S. negotiations. Would you?
Ms. Velazquez. Reclaiming my time.
Secretary Bessent, the President goes into a press
conference and claims that there are negotiations going on:
then the next day there is no negotiations going on.
Why would you not answer my question, and that would be
considered detrimental to American people to the American
economy? I do not understand. Despite your claim----
Secretary Bessent. Congresswoman, I am happy to say there
are negotiations going on. I am not going to reveal the
details.
Ms. Velazquez. How long do you think those negotiations
will take before they are concluded?
Secretary Bessent. There are numerous countries--as I have
said, if you saw my CNBC interview, which you referenced, that
there are 18 important trading partners, and we are moving
forward in all deliberate speed with those.
Ms. Velazquez. Okay. Do you consider these negotiations
advanced negotiations?
Secretary Bessent. Some of them are quite advanced.
Ms. Velazquez. So you expect this deal to be more than
memorandums of understanding? You expect them to be fully
negotiated trade deals?
Secretary Bessent. I via believe that they will be the
agreements in principle, and then we will paper them over in
the coming months. Once we reach an agreement, then I am sure
that the other countries will live up to them.
Ms. Velazquez. Okay. In congressional testimony yesterday,
you said the United States has not started negotiating with
China on tariff reductions. Does that continue to be your
position, yes or no?
Secretary Bessent. As you may have read----
Ms. Velazquez. Yes or no, sir.
Secretary Bessent [continuing]. as you may have read in the
press, I will be going to Switzerland, and the negotiations
will begin on Saturday.
Ms. Velazquez. Okay. So the President told you that would
be your answer today?
Secretary Bessent. I----
Ms. Velazquez. Can you tell who from the Trump
Administration is engaged in those discussions?
Secretary Bessent. Which discussions?
Ms. Velazquez. With China.
Secretary Bessent. For trade discussions?
Ms. Velazquez. Pardon?
Secretary Bessent. I'm sorry.
Ms. Velazquez. Trade discussions, yes, sir.
Secretary Bessent. The trade negotiations will be led by
myself and Ambassador Jamieson Greer of the United States Trade
Representative (USTR).
Ms. Velazquez. What about Pete Navarro?
Secretary Bessent. I'm sorry?
Ms. Velazquez. Peter Navarro. Is he----
Secretary Bessent. He will not be joining us in June.
Ms. Velazquez. Thank God for that. Are those negotiations
considered advanced?
Secretary Bessent. Pardon?
Ms. Velazquez. Are those negotiations considered advanced?
Secretary Bessent. As I said on Saturday, we will begin,
which I believe is the opposite of advanced.
Ms. Velazquez. Secretary Bessent, as Treasury Secretary and
a senior member of President Trump's assistant economic team,
has President Trump given you the authority to finalize any
trade agreement with China or any other trading partner?
Secretary Bessent. As President Trump has stated, he will
have the final decision on any trade agreement.
Ms. Velazquez. So you are telling me of these increased
prices, the stock market losses, the production delays are all
based on the wings of Donald Trump; that you could strike the
best deal with Canada, Mexico, or even China that is completely
in our favor, giving us everything that----
Chairman Hill. The gentlewoman's time has expired.
Ms. Velazquez. Especially if President Trump decides at any
certain moment----
Chairman Hill. The gentlewoman's time has expired.
Ms. Velazquez [continuing]. for whatever reason not to take
the deal, that will be it. I yield back.
Chairman Hill. The gentleman from Oklahoma, Mr. Lucas, who
is the Chair of our task force on monetary policy is recognized
for 5 minutes.
Mr. Lucas. Thank you, Mr. Chairman. As the dust has
continued to settle after last month's episode of Treasury
market volatility, can you give an updated assessment of those
events and how would you characterize the functioning of the
market during that period? The dust up in Treasury.
Secretary Bessent. The market was very well-functioning. It
was volatile, but the underlying infrastructure worked quite
smoothly, sir.
Mr. Lucas. Does the Treasury Department have the tools
necessary to address market volatility? You have said you may
increase the use of the buyback program. Are these or other
authorities that--are there other authorities that might be
helpful to address the challenges of the market?
Secretary Bessent. Yes, sir. We have a very large toolkit
that we can deploy as does the Federal Reserve.
Mr. Lucas. Taking a step back, Mr. Secretary. Can you
provide us with a sense of what regulations the administration
is working on to bolster resilience in the Treasury market and
the timelines when you would expect those changes to be
announced? This is a core issue on the task force I and a
number of my colleagues are working on.
Secretary Bessent. Sir, the auction sizes, the current
issuance sizes leave us well positioned to address potential
changes in borrowing needs. I can tell you that investor
participation in auctions, there has been broad investor
support. Our awaited average maturity is about 61.2 months,
which is quite wholesome. We have implemented a buyback program
with two objectives--liquidity support and cash management.
Mr. Lucas. One last question along that line. I have long
said that the administration should look at reforming
regulations like the supplemental leverage ratio to relieve
some of the constraints that market participants are facing in
Treasury market. I hope you will consider looking at that.
Secretary Bessent. Sir, Treasury does not look at that, but
I believe that it is a high priority for the re-regulators, the
Office of the Comptroller of the Currency (OCC), the Federal
Deposit Insurance Corporation (FDIC), and the Federal Reserve.
Mr. Lucas. Thank you. As the Securities Exchange Commission
(SEC) continues to implement their clearing rule, a number of
firms, including those outside the United States are looking to
provide clearing services for U.S. Treasuries and their
derivatives.
How are you working with the SEC and the Commodities
Futures Trading Commission (CFTC) to ensure the integrity of
the Treasury markets as these firms look to intermediate?
Secretary Bessent. Sir, the Treasury market is a global
market, and we welcome new participants, and we want to make
sure that best practices employed in the United States are also
employed globally.
Mr. Lucas. The reason I ask that is if you could
specifically comment on the clearing of U.S. sovereign debt
outside of the United States, what risk could that potentially
present? I come at that from the perspective if there is a
challenge in the market, if it is a U.S.-based entity, then the
regulators who would make the difficult decisions are here. If
it is outside of the United States, they might have a different
perspective.
Secretary Bessent. We are constantly studying that, sir. As
of now, we do not believe that it presents a risk. I will--as
we continue our studies, I will have my staff interact with
your team.
Mr. Lucas. Absolutely, Mr. Secretary. One final question.
Primary dealerships have become an expensive proposition for
firms, which in one explanation for participants leaving the
market. It is one of the many explanations. Should we be
looking at ways to make the environment friendlier to investors
wanting to become primary dealers?
Secretary Bessent. Sir, we have saw at the recent auction
very low participation by the primary dealers, which tells me
that there may be the regulatory function there that is
preventing them from using their balance sheet for the benefit
of the U.S. Treasury.
Mr. Lucas. So clearly the task force that Chairman Hill was
kind enough to set up and yourself, we have work to do. Thank
you, Mr. Secretary.
Mr. Huizenga. Would you yield.
Mr. Lucas. I will yield to the gentleman from Michigan.
Mr. Huizenga. Thank you and I can get my China question in.
**I appreciate my colleague doing that. I want to talk a little
bit about the international financial institutions, the FEE,
such as IMF World Bank, and they are falling short of
addressing key challenges. So China, whether it is in Africa or
Burma has really engaged in a debt trap diplomacy. How should
the IMF really help borrowers take the fund's advice when it
keeps giving China a free pass?
Secretary Bessent. Congressman, as I said, in a public
interview after one of my IMF speeches, it is time for China to
graduate from developing country status. It is the second
largest economy in the world. They are a large important
economy, and they should no longer be granted the status of a
developing economy.
Chairman Hill. I would like to invite you, Mr. Secretary,
to continue that answer in writing. I thank the Vice Chairman
and Mr. Lucas.
Let me call on the gentleman from California, the Ranking
Member for our Capital Market Subcommittee, Mr. Sherman.
Mr. Sherman. First, a parliamentary inquiry since the last
speaker had an extra 30 seconds. Can I have an extra 30
seconds?
Chairman Hill. I would be happy to do that.
Mr. Sherman. Mr. Chairman, I agree with you that special
drawing rights should be increased to only with congressional
input and I agree with Mr. Huizenga that we have focus on Burma
Myanmar.
I ask unanimous consent to put in the record a chart
showing how the value of the dollar compared to other
currencies has declined precipitously since Trump's so-called
liberation date; and also put into the record a CBO report
issued just an hour ago that shows that Republican proposals to
change Medicaid would in one case take one and a half million
people would lose their Medicaid benefits, and in another
proposal would cost 3.9 American or Medicaid benefits.
Chairman Hill. Without objection.
[The information referred to was not submitted prior to
printing.]
Mr. Sherman. I also ask unanimous consent to put in the
record a letter I sent to the Secretary responded to by his
assistant secretary, dealing with direct file, which means you
do not have to pay Turbo Tax because the IRS has the software.
The response that I got, an absurd response was basically,
well, as long as--you know, we just want to make sure Turbo Tax
makes a lot of money. So we are not going to do that.
I would point out that the IRS could send every American
for their voluntary use a proposed first draft of the tax
returns since you already have the W-2, you already have the
1099, and you do not have all the input errors that come for
people doing their own returns. That is something that your
administration is stopping. I would ask you----
Chairman Hill. Without objection.
[The information referred to was not submitted prior to
printing.]
Mr. Sherman. Yes, I would ask you, Mr. Secretary, to
provide for the record within 1 week your best estimate of when
the United States will hit the debt ceiling and exhaust our
borrowing capacity. Can I count on you to provide that for the
record?
[The information referred to was not submitted prior to
printing.]
Secretary Bessent. Sir, the so-called X date is a moving
target.
Mr. Sherman. I would like your best shot.
Secretary Bessent. As I stated yesterday, we are moving on
to the warning track, and we do not want to be on the warning
track----
Mr. Sherman. I would ask you to provide--to Congress the
best information you can, but I am going to go on to another
question.
I represent one of the two areas devastated by the Los
Angeles fires. I spoke directly and on camera to President
Trump and asked him to exempt building materials from these
tariffs. The National Association of Home Builders says that
these tariffs will add $11,000 to the cost of these fire
victims rebuilding their homes.
Can you assure us that in a country where we have a
devastating housing shortage in general, where we have
thousands of people in Los Angeles that have to rebuild their
homes in particular, that these fire victims are not going to
face this additional cost to rebuild their home?
Secretary Bessent. I will look into the end of that matter
and----
Mr. Sherman. That is exactly what the President said in
January.
Secretary Bessent. I was in Los Angeles this weekend, and I
toured the devastation. And----
Mr. Sherman. Thank you. I hope you saw the devastation in
the Palisades, and I hope you will not be imposing another
$11,000 cost on every home builder.
Now as to capital markets where I devote most of my time,
all of us on the subcommittee agree that we are trying to get
people to invest in American stocks and build the American
economy. In fact, our tax code has hundreds of billions of
dollars of incentives to get people to invest in America. China
also has incentives to get the Chinese people to invest in
Chinese stocks. There is a difference.
China only provides those incentives if you--to Chinese
people if they invest in Chinese stocks. American billionaires
like investing in China, making tens and hundreds of millions
of dollars in profit.
Can you think of a reason why the American Tax Code should
provide enormous tax benefits like the capital gains allowance
to American billionaires who invest in Chinese stocks? Why is
that in our national interest?
Secretary Bessent. Sir, it is not just available to
billionaires. If you were to buy a----
Mr. Sherman. Right. Why do we not want to----
Secretary Bessent. A Chinese Exchanged Traded Fund (ETF),
a----
Mr. Sherman. Why would we be neutral on whether I buy an
American ETF or a China ETF? Do we not prefer American capital
be invested in America or are we just fine with encouraging
Americans to invest abroad.
Secretary Bessent. Sir, we do not want to close the capital
account, and we do want to investors to be able to maximize
their judgment where they certainly----
Mr. Sherman. Let me go on to one more thing.
Secretary Bessent. I have said I would not bet against the
United States, but----
Mr. Sherman. Please, next question. Next question. Abu
Dhabi and the United Arab Emirates just announced that they
were going to give $2 billion to a stable coin put forward by
World Liberty Financial. This stable coin pays no interest. You
and I are both finance people. I just want to check my math.
Assuming a 4 percent rate of return, is this interest-free
loan of $2 billion worth $80 million every year to World
Liberty Financial and its Trump owners?
Secretary Bessent. Sir, I have not seen that. I do not know
the expense ratio. As far as I know, no stable coins pay
interest.
Mr. Sherman. So The New York Times is wrong. Please read
the article. I yield back.
Chairman Hill. The gentleman yields back.
The gentleman from Texas, Mr. Sessions, is recognized for 5
minutes.
Mr. Sessions. Mr. Chairman, thank you very much. Secretary,
welcome. We are delighted that you are here. Part of the
challenge against you this morning--and I am sure some days--is
the explanation of the tariff matter that President Trump has
initiated and sticking by. I would like to go by just my input
on that if I could. That I think that President Trump sees the
relationship with China by what it really is, and that is an
unfair relationship. One in which needs to be not only looked
at, but really something done about it.
I know that while we have permanent normal trade relations
(PNTR), it should mean that we treat them same way they treat
us, but that is not happening. President Trump, as part of
these changes, has changed the de minimis rule. That de minimis
rule was the amount of money that a package when it comes into
our country, under this circumstance, whether it was looked at
or not, whether a tariff was paid upon it, then I believe that
there were Chinese companies taking advantage of that. Some 4
million packages a day were coming to the United States, and I
say we are coming because I do not believe that rate is still
occurring.
As a result of that, what happened is it contributed to the
Fentanyl issue that we had. Because we did not look at these
packages with the same viewpoint that others did.
My point in bringing this up is that I believe that with
the new numbers of 177,000 net new American jobs being created
in the private sector, that there is an understanding by people
who want to invest in America, that this President is finally
taking on the Chinese who undermined not just intellectual
property but undermined with their government, the Chinese
Government, undercutting the price and manufacture of many
products that were American-made. Many of them or some of them
might be power tools. Of course, we know Craftsman is an
American-made product. It is not uncommon and was not uncommon
for their tools brought on the internet at $400 or $500 and for
a Chinese product to be brought for $40 or $50. That undermined
not just our intellectual property, but actually undermined the
manufacturing that takes place in this country. I am delighted
that you and the President are engaged in balancing that out. I
think that is what these 177,000 new American jobs net provided
for us because it is people who want to invest in the United
States knowing that finally we have a President that will
protect that onslaught of Chinese goods undercutting American,
not just jobs in intellectual property, but the events that
take place therein.
I think this President has done a great job and I want to
offer my support for that. Because I think that part of what
the President has done is set a new challenge and mark for
Americans now to pick up that part that was before challenged
by China.
Mr. Secretary, Russia still earns over $700 million a day
in fossil fuel revenue that helps its war against Ukraine, and
I think that most of us here would like to see Russia held
accountable.
Can you talk to me about sanction or sanctions that are or
are being considered against Russia energy firms as it relates
to selling their products to China?
Secretary Bessent. Yes, sir. I will tell you that the Biden
Administration exercised with regards to Russia and Ukraine
support a big dichotomy. On one hand, they were giving aid to
government of Ukraine. On the other hand, their sanctions
against the Russian federation were very, very weak against--
the sanctions were just against some of the lower-level oil
companies. There was a price cap that has never worked.
On his way out the door and in a fit of the bravery, the
National Security Advisor Jake Sullivan raised the sanctions
because the Biden Administration had been worried about
upsetting the oil price, pushing up oil prices during an
election year.
The Trump Administration through our energy abundance and
signaling to the energy markets, crude oil is down about 20
percent thus far this year. I read with great interest this
morning that Russian generation revenues were down 12 percent
last month which will put a dent in the Russian war machine,
sir.
Mr. Sessions. Mr. Secretary, I hope you will find today as
valuable for us and yourself. I hope you will know that we----
Chairman Hill. The gentleman from----
Mr. Sessions. Thank you, Mr. Chairman. I yield back my
time.
Chairman Hill. The gentleman from New York, Mr. Meeks, is
recognized for 5 minutes.
Mr. Meeks. Thank you, Mr. Chairman.
Mr. Bessent, let me--and I am just a plain, simple man, the
average everyday American looking at this hearing today. Can
you tell me first does trade deficits constitute a national
emergency?
Secretary Bessent. The hollowing out of U.S.
manufacturing----
Mr. Meeks. No, just yes or no.
Secretary Bessent. The national emergency, sir.
Mr. Meeks. It does. You are telling me the trade deficits
equals a national create----
Secretary Bessent. Persistent and prolonged, yes, sir.
Mr. Meeks. Do you not know also, sir, that for the last 4
decades we have had trade deficits in the United States of
America, and nobody said it was an emergency? Democratic and
Republican Presidents? You know what that says to me? That is
not an emergency because it has not been for 4 decades. It says
to me that we should bring tariffs back to the U.S. Congress so
that we can make that determination as the Constitution has
said and not try to go around Congress. That's just
unbelievable to me.
Let me ask this question. Maybe I missed it. Who was the
President, or who has been the President since January 20,
2025.
Secretary Bessent. Donald J. Trump.
Mr. Meeks. Okay, who was the President in 2024?
Secretary Bessent. One believes President Biden.
Mr. Meeks. One believes? Are you one of those nonbelievers
that the election--the American people did not vote?
Secretary Bessent. I--I I am not.
Mr. Meeks. You are not? You said ``one believes?''
Do you believe in the Constitution of the United States,
Mr.----
Secretary Bessent. I believe in the Constitution of the
United States.
Mr. Meeks. So you believe in it? Without any second
thought, you do not have to think about it, you believe in it,
and you would abide by it? Is that correct?
Secretary Bessent. I have, and I do, sir.
Mr. Meeks. Okay. Do you know that a President has said he
may or may not; he does not know?
Let me ask this question. I could not believe my ears,
Sunday during NBC'S Meet the Press, President Trump credited
himself for the strong economy in 2024 when Joe Biden was
President, but then he blamed President Biden for a weak
economy in 2025 when he was President.
Now, I am not so sure how the American people put that
together. In 2024, strong economy, he tried to take the credit.
In 2025 when he is the President, he blames Joe Biden. That
does not make sense to me. I do not think it makes sense to
most Americans, and I hope, Mr. Secretary, you are a
businessman, it does not make sense to you either. It cannot
possibly make sense to you.
**Let me ask this question. If a government, say, look,
Argentina--I remember when I came here--Argentina kept failing
to pay its debt, not once or twice or three times, and we were
all upset about it. We knew that they needed a host; somebody
to take over their government. Somebody should have helped the
President of Argentina.
If the United States or did not pay its debt or something
we would be very upset about that if we could not pay our debt.
I mean, that is one of our focuses. Is that not correct?
Secretary Bessent. Sir, the United States will always meet
its debt obligations.
Mr. Meeks. Always. Let me ask you this. Donald Trump, the
dealmaker--and you did not answer Ms. Velazquez' questions--no
deal. I thought you said 3 weeks ago that there would be deals
but Donald Trump, not once, not twice, not three times, not
four times, not five times, but six times failed to pay his
debts on his business and went bankrupt, and you are going to
call that a good businessman.
Chairman Hill. The gentleman's time has expired.
Mr. Meeks. I would not invest in that economy--
Chairman Hill. The gentleman's time has expired.
Chairman Hill. The gentlewoman from Missouri,
Mrs. Wagner, the Chair of our Subcommittee Capital Markets,
is recognized for 5 minutes.
Mrs. Wagner. I thank you, Mr. Chairman. I will try to keep
my tone down and I thank Secretary Bessent for your testimony.
I, sir, am going to try to stick to the actual title of this
hearing and why we are supposed to be here today, which is the
state of the international financial system.
Here we go. Mr. Secretary, under the Biden Administration,
Congress required treasury to determine whether any Chinese
financial institutions were engaged in oil purchases from Iran,
no matter how small or how large the transaction. This
determination would subject these Chinese entities to secondary
sanctions, sir. Just last week the President himself ordered
such sanctions for any purchase of Iranian oil, which helps,
obviously, the Ayatollah finance terrorism around the world.
Mr. Secretary, can you describe how-well, I think we all
know how Iran uses oil sales to fund it is proxies, including
Hamas, Hezbollah, the Houthis in Yemen, to the extent there is
any Yemen left, Treasury is now over half a year late with its
statutory determination on Chinese buyers of Iranian oil.
I have three questions, sir, related to missing this
deadline. The first is, why has it not been submitted to
Congress, had the previous administration done anything to
prepare this determination, and third, when can Congress expect
to receive it?
Secretary Bessent. To all three of those I will have my
staff get back to you on that. Representative Wagner, what I
will tell you is that since I have become Treasury Secretary,
the Treasury has repeatedly sanctioned so-called Chinese's
teapot refiners who are very large buyers of Iranian oil. These
are independent refiners away from the State-owned enterprise--
enterprises. We have begun that program over the past few
weeks, and we will continue as needed.
Mrs. Wagner. Good. I know that you are in negotiations
with, I will say, that 18th country, which is China. We are
thrilled to hear of your trip there, and I hope that this is
something that you will discuss with them in terms of their
purchasing of Iranian oil that does nothing but lift up a
regime that is funding terrorism throughout our world, I will
say.
What actions has Treasury taken to combat cooperation
between Iran and China on illicit finance and money laundering?
Secretary Bessent. Again, the secondary sanctions on these
teapot refiners have been a very fulsome effort, and we will
continue that. When President Trump left office, Iranian oil
exports were between 100-and 300,000 barrels per day. Now they
are 1.6 million barrels per day, which allows the regime to
finance its terror proxies, not just in the Middle East, but
all around the world.
Mrs. Wagner. Correct. Yes, we have seen it and we have
lived it. It has caused unbelievable death, devastation and
grief and resources and loss of life throughout our world. I am
proud that the President himself endorsed sanctions just last
week for any purchase, any purchase, not just from China, of
Iranian oil. I hope that these--we can get a report on what has
been happening with China.
Switching gears. In February several members of this
committee and the Senate, including myself, and the Chairman,
and the Senate Banking Committee, sent you a letter voicing
concerns about the European Union's corporate sustainability
due diligence directive, or CSDDD. This directive, which was
finalized by the EU last year, will require many American
companies to evaluate their supply chains and end certain
business activities not based on U.S. law, but do U.N.
principles.
This directive not only hurts our economic competitiveness,
but also undermines our jurisdictional sovereignty, sir. It
would force both public and private companies to comply with
regulations that have not been approved by Congress, while also
exposing them to increased litigation and risk in the European
Union (EU).
I am running out of time, Mr. Chairman, but this is
something I feel very strongly about. It is in with the
international realm here, and I have two questions regarding
this.
Chairman Hill. The gentlewoman's time has expired.
Mrs. Wagner. That I will submit for the record. Thank you.
Chairman Hill. They will be submitted for the record. I
recognize Mr. Scott, the gentleman from Georgia, for 5 minutes.
Mr. Scott. Thank you, Chairman. Secretary Bessent, let me
ask you this: Do you agree that the FDIC plays a very essential
role in safeguarding our depositors, insuring prudent bank
supervisors and maintaining the safety and soundness of our
financial system?
Secretary Bessent. Congressman, I agree that a well-
functioning FDIC is essential to the U.S. financial system.
Mr. Scott. On Monday, you said this, and I quote, you said
this, that the President tasks you with helping him choose the
leader of the financial regulators so that we are all in line,
all regulators to be safe, sound and smart, and you went on to
list the key positions that you have done that, including a new
Vice Chairman for Supervision of the Federal Reserve (Fed), a
new head of the OCC, and Paul Atkins of the Securities and
Exchange Commission, and a new CFTC Commission. As of this
morning we have no FDIC Chairman full-time. It is now under
temporary leadership of an acting Chair named Travis Hill with
the President having no current plans to either formally
nominate him or find a replacement. The Nation is watching us,
why we do not have the head of the FDIC. My question is, have
you not helped President Trump in selecting a Chairman to lead
the FDIC?
Secretary Bessent. Congressman, I would point out that
under the previous administration, there was only an acting
Chair of the OCC for 5 years. 5 years. Mr. Hill is the acting,
and as a matter of fact, the head of the OCC, the head of the
CFTC has not been confirmed, so those are, in fact, acting
also. Mr. Hill is a very capable regulator, having been on the
board of the FDIC----
Mr. Scott. Yes, I am not--you are filibustering here.
Secretary Bessent. We are pursuing----
Mr. Scott. I am not questioning that.
Secretary Bessent. With all deliberate speed.
Mr. Scott. Have you been instructed by President Trump to
refrain from offering a list of viable candidates to lead the
FDIC?
Secretary Bessent. No, sir. I am constantly reviewing the
list and thinking about who is best to lead that important
institution.
Mr. Scott. I want you to know that I wrote a letter to the
Trump Administration--here it is--expressing grave concern with
the erosion of financial regulatory agency independence. Mr.
Chairman, I would like to submit this for the record.
Chairman Hill. Without objection.
[The information referred to was not submitted prior to
printing.]
Mr. Scott. We remain highly alarmed by this growing
perception that our financial regulators have acquiesced to
political pressure from this administration. Perhaps even from
the President of the United States. If I were President, I
would not have this vacancy at a time when we are running
tariffs all over the country, when our economy is in these
kinds of difficulties. The Nation is watching us. Russia is
operating us as the President is going around the country
dealing with upsetting Canada, places around the world. I just
want to know where are we going? When are we going to have a
Chairman? Are we going to have it? Answer me truthfully, has
President Trump asked you to delay this appointment, and if so,
why?
Secretary Bessent. Sir, that statement is incorrect. He has
not asked me to delay that appointment. I believe that your
question is when are we going to have an FDIC nominee, and we
have OCC nominees, we have a CFTC nominee, we have a Vice-
Chair----
Chairman Hill. The gentleman's tire has expired.
Mr. Scott. Mr. Chairman----
Secretary Bessent. I would ask you to urge your Senate
colleagues to, on the Democratic side, to vote for them.
Mr. Scott. When is he going to do it?
Chairman Hill. Mr. Scott, your time is expired. Excellent
discussion.
Mr. Scott. Thank you.
Chairman Hill. I recognize the distinguish Chair of our
Financial Institution Subcommittee, Mr. Barr of Kentucky, for 5
minutes
Mr. Barr. Secretary Bessent, thank you and President Trump
for in February issuing the national security memorandum
entitled, ``America First Investment Policy,'' directing
Federal agencies to address outbound investments in China.
In March, as you know, Senator Cornyn and I reintroduced my
bill to restrict outbound investment into China, specifically
into Chinese military industrial complex entities primarily
through OFAC sanctions. Tell me, Mr. Secretary, what do you
think about that legislation and the context of the President's
national security memorandum?
Secretary Bessent. Congressman, I want to thank you for
your leadership on this matter. My team and I appreciate your
input and molding this important issue. One of the most
important financial issues of our time. It is a new national
security tool that we restrict the PRC from exploiting the
benefits, and we appreciate that Congress wants to move forward
with legislation that is important and helpful, and we would
like a bit more time for our process, including the work
mandated by the President, to inform the legislation so that it
is durable because of the importance of this.
Mr. Barr. Thank you, and I look forward to working with you
and the President to align our legislation with the President's
policy on this. I want to give you and President Trump another
tool of economic statecraft to increase President Trump's
leverage in his negotiations with General Secretary Xi. This is
a very important issue. As you probably noticed, there was
recently a $75 million venture investment into a Chinese
artificial intelligence firm, Manus. Is Manus AI on the Chinese
Military-Industrial Complex Companies (CMIC) Treasury entity
list?
Secretary Bessent. I will have my staff get back to you on
that, sir
Mr. Barr. I think the answer is no, and that is why we need
this legislation so that our outbound restrictions look not
just at entities, but also technologies of national security
concern, like militarized artificial intelligence that this
entity Manus AI is doing.
I would also note that the waiver authority that I embed in
this legislation with Senator Cornyn would give you, as
Treasury Secretary, the ability to authorize BlackRock or other
United States firms to invest in Panama to displace the
Chinese. Thank you for your collaboration with us on that.
Secretary, you said that with President Trump we are going
to re-privatize the American economy. That is music to my ears.
That is music to the American people's ears.
When Federal bank regulators are talking about reproposing
the Basel III Endgame proposal, they have been saying now for a
long time we should do it in a capital neutral way abandoning
former Vice Chair Barr's approach of a huge gold plating of
bank capital.
Since the Federal Reserve started to use the term,
``capital neutrality'' in 2019, however, capital has increased
by 10 to 20 percent making the concept of capital neutrality
really arbitrary. Large banks are now subject to stress tests,
Comprehensive Capital Analysis and Review (CCAR), Global
Systemically Important Bank (GSIB) surcharge, and a number of
liquidity and resolution requirements.
When looking at our bank capital regulations in the context
of an America-first agenda, Mr. Secretary, should we be aiming
for capital neutrality or should we be instead looking at
capital levels that actually promote American competitiveness?
Secretary Bessent. Congressman, as you know, I have been
very concerned about our community banks, our small banks, our
small regional banks, and the growth of private credit outside
the regulated system tells me that the--many of the regulations
may be too tight, and that the business is pulled into the so-
called shadow market. I think we want to safely and soundly
expand the regulated financial system and get them on equal
footing, and I think that these capital levels that are
predictable are very important for that.
Mr. Barr. Last question about China investment in
Venezuela. Last week, Venezuelan's Vice President Rodriguez
asked Chinese officials to increase oil purchases as the
country is feeling the squeeze on its energy sales.
Tell me what you think about the Office of Foreign Assets
Control (OFAC) licenses for United States companies operating
in Venezuela when those American firms could displace China to
enhance American energy dominance.
Secretary Bessent. It is a very acute balancing act there
between displacing China, but United States entities providing
hard currency for the Maduro regime, and we are constantly----
Chairman Hill. The gentleman's time has expired.
Mr. Barr. I look forward to working with you on that issue.
I yield back.
Chairman Hill. I recognize the distinguish gentleman from
Massachusetts, our Ranking Member of the Digital Assets
Financial Technology and Artificial Intelligence Subcommittee,
Mr. Lynch, for 5 minutes.
Mr. Lynch. Thank you, Mr. Chairman. Mr. Secretary, thank
you for coming before this committee and helping us with our
work.
Mr. Secretary, between March 11th and March 15th, 2025, you
and more than a dozen senior officials, including--of the Trump
Administration, including Secretary Hegseth, Director of
National Intelligence, Tulsi Gabbard, National Security
Advisor, Mike Walsh, used a commercially available, non-
governmental encrypted, non-secure app to discuss and
coordinate imminent United States military strikes in Yemen in
a group chat entitled, ``Houthis PC small group.''
Particularly, Defense Secretary Hegseth shared actionable
intelligence, including sensitive and classified details of an
imminent military operation against Houthis rebels and other
military plans. These included precise launch times for U.S.
jet fighter assets, targeting locations for those Houthis
rebels who were, by the way, equipped with antiaircraft
systems. Mr. Hegseth shared the targeting sequencing against
Houthis rebels and described the weapon systems, the U.S.
weapons systems involved. National Security Council has
confirmed that this chat, Signal chat was authentic and that
you had participated.
You realize that for you, Mr. Secretary, because of the
responsibilities you have, even outside the principles
committee, that group, you have a target on your back from our
adversaries, China, North Korea, Russia and others. Can I ask
you, have you been briefed on the proper protocols for
discussing information such as active military plans?
Secretary Bessent. I have by my general counsel.
Mr. Lynch. Very good.
Secretary Bessent. If you will look----
Mr. Lynch. I have a bunch of questions, so I am just trying
to narrow this down because this is really, really a concern.
Just reclaiming my time, so let me ask you.
Secretary Bessent. That chat was in my chief of staff's
name, which is widely available.
Mr. Lynch. Sir, let me ask the questions and you provide
the answers. Okay. How about that.
Secretary Bessent. Waiting for the question.
Mr. Lynch. Are you preserving records, Mr. Secretary, of
these communications as required by the Public Records Act?
Secretary Bessent. Yes, sir.
Mr. Lynch. Good. Okay.
Secretary Bessent. My general counsel has photographs.
Mr. Lynch. Are you still discussing sensitive military
intelligence on a nonsecure line?
Secretary Bessent. I have never done that.
Mr. Lynch. Okay. The National Security Council says you
were on a chat that discussed those details. Are you saying
that was not the case?
Secretary Bessent. I have said that I never discussed them.
Mr. Lynch. Someone discussed it with you. You were on
that--you were on a nonsecure line for a meeting with other
secretaries, right? Those people I just mentioned, you were not
on that chat?
Secretary Bessent. I was, but you----
Mr. Lynch. Okay. That is what I am talking about. You could
have, you could have intervened, you could have brought it up,
you could have said this is an insecure line, we should not be
doing this, we are putting our sons and daughters in uniform at
risk, pre-attack, you could have done all of that.
Mr. Hegseth, this is not involving you, but Mr. Hegseth
afterwards did the same thing with a family chat, his wife, his
brother, his sister, family attorney. You do understand the
troublesome nature of that, right? Are you dismissing that and
calling this a roaring success as others have done? As the
White House has done?
This is troubling, and I just want the reassurances for
this committee, and for other Members of Congress, other
committees, and for most importantly, for the families of
Americans who send their sons and daughters into harm's way,
they put on that uniform, I just want the reassurances that we
are not doing--you know, this buffoonery has to stop, right, at
some point. There are serious consequences to not complying
with security protocols.
Mr. Secretary, you are a smart guy. You are a smart guy.
You did not create this situation. You were drawn into it. I am
just trying to reassure the committee that this stuff is not
happening anymore.
Chairman Hill. Gentleman's time has expired.
Mr. Lynch. Allow the gentleman to answer? It would be a yes
or no.
Chairman Hill. I think the gentleman's time has expired.
Secretary Bessent. Congressman, I am happy to say that
because of my age, I pick up the phone and call people.
Mr. Lynch. There you go.
Chairman Hill. The gentleman's time has expired. The
gentleman from Georgia, the Vice-Chairman of our Financial
Institution Subcommittee, Mr. Loudermilk, recognized for 5
minutes.
Mr. Loudermilk. Thank you, Mr. Chairman. Secretary, thank
you for being here. I think you and I are both aware of the
paradox of the U.S. Reserve currency status. The so-called
Triffin Dilemma says that to maintain the benefits of the
global reserve currency status, we may always run a concurrent
account deficit, which, in turn, risks undermining global
confidence in the dollar.
The U.S. enjoys an exorbitant privilege from the dollar's
reserve status. This means that among other benefits there is a
high demand for dollar dominated assets worldwide,
substantially lowering borrowing costs. It also allows us to
run sustained trade deficits and drives capital investment into
the United States.
My first question is, how is our current reserve status
different from what it was under the Bretton Woods system when
the dollar was convertible to a fixed amount of gold rather
than floating?
Secretary Bessent. Sir, it is now based on the full faith
and credit of the United States rather than backed by gold.
Mr. Loudermilk. Okay. Does the demand for dollars and the
U.S. debt worldwide, and the reduced borrowing cost that come
with it, contribute in a meaningful way to some of our failings
as fiscal stewards?
Secretary Bessent. I would say that the unfettered ability
to borrow has made us more prolific as there is very little
potential for market discipline to date. There is the potential
that the market may discipline U.S. Government 1 day, and I am,
along with the administration, President Trump, trying to set
the country on a path to avoid that.
Mr. Loudermilk. We appreciate that. I have long said that I
do not feel that there is the political will within Congress
anymore to restrict spending and balance the budget, and so I
appreciate the work that you are doing there.
Is there a world where we can have our cake and eat it too?
In other words, is there a policy configuration where the U.S.
can maintain the best elements of its exorbitant privilege
while also having a balanced export economy?
Secretary Bessent. Yes, sir, there is. I would point out
that the exorbitant privilege, as I believe it was a French
politician called it, does not always result in the lowest
interest rates. Japan's interest rates are lower than ours.
China's interest rates are lower than ours. Most of the EU
interest rates are lower than ours.
Mr. Loudermilk. Okay. I want to shift gears just slightly.
For several years, I have called for Financial Crimes
Enforcement Network (FinCen) to raise the threshold for
currency transaction reports from $10,000 to some higher value.
Working on legislation has been for the last several years, and
I do have legislation again this year on that.
If adjusted for inflation from the 1970s, this threshold
would be somewhere between $74,000 and $80,000, but we have
not. We are still stuck at that $10,000 limit.
In your opinion, what threshold value best balances privacy
and compliance costs against the utility that these reports
have for law enforcement?
Secretary Bessent. Congressman, I am not sure what the
equilibrium level is. What we have discovered--so you were
talking about the threshold for a suspicious activity report.
Mr. Loudermilk. Or the concerns--currency transaction
report.
Secretary Bessent. We are now examining that, and we are
finding that sometimes higher is better; sometimes lower is
better. We have discovered that there are approximately 40
counties on the United States Mexico border that account for a
substantial amount of nefarious behavior by the cartels, so we
have lowered that to $200, and we are finding great efficacy
there in pushing the cartels back into Mexico and not allowing
them to deal in the United States. I would say, sir, it is a
moving target.
Mr. Loudermilk. Okay. I can understand and appreciate that.
One of the issues that we have from a nationwide status is the
compliance cost that goes to small financial institutions, and
even from law enforcement, the complaint is trying to find the
list of financing currently is like looking for a needle in the
haystack because of the pure volume of reports that are being
made. My argument has been from--in a nationwide status, and I
am sure we can work on something to make exemptions during
times like you are talking about now and locations, but it is
not to increase the size of the haystack, but reduce the
haystack so it becomes more prevalent, the illicit financing.
Secretary Bessent. Look, Congressman, I am hypersensitive
to the needs of the small community banks and the undue burden
that much compliance is placing on them, and we are working
across a variety of ways to lower the costs.
Mr. Loudermilk. I look forward to working with you on these
things.
Mr. Steil [presiding]. The gentleman yields back. The
Ranking Member on the Oversight Investigations Subcommittee,
the gentleman from Texas, Mr. Green, is recognized.
Mr. Green. Thank you, Mr. Chairman. I thank the Ranking
Member, and I thank the witness for appearing.
Mr. Treasurer, when you testified before the Senate, you
indicated that the CDFI fund is a very important program. It is
very important to us. Is this correct?
Secretary Bessent. I did, sir.
Mr. Green. Is it true that you would not agree that it is a
woke program, has cultural Marxism associated with it, and that
it is--that it is abused. You would not agree with that, would
you?
Secretary Bessent. Sir, I think the CDFI fund is performing
its statutory functions as required.
Mr. Green. So you would not agree, then, that it is woke.
Is its statutory function to be woke?
Secretary Bessent. I have never seen that in the statute,
sir.
Mr. Green. What about Marxism, is that associated with it
in the statute?
Secretary Bessent. Again, sir, I have never seen that.
Mr. Green. Now, given that the President desires to cut
into this program, you are the Secretary of the Treasury, what
are you going to do about it to protect it?
Secretary Bessent. Sir, the skinny budget does propose a
new $100 million award program that would provide access to
affordable financing.
Mr. Green. Does that, does that take care of the many
billions that we put in, $12 billion to support the CDFI, that
is a lot--quite a distance from the $12 billion, sir. What are
you going to do about it?
Secretary Bessent. Look, I understand----
Mr. Green. Did you advise the President?
Secretary Bessent. Sorry.
Mr. Green. Do you advise the President?
Secretary Bessent. I advise the President on a wide range
of matters.
Mr. Green. Is this considered a part of a wide range of
matters? Would you advise the President that he should not cut
these funds?
Secretary Bessent. I look forward to working with you and
the committee to ensure these programs operate efficiently for
taxpayers.
Mr. Green. What about efficiently for taxpayers and
efficiently as a result of them being in the place to do so? If
you do not have the money, they cannot be efficient. They
cannot serve taxpayers if they do not have the money. Sixty-one
percent of these programs are in Republican districts.
Secretary Bessent. Is there a question?
Mr. Green. Yes, it is a question in the sense that I am
asking you to suggest to the President that this is important
and that you not cut it.
Secretary Bessent. So the skinny--as I said----
Mr. Green. A $100 million is quite a distance from $12
billion.
Secretary Bessent. That is not the annual--$12 billion is
not the annual appropriations.
Mr. Green. No, but $12 billion is what we, a bipartisan
group of folks put into the CDFI, as well as into the minority
depository institutions. We do not want to see that cut.
Let us go to another area. Do you agree that when a tariff
is imposed upon a product that is coming into this country,
that the tariff is collected at the border?
Secretary Bessent. Yes, sir.
Mr. Green. Do you agree that money that is collected goes
into the Treasury's coffer?
Secretary Bessent. Yes, sir.
Mr. Green. Do you agree, also, that if the person that is
importing this product is of the opinion that it is something
that his clientele, his customers desire, that he will pay that
tariff?
Secretary Bessent. Yes, sir.
Mr. Green. Do you agree that when he pays that tariff, he
is likely to pass it on to his customers, his consumers?
Secretary Bessent. Sir, the laws of economics would say
that there are very elasticity----
Mr. Green. I understand, but do you agree he is likely to
do that? Do you agree that he does it sometimes? Do you agree
that he does it sometimes?
Secretary Bessent. Again----
Mr. Green. Do you agree that he ever--does he ever do it?
Secretary Bessent. Sure.
Mr. Green. So your position is as the great treasurer you
are, that this is not passed on to the taxpayers?
Secretary Bessent. It could be--
Mr. Green [continuing]. and consumers. It could be? Is it
ever? It is hard to say yes, is it not? It really is. Listen,
sir, you do not have to--listen, do not fear--do not fear the
President, sir. Is it ever passed on--have you ever heard of
this tax money being collected and passed on to the consumer to
pay? Have you ever heard of that?
Secretary Bessent. The most recent studies from----
Mr. Green. Okay. Let us go on to this point. I have a
better point to make. Excuse me. I am reclaiming my time. I
have a better point. Listen for just a second. I only have a
little bit of time. When it goes into the coffers, that money
is then going to be a part of the tax dollars that can be
accorded to persons in terms of a tax cut. Is this true?
Secretary Bessent. It is part of the overall----
Mr. Green. Yes, it is true, which means that the consumer,
the person who pays that tax, that is tariff tax, when he makes
that purchase, is going to put his money in your coffer, our
coffer, and then the President later on can say you got a tax
cut, but it is really the money that the consumer has put into
your coffer. That is true. I yield back.
Mr. Steil. The gentleman yields back. The gentleman from
Ohio, the Chair of the National Security Illicit Finance and
International Financial Institution Subcommittee, Mr. Davidson,
is recognized for 5 minutes.
Mr. Davidson. Thank you, Chairman. Mr. Secretary, I applaud
your eloquent message at the Milken Institute clarifying the
Trump Administration's coherent and effective strategy and
thank you for helping lead that.
My committee on National Security Illicit Finance and
International Finance Institutions aligns completely with your
efforts on illicit finance on trade with the pending
reauthorization of the Defense Production Act, the national
interest with outbound investment of laws and clarity, and on
focused international financial institutions. I remain highly
concerned about the future of money, and frankly, probably the
important policy debate we are having. I will save that part
for future hearings.
On illicit finance, I applaud your FinCEN final interim
rule removing beneficial ownership reporting requirements for
U.S. companies and citizens.
The prior approach was collecting information on millions
of Americans and companies, even homeowners' associations,
under the guise of illicit finance. Lots of noise and very
little signal. By narrowing the scope of the rule you are
focusing on the signal.
Given the shift in focus, millions of Americans have shared
sensitive personal identifiable information. Mr. Secretary, as
the committee moves forward clarifying the rule, would you
commit to supporting the deletion of data already collected
under the previous rule?
Secretary Bessent. Sir, my staff is working on what will
happen to that data, and we will get back to you on that.
Mr. Davidson. Appreciate it. We will work with you, and
certainly hope you safeguard it always, but it would be
especially safe if it was deleted.
Speaking of legislation, my bill, the Chinese Currency
Accountability Act of 2025, it would require the Secretary, you
in this case, to instruct the United States Governor of--the
United States Executive Director at the IMF to use the voice
and vote of the United States to oppose any increase in the
weight of the Chinese research and development (R&D) in the
basket of currencies used to determine the value of special
drawing rights. This bill has passed the House on a bipartisan
basis, most recently in February, and it still awaits Senate
action.
Mr. Secretary, far more effective than while waiting for
the Senate is your leadership on this issue. Will you advocate
for opposing an increase in the R&D until China straightens
itself out?
Secretary Bessent. I look forward to working with Congress
on this issue on whether additional legislation is needed to
address the Chinese practices, or whether it could be done
through trade negotiations.
Mr. Davidson. I wish you great success in your pending
negotiations. Certainly, if you look at the IFIs, things like
Argentina's recent restructuring under the IMF, basically they
built out the Belt and Road. They never really have to worry
about the default at the Belt and Road. They are using their
influence in the international financial institutions like the
IMF and the World Bank to frankly cover risk at the Belt and
Road. Hopefully that will be restructured.
You have already covered outbound, and I really appreciate
the dialog on that. I would like to turn to the Defense
Production Act. I mean, when you look at how you have organized
and communicated the President's approach there, and the
administration's approach, national security is, of course,
paramount to that. As we organize and update and reauthorize
the Defense Production Act, of course it deals with the
Department of Defense, deals with Commerce, who does a lot of
those things, but it has been structured under the authority of
the Department of Treasury. Would you commit to working with
our committee on national security and finance together the
input and get a final reauthorization across the finish line
this year?
Secretary Bessent. I think it is an important piece of
legislation. We look forward to working with you on that.
Mr. Davidson. Thank you, Mr. Secretary. Last, you have
spoken eloquently about the kind of mission creep that comes in
through some of our international financial institutions. As
you know, the IMF set up a climate fund in 2022 known as the
Resilience and Sustainability Trust. Given concerns about IMF
mission creep, will you work to eliminate RST so that the IMF
can get back to its core mission?
Secretary Bessent. Congressman, at my speech during IMF
week, I stressed the need to get back to basics at all of the
multilateral development banks, especially the IMF.
Mr. Davidson. Yes. Thank you. I mean, the World Bank is
spending a massive amount on that. As Chairman Hill and I met
with the Inter-American Development Bank, they highlighted
things that they were doing to deal with natural disasters,
that are important for tourism for them, so some of this is
characterizing things that are really infrastructure for those
countries as climate change maybe to appease the previous
administration. I am confident you will get it right. To the
extent we can be helpful in that as we reauthorize these
programs and we consider doing that.
I thank you for your clarity talking about American
leadership there, so that American's interests are focused with
the use of America's resources. Thank you for your steadfast
work and your testimony today, and I yield back.
Mr. Steil. The gentleman yields back. The gentleman from
Illinois, the Ranking Member on the Financial Institution
Subcommittee, Dr. Foster, is recognized for 5 minutes.
Mr. Foster. Thank you, Mr. Chairman, and Secretary Bessent,
for your appearance here today, as well as your very nice
courtesy call where we were able to identify areas of common
interest, like the digital citizenship.
I would like to speak today about the strength of the U.S.
dollar and the decline of U.S. manufacturing, which as you
know, I am very concerned about. I started this company back
when I was 19 years old that now provides over 1,500
manufacturing jobs in the Midwest and it has not been easy.
We lived--we started our company in the beginning of the
Reagan inflation, then we had to live through all of the Bush
policies and the China shock that occurred on his watch. We
lived through just all the ups and downs of this, and it is not
an easy thing.
Now, in terms of the strength of the dollar, it is affected
by many things, and it is including central bank policies,
interest rates, tariffs, and the balance of trade. In the long
run, I believe that the strength of the dollar reflects the
world's confidence in the U.S. economy and the competence of
U.S. leadership and the value of products made by American
workers, and our reputation as a fair place to do business and
the rule of law in America.
Now, Secretary Bessent, earlier this week you ran an op-ed
in The Wall Street Journal echoing many of the points you made
in your testimony. In that op-ed, you promised, interalia, more
jobs, more manufacturing, more deregulation, lower taxes, less
national debt, all while maintaining a strong dollar.
On the other hand, Stephen Marin, Trump's choice for the
Chair of the Council of Economic Advisors, wrote a paper last
year arguing for weakening the dollar through something he
called the Mar-a-Lago Accords, which you have reportedly been
placed in charge of negotiating.
The President himself has just been all over the map on
almost a daily basis on whether a strong dollar or a weak
dollar will make America great again. My question is, what is
it? Does the administration support a strong dollar or a weak
dollar?
Secretary Bessent. Sir, I will work a little backward, is
Stephen Miran's paper was when he was in the private sector,
and I think it related to a range of outcomes. Two, that I
believe that the conditions for a strong dollar are important
for international competence. Again, when we think of strong
dollar, what is a strong dollar? Is it the composite on the
Bloomberg of all currencies, is it a trade-weighted dollar?
Then we can also look at bilateral relationships, because much
of that could be not so much a strong dollar, but other
countries manipulating and suppressing their currencies which
would----
Mr. Foster. We lived through that in the Bush
Administration and his non-reaction to what China was doing. I
know all about that, but I think it is interesting to look at
the historical record here. I think, I have behind me a plot of
the strength of the U.S. dollar under recent presidents. I
believe your staff has a copy of a one-page handout that could
be given to you if it is easier to read. What it says is
remarkable. It says that under every President, every
Republican President, Reagan, Bush, Bush Jr., Trump 1 and now
Trump 2, the dollar has weakened.
Under every Democratic President, without exception,
Clinton, Obama, Biden, the dollar has gone up significantly. I
do not think that is an accident. I think it is because of all
the factors, including predominantly the confidence that the
United States will maintain a well-regulated and well-governed
economy and a fair place to do business.
Now also on that handout, which I think--has that actually
been given--do you have a copy of the handout with the graphs
on it? It is double-sided, single page. We can get you another
copy if you want. It also has the argument in favor of a weak
dollar; it should make manufacturing easier in the United
States. Make our--that is one of the arguments for it.
If you look at the historical record here, if you just look
at, for example, change in manufacturing employment under
Democratic and Republican Presidents, it is remarkable. For
longer than you or I have been alive, Democratic Presidents
have increased manufacturing employment, and Republican
Presidents have decreased manufacturing employment. From
Franklin Delano Roosevelt (FDR), Truman, Kennedy, Johnson,
Carter, Clinton, Obama and Biden all increased manufacturing
employment. Eisenhower, Nixon, Ford, Reagan, Bush, Bush 2, it
all dropped. Okay. I do not think this is an accident.
The thing I want to ask you about is how do the Republicans
manage to weaken the dollar and weaken manufacturing employment
at the same time, because it seems like that is completely
crossways to the narrative that we are hearing from this
administration?
Secretary Bessent. Sir----
Mr. Steil. The gentleman's time has expired. The Secretary
can answer in writing. The gentleman from Tennessee, the Vice
Chairman on Oversight Investigation Subcommittee, Mr. Rose, is
recognized for 5 minutes.
Mr. Rose. Thank you, Chairman Steil. I want to thank
Chairman Hill and Ranking Member Waters for holding this
important hearing. Secretary Bessent, thank you for being here
with us today and answering our questions
Secretary Bessent, given that the Mint, the U.S. Mint's own
Fiscal Year 2024 report shows that the nickel, the U.S. nickel
now costs 13.78 cents to produce, and that experience in other
countries suggest that our nickel production, or demand would
double, triple, maybe even multiple times beyond that if we
eliminate the penny. Is Treasury analyzing the risk that
stopping penny production alone could actually worsen our
coinage losses or seigniorage losses by pushing annual nickel
losses well past $200 million.
Secretary Bessent. Congressman Rose, that we have looked at
this, and we believe that it is possible by changing the
composition of the nickel to bring down the cost to $0.05 or
less.
Mr. Rose. Absolutely. That was going to be my next follow
up question to you.
Secretary Bessent. I will point out that the dime is very
profitable.
Mr. Rose. Yes, and it will sound like a little self-
interest, but a Tennessee company is one of the folks that
could lower the cost of the nickel and has made a proposal that
I know you are----
Secretary Bessent. We are investigating that with them and
are very intent on maintaining those jobs, sir.
Mr. Rose. I would just say from my deep dive into both
penny and nickel production, it seems to me that there are
significant savings beyond just saving on composition of the
nickel, so I would encourage Treasury and the Mint to take a
look at refocusing how we produce those coins to make them
actually positive for the balance in terms of producing
seigniorage for the United States. I am glad to hear that you
are moving in that direction
Secretary Bessent, the President has recently made budget
requests that propose significant cuts to the Community
Development Financial Institutions, or CDFIs, or the CDFI fund,
and suggest to ending core CDFI programs. I know you have
recently made public comments about the statutory basis for the
CDFI programs. What is your position on the future of the CDFI
fund, and do you believe it should continue to play a role in
supporting access to capital in underserved communities across
the country?
Secretary Bessent. Congressman, as I told the Congressman
on the other side of the aisle, we are creating a new $100
billion award program that would provide access to affordable
financing, and this will be mostly in rural America.
Mr. Rose. Excellent. I am glad to hear that, and I
understand we always need to address how these programs work
and whether they are efficient, cost-effective, and produce the
outcomes we want. I am glad to hear that you are making moves
in that direction.
I just want to pause at this point and say broadly, it is
refreshing to have competent aggressive energetic leadership,
and so, I commend you for that and very excited about the
things that you are doing at the Treasury.
Secretary, can you discuss the significance of confirming
President Trump's regulatory appointees in advancing his
America-first agenda? Specifically, how do these appointments
impact the implementation of these important policies to move
America forward?
Secretary Bessent. Yes, sir. I believe that we need to get
them appointed as soon as possible. We have some very good
acting, the chairs or directors of these, but the sooner we can
do it, the sooner we can get down to the business of making
those institutions work better for the American people, and
making sure that main street can prosper, because I have been
very concerned, as I have mentioned today, I have met, I think,
the--personal meetings with over 50 community bankers, I spoke
to more than 300, and I think it is very important to get these
regulators in place so that community banks, small banks, small
regional banks can make sure that Main Street participates with
the rest of the country.
Mr. Rose. Thank you. I completely agree, and that is what
we are hearing, what I am hearing from the regulated entities
in my district and across Tennessee.
Secretary, given the IMF's limited success in pushing China
on transparency and debt restructuring, how can Treasury
justify supporting the IMF's current leadership?
Secretary Bessent. We are in constant discussions. It is
leadership that I inherited. Thus far they seem very open to
the Trump agenda, America first, and advancing the issues that
most affect the United States and working Americans, so we will
keep pushing them on that.
Mr. Rose. Thank you, Mr. Secretary. Mr. Chairman, I yield
back.
Mr. Steil. The gentleman yields back. The gentlewoman from
Ohio, the Ranking Member on the National Security illicit
Finance and International Institution Subcommittee, Mrs.
Beatty, is recognized for 5 minutes.
Mrs. Beatty. Thank you, Mr. Chairman, and Ranking Member,
and to you, Secretary Bessent.
The Trump Administration has alleged that detecting and
deteriorating transnational criminal organizations such as
Iranian terrorist groups and their proxies is a priority for
national security, but on March 2nd of 2025, your Department
announced that it would not enforce any penalties or fines
associated with the Beneficial Ownership Information (BOI)
reporting rule, nor will it enforce the Corporate Transparency
Act (CTA) against U.S. citizens, domestic reporting companies
or their beneficial owners. I am a little confused of how you
square those 2 things.
My question is, can you explain to, or would you explain to
the American public how you undermine the bipartisan CTA and
expect law enforcement and national security agencies to
quickly and effectively know the true owners behind shell
companies registered in the United States now that foreigners,
including a drug cartel, gang members, could register a company
in the United States with no State or any Federal ownership
reporting requirements. I remind you in your testimony, you
talked about illicit actors; well, these are some of our
illicit actors.
Secretary Bessent. Congresswoman, an overwhelming majority
of the domestic entities that you are describing are
hardworking Americans with small businesses. We bifurcated the
bill, and any foreign entities must still file.
Ms. Beatty. So are you saying to me it is not true, that
they must file and do--the foreign entities must file the BOI?
Secretary Bessent. Yes. We bifurcated the CTA programs that
domestics do not have to.
Ms. Beatty. So maybe I am asking it the wrong way. So it
appears that they are doing it, registering to avoid the
transparency of who the companies are.
Secretary Bessent. I am not sure what your question is. I
would be happy to answer it.
Ms. Beatty. So I guess I am looking at it as, and if you
are saying it is not true, and that they now are complying and
completing the BOI--so let us take it one step at a time. So
you are saying everybody is completing the BOI. You are
enforcing it.
Secretary Bessent. No, ma'am. I am saying that we have
bifurcated it. That U.S. nationals do not have to file, and
that foreign nationals do.
Ms. Beatty. Okay. So I guess when we look at this, if we
are limiting enforcements of the rule just to the foreign
entities, that creates a giant loophole whereby any foreign
entity can register in the United States and evade or not do
the BOI reporting requirements.
Secretary Bessent. They would be subject to all--they would
have to come through a U.S. financial institution, so they
would be subject to all U.S. institution----
Ms. Beatty. Including the BOI?
Secretary Bessent. The----
Ms. Beatty. Including the BOI? Including the BOI? Yes or
no? Because the answer is no. I mean, you can say it however
you want to, but the answer is no. This makes it easier--and
this is what I want the American folks to know--it makes it
easier for human and drug traffickers, cartels, terrorists,
organizations and other criminals to do business in the United
States. When you are limiting the enforcement just to foreign
entities it exempts 99 percent of the entities that Congress
intended the law to cover when it was passed into law.
I think I do have my answer. We are just not agreeing on
it, and we know why. Let me go to my second--it is my time. Let
me go to my next question. It is my time. It is my time. You
will not do this on my time.
Now, I am going to ask for a few more seconds since he
refused to comply with my time. Not his time.
In 2016, former Secretary Jack Lew announced that Harriet
Tubman was to be the new face of the $20 bill. Can you tell me
what is the current status of this project?
Secretary Bessent. No, ma'am, I cannot, but my staff will
get back to you.
Ms. Beatty. No. I want you to get back to me because, see,
there seems to be an issue when it comes to things that affect
people of color or people who live in poverty, whether it is
what you are doing with Social Security, what you are doing
with restricting funds----
Mr. Steil. The gentlewoman's time has expired.
Mrs. Beatty. So I want you----
Mr. Steil. The gentlewoman's time has expired.
Mrs. Beatty. Will you respond to me?
Mr. Chairman, I need him to answer if he will--I am not a
staff person.
Mr. Steil. The gentlewoman can submit questions for the
record.
Mrs. Beatty. I am not asking him to have his staff report
to me. Mr. Chairman, I am addressing it to you----
Mr. Steil. The gentlewoman's time has expired.
Mrs. Beatty [continuing]. to ask him to respect me. Mr.
Chairman, I am talking to you.
Mr. Steil. The gentlewoman's time has expired.
Mrs. Beatty. I need him to address----
Mr. Steil. The gentlewoman's time has expired.
Mrs. Beatty. If we will answer me as--no, I am not going to
yield. I am not going to stop until you----
Mr. Steil. The gentlewoman's time has expired.
Mrs. Beatty. You direct him to answer to me as a Member of
Congress. Mr. Chairman, point of order to you. Mr. Chairman,
point of order to you. I will not stop. I will not be silent--
--
Mr. Steil. The gentlewoman is not offering----
Mrs. Beatty. Until you direct him to answer me.
Mr. Steil. An appropriate parliamentary inquiry. Does the
gentlewoman have a parliamentary inquiry?
Mrs. Beatty. Yes, I do.
Mr. Steil. Please state the parliamentary inquiry.
Mrs. Beatty. As a member of the U.S. Congress addressing
the Secretary, I am asking you to rule on asking this hostile
witness to direct his response to me versus having him tell me
that his staff will respond to me. My staff person did not ask
him the question. I did.
Mr. Steil. The gentlewoman does not state a parliamentary
inquiry.
Mrs. Beatty. Let me ask a point of privilege to you, Mr.
Chairman, because I am not going to stop this this morning
until you respond to me, then, if you will direct the Secretary
to respond to me as a Member of Congress, or let me ask him.
Mr. Steil. There is not a point of privilege. The
gentlewoman's time has expired.
Mrs. Beatty. If he will respond to me----
Mr. Steil. The gentlewoman's----
Mrs. Beatty. Will he respond to me----
Mr. Steil. The gentlewoman will suspend. The gentlewoman
will suspend.
Mrs. Beatty. It could be simple if he will respond to me.
Mr. Steil. The gentlewoman will suspend.
Mrs. Beatty. If he responds to me----
Mr. Steil. The gentlewoman will suspend.
Mrs. Beatty. If he will respond to me----
Ms. Waters. The gentlewoman makes a legitimate request. She
has personal privilege.
Mrs. Beatty. You could simply ask him to respond.
Ms. Waters. She has personal privilege.
Mrs. Beatty. Just ask him to respond if he will respond to
a Member of Congress versus saying a staffer. It is as simple
as that.
Mr. Steil. I ask that members keep decorum and remain
cordial during today's hearing.
Mrs. Beatty. I am being cordial.
Mr. Steil. The gentlewoman will suspend. The Chair has the
time.
Mrs. Beatty. Mr. Chairman, will you----
Mr. Steil. The Chair has the time. The gentlewoman will
suspend.
Ms. Waters. The gentlewoman makes a legitimate request.
Mr. Steil. I ask that members keep decorum and remain
cordial during today's hearing.
Mrs. Beatty. I am being cordial. I resent your statement to
imply that I am not. I am a Member of the U.S. Congress. I am
asking this Secretary----
Mr. Steil. The gentlewoman may submit questions for the
records (QFRs), for the record, which will be responded to by
the Secretary.
Mrs. Beatty. Thank you.
Mr. Steil. The gentlewoman's time has expired. The
gentleman from Texas, the Chairman of the Small Business
Committee, Mr. Williams, is recognized for 5 minutes.
Mr. Williams. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for being here. This may be a little easier on you
here. I will try to move it fast forward.
The Chinese Community Party has enabled their economy to
serve as a central hub for money laundering, human trafficking
and the export of chemicals used to manufacture fentanyl.
Increasingly Chinese nationals of financial works have informed
operational lines, as with Mexican cartels, providing
laundering services, digital payment platforms and chemical
shipments to fuel the trafficking of fentanyl across our
southern border.
These criminal partnerships exploit the international
financial system, impose a direct threat to U.S. national
security, public health and financial integrity.
My question, Mr. Secretary, is, can you elaborate on the
steps Treasury has taken to disrupt the flow of illicit
financing, money laundering and drug trafficking between
Chinese entities and Mexican drug cartels?
Secretary Bessent. Thank you, Congressman, for that very
important question and know that they are interlinked, that the
Chinese provide precursor drugs that are then converted into
fentanyl by the Mexican cartels.
Just today, I signed an order that will be made public
within the next few days identifying Chinese entities who are
engaged in the fentanyl trade.
Mr. Williams. Great. Far too long, China has taken
advantage of the international financial system and has become
the world's largest creditor. The IMF and World Bank's focus on
climate and social initiatives has resulted in a lack of
accountability for the Chinese unreliable economic data,
currency manipulation and opaque predatory lending practices.
In addition to the lack of accountability, this shift in
focus to climate has forced many developing countries to turn
to Chinese financing.
The United States must leverage its leadership of the
world's stage to counter China's growing influence as a global
lender and put an end to the deceptive economic practices.
Secretary, how is Treasury working to prevent IMF and the
World Bank recourses from indirectly legitimizing China's
deathtrap diplomacy and economic depression?
Secretary Bessent. Congressman, in various ways. One, as
you would have noticed I would have said that when this
horrible Russia-Ukraine conflict ends, that the--no one who--no
country or person who financed the Russian war machine will be
eligible for any rebuild in Ukraine, especially that financed
by the World Bank or any of the other multilateral development
banks.
Also, we are working with the Organization for Economic
Cooperation and Development (OECD), especially, to look at--and
the IMF, and the World Bank, to look at the true debt levels
for these countries. Everyone agrees, or everyone, save one
country, agrees that this is a problem, that there are
rapacious mineral deals, that there are towing arrangements,
and it is impossible to know and assist a country that has
experienced economic hardship when we do not know the true
levels, or if there is an undisclosed priority payment to
another creditor.
Mr. Williams. Let me try to get to my last question. I was
encouraged to hear that you are taking a fresh look at the bank
regulatory framework to better reflect the actual risk and to
ensure a level playing field across the financial system. As
part of that review, I hope you will consider where U.S.
regulations may be putting banks and financial institutions at
a disadvantage be to our foreign competitors. In particular, I
urge you to weigh the combined impact or proposals like Basel
III Endgame, the GSIB surcharge and leverage requirements,
especially whether these changes could limit the bank's ability
to support the economy and compete globally.
In your work so far, are there any specific areas where you
plan to address these concerns about regulatory--putting U.S.
institutions at a disadvantage, such as in the reproposal of
the Basel III Endgame rule by amending the GSIB surcharge
regulation.
Secretary Bessent. Congressman, we are looking across all
areas and know that this is at the top of our agenda, that most
countries have very concentrated banking systems. In many
cases, the banking systems are larger than the Gross Domestic
Product (GDP) of the countries. So they have very different
needs than the United States. To strengthen the United States,
lending and capital markets and economy is the breadth and
depth of our financial institutions. We will continue to
advocate for them both at home and abroad.
Mr. Williams. Thank you for your service. I think you are
doing a great job. I yield back.
Mr. Steil. The gentleman yields back. The gentleman from
California, the Ranking Member on the Task Force on Monetary
Policy, Mr. Vargas, is recognized for 5 minutes.
Mr. Vargas. Thank you very much, Mr. Chair, and Ranking
Member for holding this hearing.
Mr. Secretary, welcome. It is great to have you here. I
want to thank my colleague and friend from Texas for asking the
question about Russia. Do you consider Vladimir Putin a war
criminal?
Secretary Bessent. Yes.
Mr. Vargas. Would you negotiate with a war criminal?
Secretary Bessent. I think that is the nature of diplomacy.
One must negotiate with both sides, sir.
Mr. Vargas. So you will be negotiating then with a war
criminal?
Secretary Bessent. I believe that negotiation was needed
with the Japanese after World War II.
Mr. Vargas. Okay. Thank you for that answer.
Are you familiar with what President Trump has called his
one Big Beautiful Bill?
Secretary Bessent. Yes, sir.
Mr. Vargas. Would you describe the basics of that bill?
Secretary Bessent. It is combination--the core of that bill
is to make the 2017 Tax Cuts and Jobs Act permanent.
Mr. Vargas. If this what he quotes, a Big Beautiful Bill
passes, will the deficit go up or will the deficit go down?
Secretary Bessent. I believe over time the deficit to GDP,
which is the important number--even Secretary Yellen agrees
with that--will stabilize and go down.
Mr. Vargas. So next year, will it go down?
Secretary Bessent. Sir?
Mr. Vargas. Yes.
Secretary Bessent. I believe--yes.
Mr. Vargas. So if the past--if the Big Beautiful Bill
passes, do you believe the deficit will go down next year?
Secretary Bessent. The deficit to GDP will. Because, again,
what is important is that we grow the economy faster than we
are growing debt.
Mr. Vargas. I understand that. I understand that. Of
course, but you say that in the long term--I am asking the
short term, will the deficit go down?
Secretary Bessent. I believe the debt to GDP can go down.
Mr. Vargas. What about the deficit itself? The amount of
money--the amount of money that comes in as opposed to goes
out, will the deficit go down next year?
Secretary Bessent. Will it go down from 2024 and 2025, I
believe it will because these are ordinary----
Mr. Vargas. Okay. What about the long-term debt? Will it go
up or down if this Big Beautiful Bill passes?
Secretary Bessent. Again, sir, while the absolute----
Mr. Vargas. I think the reason you are having a hard time
answering----
Secretary Bessent. I am not having a hard time answering
because what is important----
Mr. Vargas. I have given you plenty of time.
Secretary Bessent [continuing]. is that the absolute level
of debt, it is as Secretary Yellen said the debt to GDP. So if
our GDP were a hundred--.
Mr. Vargas. Everyone is talking about the $37 billion. Is
it going to go up or down?
Secretary Bessent. Sir?
Mr. Vargas. Yes, is it going to go up or down?
Secretary Bessent. It will likely go up.
Mr. Vargas. Okay.
Secretary Bessent. If the GDP goes up faster, we----
Mr. Vargas. I think that is an interesting thing. My
colleagues on the other side always talk about reducing the
debt and reducing the deficit. Yet the hypocrisy of trying to
pass the big beautiful bill that will cause both of them to go
up.
Secretary Bessent. No, sir, I did not say the deficit----
Mr. Vargas. I know you did not say--you are trying not to
say it, but that is exactly what is going to happen.
Secretary Bessent. No, I actually said it would not go up.
Mr. Vargas. I know you did.
Secretary Bessent. Just to be clear----
Mr. Vargas. You said the number would go up.
Secretary Bessent. Just to be clear, last year I had 6.7
percent deficit to GDP----
Mr. Vargas. No, no, I am asking the number. No, no, no, I
am asking the actual number. No, we are looking at----
Secretary Bessent. If I can--the previous administration
was the largest when we were not in recession and not----
Mr. Vargas. I am not going to let you get away with that
because it is very clear what is going to happen if they pass
their bill. The deficit is going to go up, and the debt is
going to go up, and we are going to see the hypocrisy of them
always saying cut the budget, so the deficit is going to go
down, and the debt is going to go down. It is not. It is going
to go up.
Now, I do want to ask you about the independence of the
Fed.
Secretary Bessent. Yes, sir.
Mr. Vargas. You have kind of been on both sides of the
fence on this. You seem to say that we need an independent Fed,
but at the same time you said they should have been a shadow
Fed.
Secretary Bessent. Since taking office, I have refrained
from commenting on Fed monetary policy and I have said that
monetary policy is a jewel box that must be preserved.
Mr. Vargas. Okay. Great. Last, I do want to ask this
because a number of my colleagues have brought it up about
elite, the coastal elites. Where did you go to school?
Secretary Bessent. I grew up in Little River, South
Carolina.
Mr. Vargas. What university did you graduate from?
Secretary Bessent. 500----
Mr. Vargas. Wait. You graduated from Yale. You were part of
the Fed's society, one of the big three.
Secretary Bessent. Congressman, I worked three jobs to put
myself through Yale----
Mr. Vargas. I understand that too.
Secretary Bessent. So the thing----
Mr. Vargas. The thing that I was--the funny part is, let us
talk about the coastal elites, you are a billionaire that went
to Yale. I do not hold that against you.
Secretary Bessent. Vice President Pence was--
Mr. Vargas. I just find it interesting that my colleagues
are always talking about the coastal elites. Yet the President
and yourself are both coastal elites.
Secretary Bessent. I made all my own money, sir.
Mr. Steil. The gentleman yields back.
I recognize myself for 5 minutes for the purpose of asking
questions.
Secretary, thank you for being here. Earlier today you
referenced the Electric Slide,--I will share my concerns that
during 4 years of the Biden Administration, we were sliding
behind foreign competition, in particular, in the digital asset
space from the Bahamas to China.
I want to ask you, what would happen if we put our heads in
the sand, if we object, if we walk out of that type of
leadership role, which I think is so essential, to make sure
that the United States continues to lead the way in Web3 as we
did in Web2? In particular, how does the leadership in digital
assets play into President Trump's broader agenda and,
specifically, how do dollar-denominated stable coins impact
dollar dominance in Treasury markets?
Secretary Bessent. Congressman, thank you for that very
important question. Our goal is to encourage firms to reshore,
reshore, bring back to the United States best practices that
are digital asset innovation and experimentation here in the
United States without scaling back their ambition to influence
global industry.
The administration's efforts to promote clear regulatory
frameworks for digital assets will contribute to this goal. So
ongoing efforts from a fair access interoperability of payment
technologies across all borders. We will continue these more
private-sector solutions and discourage public-sector solutions
that historic markets can stifle competition.
Mr. Steil. Let me jump in because I think that is spot on.
Let us talk about what happens if we fail to act. Yesterday,
some members objected--walked out of a hearing to discuss
market structure and digital assets, and an absolutely
essential leadership role of the United States has to play.
What happens if we walk out on our responsibility to lead
in the digital asset space? What would occur if Web3 center of
gravity shifts away from the United States to countries like
China or other locations?
Secretary Bessent. Numerous things could occur, sir. As we
saw, under the previous administration, an entire ecosystem,
the unregulated and renegade springs up outside the U.S and
illicit actors abuse the value of these transfer systems. There
is a technological loss here.
Mr. Steil. Can you walk us through or share any of your
impressions from the conversations you have had with your
counterparts abroad as it relates to their experience with
regulating in the digital asset space?
Secretary Bessent. They believe it is very important and I
believe that they are a little worried that the U.S. is willing
to restore its leadership here. As I said earlier, there is a
chance that digital assets can provide a substantial source of
demand for the U.S. dollar.
Mr. Steil. In my bill, the Stable Act, which regulates
dollar-denominated stable coins, we give the Treasury the
authority to identify which foreign stable coin regulatory
regimes are comparable to ours. What are the key aspects of
comparable regimes? Are there lessons or criteria that we can
draw from other similar areas in the financial services space?
Secretary Bessent. Congressman, I think that we had the
blueprint with the bank regulation and adherence to anti-money
laundering laws around the world. Financial stability, and
the--I would guess that 70 percent of the countries would be
very easy to judge, yes, no, and then there will be another
group. That is why I believe that some of the bills encourage
phasing this in.
Mr. Steil. A lot of stable coins, a lot of digital asset
space needs reliable banking services. Could you comment
briefly on how the Treasury's working with bank regulators to
ensure that financial institutions can safely participate in
this emerging industry?
Secretary Bessent. We have recently delivered a report to
the President on this. We had safe and sound best practices. We
want to work with the financial industry with new companies and
entrepreneurs as well as incumbents. The banks--there is a
solution to banks to participate in this business, whether it
is through custody or their own coins.
Mr. Steil. Let me shift gears really quickly in my final 30
seconds. President Trump issued an executive order on
modernizing payments to and from Americans' banks accounts. The
executive order noted that the Treasury checks are 16 times
more likely to be reported lost or stolen or returned as
compared to electric transfer funds. Do you think we are making
real progress in this space?
Secretary Bessent. We are working via all speed ahead. A
Congresswoman from Staten Island via told me of numerous losses
of checks in the postal system, and we think it is both cost
cutting and a good practice, sir.
Mr. Steil. Thank you very much. Thanks for being here
today.
I now recognize the gentleman from Texas, Mr. Gonzales, for
5 minutes.
Mr. Gonzalez. Mr. Secretary, thank you for joining us this
morning. According to The Wall Street Journal, oil and gas
companies have lost over $280 billion in market value in April
of this year alone, more than any other sector. This decline is
attributed to a combination of factors but mostly attributed to
the tariffs.
At a recent Dallas Federal Reserve meeting, a veteran CEO
said, quote, I have never felt more uncertainty about our
business in my entire 40 years in the industry, and this
turmoil is no accident. It is a direct result of Mr. Trump's
vandalism.
Just yesterday, Diamondback Energy, one of the largest
Permian producers told shareholders that tariffs are adding
significant costs of drilling activity. That is mostly due to
the tariffs to our neighbors to the North and the South.
Mr. Secretary, the chaos in the energy sector has eclipsed
any gains from President Trump's industry-friendly regulatory
rollbacks that they were so much looking forward to. Stable
energy prices depend on stable policy. The Trump Administration
pledged to support American energy sector. However, this
decline demonstrates the opposite.
Given these outcomes, how do you reconcile the
administration's stated support for energy sector with policies
that appear to have directly undermined its stability and
global competitiveness?
Secretary Bessent. Sir, I will take issue with the idea
that it was tariffs. We have seen one of the largest decreases
in the underlying price of crude in history.
Mr. Gonzales. That is right.
Secretary Bessent. So----
Mr. Gonzales. A hundred percent--there is not a single
energy CEO in America right now that would agree with you. They
are all attributing to their downfall right now and the
troubles that they are having to the tariffs, and they need
some relief. What is the administration going to do?
Secretary Bessent. Congressman, you and I must speak to
different energy executives, because I speak to them quite
often.
Mr. Gonzales. I spoke to American Petroleum Institute (API)
today.
Secretary Bessent. I will note that the Organization of the
Petroleum Exporting Countries (OPEC) has done a substantial--
substantial supply increase and the history of substantial OPEC
supply increase----
Mr. Gonzalez. The tariffs are just making it worse. China
is no longer buying our L and G, and neither is a lot of other
countries around the world.
Secretary Bessent. I think we have seen the--Harold Hamm,
head of Continental Resources had said that he is reshoring his
supply chain, and he believes that over time he did not save
any money, any money by outsourcing the equipment.
Mr. Gonzalez. Secretary, our energy industry is hurting,
and they need your help. I know you are a smart man, and you
are one of the most stable people in this administration. You
need to talk to President about this. This is hurting the
industry, and it is hurting the American people, and more needs
to be done.
I have another question that I want to talk to you about
that is hopefully a little easier. It has to do with our
shrimping and fishing industry. As you may know, our domestic
shrimping and fishing continue to experience economic hardships
caused by an increase of foreign imports, high fuel prices,
labor shortage, immigration regulation, all to make matters
worse.
Plus we have flooded the domestic seafood markets with
foreign farm-raised shrimps. Many which are subsidized by
American Federal dollars in the international financial
institutions.
We need to put an end to this. What are we doing in terms
of tariffs to help this industry that is hurting? I know--I
mean, if we want to talk tariffs, there are some that work. I
think this is certainly an industry that needs a lot of help.
It has been ignored. It is on the verge of collapse. If we
continue down this path, we will rely on imported seafood and
certainly imported shrimp which is hurting the worse within the
seafood industry.
I do not know how familiar you are with this industry, but
I am curious to hear your opinions and what can be done to
improve this?
Secretary Bessent. Sir, as I mentioned earlier, this
coastal elite grew up in a fishing village that when I was
young was 500 people, so I am very attuned to that. Again, on
one hand you are saying you do not like tariffs. On the other,
they are----
Mr. Gonzalez. No, I do not like tariffs on our energy
sector. Yes, we do need tariffs on certain industries. This is
one of them that I think would make sense.
Secretary Bessent. I agree and I would be happy to work
with you on this. We have worked with the Alaska delegation
extensively on what is happening with Russian illegal fishing
and illegal or sales to China that is then transship back to
the United States. We would be happy to work with you on that.
Mr. Gonzales. I would love that. Okay. I will be in touch
with you. Thank you so much. I yield back.
Chairman Hill [presiding]. The gentleman yields back.
The gentleman from South Carolina, Mr. Timmons, is
recognized for 5 minutes.
Mr. Timmons. Thank you, Mr. Chairman. Secretary Bessent,
thank you for being here with us today. You are respected by
the President, his economic team, leaders on Wall Street, and
the broader international financial community. Your steady
leadership is appreciated on both sides of the aisle. After an
abysmal 4 years, it is encouraging to see thoughtful and
serious leadership guiding this discussion once again.
I would like to add a personal note. Both of us are proud
to call South Carolina home. My family like yours also came to
Charleston in the 1600s.
I know you understand the economic landscape of South
Carolina deeply, and that perspective is invaluable in the
position that you hold.
Let me start with a question about the textile industry.
South Carolina and especially my district in the upstate has a
long history in textiles. For over a hundred years, it was more
than just an economic sector, it was part of the cultural and
social fabric in our communities but there was a drastic shift
in the seventies and the eighties.
Well-intentioned regulations from Washington related to
labor and the environment made the U.S. economy no longer
competitive. While I agree with the policies that we should not
dunk dyes and chemicals into the rivers, and we should not have
120 degrees in factories and people should only work 40 hours a
week, we need to focus on being competitive. Those regulations,
all of it did was push all our textile jobs to China--or most
of our textile jobs to China.
China took advantage of it. They incentivized and
subsidized textile manufacturing, capturing an enormous amount
of the market share. Hundreds of thousands of jobs were lost in
the South.
Recently, you made a comment suggesting we do not need to
bring the booming textile industry that once defined the
regions where we both grew up back. That statement stirred some
concern from some of the textile companies that survived in the
district.
I agree with your broader point that we should not return
to producing low-quality goods just for the sake of
manufacturing in the United States.
I do want to ask, do you agree that we should prioritize
support for the American textile industry that are still here
and particularly leaders that are in innovation and high-tech
manufacturing and people that are producing Berry Amendment
products for our warfighters?
Secretary Bessent. Congressman, what I mean and meant was
the survivors in this industry, they had done it through
innovation, and they will continue to innovate, and they are
high-end textile manufacturers. I remember going to China in
the 1990s and 2000s and seeing everything that had been
outsourced there in the textile industry. Socks--sock city,
underwear city--and those are the jobs you and I grew up with
and many people or family and friends were involved with. I
think that we, through good tariff policy, can make sure that
these existing businesses can grow and thrive, especially in
the high-end. Again, anyone who has survived has done it
through innovation and hard work.
Mr. Timmons. That is what I told them. I told them that we
still support them, and we are going to make sure they continue
to thrive.
Secretary Bessent. A hundred percent, sir.
Mr. Timmons. Absolutely. Absolutely. I want to turn to the
automotive industry, specifically, Bavarian Motor Works (BMW),
which operates its largest plant in the world in Spartanburg,
South Carolina. That facility which opened in 1994 has helped
make our State the top auto exporter in the United States and
employed either directly or through nearby supply networks
indirectly, almost 80,000 of my constituents. It is almost one
in ten of them, and for foreign automakers like BMW are
continuing to invest heavily U.S. manufacturing. Incredibly
they have invested an additional $4 billion in the last 3
years. That investment has real lasting benefits for American
workers, exports, and innovation.
It is President Trump's promise to the American people to
renew the U.S. economy's competitiveness in the global economy,
and this is an effort long overdue.
My question is this: As President Trump renegotiates our
trade relationships with the world, is it fair to stay that
BMW--the type of investment that BMW has made a generational
investment is what we are hoping to incentivize?
Secretary Bessent. Yes Congressman. I regularly see at the
Port of the Charleston the BMW X series sitting there for
export. I think that the President recently met with the heads
of the three German auto companies and is working toward a
solution for more American content and more made in the United
States rather than just as assemblers. There would be more jobs
in your district.
Mr. Timmons. That message was heard loud and clear and they
are going to continue to invest. They have been a very good
partner. I am just excited because interest rates are coming
down, energy costs going down, regulatory relief--a more fair
trade deal. We are going to be the best place to start to grow
to build a business. I appreciate your leadership in that
regard. Thank you, sir. I yield back.
Chairman Hill. The gentleman yields back.
The gentleman who is the Vice Ranking Member of the full
committee, Mr. Casten, is recognized for 5 minutes.
Mr. Casten. Thank you, Mr. Chair. Secretary Bessent, I am
starting my seventh year in Congress. In those 7 years, I have
never received more phone calls from my constituents on any
issue than the hack into the Treasury payment system earlier
this year.
As you know well, this is the system that manages over $5
trillion a year of Federal payments, payments to taxpayers,
payments to Social Security beneficiaries, payors to embedded
foreign assets who are overseas and under cover, and it has
very personal information and their routing information. This
is a purple district. People were nervous.
We sent a letter to your office on 150 colleagues asking 20
questions. Your response that we just received was
nonresponsive on all 20.
Mr. Chairman, I would like unanimous consent to enter those
two letters into the record.
Chairman Hill. Without objection.
[The information referred to was not submitted prior to
printing.]
Mr. Casten. I want to get through a lot of those questions
right now, Secretary Bessent. I would ask you to be as brief as
you were in your response, but I would very much like a more
fulsome answer in writing.
In January, The New York Times reported that you pressured
David Ludwig out of his role overseeing that after he refused
to grant that access to people that Elon Musk had imposed. Can
you confirm the accuracy of those reports.
Secretary Bessent. That is incorrect.
Mr. Casten. You met with him on January 30 and put him on
administrative leave, and he left a day later. Is that
accurate?
Secretary Bessent. I--they did not put him on
administrative leave. Administrative leave--I asked him to
take--I met with him 90 minutes after----
Mr. Casten. So you are denying The New York Times report?
Secretary Bessent. I,
Mr. Casten. Was it your choice----
Secretary Bessent. I am adamantly saying that The New York
Times is inaccurate.
Mr. Casten. Okay. That is fine. That is yes or no. The New
York times was inaccurate. Fine.
Secretary Bessent. I placed him on administrative leave,
and he was--subsequently resigned after sending numerous----
Mr. Casten. Sir, I am just asking for a yes or no
questions. If you want to be voluminous, please write me a
letter.
Was it your decision to terminate Mr. Ludwig, or were you
pressured by others.
Secretary Bessent. He resigned.
Mr. Casten. Who had made the decision to put him on
administrative leave? You or someone else?
Secretary Bessent. Again, sir, he was not put on
administrative. That is totally inaccurate.
Mr. Casten. Fair enough. Tom Krause--you a fan of him, who
is not playing that role?
Secretary Bessent. Yes.
Mr. Casten. You had mentioned earlier he was in that role.
Do you agree that role includes duties that include the
managing Treasury payment system to ensure your time at Social
Security, payments overseeing auctions for U.S. Treasury bonds
which determine interest rates, and ensuring the United States
does not breach the debt.
Would you agree that is all the part of the functions that
Mr. Krause is now holding?
Secretary Bessent. No.
Mr. Casten. No? Shocking. Okay. Does Mr. Krause have any
prior experience in government service?
Secretary Bessent. No, he does not. Neither do I.
Mr. Casten. Does Mr. Krause have any prior experience in
the financial sector, which of course you do?
Secretary Bessent. What's that?
Mr. Casten. Just you can answer me. I am doing this solo.
You do not need the people behind you to help you.
Does Mr. Krause have any experience in the financial
sector?
Secretary Bessent. In the financial sector, yes. He has put
together more than a hundred----
Mr. Casten. No, no, no. Did he work for a bank? Did he work
for a hedge fund? Did he work for a private equity firm?
Secretary Bessent. He worked for a private equity firm.
Mr. Casten. He is the CEO of a software company.
Secretary Bessent. He has done over a hundred billion of
tech deals.
Mr. Casten. He runs a software company. He is still the CEO
of that software company, is he not?
Secretary Bessent. I am not sure.
Mr. Casten. He is. Is it your view that job that he is
holding is a part-time job?
Secretary Bessent. I am not----
Mr. Casten. Managing $5 trillion a year of distributions.
That is a part-time job, or does that require full time?
Secretary Bessent. No, sir, he is managing $5 trillion a
year in distributions. He is doing a tech upgrade, and ERP
system----
Mr. Casten. That is all that Mr. Ludwig was doing was a
tech upgrade?
Secretary Bessent. Sorry?
Mr. Casten. Mr. Ludwig who said I am not going to allow
people to hack into the system; he was just doing a tech
upgrade? Were you downgraded what that job function is?
Secretary Bessent. Mr. Leverick was in charge of 1.5
billion payments a year, which one-third did not have a task
identification----
Mr. Casten. Sir, come on. Come on, come on, come on.
Secretary Bessent. Sir, he had----
Mr. Casten. We are going to move along. The Chairman
notably a moment ago did not swear you in so you are not under
oath right now.
February 4 in your response to a Senate Democrats letter
you said that Mr. Krause will only have read-only access. A
moment ago in response to our Chair, you said, and I quote:
They were only granted read-only access at Treasury.
You are not under oath right now--you could be, but you are
not. Mr. Jueli testified under oath in a recent hearing saying
that Marko Elez was write access to the Treasury payment
system. Do you wish to correct your remarks to Chair with the
Ranking Member that noone was given write access?
Secretary Bessent. I would say that I----
Mr. Casten. That no one was given the write access.
Secretary Bessent. I never granted anything other than----
Mr. Casten. Marko Elez was given write access.
Secretary Bessent. I never granted anything other than
read-only access.
Mr. Casten. Mr. Elez left the Treasury Department in part
after it was discovered that he said normalizing Indian Hate
and I just want a eugenic immigration policy. Do you agree with
those sentiments?
Secretary Bessent. I do not at all.
Mr. Casten. Do you think that someone who holds those
sentiments should be employed in your department?
Secretary Bessent. I had a conversation with the Vice
President----
Mr. Casten. This is----
Secretary Bessent. I admired his grace.
Mr. Casten. He then went to HHS----
Chairman Hill. The gentleman's time has expired.
I thank the gentleman from Illinois.
The gentleman from Indiana is now recognized, Mr. Stutzman,
for 5 minutes.
Mr. Stutzman. Thank you, Mr. Chairman. Mr. Secretary, thank
you for being here and, frankly, I apologize. The fact that you
are getting a lot of accusations thrown at you, and you have
not had much chance to respond to some of them, and that are
fair questions that I know that you have good answers for.
With respect to the individuals originally referenced by
Ranking Member Waters who may have had access to certain
Business and Financial Service (BFS) system, and in response to
Mr. Casten, do you want to add any additional information on
that matter?
Secretary Bessent. I would say that is in litigation, and I
never authorized access.
Mr. Stutzman. Thank you. I just want to say thank you for
your service and for your willingness to come serve in
Washington, DC, at a critical time and the fact that you heeded
President Trump's call. It is refreshing, honestly.
We see a lot of ups and downs. Things that are happening
around the world but, here at home, there is a reset that is
happening, and that does create some volatility. I will tell
you what, there is a lot of good news that I think the other
side is missing. I found it ironic that this chart was handed
out earlier. Of course, it tries to show that all the blame is
on the Republican or Presidents over the past century or so but
the one that really----
[Chart.]
Secretary Bessent. Congressman, if I may interrupt, as a
former finance professor, that chart would get an F.
Mr. Stutzman. I agree. It is interesting that you know this
big drop-off right here after President Clinton--I live in one
of the heaviest manufacturing districts in the country, and I
know that businesses do not turn on a dime that quickly but
that was because of different trade policies. Something
happened during the President Clinton era that caused a lot of
jobs to leave. That is what President Trump and you are trying
to fix. Is that correct?
Secretary Bessent. I think that thing was called NAFTA,
sir.
Mr. Stutzman. Exactly. Thank you for doing that because we
saw jobs growing up in northeast Indiana and the auto industry,
agriculture, and manufacturing just continue to have the slow
decline. Manufacturing is critical to a nation, and
manufacturing has built America. We have seen jobs leave
because of bad policies over years.
Because of President Trump and because of you, sir, we are
now seeing headlines that say: Rolls-Royce Planning to Shift
Production to the United States to Avoid Trump's Tariffs. We
see headlines saying: Johnson and Johnson To Invest Over 55
Billion in United States in the Next 4 Years.
Even in my district, GM has announced that they are
increasing truck production. I know coming from a manufacturing
family that we are seeing opportunities. Is it going to happen
overnight? Absolutely not, but it is at least giving us the
opportunity to look forward and say there is an opportunity
because you all are setting, resetting the table to look out
for America first.
I want to say thank you, and if you do not--and I have
heard you say this before that President Trump has tasked you
with reducing debt and deficits as well as keeping the economy
strong, that is a huge task, but it is one that has to happen.
I appreciate what you have been doing. Because the debt prices
would just flat out limit us to any sort of recovery. It would
be very difficult.
I want to ask you really quick about the Federal Reserve's
dual mandate. Generally speaking, should the Federal Reserve
focus more on fighting inflation or providing maximum
employment and what should the Fed focus on if the economy
enters stagflation?
Secretary Bessent. Sir, I would just comment on monetary
policy in general rather than the Federal Reserve. I think the
two are inexorably linked. As we saw during the terrible
inflation during the Biden years, that employment picked up,
but that was a slingshot effect. As we went--came into post-
COVID recovery that financed the debt-fueled government
spending, and we are trying to end that.
So the Federal Reserve should focus on both, and it is at
different times. Look, keeping inflation down, President Trump
won because of, I believe, working real wages for working
Americans flopped.
Mr. Stutzman. Now, that is absolutely right, and we saw the
cost of living go up. The last 4 years have been the hardest on
Americans due to the former administration's policies and I
know that there is a huge recovery, and people are still trying
to recover and are hopeful and optimistic.
My time is about to expire, I just wish you the best, and I
want to say thank you. Working together here on this committee,
there are plenty of places to work together and try to get us
back on track rather than pointing fingers. So.
Chairman Hill. The gentleman's time has expired. We now
recognize the gentlewoman from Massachusetts, Ms. Pressley, for
5 minutes.
Ms. Pressley. Thank you. Secretary Bessent, you have heard
from Democrats publicly and I am certain you have heard from
Republicans privately that this administration's reckless and
chaotic tariff policy is wreaking havoc on our economy. Rather
than delivering that stability for our country, this Trump
tariff tantrum has been inconsistent, counter-productive, and
disconnected from reality.
In my district in the Massachusetts Seventh, I am hearing
it from everyone. Small businessowners are reeling from the
unpredictable on again, off again tariffs. They are holding
back on expansion, delaying hiring, and bracing for the impact.
Local and State officials are telling me about the effect
tariffs will have on our State budget. Simultaneously,
Massachusetts will see energy bills increase while revenue from
tourism will decrease.
I want to focus on the constituent outreach that I received
from everyday families who are just fighting to make ends meet.
Yes or no. Mr. Secretary, do you know what a car seat is?
Secretary Bessent. I have two children, yes.
Ms. Pressley. I figured as much. It is correct you and your
husband have two children. So I am sure you know that car seats
are absolutely essential for families when traveling with
babies and toddlers to school, to worship, to doctor's
appointments, just everyday living. Not only are car seats
essential but they are also the law of the land. It is the law
of the land in 50 States. There is no getting around that.
Mr. Secretary, what is your estimate of how many babies are
born in the United States each year?
Secretary Bessent. I would guess two to three million.
Ms. Pressley. While the number fluctuates, there have
consistently been more 3.5 million babies born in the United
States. That means millions of families in this country are
doing what? Buying a car seat. Because it is essential, and it
is the law of the land in all 50 States. Now that cost is going
up because Trump has announced up to 145 percent tariffs on
Chinese imported products. Approximately, nine out of every ten
car seats in the United States come from China. That is a steep
cost. Steep costs, high for families all over the country. The
price is up in Republican districts and in Democratic
districts.
It is not just the car seats that are impacted. We are
talking about strollers, cribs, highchairs. No family is exempt
from the harm of these Trump tariffs on essential baby products
but do not just take my word for it.
Mr. Chair, I would like to enter into the record a Yahoo
finance article from May 2025, entitled: First-year baby
expenses already topped $20,000, and tariffs are adding to the
bill as China dominates key imports.
Chairman Hill. Without objection.
[The information referred to was not submitted prior to
printing.]
Ms. Pressley. Look, I support improving manufacturing in
America, but that is not going into effect overnight like these
tariffs are. There needs to be an exemption to help America's
families. Trump has used his power for tariff exemptions on
thermal plastics, semiconductors, but what about baby products?
Mr. Secretary, do you support an exemption to tariffs on
items that parents need to care for their kids? Yes or no?
Secretary Bessent. Congresswoman, what you are referring to
are----
Ms. Pressley. Yes or no?
Secretary Bessent. What you are referring to are----
Ms. Pressley. I am reclaiming my time because I do not want
you to filibuster and give me some macroeconomic answer.
Families at home are hurting, and they just--just give me a
direct answer.
Secretary Bessent. I am going to agree with you that----
Ms. Pressley. So, yes, you do support an exemption on
tariffs for products that are essential for families for their
babies?
Secretary Bessent. Exemptions on E-4 items of which----
Ms. Pressley. I am sorry, I have to reclaim my time. I am
reclaiming my time. I am--Mr. Chair, I am reclaiming my time.
Give me my time back. I am reclaiming my time.
I just want a simple yes or no. Do you support an exemption
to tariffs on items that parents need to care for their kids?
Because you all claim you are pro family. I cannot hear the
words you say because I see the things that you do every day.
So clear it up.
Yes or no, do you support an exemption to tariffs on items
that parents need to care for their babies?
Secretary Bessent. It is under consideration.
Ms. Pressley. Great. Good. I do not know what is stopping
an exemption from going into effect today? So do it now. In
Donald Trump's America, yesterday's price is not today's price.
Costs are going up. Everyone is suffering, especially our
families with young children.
Mr. Secretary, I am making an appeal to you. On behalf of
the people of this country, please tell occupant Trump to
reverse course and stop hurting America's families. I yield
back.
Chairman Hill. The gentlewoman yields back.
The gentleman from Pennsylvania, our Chair of our Oversight
and Investigation Subcommittee, Mr. Meuser, is recognized for 5
minutes.
Mr. Meuser. Mr. Secretary, great to be with you. Thank you.
Boy, oh, boy, I sure wish we had colleagues that were upset
about the Biden 20-percent inflation and lack of wage growth
along with that inflation and the high energy costs that were
costing families throughout my district thousands of dollars. I
wish we would have heard a peep about that. Yet, we have just
angry, angry voices over the potentiality of bringing
manufacturing back to the United States that, in fact, has not
even gone into effect yet. It is nuts.
Mr. Secretary, the ongoing litigation response to the
Democrats' questions about the Treasury DOGE team, it is true
that they can find all of the information--find all the
available information there?
Secretary Bessent. Yes, sir.
Mr. Meuser. Okay. Thank you. Also, regarding the Beneficial
Ownership Rule, which was a disaster for my small businesses--I
mean all of them, 100 percent, complained about it--the
original intent of the Corporate Transparency Act was to root
out bad actors.
The previous administration, however, turned it into a
massive data collection with over 50 questions--originally
there were four--that outraged small business, accountants,
attorneys, anybody who had anything to do with it. In fact,
only 20 percent of the small businesses were even able to
comply by the January 1 deadline. Meanwhile they were
threatened with fines up to $500 per day and up to $10,000,
small businesses. They were beside themselves.
You listened to the small businesses and did something
immediately to correct course, exempting U.S. companies from
reporting. My small businesses throughout my district,
throughout Pennsylvania applaud you for eliminating a needless
bureaucratic reporting regime. So thank you.
Secretary Bessent. Congressman, I am just sorry that so
many of them had to waste their hard-earned dollars either
complying or preparing to comply.
Mr. Meuser. And losing sleep and everything else. Some even
going out of business because they found it preposterous. Thank
you.
Let us talk about removing the ideological, subjective,
even capricious regulators that--how would you--under the Biden
Administration, bank supervisors focused more on ideological
concerns and less on material bright line financial rules
versus the risks. How do you work with bank regulators to
refocus supervision on bright line rules rather than an issue
unrelated to safety and soundness?
Secretary Bessent. Again, Congressman, very important
point. We could see that we had three--under the previous
administration, we had three of the largest bank failures in
U.S. history. Two weeks before that, the Financial Stability
Oversight Council published a report that said that climate was
the biggest threat to the financial system, not the deposit
volatility, not overleveraged bond portfolios. So we are
promoting common sense back to basics.
Mr. Meuser. Yes, thank you. Okay. The efforts related to
the removal of reputational risk as a basis of supervisory
criticism. Can you comment on that?
Secretary Bessent. Yes, sir. Many people, many individuals,
many organizations were debanked because of their political
beliefs, and regulators used that as a litmus test. That it is
a very capricious category in bank regulation. So we had moved
to remove that as a criteria. We believed that financial ratios
are much more important than whether you are a Democrat, a
Republican, or an Independent.
Mr. Meuser. Thank you. Yes. Well put. I appreciate the fact
that you see things that way as should be seen.
Capital requirements. Basel III Endgame, of course, and the
G ship surcharge and other proposed capital rules might put
U.S. banks at an international disadvantage. What do you
believe--if you got an idea of the right level for capital
requirements?
Secretary Bessent. Sir, we are examining that now, and we
will weigh in heavily at the BIS and the other rulemaking
entities. Again, this one-size-fits-all. I believe one of the
reasons we have seen the stagnation in many other countries is
the regulatory, the framework, the very tight regulatory
framework that they have put around their regulated financial
institutions.
Mr. Meuser. Thank you. I am almost out of time. I will
yield back. Thank you very much, Mr. Secretary.
Secretary Bessent. Thank you.
Chairman Hill. I thank the gentleman.
The gentleman from New York, Mr. Torres, is recognized for
5 minutes.
Mr. Torres. Thank you, Mr. Chair. During so-called
Liberation Day, Donald Trump imposed tariffs on territories,
populated not by humans, but by penguins. He imposed tariffs on
countries with which the United States runs a trade surplus,
not a trade deficit. He imposed tariffs on products that cannot
be produced domestically which means a higher cost for American
consumers without any benefit to American manufacturers. He
imposed tariffs on impoverished nations like Lesotho, which
cannot afford to buy as much from us as we buy from them.
If President Joe Biden had put in place these absurd
tariffs, every single Republican, without exception, would have
condemned his trade policy at the height of incompetence.
You, Mr. Bessent, would have joined that course of
criticism. There is no doubt in my mind. Swap out Biden's name
for Trump's and suddenly the moral outrage from Republicans
vanishes like magic.
I have a simple yes or no question. Do you think excessive
taxation undermines the competitiveness of are American
manufacturing.
Secretary Bessent. Yes, sir.
Mr. Torres. Now the Trump tariff regime is a breeding
ground for the excessive taxation of American manufacturing.
Consider as an example Intel's manufacturing of Central
Processing Units (CPUs). Intel sources, foreign components,
which are subject to the first layer of taxation. It then
manufactures the CPUs in the United States before exporting it
to China, which will face a second layer of taxation. Finally,
China will export the CPU back to the United States where it
will face a third layer of taxation. Taxation upon taxation
upon taxation of American manufacturing goods.
Do you think that kind of compounding taxation of American
manufacturing goods like Intel CPU will strengthen or weaken
American manufacturing?
Secretary Bessent. Sir, I just want to be clear, you are
saying that taxes raises costs?
Mr. Torres. I am sorry?
Secretary Bessent. Sir, you are saying that taxes raise
costs?
Mr. Torres. Taxing the intermediate goods that go into
manufactured products raise costs, yes.
Secretary Bessent. You are saying that taxes are
inflationary?
Mr. Torres. Taxes are inflation--yes.
Secretary Bessent. Good, then we should cut taxes----
Mr. Torres. In the context of tariffs, yes.
Secretary Bessent. Then we should cut taxes, and you should
join the----
Mr. Torres. Can you answer my questions about the tariffs?
Secretary Bessent. I am not sure I understand----
Mr. Torres. Intel CPU would face three levels of taxation,
the taxes on the foreign components, the tax--the United States
taxes, and the Chinese taxes, or the Chinese tariffs.
Do you think that kind of compounded taxation hinders or
helps American manufacturing?
Secretary Bessent. I think the strategic American
manufacturer is very important like Intel, and I think we have
to bring that back to the United States.
Mr. Torres. Do you think taxing intermediate goods that go
inside American manufactured products helps or hinders
manufacturing?
Secretary Bessent. I believe that as the Intel example you
gave we have to bring these strategic industries back to the
United States.
Mr. Torres. We are not going to bring every component--a
Boeing aircraft, 747, had six million components. There is no
universe in which we are going to manufacture all six million
components in the United States. If you impose a tax on those
foreign components, you are hindering the manufacturing of
Boeing 747 here in the United States. Do you even acknowledge
that?
Secretary Bessent. I acknowledge that the supply chains are
wide, but we have also for the automakers, we have given an
exemption--
Mr. Torres. I am not asking about the automakers. I am
asking about Boeing aircraft. Let me move on.
Critical minerals are central to military defense of the
United States. China controls almost all of the world's rare
earth mining and almost all of the world's critical mineral
processing and refining.
The Trump Administration has chosen to wage a total trade
war with China without first building a critical mineral supply
chain here at home. Just like it would be foolish to enter a
car race without enough fuel in the tank or enter our
weightlifting competition without sufficient strength to lift
the weights. It seems equally foolish to wage an all-out trade
war on China without a domestic critical mineral supply chain,
breaking China's strongest choke hold over the United States,
the Chinese Communist Party's (CCP's) choke hold on critical
minerals and rare earth elements is a precondition for winning
the trade war against China. Do you agree with that?
Secretary Bessent. I believe that we have to bring the rare
earth--as you correctly said, processing back--or not even back
to the United States, we have to have----
Mr. Torres. Not even processing. It is rare earth mining as
well and it is critical mineral processing and refining.
Secretary Bessent. Strategic minerals----
Mr. Torres. The weaponization of critical minerals against
the United States is the opposite of making America safe again.
Secretary Bessent. Rare earths are not that rare.
Processing is rare.
Mr. Torres. The binding is rare too. We have an
insufficient mining industry here in the United States, and you
know that.
Secretary Bessent. Good. Then I hope you will join us in
the deregulation of many of these onerous mining requirements.
Mr. Torres. I think my time has expired.
Chairman Hill. I appreciate the gentleman from New York.
The gentlewoman from California, Mrs. Kim, is recognized
for 5 minutes.
Mrs. Kim. Thank you, Chairman Hill, and Ranking Member
Waters for holding this hearing.
Secretary Bessent, good to see you, and thank you so much
for coming. Southern California, where I am from, and in the
district that I represent serves as the primary gateway to
Pacific Rim and Asian goods into the United States come through
the ports of L.A. and Long Beach. We are already starting to
see a drop in volume as the ports of L.A. and Long Beach are
expected to see a 35 percent to 30 percent drop when compared
to a year ago.
Cargo volume is one of the largest drivers in the region,
and long-term drop will not just impact families at the grocery
stores and small businesses bottom line but also result in
truckers and dock workers losing their jobs.
Secretary Bessent, I would like to ask how can you ensure
that our tariff policy will not unintentionally harm American
small businesses and workers in the long term?
Secretary Bessent. Congresswoman, we believe over the long
term that it will drive growth in the economy. As I have said
many times, it is a mistake to look at trade in isolation, the
Trump economic policy as a three-legged stool: trade, taxes,
and deregulation. We believe that the sum of the parts--that
the whole is greater than the parts. As we complete each one of
those that the United States will see substantial economic
growth.
Mrs. Kim. Thank you. I know that a lot of my constituents
share these concerns that we raised. I would like to continue
this discussion on this specific topic with you moving forward
because I am concerned that these long-scale tariffs, if they
continue in the long term, then American working families and
small businesses will suffer under price hikes and a lack of
certainty.
I want to shift gears and discuss the Financial Stability
Oversight Council, FSOC. Under the previous administration,
Secretary Yellen rescinded the nonbank systematically important
financial institution and replaced with a new framework with
assessing the financial risk. This new framework overlooks the
importance of prioritizing an activity-based standard and a
cost-benefit analysis.
Secretary Bessent, does FSOC intend to reassess the 2023
guidance so that it is more closely aligned with the thoughtful
process that was created in 2019?
Secretary Bessent. Congresswoman, that is on our agenda.
Mrs. Kim. Thank you. As you finalize that decision, I want
to emphasize that my support for a return to an activity-based
standard that more appropriately addresses the risk of
nonbanks. Thank you.
Secretary Bessent. Treasury would be happy to work with
your team on that.
Mrs. Kim. Thank you. Finally, I would like to urge you to
continue your support for CDFI. CDFI fund programs are
statutory, as you know. It has been critical in promoting the
local economy in Orange County.
Do you still agree that the CDFI fund has a critical role
to play in fostering economic opportunity? I think I know the
answer because you stated very clearly in public statements.
Secretary Bessent. We believe that the--if CDFIs follow
their statutory obligations and do not digress in the more
ideological boundaries, that they can be important
institutions.
Mrs. Kim. Thank you. As you know, last week I attended the
financial literacy roundtable that your team put together.
Thank you so much for inviting me.
Secretary Bessent. I think I just missed you.
Mrs. Kim. Your team was very well represented. Again, I
want to thank you so much because as a Co-Chair of the
Financial Literacy and Wealth Creation Caucus, events like that
bringing the stakeholders together and having a meaningful
dialog in conversation I think is critically important, and we
need to continue that.
Can you talk about how you can continue to advance
financial literacy initiatives? Now that we are past the
financial literacy month, I mean, I was able to take the
leadership and pass the bill that proclaims the month of April
as the financial literacy month. I hope that we can continue to
work in this space together.
Secretary Bessent. As you should know that it is a strong
core belief of mine that financial literacy is the only path to
economic independence and well-being. The more Americans who
can be educated--and I think we should probably go State to
State and encourage each State to put in financial literacy
standards for their students.
Chairman Hill. The gentlewoman's time has expired.
Mrs. Kim. Thank you very much.
Chairman Hill. The gentlewoman from Texas, Ms. Garcia, is
recognized for 5 minutes.
Ms. Garcia. Thank you, Mr. Chairman, and thank you to
Secretary for being with us today.
I want to start first by just clarifying your testimony in
its delivery. Why did you ask for your witness statement to be
embargoed until this morning?
Secretary Bessent. Pardon me? Pardon me?
Ms. Garcia. Your testimony reads right at the top:
Embargoed until delivery. Which means that we did not follow
the usual practice of this committee of getting the testimony
24 hours in advance so that committee members can review it and
prepare for questions. Yours was posted at 10:01. The committee
was at 10. It looks like you did not----
Secretary Bessent. My staff is just telling me that it is
standard practice.
Ms. Garcia. It is your standard practice? It is not our
standard practice as a committee.
Secretary Bessent. I am told that it was standard practice.
Ms. Garcia. Okay. You were told by whom, sir?
Secretary Bessent. So, my comps team and legislative
affairs team working with the committee.
Ms. Garcia. Mr. Chairman, I think for the record I think
you should clarify that to the gentleman that is not our
standard. I know that--at least I did not know anything about
this until I got it here. I do not think our committee staff on
the Democratic side was notified that we would be getting all
your testimony late. I just wondered why you had made that
request. Clearly at the top: Embargoed until delivery.
Secretary Bessent. Embargoed till delivery I think that was
mostly meant for the press.
Ms. Garcia. We are not press, sir. We are the Members of
Congress that have oversight.
Mr. Chairman, I would hope that you not condone this kind
of late submission. It just does not help, frankly, for some of
the atmosphere that is created. When we all just sit down and
we still do not have your testimony, well, then, we just sort
of do not feel really good about that. It is not our custom and
practice.
Secretary Bessent. Congresswoman, I appreciate the
importance that you put on my statement.
Ms. Garcia. Thank you. Notice is important, sir. You know
what the poverty rate is in our country?
Secretary Bessent. I believe that the poverty level is a
fixed number.
Ms. Garcia. No, do you know the poverty rate in this
country?
Secretary Bessent. I believe it is in the teens.
Ms. Garcia. In the teens. Okay. It is about a little over
11 percent. It just strikes me that most of all of your
testimony is always about the tax cuts and cutting costs. It is
always about tax cuts, and it is always about the rich. Nothing
is ever said about poor other than you suggesting that you
worked yourself through college.
Secretary Bessent. No ma'am. No tax on tips. No tax on
Social Security. No tax on overtime.
Ms. Garcia. Sir, I read your testimony. That is not
anywhere in here. That is not in here sir.
Secretary Bessent. Deductibility of auto loans----
Ms. Garcia. I am referring to your testimony, and what I
have listened to. I said right upfront, I can see you, and I
can hear you. You have not said one thing about what we are
doing to help the poor. In fact----
Secretary Bessent. None of your colleagues asked me.
Ms. Garcia. Even when we were talking about the car seats,
that impacts poor people more than anyone else. Because not
only can they usually not even afford a car seat and have to go
to a garage sale to find one, now it is going to be even
higher. Your President is suggesting that he wants to give a
$5,000 bonus to women to have babies, and then what? Just leave
them out in the cold alone, no car seat, no food? No Medicaid?
No CHIP program?
Secretary Bessent. Congresswoman, I can tell you the worst
thing----
Ms. Garcia. I am asking you right now, sir----
Secretary Bessent. The worst thing for working families
will be the expiration of the 2010 Tax Cuts and Jobs Act----
Ms. Garcia. As Secretary of Treasury, it is not just about
the inflation rate. It is not just about the GDP. It is also
about making sure that we keep the poverty rate in this country
low. There are people who are living in poverty that never have
lived in poverty before. You also had failed to say here, you
say unemployment remains low. I mean, the subject should have
read: Unemployment went up.
Secretary Bessent. Ma'am----
Ms. Garcia. Because it did.
Secretary Bessent. Under the Biden Administration----
Ms. Garcia. We are not talking about Biden, sir. We are
talking about your testimony here today about the current
President and his plans. Because I can tell you, I am from
Houston. I am concerned, too, about some of the tariffs on
energy. We have done a lot to increase trade in Houston,
construction, everything after the pandemic, and all things
were growing. Everything has been growing but now that the
Trump tariffs have surfaced, it is threatening Houston's
economy. I represent the area where almost all the entire ship
channel is in. The petro chemical companies are in my district.
The port is in my district. Everybody is trying to figure out
just what all we are going to do.
Chairman Hill. The gentlewoman's time has expired.
Ms. Waters. Mr. Chairman.
Chairman Hill. Ranking member.
Ms. Waters. I ask unanimous consent to enter into the
record the opinion and order by the United States District
Court in the Southern District of New York in the Matter of New
York versus Donald Trump that directly contradicts several
responses the Secretary gave to me about DOGE's access to
Treasury payment systems.
Chairman Hill. Without objection.
[The information referred to can be found in the appendix.]
Chairman Hill. I want to thank our witness today. We
appreciate Secretary Bessent's testimony.
Without objection, all members will have 5 legislative days
to submit additional written questions for the witness to the
Chair. The questions will be forwarded to our witness for his
response.
Secretary Bessent, please respond no later than June 2,
2025. This hearing is adjourned.
[Whereupon, at 1:03 p.m., the committee was adjourned.]
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