[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
EVALUATING THE OPERATIONS OF THE
COMMITTEE ON FOREIGN INVESTMENT
IN THE UNITED STATES (CFIUS)
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON NATIONAL SECURITY,
ILLICIT FINANCE, AND INTERNATIONAL
FINANCIAL INSTITUTIONS
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
__________
JANUARY 14, 2026
__________
Serial No. 119-51
Printed for the use of the Committee on Financial Services
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
63-579 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
------
SUBCOMMITTEE ON NATIONAL SECURITY, ILLICIT FINANCE, AND INTERNATIONAL
FINANCIAL INSTITUTIONS
WARREN DAVIDSON, Ohio, Chairman
ZACHARY NUNN, Iowa, Vice Chairman JOYCE BEATTY, Ohio, Ranking Member
FRANK D. LUCAS, Oklahoma JOSH GOTTHEIMER, New Jersey
PETE SESSIONS, Texas JUAN VARGAS, California
ANDY BARR, Kentucky BILL FOSTER, Illinois
ROGER WILLIAMS, Texas VICENTE GONZALEZ, Texas
YOUNG KIM, California RITCHIE TORRES, New York
ANDREW OGLES, Tennessee SEAN CASTEN, Illinois
LISA McCLAIN, Michigan SAM LICCARDO, California
MARIA SALAZAR, Florida
C O N T E N T S
----------
Wednesday, January 14, 2026
OPENING STATEMENTS
Page
Hon. Warren Davidson, Chairman of the Subcommittee on National
Security, Illicit Finance and International Financial
Institutions, a U.S. Representative from Ohio.................. 1
Hon. Joyce Beatty, Ranking Member of the Subcommittee on National
Security, Illicit Finance and International Financial
Institutions, a U.S. Representative from Ohio.................. 3
STATEMENTS
Hon. French Hill, Chairman of the Committee on Financial
Services, a U.S. Representative from Arkansas.................. 4
WITNESSES
Statement of Hon. Chris Pilkerton, Assistant Secretary for
Investment Security, U.S. Department of the Treasury........... 4
Prepared statement........................................... 7
APPENDIX
MATERIALS SUBMITTED FOR THE RECORD
Hon. Maxine Waters:
Coalition for a Prosperous America (CPA)..................... 40
Quantifind................................................... 47
Hon. Sam Liccardo:
January 14, 2026 letter to David Ellison..................... 51
RESPONSES TO QUESTIONS FOR THE RECORD
Written responses to questions for the record from Representative
Representative French Hill................................... 55
Representative Maxine Waters................................. 62
Representative Zachary Nunn.................................. 73
Representative Sean Casten................................... 76
EVALUATING THE OPERATIONS OF THE
COMMITTEE ON FOREIGN INVESTMENT
IN THE UNITED STATES (CFIUS)
----------
Wednesday, January 14, 2026
U.S. House of Representatives,
Subcommittee on National Security, Illicit Finance,
and International Financial Institutions,
Committee on Financial Services,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:05 a.m., in
room 2128, Rayburn House Office Building, Hon. Warren Davidson
[chairman of the subcommittee] presiding.
Present: Representatives Davidson, Lucas, Sessions, Barr,
Williams of Texas, Kim, Ogles, Nunn, Beatty, Vargas, Foster,
Gonzalez, Casten, and Liccardo.
Also present: Representatives Hill, Waters, and Green.
Chairman Davidson. The Subcommittee on National Security,
Illicit Finance, and International Financial Institutions will
come to order.
Without objection, the chairman is authorized to declare a
recess of the committee at any time. This hearing is titled,
``Evaluating the Operations of the Committee on Foreign
Investment in the United States.'' Without objection, all
members will have 5 legislative days within which to submit
extraneous materials to the chairman for inclusion in the
record.
OPENING STATEMENT OF HON. WARREN DAVIDSON, CHAIRMAN OF THE
SUBCOMMITTEE ON NATIONAL SECURITY, ILLICIT FINANCE AND
INTERNATIONAL FINANCIAL INSTITUTIONS, A U.S. REPRESENTATIVE
FROM OHIO
Today is the committee's annual oversight hearing on the
Committee on Foreign Investment in the United States (CFIUS)
and will provide members an opportunity to review the Trump
Administration's implementation of the CFIUS process and the
Outbound Investment Security Program, both of which are
administered by the Office of Investment Security.
The United States is the world's top destination for
foreign direct investment, with over $5.7 trillion in total
investment so far, and trillions of dollars of new commitments
during this--President Trump's current term.
Our open investment environment makes this possible, which
is why successive presidents have reaffirmed it is important.
In fact, foreign direct investment accounts for 10 percent or
more of jobs while foreign firms employ around 25 percent of
all manufacturing workers, making investment critical to the
well-being of Americans across the country.
Established in 1975 under the Department of Treasury, CFIUS
seeks to preserve this open investment environment while
ensuring that the very openness does not become a weapon our
adversaries could use against us. The 2018 Foreign Investment
Risk Review Modernization Act, otherwise known as FIRRMA,
expanded its jurisdiction to include noncontrolling investments
in critical technologies' infrastructure and sensitive personal
data. CFIUS must rigorously scrutinize foreign investments from
any source that could undermine our technology, agriculture,
energy sectors, and more while enabling beneficial investments
and inflows that do strengthen our economy.
At the same time, CFIUS must not become so bureaucratic
that the process prioritizes answering every conceivable
question over neutralizing threats. So with this in mind, I
want to commend President Trump both for his America First
Investment Policy, which reiterates its commitment to welcoming
foreign investment, as well as his tireless efforts to secure
trillions in new investment in our country.
I especially want to highlight CFIUS's Known Investor
Portal pilot program, which promises to streamline investment
for repeat friendly investors, allowing resources to be
directed where they matter most for screening new risks.
However, reviewing inbound investments alone cannot fully
protect our national security. This is why Congress enacted
Representative Barr's Comprehensive Outbound Investment
National Security (COINS) Act last month as part of the
National District Attorneys Association (NDAA), which tasks the
Office of Investment Security to build on the Outbound
Investment Security Program. Now that this legislation has
become law, it falls on this committee to ensure that it is
implemented in a targeted and thoughtful manner while ensuring
that American capital does not support military industrial
bases of our adversaries, particularly the People's Republic of
China.
As treasury writes an updated outbound investment rule, it
is imperative that it is clear, streamlined framework so that
it can ensure American investors can comply without overly
burdensome bureaucratic obstacles that halts our financial
sector.
As the world becomes more complex and interconnected,
Office of Information Security (OIS) must ensure that U.S.
national security is protected both to inbound and outbound
investment fronts, and in ensuring that our processes are
efficient and effective means investment screening must be
transparent and clear for our friends and fellow citizens to
comply with, and difficult for our adversaries to exploit. This
is our task today.
I yield back and I now recognize the ranking member for her
remarks.
OPENING STATEMENT OF HON. JOYCE BEATTY, RANKING MEMBER OF THE
SUBCOMMITTEE ON NATIONAL SECURITY, ILLICIT FINANCE AND
INTERNATIONAL FINANCIAL INSTITUTIONS, A U.S. REPRESENTATIVE
FROM OHIO
Mrs. Beatty. Good morning, and thank you, Mr. Chairman, for
holding this hearing, and thank you to our assistant secretary
for being here today, fresh on the job.
The Committee on Foreign Investment in the United States,
or CFIUS, plays a pivotal role in our national security
framework by ensuring that foreign direct investment
transactions do not pose a threat to the United States while
maintaining an open investment environment. Although CFIUS has
only blocked a handful of transactions to date, its thorough
vetting process is essential to protect our national security.
The businesses that participate in that process rely on its
clear and fair rules.
Unfortunately, under President Trump, the CFIUS review
process has become unpredictable and turned into a political
tool used to punish his opponents while enriching himself, his
family, and his billionaire friends. We saw this with TikTok
where he exploited tangible security concerns for personal and
political leverage. We saw this with the Nippon Steel-U.S.
Steel deal where he inserted his own name and operational
controls into the new company's Articles of Incorporation.
Since taking office, we have seen it with his crypto
ventures involving foreign actors that have increased his
personal net worth by billions.
This repeated and blatant abuse of power does not make
America safer. It only creates confusion for businesses; it
scares investors and weakens our ability to compete with
adversaries like China.
Every member of this subcommittee should be concerned about
the President's activities and the national security risks they
create, particularly on the heels of last summer's hearing
where we all agreed on the importance of a clean investment
security process.
We must preserve the integrity of CFIUS and ensure our
national security tools remain protected and well-resourced.
That includes reinstating the bipartisan supported Corporate
Transparency Act rule to help national security programs like
CFIUS combat anonymous shell companies used to obscure the true
ownership and control beyond covered transactions. This
administration, and some of my colleagues across the aisle are
determined to undercut this bipartisan law, which will only
make it harder for CFIUS, the Outbound Security Program,
financial institutions, and national security agencies to
properly assess national security risk.
Certainly we are here because of the very nature of the
name of this committee, that we are committed and obligated to
protect our national security.
Last, politics has no place in matters of national
security, and Democrats will continue to resist efforts that
would either undercut CFIUS or distort its purpose. Since our
last hearing on investment security, the Comprehensive Outbound
Investment National Security, or as we refer to, COINS Act was
signed into law, codifying the expanding and Outbound
Investment Program.
So welcome, and we will be watching the implementations of
this law closely. I look forward to learning more about our
investment security framework and operating and exploring ways
that we can strengthen it.
Thank you again for being here, and thank you, Mr.
Chairman, for holding this committee and I yield back.
Chairman Davidson. I thank the ranking member.
I now recognize the chairman of the full committee, Mr.
Hill, for 1 minute for an opening statement.
STATEMENT OF HON. FRENCH HILL, CHAIRMAN OF THE COMMITTEE ON
FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM ARKANSAS
Chairman Hill. Thank you, Chairman Davidson, and welcome,
Secretary Pilkerton. We are glad to have you today.
Congratulations.
CFIUS plays a critical role in safeguarding the national
security while also fostering here in the United States an open
investment climate. Today we are examining how its expanded
authority under FIRRMA impacts U.S. investment in emergency
security challenges.
CFIUS continues to evolve to address national security
threats from abroad. At the same time, CFIUS's narrow mission
supports the confidence investors have in the openness and
integrity of the U.S. economy. As with any national security
program, ongoing oversight and evaluation of CFIUS's
effectiveness are essential duties for the Members of Congress,
and particularly this committee. Our discussion will focus on
evaluating CFIUS's role in protecting national security while
upholding that open investment climate.
CFIUS has earned bipartisan support by sticking to this
mission. It does not and must not allow itself to become a tool
for industrial policy and partisan agendas.
I thank the witness for being here today, and I look
forward to our discussion. I yield back.
Chairman Davidson. Thank you, Chairman.
Today we welcome the testimony of Hon. Chris Pilkerton,
Assistant Secretary for Investment Security at the U.S.
Department of Treasury.
Assistant Secretary Pilkerton, thank you for taking time to
be here today. Congratulations on your confirmation. You will
be recognized for 5 minutes to give an oral presentation of
your written testimony. Without objection, your written
statement will be made part of the record.
Assistant Secretary Pilkerton, you are now recognized.
STATEMENT OF HON. CHRIS PILKERTON, ASSISTANT SECRETARY FOR
INVESTMENT SECURITY, U.S. DEPARTMENT OF THE TREASURY
Mr. Pilkerton. Good morning. Chairman Hill, Chairman
Davidson, Ranking Member Beatty, and members of the
subcommittee, thank you for inviting me here to testify today
to provide an update on the Committee on Foreign Investment in
the United States.
I come before you today having been sworn in as the
Assistant Treasury Secretary for Investment Security just over
a week ago on January 5. While I am new to this role, CFIUS is
currently celebrating its 50th anniversary, and I humbly accept
this important charge to safeguard our country's national
security while ensuring that America continues to be the
world's greatest destination for investment.
In his America First Investment Policy, President Trump
committed to maintaining a strong and open investment
environment coupled with critical national security
protections. The President's tireless work on behalf of the
American people is driving trillions of dollars of investment
commitments into America, bolstering our superior commercial
innovations and technologies, creating jobs, building
communities, and providing opportunities for many Americans. As
I am sure you are all aware, the CFIUS annual report to
Congress provides a more comprehensive picture of the
committee's work, so I would like to use my statement here to
share just some of the key program goals for 2026.
First and foremost, CFIUS's core priority remains assessing
and addressing any national security risks that arise from
transactions that fall within its jurisdiction. By evaluating
these potential threats from adversarial actors, the
committee's many interagency participants, including subject
matter experts, law enforcement, and the intelligence
community, serve as important gatekeepers to protect our
homeland. The commitment to this guiding principle must always
lead the committee's work.
Second, process efficiencies and stakeholder communication
will be an important part of CFIUS. While the national security
risk assessments must be thorough and dependable and will
always serve as the touchstone of the program, we understand
that unnecessary delays and overburdensome procedures can
potentially reduce investment and limit the opportunity for job
creation and local economic impact.
In this spirit, as set forth in the America First
Investment Policy, President Trump directed CFIUS to create an
expedited fast-track process to facilitate greater investment
from allies and partners, which we are now piloting as the
Known Investor Program. This is the first iteration of a
program that will seek to collect detailed information from
foreign investors in advance of potential transactions so we
can maximize administrative efficiencies while still adhering
to the integrity of process, including robust due diligence and
tailored actions where necessary to protect national security.
We intend to build upon this pilot over the course of this year
and look forward to working with relevant parties to ensure its
success.
Third, as Congress directed, filing certain types of
transactions with CFIUS is mandatory, and the committee has the
authority to review any transaction not voluntarily filed with
CFIUS that is covered by its jurisdiction and may raise
national security considerations. Accordingly, CFIUS is focused
on ensuring transaction parties comply with the mandatory
filing requirement, and we are prepared to act if they fail to
do so. When in doubt, we encourage parties to engage
proactively with CFIUS and utilize the committee as a resource
in these circumstances, as addressing national security risks
is typically easier for all parties involved before a
transaction is closed than after.
Fourth, building on the benefits of foreign investment,
which include increased jobs, wages, research and development,
exports, and many more. In line with CFIUS's mandates to
educate the business community and strengthen national
security, we want to work with industry to better understand
their supply chain and vendor needs so we can work with
interagency partners, such as SelectUSA, the U.S. Small
Business Administration, and the Department of War's Office for
Industrial Base Policy, as well as the private sector to better
inform their deployment of capital to build secure and
resilient sources of supply right here in the United States.
Fifth, as Congress set forth in the Foreign Investment Risk
Modernization Act in 2018, CFIUS will continue to actively work
with allies and partners on their own investment security
programs. This engagement to date has led to the establishment
and enhancement of dozens of investment screening mechanisms
around the world and will remain an important part and
important tool as this administration engages the global
community on critical economic and national security issues.
This work will be coupled with the insights of our growing team
of subject matter experts, scientists, and engineers to ensure
we stay ahead of global technology trends and potential
threats.
CFIUS will continue to review the committee's processes,
practices, and authorities to ensure that we are well-equipped
to address existing and evolving threats that can accompany
foreign investment while preserving the United States' strong
and open investment environment.
Thank you again for inviting me to appear today, and I look
forward to your questions.
[The prepared statement of Mr. Pilkerton follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Davidson. Thank you. We will now turn to member
questions, and I recognize myself for 5 minutes.
I support President Trump's February National Security
Presidential Memorandum, which makes clear that the United
States can and must encourage foreign investment while
rigorously protecting our own national security. The memorandum
reaffirms a core principle of America's economic leadership:
Remain open for business to our allies and trusted partners,
but we will not allow adversaries to exploit our openness to
undermine our technological edge, our supply chains, or our
overwhelming military superiority. That balance--speed for
trusted investors, scrutiny for adversaries--is essential if we
want the United States to remain the world's top destination
for investment while keeping our national security front and
center. I hope that we grow our friends, grow our allies, and
diminish our enemies in this process but with the surge of
commitments in foreign direct investment, efficiency becomes
even more important.
So in May, CFIUS launched the Known Investor Portal. Mr.
Secretary, how will you and your team ensure that information
collected by the portal actually expedites reviews without
becoming just another bureaucratic process?
Mr. Pilkerton. Mr. Chairman, thank you for that question. I
wholeheartedly agree with you that predictability, durability,
and efficiency of the process is absolutely critical.
The Known Investor Program, which is tied back to the fast-
track concept in the America First Investment Policy, is
currently under pilot. We are in the process of gathering
information and learning new information to ensure that process
is as efficient as it possibly can be. In fact, we are going to
be releasing soon a request for information from the public as
well to get a sense from a whole variety of stakeholders so we
can ensure that we are accounting for all of that.
Under my leadership, it will not be just another
bureaucratic exercise. The purpose of this exercise is to get
as much data as possible so that as we conduct our national
security reviews, we can have a very good understanding of the
parties that we are conducting transactions with and their
intentions.
Chairman Davidson. Thank you so much.
In CFIUS's annual report for 2024, it states that the
committee, quote, identified and considered thousands of
potential non-notified transactions. Do you know how CFIUS
calculated the ``thousands'' number, and are you satisfied with
the number of voluntary filings received? I think the concern
is--is there a type of transaction that is not--where you are
not being notified at CFIUS? So what steps can Congress do to
shore that up, or what are your concerns as you come into this
role?
Mr. Pilkerton. Thank you for the question.
As I alluded to in my opening statement, we cannot conduct
national security reviews of transactions that we do not know
about. So non-notified transactions are going to be a priority
for this administration. There is various sources that we can
identify these through--open-source activities, referrals,
intelligence community, law enforcement but one of the things
that I intend to do is be able to travel and share some
information about CFIUS and the program writ large with the
communities and with the country so that we can inform folks--
so we can get more information about non-notifieds.
The important thing to recognize about non-notified
transactions, as I said in my earlier statement, is if we find
out about them, then we can work with the parties to see if
there is a way to get to mitigation or get to a potential
transaction.
Chairman Davidson. Thank you. As we look forward to the
challenge of looking at outbound screening as well, one of the
concerns is, even on the current inbound process, it seems like
every year it gets more complex and less transparent and
sometimes takes longer. So to what extent is Treasury playing,
kind of, quality control and making sure these are relevant
questions? At some level, they kind of have to be unique to the
situation even if it is a known investor, this particular
investment has got its own criteria to some extent. How do
you--how do you get, I guess, efficient at operating that?
Because that is, I think, a concern a lot of folks in industry
have, is that it is inconsistent or not a very efficient
process.
Mr. Pilkerton. Thank you very much for the question.
While I have just been in the office for about a week, I
already have a big whiteboard in my office that says ``process,
process, process,'' and I want to make sure that we are
minimizing the inefficiencies in the process and hearing from
the public and the stakeholders to ensure that the information
that we are asking for is certainly consistent with what we
need to make this decision.
We engage very closely with the intelligence community, law
enforcement, and of course the other committee members to make
sure the information that we are gathering is useful to them.
So I think that will be sort of an ever-growing process. Once
again, I take your point that efficiency is critical for the
predictability of these transactions.
Chairman Davidson. Thank you so much.
I now recognize the gentlewoman from Ohio, Mrs. Beatty, who
is the ranking member of the subcommittee.
Mrs. Beatty. Thank you, Mr. Chairman. Again, thank you to
our witness.
In September, President Trump signed an executive order
announcing the formal start of the Trump Gold Card visa program
whereby individuals and corporations can fast-track their U.S.
residency process by making a financial contribution to the
United States.
How are investments related to these so-called ``golden
visas'' being reviewed by CFIUS for national security
implications and describe in detail what is being done on this
issue, please.
Mr. Pilkerton. Ranking Member Beatty, thank you very much
for the question, and I appreciate you having me before the
committee today.
As you are aware, there is CFIUS confidentiality across any
cases that may or may not be part of the committee's
jurisdiction or under review. So I cannot speak to any
particular matter.
The visa that you are referencing is being overseen by the
Commerce Department, so I certainly could refer you to them.
For your awareness, and I am sure as you know, Commerce is a
very important part of the committee. So on any issues that
they are overseeing, we will be working closely with them and
that information will also be shared with the rest of the
committee so they can help us identify any national security
risks regardless of the matter before them.
Mrs. Beatty. Okay. So you do not have anything to do with
that at all. Is that what you are basically saying? I can check
with Commerce to see what they would have to say.
Mr. Pilkerton. I certainly understand and appreciate that,
but I cannot speak to any----
Mrs. Beatty. You cannot tell me if you have something to do
with it or not? That is a yes or no.
Mr. Pilkerton. I----
Mrs. Beatty. I understand your point about you cannot go
into detail, but you could say yes or no that you have
something to do with it--in your authority or not. So is that a
no? Because I am going to research it more and I think there
might be something that you are looking at, but I will accept
your yes or no.
Mr. Pilkerton. With all due respect, under my understanding
of CFIUS confidentiality, I cannot speak to transactions that
may or may not be coming through the process----
Mrs. Beatty. So you do not know if it is coming through the
process or not?
Mr. Pilkerton. I cannot speak to anything with respect to--
--
Mrs. Beatty. I am not asking you to speak about it. I am
simply asking you, in your role, is this something that could
or would come through your process? That is not violating any
confidentiality. I am not asking you to address talking about
it, just if you have any belief or knowledge that it could or
may come through you. That is a simple yes or no. I take that
as you are not going to answer. Let me go to my second
question.
You noted in your opening testimony that pursuant to
President Trump's direction, CFIUS is piloting an expedited
review process for lower risk transactions. What is the status
of this procedure, which is through your jurisdiction? For the
record, a follow up to Mr. Chairman's question is--you can say
yes or no--that this will go through the notice and comment
period.
Mr. Pilkerton. Yes. So with respect to the Known Investor
Program, I certainly can confirm that process is in an up-and-
running pilot. We anticipate that pilot to go through 2026. We
are gathering information and getting lessons learned. As I
referenced before, we do have a request for information that
will be coming out soon to get more information. I would also
anticipate that we would be putting out a lot of public
guidance associated with that over the course of the year. I
know it is an area of specific interest, obviously, for you and
for the committee. So we want to be sure that we are not only
sharing that information but also getting as much feedback as
we can to make sure it is as efficient as possible.
Mrs. Beatty. How long of a period? Is that a 60-day period?
A 90-day period of the notice and comment period?
Mr. Pilkerton. I do not know if we have determined that,
but I think it will probably be around 60 days. That would be
my guess.
Mrs. Beatty. Also, the Foreign Investment Risk Review
Modernization Act mandates that CFIUS coordinate with allies
and partners in information sharing and investment screening
efforts. Is CFIUS doing this and in what ways could the
committee improve those efforts?
Mr. Pilkerton. Could you repeat the question? I am sorry.
The door just opened and I----
Mrs. Beatty. No worries. The Foreign Investment Risk Review
Modernization Act mandates that CFIUS coordinate with allies
and partners in information sharing and investment screening
efforts. Is CFIUS doing this and what ways could the committee
improve those efforts?
Mr. Pilkerton. Thank you very much for the question and
thank you for repeating it.
Mrs. Beatty. No worries.
Mr. Pilkerton. Yes. The international partner engagement
for CFIUS, as I mentioned in my opening statement, is
absolutely critical. Over the course of the program,
particularly over the last few years, we have had a number of
interactions--and it is very routine--with folks around the
world to help them to develop their investment screening
processes. Some of the countries that we talk with do not have
any investment screening. Some only have sort of a smaller
version of it and so we want to share best practices as to what
we have learned as well because not only is it just sharing
that information abroad, there is also a huge benefit to the
United States because any country that we do business with
could certainly become an unwitting vector for an adversary.
Mrs. Beatty. Thank you. My time is up. Thank you for that
detailed response.
Mr. Pilkerton. Thank you.
Chairman Davidson. I thank the ranking member.
I now recognize the gentleman from Arkansas, Mr. Hill, who
is the chairman of the full committee, for 5 minutes.
Chairman Hill. Thank you, Chairman Davidson, and again,
welcome, Mr. Secretary.
We heard in opening comments about not wanting to undercut
CFIUS's important role due to politicization, but I think many
believe that President Biden politicized the CFIUS process when
he rejected Nippon Steel's acquisition of U.S. Steel. In my
view, this abuse undermined the national security function of
CFIUS and called into question the credibility of the process.
I am glad to see in the last few months that the Trump
Administration has reversed that decision and that--you
mentioned in your opening statement the importance of the
integrity of the system. Can you tell me what steps Treasury
has taken to undo that damage and return CFIUS to its impartial
national security role?
Mr. Pilkerton. Thank you very much for the question, Mr.
Chairman.
Obviously, Congress has established a very clear process.
As I mentioned in my opening, CFIUS is celebrating its 50th
anniversary, and obviously the laws have been updated over the
years, including most recently with FIRRMA, and now the COINS
Act that we have from the NDAA.
It has been a key principle that when we look at a
transaction, the entire committee--so you have got experts from
all the different agencies looking at these transactions to
determine what the potential national security risks are and
those national security risks are a whole host of different
things. I know we spent a lot talking about technology and
data, and obviously those are some of the large ones, but when
we go through the process, we move from the area of identifying
the risks to looking at what the potential mitigation
strategies or controls will be. It is a standard enterprise
risk management process that I have taught in academia prior to
this and that is what is supposed to happen. It is the threat
of the potential actor, the vulnerability of the actual
transaction, and then what is that risk that we need to control
for. It is a very, sort of--I am opening it as a sort of simple
equation. It is obviously much more complicated than that, but
that is what the process should be and will certainly continue
to be under my leadership.
Chairman Hill. We will certainly be watching for that here
in the committee in our oversight capacity.
Japan is one of our closest allies, no doubt, but CFIUS has
still not granted Japan accepted foreign State status. Why do
so many of our friendly partner nations remain subject to CFIUS
hurdles when Congress gave you a tool to exempt them?
Mr. Pilkerton. Thank you very much for the question.
As you know, right now, the accepted foreign State status
is limited to The Five Eyes partners. We certainly are always
examining that and looking at opportunities to ensure that we
are able to bring in various investments from various
countries. I think Known Investor Program is certainly another
way to take a look at that, and we certainly want to advance
that. Japan has certainly been a strong ally and partner, and I
am always happy to engage with you and----
Chairman Hill. I think we should continue the conversation
because as the government moves to more of a partnership
friend-shoring issue and challenge--taking the challenge of
critical mineral development, the processing of those is
unlikely to take place in the U.S., but it is also unlikely to
take place in a lot of The Five Eyes member countries with
exception, perhaps, of Australia. So I think that kind of a
business combination is going to be important going forward.
On the nations that have sought consultation with you on
developing their own inbound investment screening protocol,
could you provide us with a list of those countries in the
Western Hemisphere that you have consulted with?
Mr. Pilkerton. Just picking up on your last point about
Japan, I know Japan has been increasing their investment
screening, and we will be likely engaging with them to learn
more and be as helpful as we can.
With respect to the number of countries that we have had in
the Western Hemisphere that we have engaged with, I am happy to
circle back to you on that.
Chairman Hill. That would be helpful and we are happy to
receive that, if it needs to be classified in a classified
setting.
Treasury continues to implement the outbound investment
restrictions that were launched by the Biden Administration,
and just last month, it was reported that China was trying to
undo the U.S. investment assumption of CK Hutchinson's ports,
which included those at the Panama Canal. That was a major
outbound investment championed by the President, and so, I am
concerned that it is off track. Could you, in the time I have
remaining--we do not have much, so would you respond to me in
writing on that subject?
Mr. Pilkerton. Yes, sir. Happy to do so.
Chairman Hill. Good. Thank you very much. Mr. Chairman, I
yield back.
Chairman Davidson. Thank you, Chairman.
I now recognize the gentlewoman from California, Ms.
Waters, who is the ranking member of the full committee.
Ms. Waters. Thank you very much.
Mr. Pilkerton, last year, it was announced that President
Trump's World Liberty Financial completed a deal with MGX, a
company based in the United Arab Emirates. The foreign firm
invested $2 billion in Binance, a shady Chinese-owned
cryptocurrency exchange, where Treasury had said, and I quote,
allowed money to flow to terrorists, cyber criminals, and child
abusers through its platform, unquote. To fund the deal, MGX
purchased $2 billion of Trump's World Liberty Financial
stablecoin USD1, effectively a hefty foreign investment in
Trump's then brand new stablecoin.
Further, while it is unclear what role Binance played or
continues to play in World Liberty Financial, we do know that
the foreign firm has no public headquarters, and the former CEO
received a pardon shortly after accepting the Trump
stablecoins. Thus, we know that this sounds like a covered
transaction between a U.S. business and a foreign person that
would require CFIUS review.
Did CFIUS receive the required filing from the parties for
this significant transaction? Did CFIUS complete a review of
the transaction? If so, what was the outcome?
Mr. Pilkerton. Ranking Member Waters, thank you very much
for the question.
Given the fact that there is statutory confidentiality
associated with the CFIUS program, I am not permitted to speak
about any matter that may or may not have come through the
CFIUS program.
Ms. Waters. So was the review done?
Mr. Pilkerton. With respect to this or any other matter,
under the statutory confidentiality, I am not able to speak to
any particular matter.
Ms. Waters. What I would like to ask you is if there was a
review of the transaction, could we get a briefing on it here
in Financial Services?
Mr. Pilkerton. I am happy to have our legislative team work
with your staff.
Ms. Waters. I beg your pardon?
Mr. Pilkerton. I said I am happy to have our legislative
team work with your staff on this.
Ms. Waters. You will have them do the--give us the
briefing?
Mr. Pilkerton. I will certainly ask my legislative team to
engage with your staff on this matter.
Ms. Waters. Who has the authority to make sure that they do
it? You said you would ask. What if you get a ``no?''
Mr. Pilkerton. I will talk to my legislative team, and I
will certainly have them engage with your staff on this matter.
Ms. Waters. You will do that.
Mr. Pilkerton. I absolutely will speak----
Ms. Waters. Let the record--record such. Thank you so very
much.
Mr. Pilkerton. Thank you, ma'am.
Ms. Waters. I have another question I would like to ask you
at this point, if I can just identify where that question is. I
thank you for being here.
As you know, Congress passed the Outbound Investment
legislation in the most recent National Defense Authorization
Act, NDAA. It included language that provided exemptions that
limit the coverage of passive U.S. financial investments in
Chinese technology firms and sectors. This is despite numerous
studies, for example, from the Morgan Stanley, the U.S. China
Economic and Security Review Commission, and the Coalition for
a Prosperous America that showed that U.S. firms have billions
passively invested in Chinese companies, including Chinese
military industrial complex companies. Thus, how does Treasury
access whether U.S. funds, particularly retirement funds, such
as those managing public sector, pensions for teachers, first
responders, and other American workers are being invested
unbeknownst to the individual American in companies that
support adversarial governments or their defense sectors?
Mr. Pilkerton. Thank you very much for the question.
The Outbound program is something, as you know, that is
relatively new, over the course of the last year. Treasury has
issued regulations around this but given the fact that there
are certainly other ongoing questions, we also have a number of
frequently asked questions that are on the website. Now we have
the COINS Act that we will be able to regulate and administer,
and we would anticipate that would be a new regulatory regime.
In other words, new rules will be written and that will
certainly go through the notice and comment process.
I think the most important thing maybe gets at the core of
your question is that people have a level of predictability
when they are making investments and there are very clear
guidelines, particularly around the national security risks
that you highlighted, and you mentioned. So when we look at
China and when we look at some of the other nations that are
identified in the COINS Act, those are areas that we will be
looking at very closely, and we will continue to get
information out there to the public and work with this
committee.
Chairman Davidson. The gentlewoman's time has expired.
Ms. Waters. Thank you. I yield back.
Chairman Davidson. Thank you. The gentleman from Oklahoma,
Mr. Lucas, who is also the chairman of the Task Force on
Monetary Policy, is now recognized for 5 minutes.
Mr. Lucas. Thank you, Mr. Chairman, and thank you to our
witnesses, the Assistant Secretary, for being here today.
The topics you deal with are some that I have been
concerned about for the better part of a decade, specifically,
the issue of ownership of key agricultural equities, like land
and infrastructure by foreign adversaries, has continued to
raise alarm bells across the country. That is why I introduced
the bipartisan Agricultural Risk Review Act to add the
Secretary of Agriculture as a permanent member of CFIUS for any
transaction relating to the ag industry and require CFIUS to
initiate reviews of threats notified by the United States
Department of Agriculture (USDA). Our annual appropriation
bills have recognized the need for this language, but we must
submit this practice into law.
Mr. Secretary, USDA has committed to working across
agencies to ensure sensitive ag equities are not controlled by
foreign adversaries. Can you provide Treasury's perspective?
How does CFIUS benefit from the Secretary of Agriculture's
input and would it be helpful for the Secretary to be a
permanent member for transactions related to ag?
Mr. Pilkerton. Congressman, thank you very much for that
question.
So under the Consolidated Appropriations Act, the USDA
Secretary is a member of the committee for ag-related
transactions, and I can tell you that Secretary Rollins is in
the room for those conversations. Her staff is very engaged--
Deputy Secretary Vaden--I have met with both of them and spent
time with them because I know this is an incredibly important
issue to them as it is to Secretary Bessent.
In fact, Secretary Bessent and Secretary Rollins signed a
memorandum of understanding last year to enhance focus on
agricultural land, biotech transactions, transportation,
storage, and processing. Secretary Rollins often says food
security is national security, and I certainly agree with that.
Her leadership has been very important. So I look forward to
working with them very closely on these issues as well as
getting their insight and leadership.
Mr. Lucas. My bill preserves CFIUS's case-by-case approach
to ensure that the United States retains a friendly investment
climate. Can you expand on Treasury's efforts to attract
investment without compromising national security?
Mr. Pilkerton. Thank you very much for the question.
I think one example of that under the America First
Investment Policy is the Known Investor Program trying to
ensure that we get more information upfront so that we are
making these decisions when the capital is coming through, we
have more information about the underlying transaction and the
investors.
We are also going to be traveling the country and spending
time with various communities to ensure folks are aware of
CFIUS, aware of the program, aware of the process, and we will
be doing more roundtables and conferences associated with that,
and then work very closely with our partners at Commerce and
State who have an international investment mission of bringing
foreign direct investment (FDI) back into the United States.
Mr. Lucas. Secretary, we have a patchwork of State laws
across the country dealing with the issue of foreign adversary
ownership of ag equities. How is the Treasury Department
thinking about the interplay between the various State laws and
our Federal regulations?
Mr. Pilkerton. Thank you very much for the question, and it
is an important one.
We work closely with our State partners in implementing our
process. One of the things that I want to be able to do during
my tenure as Assistant Secretary is to ensure that State
legislators and State Chambers of Commerce, in particular, are
aware of CFIUS, its role, and its jurisdiction. I can only
execute on the laws that this Congress has passed, but I think
that information sharing, certainly at a high level, but just
understanding processes, will be very good for those
relationships and hope to close the loop here.
Mr. Lucas. In Oklahoma, under State law, we have some very
strong language dealing with these kinds of issues. My State
authorities are very enthusiastic about enforcing that. A lot
of times, they have to be made aware of what is going on in
order for them to enforce State laws, so this sharing of
information is critically important. With that----
Mr. Pilkerton. That is an invitation I humbly accept, sir.
Mr. Lucas. Absolutely. With that, Mr. Secretary, thank you
for being here. You have perhaps one of the most critical roles
when it comes to the future of the economy of this country.
I yield back, Mr. Chairman.
Mr. Pilkerton. Thank you.
Chairman Davidson. I thank the gentleman.
The gentleman from California, Mr. Vargas, who is the
ranking member of the Task Force on Monetary Policy, is now
recognized for 5 minutes.
Mr. Vargas. Thank you very much, Mr. Chairman, and I also
want to thank the ranking member for this hearing. I think it
is a very important one. Again, I want to thank the witness.
We did hear earlier about the politicization of government.
I mean, it is ironic because right now--and I will have much
more to say this afternoon at the Monetary Policy Task Force
about the politicization of the Justice Department going after
Chairman Powell. I mean, it is unbelievable to me. You know, it
is almost as if they are eating their own. I mean, Chairman
Powell is actually Republican. He is not a Democrat, but I
think he is one of the most honest, straightforward people I
have ever met.
I mean, if there is anyone that is above reproach in the
sense of his honesty, I think it is Chairman Powell and to go
after him, to try to force him to be political, I think is
horrible, and something that is very damaging to our reputation
as a Nation, and certainly to the Justice Department.
With all that being said, talking about reputations,
Secretary, you have a very sterling one. You come very well
regarded by everyone that you have worked with so far, and I
was very pleased to see that you are appointed to this
position. I know the reason for that is your tremendous Jesuit
education and training at Fairfield University. Congratulations
for that.
I do want to ask you about the Nippon Steel deal. So there
was a reversal, as the chairman said earlier, of that, and I
wanted to get your sense why--why did that happen? Was there
politics involved in the overturning of that decision?
Mr. Pilkerton. Congressman, thank you very much for your
question, and thank you for your kind words as well.
With respect to Nippon Steel, I am limited under the CFIUS
confidentiality requirements as to what I can say but I would
point you to the June executive order that the President set
forth setting through the resolution of the national security
risks.
Mr. Vargas. Okay. I do understand that you are quite
limited--I am an attorney myself, and I do understand
confidentiality and those issues. So again, I will take your
word on it, and I will also follow up with the reference that
you gave us.
I do want to ask, though, about emerging technologies such
as AI, semiconductors, and the biotech are becoming
increasingly important in the national security realm. Many of
these companies hold large amounts of our personal data. What
measures does CFIUS require to ensure that adversarial actors
cannot access this sensitive U.S. data such as our health or
biological information?
Mr. Pilkerton. Thank you very much for the question,
Congressman. What--your question is really almost at the core
of the program. Emerging technologies are advancing so quickly
that this program has a huge responsibility to oversee that, to
identify national security risks, and figure out ways to sort
of move forward within this space.
So FIRRMA gave us quite a bit of latitude and authority
over a lot of that technology. There has actually been an
expansion of the technology as well and the COINS Act on the
Outbound side.
When we see a new technology, whether it is AI or quantum,
we go through a whole host of protocols. We have the entire
committee process involved in that, and certainly the experts
are looking at that from law enforcement and from the
Intelligence Community (IC) but I take your point that because
things are emerging and advancing so quickly, CFIUS has a
responsibility to the program, to the administration, to the
Congress, and, obviously, to the country to ensure we are
staying ahead of those.
One of my priorities is to double the size of our research
team to ensure that we have Ph.D. experts that are working on
each of these areas as sort of a technology center of
excellence so we can stay ahead of the curve.
Mr. Vargas. How will you monitor later on for compliance--
because I understand that is the initial hit--how are you going
to be able to monitor it going forward?
Mr. Pilkerton. Monitor compliance with----
Mr. Vargas. Yes.
Mr. Pilkerton. Oh. So there are a lot of different ways
that we can actually look at that. We can look at the different
types of protocols that might be around particular
technologies. Like, so, for example, if you were looking at AI,
it is usually a stack of products--looking at the particular
products that an organization may be investing in or what have
you. That is a very high-level explanation but at the end of
the day, each of those transactions are going to be reviewed
not just for technology risk, of course, because we are looking
360 all the way across the board, but we need to make sure that
we are protecting our country, protecting our homeland on
each----
Mr. Vargas. My time is up. Again, I want to congratulate
you and wish you good luck.
Mr. Pilkerton. Thank you very much, sir.
Chairman Davidson. I thank the gentleman.
The gentleman from Texas, Mr. Sessions, is now recognized
for 5 minutes.
Mr. Sessions. Chairman, thank you very much. Secretary, we
are delighted that you are here. As you can see, this--not just
subcommittee, but the members of this committee have important
questions and consider that the job that you and your team does
is very important.
You earlier received a question from my colleague, Mr.
Lucas. I am from Waco, Texas, and have a district that is
dominated by agricultural interest in products and Mr. Lucas
has the same. We have spent a great deal of time attempting to
work not only with the State, with the Secretary on these sorts
of issues from agriculture, but also with you, because you are
the beginning point where people have to, as required by law,
to talk about the investments they would wish to make.
We have--both Frank and I, and I am sure most members--have
come to find out that there were some perhaps intended
consequences, perhaps unintended consequences, about decisions
that have been made about foreign ownership of companies and
contracts and properties that maybe one would not have seen
altogether except the Chinese or these entities effectively
used our capitalist system to go and acquire a number of
things. In other words, when they made an investment, they kept
going inside our system. Do you track those when someone comes
and makes an investment and you decide, Well, it looks benign.
It looks legitimate, but then they then use our system to go
and buy more property, more land, more product?
Mr. Pilkerton. Thank you very much for the question.
The transactions that come through CFIUS are certainly
tracked and when folks come through for additional
transactions, that information is obviously reviewed and
certainly updated----
Mr. Sessions. So Secretary, you are suggesting to me that
you continue to track them, and they would be required under
the law--even though they are originally allowed under the
requirements to make a purchase--you are saying that then
anytime they further make an investment, that is required under
the law?
Mr. Pilkerton. I want to be clear. Just to go back to what
I said because I just want to make sure I am absolutely crystal
clear on this. When someone comes through on a transaction,
there is underlying due diligence conducted on that person or
company or what have you. Then if they come through again, then
that information is certainly updated, included, and there is
information from the intelligence community and law enforcement
to support that.
With respect to your particular question, I am certainly
happy to engage deeper with you in a different setting.
Mr. Sessions. I would ask that take place because I think
that sets in place something that we, by and large, have not on
this side been looking and tracking, but at some point we
figure out, so I am very available. Mr. Lucas and I are very
available, and we would be very pleased to establish that, but
I think that this is important for us to understand that when a
benign transaction comes in, or something we think is benign,
that we still understand that. So, I want to thank you.
I think I have an additional question, but it is very
germane to the question that I was asking, so I will wait. If
you would please have someone in your organization get in touch
with me, I would like to set this up and then ask those
questions that are better offline.
I want to thank you and your team for your service to this
country. Mr. Chairman, I yield back my time.
Chairman Davidson. Thank you, Mr. Sessions.
The gentleman from Illinois, Mr. Casten, is now recognized
for 5 minutes.
Mr. Casten. Thank you for joining us today, Mr. Pilkerton.
Thank you, Mr. Chairman.
So CFIUS's authority is granted by Congress to negotiate,
impose, enforcing national security agreement to mitigate the
risks associated with any particular transactions. Looking at
your website today, it is essentially what your website says is
your role. Do you agree that is the basic scope of CFIUS?
Mr. Pilkerton. Yes, sir.
Mr. Casten. I ask that because I want to follow up on your
exchange with Mr. Vargas about the Nippon Steel-U.S. Steel
deal, and I want to just focus on public information. Not
trying to get you into any confidential things you cannot
disclose.
Trump reversed Biden's decision to block the proposed deal
between U.S. Steel and Nippon Steel, and he allowed the
transaction to proceed on the condition that the parties enter
into a national security agreement. The terms of that
agreement, which are public, personally grant President Trump
veto power over major business decisions, including off-shoring
of production, changing the investment schedule, their business
model, the specific products they make.
Furthermore, President Trump is listed by name--again,
public information--in U.S. Steel's amended corporate charter
filed with the Securities and Exchange Commission.
What I want to know is what was the process within CFIUS to
authorize Donald Trump's name to appear in the filings and give
him direct veto powers over major corporate decisions?
Mr. Pilkerton. Congressman, thank you very much for the
question.
I will reiterate, as you know, that there is CFIUS
confidentiality related to my role, which is mandated by
Congress. I know you indicated that you are referencing public
information, but I think it is important to lay that
foundation.
With respect to the decision process that was made there,
that information is contained in the June executive order.
Mr. Casten. So was CFIUS responsible for that or was it
delegated to a CFIUS member agency?
Mr. Pilkerton. Once again, I have to rely on the
confidentiality----
Mr. Casten. I am not asking what the decision was. I am
asking who made the decision. Was it made in your office or was
it not made in your office?
Mr. Pilkerton. The confidentiality provisions that CFIUS
set forth by Congress are very broad, so I am not in a position
to be able to speak to----
Mr. Casten. I am sorry that you feel the need to evade. Can
you then point to any prior cases where CFIUS authorized a
President to exercise a direct role over a private company's
operations?
Mr. Pilkerton. So in my role, having been in this role for
about a week, once again, cannot speak to any particular case--
--
Mr. Casten. So it is over the entire CFIUS----
Mr. Pilkerton. What I would like to say, if I may, is that
as part of mitigation agreements, there are, from time to time,
veto rights on certain types of things----
Mr. Casten. Let us be clear. The President as an individual
is named. I am asking if there is any precedent for that in the
history in CFIUS because according to Stephen Heifetz, former
CFIUS attorney, he said that this is--this is unprecedented. Do
you disagree with Mr. Heifetz?
Mr. Pilkerton. Without seeing the actual document that you
are talking about, I cannot speak to that, but I will just say
that there is a CFIUS confidentiality component here, and I am
unable to speak----
Mr. Casten. Okay. Is CFIUS considering any other agreements
that have these golden share provisions?
Mr. Pilkerton. With respect to the statutory
confidentiality that is required, I am unable to speak to any
particular matters that are going----
Mr. Casten. So for all we know, for all we know--and you
cannot shut--you cannot say that they are not looking to
commingle the personal interests of President Trump and the
interests of private sector economies. You cannot affirmatively
say that is not happening?
Mr. Pilkerton. Sir, that is not what I said.
Mr. Casten. I asked--are there any other golden share
agreements where President Trump would be named and would be
named in the Securities and Exchange Commission (SEC) filings
that you are reviewing? Yes, no, or you cannot say?
Mr. Pilkerton. Under the confidentiality requirements, I
cannot speak to any particular case.
Mr. Casten. Okay. Well, let us--let us talk more
philosophically then because this is not a one-off.
Last year, the Trump Administration acquired a 10 percent
stake in Intel, making the U.S. Government their largest
shareholder. That is not the Republican Party that I thought I
knew. I think when the government takes control of private
entities it is called socialism.
Setting aside what Trump may do, that creates a massive
conflict of interest for any future administration, because
simply the act of trying to unwind that could put huge downward
pressure--threatening to unwind that could put huge downward
pressure on their share price. You used to be the compliance
officer at J.P. Morgan. What is your message, as you sit here
today, to corporate boards who put an emphasis on regulatory
compliance, who like the rule of law, who would like to be
independent of the government, and they are confronted with the
threat of direct government action? Because as you sit here,
you cannot tell us whether President Trump is going to do this
again.
Mr. Pilkerton. Congressman, I certainly appreciate the
question, and I certainly believe very strongly in regulatory
compliance, very strongly in the rule of law. When it comes to
the particular matter that you are talking about, I would refer
you to the Department of Commerce and the team there that
worked on that matter.
Mr. Casten. I am extremely disappointed in your answer. I
yield back.
Chairman Davidson. I thank the gentleman.
The gentleman from Kentucky, Mr. Barr, who is the chairman
for our Subcommittee on Financial Institutions, is now
recognized for 5 minutes.
Mr. Barr. Secretary Pilkerton, thank you for your service
to the country. Congratulations on your appointment to this
important assignment.
As of early 2026, President Trump had announced up to $9
trillion in total foreign direct investment commitments that he
negotiated. Just as an example, UAE, $1.4 trillion investment
framework; Qatar, $1.2 trillion; Japan, $550 billion in key
industries, including energy and AI infrastructure investments;
Saudi Arabia, $600 billion investments in trade over 4 years,
later expanded to almost a trillion; South Korea pledged $350
billion in investment with an additional commitment to purchase
100 billion in U.S. energy products.
The President has been remarkably successful in just 12
months' time to negotiate massive amounts of foreign direct
investment in the United States. Consistent with that, I
applaud your office's Known Investor Program. How important is
it that as you fulfill your national security obligations
implementing CFIUS that we keep this open investment climate,
especially with respect to these key investments that President
Trump has negotiated?
Mr. Pilkerton. Congressman, thank you very much for your
question, and thank you for your leadership on the recent
outbound legislation as well.
With respect to this question, I think it is incredibly
important. The America First Investment Policy made it very
clear that while national security is going to remain a
priority, America is open for business and America is open for
business in a whole host of areas. You talk about the
technology pieces, AI and quantum and other areas, but we
really want to bring in business from all different areas,
because, obviously, the benefit to that is not just to those
business to America itself but to those communities, jobs,
research and development. Obviously, it is a whole host of
things.
So when it comes to that money that is actually coming in,
I see it as part of my responsibility to ensure that the
program is in place, whether it is a known investor or the
standard CFIUS program, has all of the efficiencies that money,
assuming that it passes the national security protocols, is
able to come into the country and be put to work.
Mr. Barr. Well, thank you. At the end of last year, as you
just noted, the President signed into law the National Defense
Authorization Act, which included my legislation, the
Comprehensive Outbound Investment National Security, or COINS,
Act, also known as the FIGHT China Act, the Foreign Investment
Guardrails to Help Thwart China Act.
The COINS Act ensures that Americans are not unknowingly
funding the military industrial complex of our adversaries by
codifying and enhancing the Trump Administration's America
First Investment Policy and the Outbound Investment Security
Program.
Your office, the Office of Investment Security, is
responsible for implementing the statute and overseeing the
prohibition and notification investments into certain sensitive
technologies.
Treasury released frequently asked questions (FAQs) at the
end of last year expressing awareness of the new obligations
under the law. Under those FAQs, you have 450 days after
enactment to issue regulations. What is your timeframe?
Mr. Pilkerton. So thank you for the question. Four hundred
fifty days is what we have, and I have been on the job about
eight. I have met with the team, and we are looking at that
very closely.
As I mentioned before, the regulatory process for this will
be full notice and comment. Of course, there will be overlap
from the regs that are in place but based on your leadership
and the work of folks around this committee, there are new
components to this program, including new technologies. So we
will be getting a lot of information out there.
Mr. Barr. Let me just move on really quick.
Mr. Pilkerton. Yes, sir.
Mr. Barr. The sanctions title and the list coordination
provisions are administered by the Office of Foreign Assets
Control (OFAC). You have the notification and prohibitions on
sensitive technologies piece. How will you collaborate with
OFAC on implementation of COINS?
Mr. Pilkerton. With respect to that language, we are
examining that very closely. We coordinate with OFAC in our
day-to-day work, as you know, and we will continue to do that
closely through this process.
Mr. Barr. Thank you. Meta is currently trying to acquire
Singapore-based, Chinese-founded Manus, an artificial
intelligence startup. Earlier this year, BlackRock backed the
acquisition of key ports in the Panama Canal. Both of these
acquisitions are examples of outbound investments that actually
promote U.S. national security and competitiveness.
Fortunately, Section 8521 of the NDAA includes a national
interest exemption that states, quote, the Secretary is
authorized to exempt from prohibition any activity determined
by the President to be in the national interest of the United
States.
While I recognize Treasury still needs to go through
rulemaking, do you agree that there are national security
benefits of certain outbound investments, and will you aim to
be certain that the program is designed properly so we do not
inhibit outbound investments that advance our national
security?
Mr. Pilkerton. I certainly agree with that, Congressman. I
think that there are certain investments that--obviously, we
have to assess everything for national security concern, as you
know. If there are investments that pass muster on those and
present opportunities and provide benefits to the American
people, once again, with the national security constraints in
mind, then I think there is certainly a lot of benefit to that.
Mr. Barr. I have run out of time, but our intention in this
bill was red light/green light. We embedded in the process a
process for nonbinding feedback to investors so that they are
given certainty and clarity about what is permitted and what is
prohibited.
Not a question, just a commentary on legislative intent
here. We hope you provide investors with that red light/green
light.
Mr. Pilkerton. Thank you.
Mr. Barr. I yield back.
Chairman Davidson. Thank you, Mr. Barr.
The gentleman from Illinois, Dr. Foster, who is also the
ranking member of the Financial Institutions Subcommittee, is
recognized for 5 minutes.
Mr. Foster. Thank you, Mr. Chair, and Mr. Secretary--
Assistant Secretary Pilkerton.
At the core of CFIUS' work is its being able to understand
who the beneficial owner of a covered transaction is and
whether they or their affiliates have interests that run
counter to the security of our country. This work requires
significant due diligence that I believe was undermined by this
administration's move to gut the Corporate Transparency Act,
which aimed to crack down on anonymous shell companies that
conceal the true beneficiaries of businesses operating in the
United States.
Now, identifying the interests of businesses, it is going
to become more difficult and more important with advances in
artificial intelligence. Specifically, agentic AI, which is
coming at us fast and it is going to really dominate the next
decade in financial services, has become a primary concern of
mine.
We are going to--you know, we have grown tolerant of the
use of shell companies to conceal ownership within limits, but
historically there has always been a human in the loop
somewhere down the line. Now we are going to have money flying
around under the control of AI agents signing contracts, doing
deals at the speed of AI.
So other countries are looking at this, and we are starting
to see international work developing the standards for
communications and conversations and contracts between AI
agents. Every country--every advanced country, except the
United States, has an understanding that when my agent contacts
your agent, they will exchange information about who the
legally traceable human is that is responsible for that agent's
actions.
So what is the--how is this going to work if the answer you
get back, well, I am an agent and I am working for an anonymous
shell corporation and I am not going to tell you who is behind
it? Is that not just going to just make the United States not a
player in this new ecosystem? How do you intend to handle that
problem?
Mr. Pilkerton. Thank you very much for the question,
Congressman.
Over the course of the CFIUS process, as I mentioned, we
have a number of committee members, many of the larger Cabinet
agencies. We also work very closely with the intelligence
community and law enforcement and, of course, have access to a
variety of different databases associated with that. So,
regardless, the CFIUS process will continue to be diligent,
continue to be thorough and fulsome.
So with respect to our work, we will move forward to
identify national security risks of the investors of those
companies as well as the transaction itself.
Mr. Foster. How is that even going to work in real time?
You know, when--if someone from EU and Korea or Japan wants to
engage in an agentic transaction. They get out their cell phone
and they say, here is my legally traceable identity. You do
your biometric login, and they present a secure digital ID that
every citizen of the EU is going to have I think by the end of
this year, every citizen of the U.K., every citizen of Korea
and Japan have had for more than a decade, I believe.
So we do not have that. What we have is a hodgepodge of a
handful of States that are getting mobile ID, digital driver's
licenses, and that is the best we have. As a result, it seems
like we are really going to not be able to play in the next
stage of development, because no one is going to trust any
agent that is unwilling to say, here is the legally traceable
human behind the deal I am offering you.
I urge you to have a look at this and try to get ahead of
the curve on this whole operation, because it is going to be
important and it will be a huge--it will be a competitive
disadvantage to the United States if we do not have a way of
actually understanding who authorized some agent and who is
going to take responsibility for that agent's action, because
this is going to be the dominant activity in financial
services.
Let us see. Can we expect--actually, on the specific issue
of privacy, preserving secure digital credentials--this is
something that the Biden Administration came in and promised
they would do something to move the ball forward.
Do you have any insight into what the plan of this
administration is going to be doing in terms of giving U.S.
citizens the ability to prove they are who they say they are
online? Is that on the agenda?
Mr. Pilkerton. With respect to data and privacy information
that come through the CFIUS process, that is one of our highest
levels of concern, and that was outlined in FIRRMA. We conduct
analyses and put together processes and procedures to ensure
that data is protected.
Once again, that is through the CFIUS process. It appears
your question may be alluding to some other agencies, perhaps
Department of Homeland Security (DHS) or others, and I cannot
speak to that.
Mr. Foster. Okay, but just when our agents start talking to
each other and doing deals, you cannot convene a committee to
figure out even who the principals are in the deal. You have to
have standards, and so you should get involved in that
conversation. Thank you.
Mr. Pilkerton. Thank you.
Mr. Foster. I yield back.
Chairman Davidson. Thanks, Mr. Foster.
The gentleman from Texas, Mr. Williams, who is also the
chairman of the Small Business Committee, is now recognized for
5 minutes.
Mr. Williams of Texas. Thank you, Mr. Chairman.
Mr. Pilkerton, thank you for being here today.
The United States has long benefited from being the world's
top destination for foreign investment, and that openness has
helped drive jobs, innovation, economic growth. At the same
time, we face increasingly sophisticated threats from
adversarial nations that seek to exploit our openness to gain a
strategic advantage.
Now, getting the balance right is critical--we have talked
about that much today--but both for our security and our
competitiveness. Mr. Pilkerton, how do you balance protecting
national security while preserving the United States'
reputation as the safest and the most attractive power to
invest?
Mr. Pilkerton. Congressman, thank you very much for your
question and thank you for your leadership on Small Business.
The question that you point out is really at the core of
President Trump's America First Investment Policy. As I said in
my opening statement, national security will always be the
priority of the CFIUS program, but the opportunity to bring in
foreign direct investment and share to the world that America
is open for business is incredibly important.
The way that I can do my part in both of those things is to
ensure that the program that we have at CFIUS remains robust,
thorough, and understandable to the parties. It has got to be
efficient. As I said before, process, process, process and that
process does include the analysis of the risks and the
mitigation, potentially, associated with them.
The other thing that I can do is ensure that people
understand the process. As I mentioned before, I would like to
be able to get out into the communities, talk to the State
chambers as well as travel internationally with our State and
commerce partners and make sure they understand the process so
that, when they come through it, we can come and have an
understanding and a conversation and ensure that it is as
efficient as possible as it can be to bring those dollars into
the country.
Mr. Williams of Texas. All right. Second, CFIUS has been
given expanded responsibilities over the past several years,
including authority over noncontrolling investments and certain
real estate transactions. As foreign investment strategies
evolve and threats become more complex, it is important for
Congress to understand whether the current framework is keeping
pace.
So looking ahead, where do you see the biggest gaps in
CFIUS authority that Congress may need to address?
Mr. Pilkerton. At this time, once again, having been on the
job for a week, I am conducting sort of my own risk assessment
of that; working with the team and sort of finding where there
may be potential gaps or things to think about.
To date, I feel that the authorities there are strong and
to date, I feel like we have what we need to do our job and
look at all the national security risks that are at issue. If
at any point I do not, I have absolutely no hesitation to come
back to this committee, because I know that there is a lot of
nonpartisan interest to help advance this program. I would
certainly engage with both sides of the aisle to advance that.
Mr. Williams of Texas. Thank you. My last question, I want
to discuss the 2017 purchase of a trailer park located at
Whiteman Air Force Base. As you know, Whiteman is home to our
Nation's B-2 Stealth bomber fleet, one of the most sensitive
and strategically important assets in the U.S. military. The
acquisition of a property that is less than 1 mile away from
Whiteman's runway raises serious national security concerns,
particularly given the potential for persistent surveillance,
intelligence collection, or interference with base operations.
So quickly, this property is reportedly one of several
properties that have been purchased by individuals with alleged
ties to the Chinese Communist Party (CCP) intelligence. So the
question is, Mr. Pilkerton, without commenting specifically, is
this the kind of transaction that CFIUS would typically want to
review for national security purposes?
Mr. Pilkerton. Thank you very much for the question,
Congressman.
As you identified, I cannot speak to any specific type of
transaction, but protecting our national security where
transactions are close to military bases or sensitive sites is
another priority for CFIUS. In fact, the NDAA had a component
entitled Protect Our Bases Act.
Those are things that we are doing. We will certainly
implement that law and work through the CFIUS process, but it
is critical that we protect the sensitive sites, including
military bases.
Mr. Williams of Texas. Absolutely. I yield my time back.
Thank you for being here.
Mr. Pilkerton. Thank you.
Chairman Davidson. Thank you, Mr. Williams.
Another gentleman from Texas, Mr. Gonzalez, is now
recognized for 5 minutes.
Mr. Gonzalez. Thank you, Mr. Chairman.
Thank you, Mr. Pilkerton, for being here with us this
morning. Mr. Pilkerton, foreign investment plays a major role
in the great State of Texas, as you may know. We are deeply
integrated. We are a deeply integrated cross-border region
economically, culturally, and financially, with families,
businesses, and investors operating on both sides of the
border.
While I fully understand and support the Treasury's
responsibility to protect national security and combat illicit
finance, I am somewhat concerned that the increasingly punitive
or opaque Federal actions, whether through CFIUS reviews or
heightened compliance burdens on banks and financial
institutions or related Treasury tools, will have unintended
consequences for communities like ours.
Actions like these will discourage legitimate foreign
investment and push capital to other countries where the United
States has less visibility or leverage. We already have some
foreign nationals that normally used our banks moving to Canada
and Europe.
My question is, how is CFIUS balancing the need to
safeguard national security while maintaining an open
investment posture for lawful, good-faith investments and
investors to ensure capital remains in places like Texas and
other places around the country?
Mr. Pilkerton. Thank you, Congressman. It is an incredibly
important question and one that we look at every day.
In the America First Investment Policy by the President, he
specifically called out overburdensome mitigation agreements.
These are parties, as you know, that come through the process.
We have identified potential risks, and then we work with the
parties to determine are there controls that we can sort of put
on this process so that we can mitigate those risks to a point
where it is acceptable to the committee.
In my experience, I certainly understand and appreciate why
those mitigation agreements are necessary, and they will
continue to the extent it is applicable and appropriate for a
certain act. As the President has called out the overburdensome
piece, I do think we need to pay very close attention to that
to ensure that folks that can come through the process and are
appropriate to come through the process can do so in an
efficient manner, and not just that the process works, but that
they are aware of that, right.
Because, to your point, I want them to be able to take a
look at the United States and land in the United States and
sort of understand the process, which is one of the reasons
that----
Mr. Gonzalez. Well, my concern now is we have banks
actually closing foreign deposits, closing the accounts because
of the overburdensome policies that have come from this
administration and prior.
We need to--I mean, Chase, which is one of the larger
banks, just closed hundreds or thousands of accounts in south
Texas from foreign nationals just because they just could not
deal with the compliance. These were good, legitimate, solid
depositors that had been banking in the United States for a
long time, and we are losing them to Canada and Europe and
other countries around the world.
I will be candid. Actions taken by this administration make
it difficult for me to trust that the current strategy is
actually supporting investment and economic stability in border
regions. I would like to ask you to please take a close look at
this because it is hurting States like Texas and other places
and it is not in the interest of our country.
What specific steps are being taken to ensure--I know you
are saying you are doing some--what specific steps are being
taken to ensure that heightened scrutiny for certain
jurisdictions like border States does not inadvertently
penalize communities like ours and continue to promote commerce
and foreign deposit in American banks? Are you all doing
something strategically targeted for this purpose?
Mr. Pilkerton. I would like to make the distinction between
sort of a CFIUS transaction and then perhaps the regulatory
rules around these that are overseen certainly by the Treasury
Department, in coordination with the OCC and others. Those are
done in our Office of Domestic Finance, but I am happy to
engage with them and certainly would point you to them as well.
We do not oversee some of these----
Mr. Gonzalez. Thank you. Please do so.
Second, we are seeing a very real strategic competition
playing out in Latin America, particularly as BRICS countries
continue to expand their economic footprint across the region.
Even after the United States supported a bailout package
for Argentina, we saw Argentina deepen its economic ties with
China by exporting soybeans and other commodities there,
signaling an alignment with BRIC and undermining American
interests.
That should be a warning sign for all of us. If our
investments posture is perceived as unpredictable or overly
restricted or disconnected from regional realities, we risk
losing influence, not because we lack capital, but because we
lack a coherent strategy that aligns security, economic growth,
and partnership.
How is this administration integrating its inbound and
outbound investment strategies to ensure the U.S. remains the
preferred partner in the region, especially for our farmers
that are getting killed just with tariffs and complications and
lack of labor? Are we doing something to improve those
conditions?
Chairman Davidson. I would just ask that response be in
writing. The gentleman's time has expired.
Mr. Gonzalez. Thank you.
Chairman Davidson. I thank the gentleman.
The gentlewoman from California, Mrs. Kim, is now
recognized for 5 minutes.
Mrs. Kim. Thank you, Chairman Davidson and Ranking Member
Beatty, for holding today's hearing. To you, our witness, thank
you very much for joining us.
While China's investment in U.S. agricultural land has
garnered much congressional attention, I would like to first
focus on second-class property purchases that is greenfield
investments. These are parcels of land that are meant for real
estate or industry or manufacturing development and those
greenfield investments near military installations and
sensitive sites fall squarely under CFIUS jurisdiction. In
successive reports like U.S.-China Economic Security Review
Commission, it has stressed the need to review those
investments.
So, Mr. Pilkerton, what is CFIUS' procedure for determining
which greenfield investments the committee review, both in
terms of jurisdiction and in terms of substance?
Mr. Pilkerton. Congresswoman, thank you very much for that
question.
CFIUS has jurisdiction over certain greenfield investments
via its real estate authority with the purchase and sale of--
and leasing, rather, of land areas.
We are looking at that question very closely. There is some
international information around greenfield investments, and we
are assessing that to make a determination as to what our
authorities would look like in that space to balance the
national security risks as well as the open investment posture
of the country.
Mrs. Kim. Because China's economic threat has arrived in
the mainstream only in recent years, I imagine the United
States has neglected the opportunity to evaluate a myriad of
foreign investments. This leads me to believe that there is a
substantial timeframe for which greenfield investments have not
been accounted.
Do you believe that there is a reasonable timeframe to look
back and conduct CFIUS greenfield review that balances both
staff resources and national security?
Mr. Pilkerton. So for transactions that come through CFIUS
and have been cleared, they have a certain safe harbor from re-
review. That having been said, there can be renegotiation of
mitigation agreements and things if there are changed
circumstances. I think, to your question, as we look at this
greenfield space, we will be looking to perhaps examine it more
closely.
I think another point that you make that is inherent in the
question is the idea of non-notified transactions. If there are
transactions that we would have jurisdiction over, so if there
are certain technology transactions that may have started or
what have you, that is something that the administration is
very, very focused on.
Mrs. Kim. Can you tell me in the last year how many
greenfield investments CFIUS has looked into?
Mr. Pilkerton. I do not have that number handy, but I am
happy to get back to you on that.
Mrs. Kim. Okay. Well, let us shift gears beyond greenfield
investments.
I would like to discuss the implications of Chinese
acquisitions of companies that have the potential to damage
American interests under CFIUS jurisdiction, like last year
Epic: It is an education software company that recently
declared bankruptcy. That was acquired by a Chinese holding
company, TAL, T-A-L, Education Group.
I know that I, along with many of my Senate colleagues,
have concerns that this acquisition could result in the chance
for the CCP to access the students' private data and also
conduct the influence operations against American students.
So can you talk about how CFIUS determined which non-
notified transactions it should request a declaration from,
especially acquisitions of companies that possess the
Americans' personal data? That is a great concern for many of
us.
Mr. Pilkerton. No. I certainly share that concern. While I
cannot speak to any particular matters, as you are aware, we
need to ensure that any transaction that comes through CFIUS,
there is no sort of per se prohibition per countries but we
want to ensure that we are constantly evaluating some of our
most critical national security risks, and I think data and
privacy is one of those.
So when we look for non-notified information, when we get
information that comes in, it goes through a standard review
process to make a determination as to whether it should have
gone through CFIUS in the first place and it kind of goes
through that exact same lens that a covered transaction or
filing would go through anyway, including the data piece that
you mentioned.
Mrs. Kim. Thank you for your time.
I yield back.
Chairman Davidson. Thank you.
The gentleman from California, Mr. Liccardo, is now
recognized for 5 minutes.
Mr. Liccardo. Thank you, Mr. Chair.
Assistant Secretary Pilkerton, thank you for your testimony
today. I appreciate your recent emphasis on protecting the
sensitive personal data of Americans. I think CFIUS was
prescient and correct in identifying, for example, TikTok and
the implicit control of the Chinese Government of sensitive
personal data of millions of Americans as a potential threat to
national security.
I know you cannot talk about specific cases, but I am
guessing you would also agree that was a sensible thing for
CFIUS to be doing. Is that fair to say?
Mr. Pilkerton. While I cannot speak about a particular
case, it is certainly very important to protect privacy data of
American people.
Mr. Liccardo. The statutory language that describes CFIUS'
scope and jurisdiction describes a focus on any investment by a
foreign person in any unaffiliated United States business
that--I am using ellipses periods here to get to the chase--
that maintains or collects sensitive personal data of U.S.
citizens that may be exploited in a manner that threatens
national security.
Does that sound familiar?
Mr. Pilkerton. Yes.
Mr. Liccardo. So I would like to provide you with a
hypothetical, knowing that you cannot discuss a particular
case. I guess before I get there, I understand it is standard
practice for you and your staff to engage in confidential
briefings with Members of Congress, members of this committee
about individual cases. Is that fair?
Mr. Pilkerton. There has certainly been a history of that
in the past, yes.
Mr. Liccardo. Okay. You can probably tell I am building
toward that request.
I would like to provide you with a hypothetical. I want you
to imagine a conglomerate media company that had the sensitive
personal data of more than 100 million Americans, including
what you all know is typically collected by many media or
online companies around location information, viewing habits,
page views, personal financial data, credit cards, et cetera.
I want you to imagine that conglomerate also had the
ability to use its technology and its outlets to communicate
instantly with hundreds of millions of Americans, and that
there was a proposed purchase of that American media
conglomerate by a group of investors. Among those investors
were some foreign entities, including sovereign wealth funds.
Now, in the abstract, assuming nothing more, that you knew
nothing more, that might be something that would get a on
CFIUS' radar. Is that fair to say?
Mr. Pilkerton. Congressman, thank you very much for the
question. I certainly appreciate that this scenario is a
hypothetical.
If there is any scenario that potentially could include
national security risks that the CFIUS program would have
jurisdiction over, and under FIRRMA components of that, maybe
data privacy, that would certainly be something that
potentially could be under consideration.
Mr. Liccardo. I appreciate that, because I will push the
hypothetical a little further and offer that the sovereign
wealth fund was controlled by an autocratic ruler that would be
investing tens of billions of dollars in equity in this
proposed takeover. That autocratic ruler directed the brutal
killing of a foreign journalist who worked for an American
newspaper in 2018, according to United States intelligence
reports that were published. That autocratic ruler and his
nation spies on activists, journalists, and foreign entities
using technological tools like Pegasus and Predator. According
to independent international reports, various non-governmental
organizations (NGOs) and that ruler engaged in a pattern of
what Facebook reported to be, quote, coordinated inauthentic
behavior in 2019 when Facebook took down 350 of its phony
accounts that were used in a mass disinformation campaign to
manipulate public behavior.
Would any of those kinds of facts be the kinds of facts
that would be relevant in a consideration of CFIUS exerting its
review and perhaps intervention?
Mr. Pilkerton. Sir, any transaction that comes through
CFIUS, we do make an assessment of the parties, of the
transaction, their history, any other underlying national
security risks.
So without speaking to any particular scenario, that would
be something that would be standard in any transaction that we
would see that we would have jurisdiction over.
Mr. Liccardo. You might have already suspected that I am
referring--that particular ruler is Mohammed bin Salman, who is
the head of Saudi Arabia and, obviously, they have a sovereign
wealth fund that is involved in this proposed takeover of a
very important media property in the United States, Warner
Brothers Discovery, as part of the Paramount deal. I know this
is far from anywhere near a finish line.
I would like to request a confidential briefing of this
matter and CFIUS' role. I have today submitted a letter to the
CEO of Paramount who is involved in that potential takeover,
urging them to voluntarily submit to CFIUS and your review,
because I think it is a matter of national security.
Would you be willing to grant the request for a meeting?
Mr. Pilkerton. Once again, with respect to confidentiality,
I am unable to confirm whether any transaction is or is not
part of the CFIUS portfolio. So I would like to be clear about
that.
Second, I am happy to have the legislative team at Treasury
engage with your staff.
Mr. Liccardo. Thank you very much, sir.
I yield.
Chairman Davidson. I thank the gentleman.
The gentleman from Tennessee, Mr. Ogles, is now recognized
for 5 minutes.
Mr. Ogles. Thank you, Mr. Chairman.
If I may, one of our colleagues from the other side
criticized the Trump Administration and their 10 percent stake
in Intel without mentioning the strategic value that--what role
that may play in national security.
I want to look backward to an obvious example of
precedents. So if you go to late 2008 and 2009, you had the
Troubled Asset Relief Program, officially known as TARP, where
the Treasury took stake in multiple corporations at a time of
economic difficulty because it was of strategic value both from
an economic but a national security standpoint.
For example, General Motors' $50 billion, which was at that
time about a 60.8 percent stake in the company in equities.
Chrysler was $12 billion, which was later sold to Fiat, which
was a 9.9 percent stake.
Then you look to the financial services industry, which
would obviously be the jurisdiction of this committee, where
Citigroup and Bank of America received $45 billion in equity
purchases and then AIG had a very complicated structured
purchase agreement of $182 billion, which roughly was a 79.9
percent stake.
So there is a historic precedence for Treasury getting
involved when it is to the benefit of the United States of
America and failing to mention that--and I serve as the
chairman of Homeland Security Cyber Subcommittee, where we deal
with these types of conversations on equities and foreign
interests and how it affects our country. Obviously our biggest
adversary is China.
That being said, I want to thank the chairman, Mr.
Pilkerton for being here. You know, we need a defining moment
in the global economy, a moment when our prosperity and our
security is inseparable.
The Committee on Foreign Investment in the United States,
or CFIUS, is one of the Nation's most important lines of
defense. Its job is to scrutinize foreign capital that could
intentionally or inadvertently undermine American national
security. That mission has never been more vital. Again, when
you look at the AI and the cyberspace, interconnectivity here
is almost unfathomable.
For years, the People's Republic of China has blurred the
lines between commercial activity and State power. Unlike
Western markets, where private companies operate independently
of government direction, China's corporate sector exists within
a political system that compels the cooperation with the
Chinese Communist Party's strategic objectives: Beijing's Made
in China 2025 industrial plan.
Its dominance of key supply chains, from rare earth
minerals to semiconductors, and an expansive industrial subsidy
are all aligned to exploit open economies while denying
reciprocal access to ours.
This is not a benign investment. It is a long-term strategy
to acquire sensitive technologies, critical infrastructure, and
intellectual property that can be used to China's advantage in
future conflict or economic leverage.
At the same time, the Islamic Republic of Iran has
repeatedly used opaque corporate structures and front entities
to evade sanctions and funneled hard currency into its military
and security apparatus. Tehran's network of proxies across the
Middle East, its sponsorship of terrorism, and its systematic
efforts to gain access to Western capital and technology pose a
clear and present threat to U.S. interests.
Iranian actors have used complex ownership chains to mask
control of entities that operate across borders, a strategy
that without vigilant scrutiny could allow hostile regimes to
penetrate or influence American technology and infrastructure
markets.
CFIUS must remain robust, discerning, and unafraid to use
its full statutory authority to scrutinize transactions
involving entities tied to these regimes.
I want to underscore, Mr. Chairman, as someone who sits on
the Cyber Subcommittee--I serve as chairman, I spend a lot of
time in the Sensitive Compartmented Information Facility (SCIF)
in a classified setting--we are attacked daily by China, by
Iran, by North Korea. They want access to our markets. They
steal our technologies and it is imperative that we support
CFIUS in its mission.
Mr. Secretary, Assistant Secretary, the Chinese Communist
Party requires companies under its jurisdiction to cooperate
with State intelligence and security services, regardless of
how these companies present themselves abroad. Given that
reality, does CFIUS treat transactions involving Chinese-
controlled entities as presumptively high risk even when those
entities claim to be a private or are routed through third
countries? Sir?
Mr. Pilkerton. Congressman, thank you for the question. As
you know, under the CFIUS program, there is no per se
prohibition from a particular country. That having been said,
with respect to China, I am aware of some of the distinct risks
that you are talking about.
I think taking it at a higher level with respect to the
impact of things like cyber, like impact on military
technologies, intelligence technologies, those areas are
particularly important for the committee and we rely upon the
entire committee around the table to help us and inform us of
those national security risks so we can make a determination as
to whether they exist, whether we can mitigate, or whether to
prohibit a transaction.
Mr. Ogles. Thank you.
Mr. Chairman, I yield back.
Chairman Davidson. Thank you.
The gentleman from Iowa, Mr. Nunn, is now recognized for 5
minutes.
Mr. Nunn. Well, thank you, Mr. Chairman, and thank you for
CFIUS for being with us here today.
I am going to be very clear: The U.S. homeland is not for
sale. That means not our military bases, not our family farms,
not our key industries.
My home State of Iowa has seen agricultural espionage
before. Chinese spies were stopped at Des Moines Airport for
stealing seeds, literally going to a farm field and pulling
them out of a test unit but because of good work here in the
United States, we were able to stop those agents at the Des
Moines Airport before they fled back to China. Now they can do
it blatantly overline.
The challenge here is that, as I sit on the China Select
Committee and understand the CCP's tactics to penetrate the
U.S. market and establish a presence here in the United States,
we need a CFIUS program that works. We welcome foreign
investment in the United States, but there needs to be a more
thorough and transparent process for understanding and
addressing the entities of concern.
I think of CFIUS like airport security in a lot of very
good ways. We want to move legitimate travelers or legitimate
investment into the United States successfully while quickly
stopping and identifying those threats before they can enter
the United States and take root, as I noted with the Chinese.
Right now, we are making everyone wait in that same,
tragic, slow line. As a result, I call on Treasury and CFIUS
several times to Congress to review and address the national
security issue which we flagged, the Bitmain and Cango active
in the digital asset space. This is iRobot and other robotics
that are now flowing back to Beijing.
The challenge here is not only could you have a Roomba that
could map your entire area and report that back, but the very
fact that the Chinese are using lawfare to be able to acquire
sensitive proprietary information, whether it be corn seeds or
robotics, and take that back to replicate inside Beijing. This
is a concern that affects all of us.
Mr. Pilkerton, I appreciate your leadership as Assistant
Secretary for Investment Security at Treasury. I think Members
of Congress want to make sure that we have got clear insight
into the CFIUS review process, particularly where it is most
appropriate.
I want to ask some specific questions here, and I
appreciate the conversation today. Is there a reason that we on
the Financial Services Committee cannot get updates on our
requests, specifically Treasury's response to my letter about
Bitmain and the work that CFIUS said is a matter that we cannot
share anything?
Can we get into a SCIF? Can we understand what is going on?
Can you help provide the clarity to this body so that we can
better address legislative solutions with you?
Mr. Pilkerton. Congressman, I certainly appreciate the
question. I am not familiar with your letter, but happy to
engage with our legislative team to come back and speak with
your staff. You raise a couple of really important points that
I would like to speak to, if I may.
The first is the engagement of this committee is very
important. As I stated before, the ability to be able to come
to you and work with you to see if there are authorities or
things that the program might need to be able to ensure that
national security remains the number one and the abilities and
processes are in place there is going to be incredibly
important. I feel very strongly that we have that now.
You made reference to the agricultural area. Earlier in
2025, Secretary Bessent signed a memorandum of understanding
(MOU) with Secretary Rollins to focus particularly in areas of
ag land, biotech, transportation, storage and processing.
So just for you and your constituents, I want you to know
that is an area I have spoken to Secretary Rollins about
personally, Deputy Secretary Vaden, and it is very high on our
radar, and we are excited to have them as part of the committee
for those transactions.
Mr. Nunn. I am very encouraged to hear that feedback. I
think that is a move in the right direction.
When we look at--I think there are 330 transactions
annually that your team reviews, that is no small
accomplishment. At the same time, I want to make sure that
there are prioritizations happening within there. I have to
assess that CFIUS is doing some level of elevation for key
things that are really critical to the United States.
Can you speak to us on how that process is working now so
we can go after these top-tier bad actors first versus looking
at everything in a monolithic approach?
Mr. Pilkerton. Sure. So from a process perspective, going
back to your sort of airport analogy, we have the Known
Investor Program that is under development. It is still under a
pilot but the idea there is when we look at the people that are
engaged in a transaction and the actual transaction itself, we
have to assess both of those components for the national
security risk.
Our hope and goal are that under the Known Investor
Program, we will be able to get a better understanding of the
parties from as much information as we can get now that will
continually be updated, as you would imagine, but that process
will be as efficient as possible.
Mr. Nunn. Thank you. I would like to make sure that we not
only encourage this pilot program but those who want to invest
do have a clean, safe pathway to do it, and those who are
dangerous are priorities at the top. This is something we
should be working on together.
Thank you, Mr. Chair.
Chairman Davidson. Thanks, Mr. Nunn.
The gentleman from Texas, Mr. Green, is now recognized for
5 minutes.
Mr. Green. Thank you, Mr. Chairman.
Mr. Chairman, Ranking Member, I have in my hand a bill
styled the Preemption of Real Property Discrimination Act. This
legislation would preempt States from producing unacceptable
laws related to real property transactions as they relate to
persons who may have a foreign background. I will say more
about that at some other time.
What is important to say is this: This legislation is
legislation that would preempt the 50 States from each having
their own laws related to individuals who are from other
countries buying property.
I am honored to tell you that Hon. Judy Chu is a co-lead on
this legislation. It was introduced in a previous Congress, and
today I plan to introduce it again.
Fifty States, 50 different laws. CFIUS has the authority to
deal with these transactions. Fifty States, 50 different laws.
Will you kindly explain, sir, whether you think we should
have 50 States with 50 different laws? Some may have a ceiling
that is quite high. Others may have a floor.
Your response, please.
Mr. Pilkerton. Thank you, Congressman, for the question.
In the CFIUS program that I have gotten the honor to lead
focuses, obviously, on the Federal CFIUS laws. Now, in
implementing that program, we work very closely with State
actors to ensure we understand their concerns and are able to
engage accordingly.
Mr. Green. Let me ask you this, sir, if I may. I appreciate
your interacting with them, but if it is only an interaction
and they are allowed to do whatever they choose, we still have
50 States with the ability to promulgate 50 different laws.
Mr. Pilkerton. Thank you very much for that question. I
just wanted to finish up saying that I not only will be
engaging with the States but also with the chambers of commerce
so they understand the Federal CFIUS program.
With respect to the CFIUS program that I lead, I can only
execute the laws on the Federal side. I have not seen your
legislation but, obviously, I will focus on what I can do.
Mr. Green. I will be proud to have you review it but 50
States with 50 different laws is unacceptable. I think we need
to preempt--CFIUS should have the authority to do this and if
we need additional laws, other than what I will be introducing
along with Hon. Judy Chu, I will be more than pleased to look
at producing the laws to do this.
This would undermine CFIUS to have these 50 States engaging
in this process at will, but there is something more sinister
that is taking place right now. It creates xenophobia when a
State like Texas produces its law and you are relying on
realtors to enforce the law. There is a certain amount of
xenophobia that is taking place, and people are worried about
their ability to engage in a legal transaction.
I am going to give you a vignette that I have a personal
relationship with. I buy property, and I was purchasing a piece
of property and dealing with the typical methodology by which
one makes the purchase. At the closing, the persons who were
assisting us wanted me to sign a document indicating that the
seller is not a foreign national. I do not know the seller's
origin. I know nothing about the seller. As a matter of fact,
never met the man. It was a man. Never met him.
Somehow there was an expectation that I would sign a
document saying that he was not a foreign national. That is the
kind of confusion that these laws can create, because people
are desiring to be law-abiding and make sure that they do that
which is within the law.
I am a very strong believer and advocate for equality,
liberty, and justice for all, as we extol it in the Pledge of
Allegiance. This behavior of allowing 50 different States to
produce laws comparable to what we have in Texas is
unacceptable. I think this bill is going to be very helpful.
Finally, Mr. Chairman, thank you for giving me this second
to say this. I support protecting our military installations,
but I do not think we have to produce a law that will allow an
American citizen to buy that land and prevent a foreign person.
I want to protect us from anyone living near those sensitive
sites. Does not matter to me where you are from. It is the
sensitive site that judges, that I judge.
Thank you very much, Mr. Chairman.
Chairman Davidson. The gentleman's time has expired. All
time for questions has expired.
I would like to thank you, Mr. Assistant Secretary
Pilkerton, for your testimony today.
Without objection, all members will have 5 legislative days
to submit additional written questions for the witness to the
chairman. Questions will be forwarded to the witness for his
response.
Assistant Secretary Pilkerton, please respond no later than
February 18 if we get those to you.
[The information referred to can be found in the appendix.]
This hearing stands adjourned.
[Whereupon, at 11:48 a.m., the subcommittee was adjourned.]
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