[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                 THE ANNUAL TESTIMONY OF THE SECRETARY
                 OF THE TREASURY ON THE STATE OF THE
                     INTERNATIONAL FINANCIAL SYSTEM

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              JULY 9, 2024

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 118-101
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


                                __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
56-906 PDF                  WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------                                

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

               PATRICK McHENRY, North Carolina, Chairman

FRANK D. LUCAS, Oklahoma             MAXINE WATERS, California, Ranking 
PETE SESSIONS, Texas                     Member
BILL POSEY, Florida                  NYDIA M. VELAZQUEZ, New York
BLAINE LUETKEMEYER, Missouri         BRAD SHERMAN, California
BILL HUIZENGA, Michigan              GREGORY W. MEEKS, New York
ANN WAGNER, Missouri                 DAVID SCOTT, Georgia
ANDY BARR, Kentucky                  STEPHEN F. LYNCH, Massachusetts
ROGER WILLIAMS, Texas                AL GREEN, Texas
FRENCH HILL, Arkansas, Vice          EMANUEL CLEAVER, Missouri
    Chairman                         JIM A. HIMES, Connecticut
TOM EMMER, Minnesota                 BILL FOSTER, Illinois
BARRY LOUDERMILK, Georgia            JOYCE BEATTY, Ohio
ALEXANDER X. MOONEY, West Virginia   JUAN VARGAS, California
WARREN DAVIDSON, Ohio                JOSH GOTTHEIMER, New Jersey
JOHN ROSE, Tennessee                 VICENTE GONZALEZ, Texas
BRYAN STEIL, Wisconsin               SEAN CASTEN, Illinois
WILLIAM TIMMONS, South Carolina      AYANNA PRESSLEY, Massachusetts
RALPH NORMAN, South Carolina         STEVEN HORSFORD, Nevada
DAN MEUSER, Pennsylvania             RASHIDA TLAIB, Michigan
SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York
ANDREW GARBARINO, New York           SYLVIA GARCIA, Texas
YOUNG KIM, California                NIKEMA WILLIAMS, Georgia
BYRON DONALDS, Florida               WILEY NICKEL, North Carolina
MIKE FLOOD, Nebraska                 BRITTANY PETTERSEN, Colorado
MIKE LAWLER, New York
ZACH NUNN, Iowa
MONICA DE LA CRUZ, Texas
ERIN HOUCHIN, Indiana
ANDY OGLES, Tennessee

                     Matt Hoffmann, Staff Director
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    July 9, 2024.................................................     1
Appendix:
    July 9, 2024.................................................    51

                               WITNESSES
                         Tuesday, July 9, 2024

Yellen, Hon. Janet L., Secretary, U.S. Department of the Treasury     5

                                APPENDIX

Prepared statements:
    Yellen, Hon. Janet L.........................................    52

              Additional Material Submitted for the Record

Gottheimer, Hon. Josh:
    Letter to Acting Comptroller of the Currency Hsu, Treasury 
      Secretary Yellen, and FinCEN Director Gacki re: AML/BSA, 
      from Representatives Gottheimer, Luetkemeyer, and Sherman, 
      dated July 8, 2024.........................................    55
Hill, Hon. French:
    Letter to Treasury Secretary Yellen and Secretary of State 
      Blinken re: seizure of Russian assets, dated May 31, 2024..    57
    Statement of Administration Policy on H.R. 4763, dated May 
      22, 2024...................................................    60
Huizenga, Hon. Bill:
    Department of the Treasury Office of Foreign Assets Control 
      Directive..................................................    61
    Letter to Treasury Secretary Yellen dated July 4, 2024.......    62
Waters, Hon. Maxine:
    Written statement of the Atlantic Council....................    64
    Written statement of the Bank Information Center (BIC).......    65
    Written statement of Sir William Browder KCMG................    70
    Written statement of the Center for Economic and Policy 
      Research (CEPR)............................................   111
    Written statement of the FACT Coalition......................   116
    Written statement of Global Financial Integrity (GFI)........   119
    Written statement of Emily Kilcrease, Center for a New 
      American Security..........................................   125
    Written statement of the ONE Campaign........................   129
    Written statement of Razom for Ukraine.......................   132
    Written statement of the Royal United Services Institute for 
      Defence and Security Studies (RUSI)........................   135
    Written statement of Transparency International..............   138
Yellen, Hon. Janet L.:
    Written responses to questions for the record from Chairman 
      McHenry....................................................   146
    Written responses to questions for the record from 
      Representative Casten......................................   176
    Written responses to questions for the record from 
      Representative Davidson....................................   185
    Written responses to questions for the record from 
      Representative Fitzgerald..................................   163
    Written responses to questions for the record from 
      Representative Flood.......................................   183
    Written responses to questions for the record from 
      Representative Garcia......................................   187
    Written responses to questions for the record from 
      Representative Gottheimer..................................   178
    Written responses to questions for the record from 
      Representative Green.......................................   191
    Written responses to questions for the record from 
      Representative Hill........................................   165
    Written responses to questions for the record from 
      Representative Kim.........................................   192
    Written responses to questions for the record from 
      Representative Nunn........................................   190
    Written responses to questions for the record from 
      Representative Rose........................................   174
    Written responses to questions for the record from 
      Representative Waters......................................   159

 
                      THE ANNUAL TESTIMONY OF THE
                      SECRETARY OF THE TREASURY ON
                     THE STATE OF THE INTERNATIONAL
                            FINANCIAL SYSTEM

                              ----------                              


                         Tuesday, July 9, 2024

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:09 a.m., in 
room 2128, Rayburn House Office Building, Hon. Patrick McHenry 
[chairman of the committee] presiding.
    Members present: Representatives McHenry, Lucas, 
Luetkemeyer, Huizenga, Wagner, Barr, Williams of Texas, Hill, 
Loudermilk, Mooney, Davidson, Rose, Steil, Norman, Meuser, 
Fitzgerald, Garbarino, Kim, Flood, Lawler, Nunn, Houchin; 
Waters, Velazquez, Sherman, Meeks, Scott, Lynch, Cleaver, 
Himes, Foster, Beatty, Vargas, Gottheimer, Gonzalez, Casten, 
Horsford, Tlaib, Torres, and Nickel.
    Chairman McHenry. The Financial Services Committee will 
come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    Today's hearing is entitled, ``The Annual Testimony of the 
Secretary of the Treasury on the State of the International 
Financial System.''
    I will note at the outset that this hearing has a hard stop 
of 1 p.m., which we will strictly observe.
    I now recognize myself for 4 minutes to give an opening 
statement.
    Secretary Yellen, I appreciate you being here today.
    From Europe to the Middle East to Asia, global unrest is 
creating additional challenges for the international financial 
system. There are also rising risks emerging from our own 
domestic failures here at home. The International Monetary Fund 
(IMF) recently warned that U.S. deficits and debt now present, 
``a growing risk to the U.S. and global economy and should be 
urgently addressed.''
    In last year's negotiations surrounding the debt ceiling, 
House Republicans secured historic guardrails on Federal 
spending with the Fiscal Responsibility Act. Unfortunately, the 
Biden Administration has undermined this bipartisan progress at 
every turn with reckless and expensive executive action.
    The government debt isn't just a challenge for America, nor 
is inflation a challenge for America alone, although it is 
distinctly worse than the rest of the globe. Total public debt 
globally is at a record high. Much of it is held by emerging 
market economies with poor creditworthiness and depressed 
interest rates that do not accurately reflect the default risk.
    This problem is exacerbated by opaque Chinese 
infrastructure lending through its Belt and Road Initiative. 
Communist China is now the largest creditor to the developing 
world. To add insult to injury, it remains one of the largest 
annual borrowers from the World Bank, despite assurances that 
these loans would be phased out.
    The Biden Administration is failing to leverage U.S. 
standing at the international financial institutions (IFIs) to 
block financing for the Chinese Communist Party (CCP). At the 
same time, Treasury is proposing a multiyear process to stand 
up an entirely new bureaucracy to regulate private U.S. 
investment to China. To be sure, the recently-proposed 
rulemaking is a step in the right direction, and more 
responsible than other proposals that have been floated about 
this town. However, this approach will take years to implement, 
and lacks the urgency necessary to confront the generational 
threat posed by the CCP.
    We have an existing, time-tested sanctions regime that can 
have an immediate impact, and I urge you, Secretary Yellen, and 
I urge the Biden Administration to use it and use it 
forcefully.
    Any serious effort, whether legislative or administrative, 
to block global funding for the Chinese military-industrial 
complex must include the full blocking sanctions in Congressman 
Andy Barr's Chinese Military and Surveillance Company Sanctions 
Act.
    Treasury has also implemented its beneficial ownership (BO) 
reporting regime as the Administration's principal effort to 
crack down on the line of foreign actors in the U.S. financial 
system. There is bipartisan support in Congress for this 
reporting regime for two reasons: first, it was supposed to be 
narrowly targeted to strengthen our national security tools; 
and second, it was supposed to protect small businesses from 
duplicative reporting regimes. Thus far, Treasury has failed to 
adhere to congressional intent on both counts.
    America faces grave strategic challenges in Europe and the 
Middle East. The Biden Administration has rightly provided 
historic military and financial support for Ukraine following 
Russia's invasion, yet Treasury has undermined its own sanction 
efforts by allowing Putin to continue funding his war machine 
through a glaring loophole in its so-called oil price cap.
    Similarly, this Administration has wavered in both rhetoric 
and action after a promising initial response to Hamas' 
barbaric terrorist attacks on Israel last October. To begin to 
right the ship, Treasury must redouble its efforts to cut off 
funding for Iran and its proxies.
    If nonsensical and contradictory policies like these 
continue, allies will continue to question America's, and 
specifically this Administration's, leadership on the global 
stage.
    I yield back.
    The Chair will now recognize the ranking member of the 
committee, the gentlewoman from California, Ms. Waters, for 4 
minutes for an opening statement.
    Ms. Waters. Thank you, Mr. Chairman. Good morning.
    I would like to welcome you, Madam Secretary, before the 
committee today and applaud the work of both your leadership 
and President Biden's leadership. The Biden-Harris 
Administration is fighting every day for people by creating 
15.7 million new jobs, doubling the average monthly number of 
jobs created during Biden's term when compared to Trump's first 
3 years before the pandemic, increasing wealth and wages 
broadly, and steering our economy out of the throes of a 
pandemic made worse by the previous Administration.
    I also applaud President Biden for never backing down in 
the face of opposition. When the Supreme Court blocked his plan 
to cancel student debt, President Biden sought other ways to 
help America's student loan borrowers. To date, the Biden 
Administration has forgiven $144 billion in Federal student 
loans for nearly 4 million borrowers. This is what it looks 
like when we have a leader who puts the well-being of the 
American people above his need for revenge. From signing into 
law the American Rescue Plan and the bipartisan infrastructure 
law, which is making the U.S. economy the strongest in the 
world, to taking on companies saddling Americans with illegal 
junk fees, to cutting child poverty in half, our economy is 
stronger because of President Biden.
    I also commend Secretary Yellen's work to stabilize the 
banking system after last year's regional bank failures, as 
well as deploying $12 billion for community development 
financial institutions (CDFIs) and minority depository 
institutions (MDIs), and $10 billion for small businesses 
through the State Small Business Credit Initiative (SSBCI). I 
am working on a bill to build on the successes and the 
effectiveness of the SSBCI, and I look forward to working with 
you on that.
    And there is still more work to be done, especially on 
issues like housing, and President Biden has made housing a top 
priority of his Administration. On the other hand, the MAGA 
operatives have made their priority loud and clear. They have 
conceived a 920-page plan to undermine our government, our 
social safety nets, and our values as Americans. This Project 
2025 is diabolical, so insidious, and so disturbing that 
everyone in this country needs to read it. They need to read it 
so they can understand the plan to take away their rights, 
their freedoms, and their democracy, and turn this country into 
a Christo-fascist state. You can read this garbage at 
www.project2025.org.
    Now, Project 2025 was written by former Trump White House 
staffers, Trump Administration officials, and the ultra right-
wing Heritage Foundation. Banning abortion and contraception, 
abolishing the Department of Education, and taking over the 
Department of Justice so a Republican President can use the FBI 
to settle political scores are just a few of the low lights. 
Project 2025 would also gut agencies like the Consumer 
Financial Protection Bureau (CFPB) and the Federal Reserve, and 
dangerously restructure the Department of the Treasury, the 
Department of Housing and Urban Development (HUD), and other 
agencies critical to the economy.
    Moreover, Project 2025 describes plans to withdraw from 
international financial institutions like the IMF and the World 
Bank, both of which have advanced U.S. democratic ideals all 
around the world.
    I yield back.
    Chairman McHenry. The Chair now recognizes Mr. Luetkemeyer, 
the Chair of our Subcommittee on National Security, Illicit 
Finance, and International Financial Institutions, for 1 
minute.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    And, welcome, Secretary Yellen.
    Since we heard from you during last year's annual 
testimony, the global debt crisis has only grown worse. Russia 
continues its war against Ukraine, and with help from Iranian 
funding, Hamas perpetrated a heinous attack on Israel, our 
closest ally in the Middle East. Meanwhile, Communist China 
continues to threaten global economic security through unfair, 
even illegal trade practices, and threatens regional security 
with escalating aggressive actions against the Philippines and 
Taiwan.
    It is therefore bewildering, despite that behavior, why and 
how the CCP still receives over a billion dollars annually from 
World Bank commitments. Indeed, the global economic and 
security situation has deteriorated so dramatically during the 
3\1/2\ years of the Biden Administration that I can't help but 
ask what have they been doing that could account for this?
    In the international financial system, the Administration's 
weakness on Iran sanctions and on energy in general is one 
obvious culprit. At the IFIs, the continued push for the green 
agenda through the evolution roadmap is another, prioritizing 
climate over the needs of 700 million people who remain mired 
in extreme poverty.
    With that, Mr. Chairman, I yield back.
    Chairman McHenry. The Chair now recognizes the ranking 
member of our Subcommittee on National Security, Illicit 
Finance, and International Financial Institutions, Mrs. Beatty, 
for 1 minute.
    Mrs. Beatty. Thank you, Mr. Chairman, and Ranking Member 
Waters. And Secretary Yellen, thank you for being here today to 
testify.
    I would like to echo the remarks made by Ranking Member 
Waters. Over the last 3\1/2\ years, President Biden has helped 
restore the United States' leadership in a global economy. We 
are experiencing unprecedented levels of job creation, 
historically-low unemployment, declining inflation, and growing 
wages and wealth, the rebuilding of an economy that works for 
everyone.
    I want to thank you, Secretary Yellen, for the work that 
you have done to restore our leadership at the international 
financial institutions and to protect our economy and our 
national security.
    I also want to thank Leader Hakeem Jeffries and the 
Democrats for governing by giving the votes necessary to pass 
the debt ceiling, although we aren't in the Majority.
    I look forward to continuing to build on the historic work 
that you and President Biden and the Administration have done.
    Thank you. And I yield back.
    Chairman McHenry. Today, we welcome the testimony of the 
Honorable Janet Yellen, the 78th Secretary of the Department of 
the Treasury.
    Secretary Yellen, thank you for being here. You will be 
recognized for 5 minutes to give an oral presentation of your 
testimony. And without objection, your written statement will 
be made a part of the record.
    We welcome you back before the committee, and I will now 
recognize you for 5 minutes.

  STATEMENT OF THE HONORABLE JANET L. YELLEN, SECRETARY, U.S. 
                   DEPARTMENT OF THE TREASURY

    Secretary Yellen. Thank you.
    Chairman McHenry, Ranking Member Waters, and members of the 
committee, thank you for the invitation to testify in my 
capacity as Chair of the National Advisory Council on 
International Monetary and Financial Policies.
    The United States built the international financial 
institutions 80 years ago with our allies and partners. Today, 
U.S. leadership at them is essential to our national and 
economic security.
    We work through the multilateral development banks (MDBs) 
to fight poverty and drive sustainable and inclusive growth, 
strengthening developing and emerging markets that are key 
trade and investment partners for the United States and 
addressing global challenges such as climate change, pandemics, 
and conflict and fragility that threaten to undermine global 
economic growth. The International Monetary Fund (IMF) provides 
crucial support to countries to help resolve debt problems, 
minimize negative spillovers to the global economy, strengthen 
governance, and restore growth.
    These institutions' strong balance sheets make U.S. 
contributions to them safe and highly cost-effective. They 
crowd in support from other partners, and the United States 
works as the largest or near-largest shareholder in all of them 
to make sure they use their funds well.
    These institutions are also the only realistic option for 
the United States to offer high-quality and transparent 
development financing at the scale needed to be a U.S.-led 
value proposition that competes with China's. We must show 
leadership and contribute strong financial support as it has 
only become more important to provide credible alternatives to 
lending options that can be opaque and coercive, potentially 
undermining borrower countries' sovereignty and long-term 
economic sustainability.
    Over the past year, we continued to push for evolution at 
the MDBs so that they are efficient, effective, and can better 
help countries address global challenges. Congress enabled a 
$250 million contribution to the World Bank's IDA Crisis 
Response Window, demonstrating U.S. commitment to providing a 
critical lifeline to the world's poorest and most vulnerable 
countries. We made the largest pledge to the replenishment of 
the International Fund for Agriculture and Development, a 
strong partner in increasing food security. We also helped lead 
successful negotiations around capital increases and important 
reforms for IDB Invest, the private sector arm of the Inter-
American Development Bank, and a key partner in Latin America 
and the Caribbean, and for the European Bank for Reconstruction 
and Development (EBRD) to enhance its lending capacity, 
including for continued support of Ukraine.
    We now ask that Congress authorize our participation in 
these capital increases and in the African Development Bank's 
callable capital increase so that it can continue to lend at 
current levels to countries that otherwise would be forced to 
look elsewhere. The President's budget also requests $1 billion 
that would enable up to $36 billion in new lending capacity at 
the World Bank, as we continue to press international partners 
to join us in efforts that could expand lending headroom by 
$100 billion.
    I thank Congress for authorizing lending $21 billion to the 
Poverty Reduction and Growth Trust, making us the largest 
contributor and further showcasing our strong commitment to 
supporting low-income countries. We also led successful 
negotiations on the 16th general quota review so that the IMF 
is adequately resourced to continue to play its crucial role at 
the center of the global financial safety net and to preserve 
our quota share and veto, solidifying U.S. influence at this 
vital institution. We request authorization to increase the 
U.S. quota to cement this significant achievement.
    Let me stop there. I would be happy to answer your 
questions.
    [The prepared statement of Secretary Yellen can be found on 
page 52 of the appendix.]
    Chairman McHenry. Thank you, Madam Secretary.
    I will now recognize myself for 5 minutes for questions.
    Let's start with the notice of proposed rulemaking on 
outbound investment. We have talked a good bit about this. As I 
said in my opening statement, I think what the Administration 
has done is a step in the right direction. I welcome it. But we 
have time-tested tools of sanctions that are clear red light/
green lights, what is permissible/what is not permissible.
    So we have a notice of proposed rulemaking, and there is a 
line established about, what are investments, investable 
technology that is prohibited versus a reporting regime, and it 
is not clear.
    So, just wanting to have one question as an example, the 
difference between artificial intelligence (AI) being used for 
an MRI in a medical setting to identify cancer, and by a drone 
operator using location targets' imaging to targets in a 
weapons setting--how do you draw the distinction between those 
two different AIs?
    Secretary Yellen. We recognize that, in artificial 
intelligence, it is widely used for many different purposes. 
And the regime that we have proposed is really oriented toward 
those uses that are clearly national security risks. We want to 
make sure that China and other countries of concern don't gain 
access to technologies and products that are critical for----
    Chairman McHenry. Why not just name names and say, ``Don't 
invest in these companies?'' Isn't that the clearest route to 
stem the flow of capital going into Chinese technology?
    Let me give you another example. The regulation says that 
AI that operates at either the 10 to the 24th, 10 to the 25th, 
or 10 to the 26th computational operations would not be 
investable for Americans.
    What is the real-world difference between these operational 
levels and the significance of one being used in a military 
capability setting?
    Secretary Yellen. We have tried to target technologies that 
are critical and can contribute to military intelligence or 
cyber capabilities in countries of concern. We want to make 
sure that what we are doing here is narrowly targeted at clear 
national security risks----
    Chairman McHenry. Why not just use sanctions for that? Why 
not just use direct sanctions that say, ``Do not invest in 
these companies?'' Red light/green light, there is no complete 
clarity here. Why not just go with that approach?
    Secretary Yellen. Sanctions usually are put in place after 
something has occurred that creates a problem, and these are 
very rapidly-evolving areas. We know that there is a gap in our 
regulatory framework, and we want to make sure that American 
firms and persons are not contributing, through their 
investment activities, to enabling firms in China or other 
countries of concern to----
    Chairman McHenry. Yes. We are trying to get at the same 
thing. I am saying clearly that we have sanctions that we can 
proactively take on companies that are using this technology, 
and it is far clearer. And that is a far clearer way to stem 
the flow of U.S. investment capital into China.
    Let me switch to one additional topic, which is the 
beneficial ownership regime. As I said in my opening statement, 
we wanted clarity here. We didn't want redundancy.
    Why did the Treasury bifurcate the beneficial ownership 
rules and move forward without the third rule? And when can we 
expect Treasury to publish the customer due diligence (CDD) 
rescission rule?
    Right now, you have two reporting regimes on small 
businesses. This is onerous. What is the timeline to clear that 
up?
    Secretary Yellen. That is something that we are working on 
revising to make sure it is consistent with the requirements of 
the Corporate Transparency Act. I believe that we are hoping to 
get something out this fall.
    We are engaging right now with other stakeholder agencies 
to discuss the substance of the proposal, and we want to have a 
notice that will enable the public to weigh in with their own 
comments.
    Chairman McHenry. Okay. Well, right now, because of rules 1 
and 2 going live, every small business in America has a new 
reporting requirement that they are most likely unaware of, and 
this needs to be cleared up.
    I will now recognize the ranking member of the committee, 
Ms. Waters, for 5 minutes.
    Ms. Waters. Thank you very much, Mr. Chairman.
    Secretary Yellen, I don't have much of a question to ask 
you. I want to thank you basically for the work that you have 
done.
    There is a lot of talk about in helping small businesses 
and minority businesses, but under your leadership, working 
with the President of the United States, you have done a 
magnificent job. I want to thank you for the Community 
Development Financial Institutions (CDFIs), an alternative to 
the big banks who don't give loans to small businesses; they 
don't want them in the bank. But because of CDFIs, people have 
a place to go to present their case and get loans.
    The other thing I want to thank you for is the Minority 
Business Development Agency, which you put $125 million into in 
order to teach and to train and to make sure that small 
businesses have the assistance that they need, the technical 
assistance to these businesses so that they have the legal, the 
accounting, and business advice that they need to grow and 
prosper.
    And, of course, I want to thank you for the SSBCI. We put 
in this committee $10 billion to create 10 million loans, and I 
want you to know that it is making a difference.
    I want you to know that the other side has not done any 
significant work for small and minority-owned businesses.
    We are trying to close the wealth gap. I give you credit 
for your leadership, and for your understanding.
    If I wanted to ask you a question, I would ask you, do you 
think that these kinds of efforts will help us to close that 
wealth gap?
    Secretary Yellen. I absolutely do, and I very much want to 
thank you for the strong endorsement that you have given 
Treasury's work. I know how important this is to you, and it is 
important to the country. It has been our focus to use the 
funds that Congress has provided most effectively since day one 
of the Biden Administration.
    And addressing the wealth gap is a top priority. At 
Treasury, we are trying to use every single tool that we have 
to make headway on this. As you know, this is something that is 
difficult to eradicate, but I think our efforts are making a 
difference. And, as I have traveled around the country, I have 
often had the chance to visit businesses that are getting help 
from CDFIs in low-income or minority communities. And I have 
seen small businesses get the support they need through CDFIs 
or through SSBCI to develop and thrive. This is a clear focus 
of all the work the Biden Administration has done.
    Ms. Waters. I think it is important for people to know that 
this is all over the country. And I am trying to get my 
colleagues on the opposite side of the aisle to work with us so 
that rural communities and small communities and towns can have 
more access. The infrastructure is not there with nonprofits 
and others to work with what you are doing for all of us. And 
maybe, there is something you can say or do to encourage those 
who have small towns in their areas that don't know about the 
programs. And, when we take it to them to ask them, ``Don't you 
want to participate in CDFIs, and don't you want some of the 
money that comes to your States with SSBCI's?'' What can we do 
to get them more interested so that more of this money can get 
into rural communities?
    I know that you don't have time. This is not the proper 
place to educate them now. But perhaps you can volunteer to 
meet with some of my colleagues to get them interested from the 
opposite side of the aisle on how they can take advantage of 
what you are doing, what the President is doing, and what we 
are learning so we can help equal the playing field so that we 
can have financial services working for everybody, and that we 
can have women- and minority-owned businesses, et cetera, that 
have been excluded for so long, participating because of the 
work that you are doing.
    Secretary Yellen. Thank you very much. And we would be glad 
to work with you or with others who are interested in bringing 
these benefits to low-income and rural communities. We do try 
to do significant outreach, and we are certainly prepared to do 
more, and would welcome the collaboration.
    Ms. Waters. Thank you. I yield back.
    Mr. Hill. [presiding]. The gentlewoman's time has expired.
    I now recognize myself for 5 minutes.
    Madam Secretary, it is great to have you here before the 
committee.
    It has been more than 2 months since President Biden signed 
the REPO Act into law, and I would like to see it swiftly and 
fully implemented by the President. I wrote to you in May, 
joined by Congresswoman Waters and Congressman Meeks, to 
encourage the Administration to do that. And, while I support 
doing all we can to help Ukraine eject Putin, I have several 
concerns about the extraordinary revenue acceleration loan 
package announced by the G7 leaders last month. I question 
whether this plan can really work in practice.
    Under the REPO Act, the President already has the authority 
to go after Russian sovereign assets in the United States, and 
I believe these frozen assets should be legally seized, the 
ownership converted, and those funds deposited in the REPO 
contemplated trust fund. I think that is in the best interests 
of Ukraine, the U.S., and our G7 allies. And I think it sends 
the right message that we are leading. Congress, on a 
bipartisan basis, passed this law. We want tough sanctions. We 
want Ukraine to have the arms they need. And we need the 
financial deterrence that the REPO Act brings. As Margaret 
Thatcher told us years ago, ``This is no time to go wobbly.''
    I would like to know how we are implementing that law. Will 
you commit to meet the mandatory deadlines as required by 
Section 104 of the REPO Act, starting July 23rd?
    Secretary Yellen. We will meet the requirements of the Act, 
but let me say we were very pleased with the passage of the 
REPO Act. It provides Treasury and the Administration with an 
important set of tools, and we think all options should be on 
the table.
    However, we also believe the strength of our response to 
Putin has been that we have a global alliance that has worked 
together in support of Ukraine, and we have looked for an 
approach that our allies, particularly the G7 and the European 
Union, could be supportive of, that would deliver significant 
revenues to Ukraine. And, as I think you know, the G7 leaders 
in June did----
    Mr. Hill. I do know, Madam Secretary. Let me reclaim my 
time just to use it effectively. And I thank you for your 
leadership, but the REPO Act, as Mr. Meeks and Ms. Waters and I 
point out, does give more strength. We should be leading and 
use that full tool, because we know the support is there in 
Europe if we will provide that leadership.
    What is the total amount, now that you have had this 2 
months, of frozen Russian Central Bank assets held in the 
Federal Reserve here in the United States?
    Secretary Yellen. It is a relatively small amount.
    Mr. Hill. I understand that. Could you give us the amount, 
please, ma'am?
    Secretary Yellen. It is on the order of $5 billion or $6 
billion. And most of the assets are held in Europe.
    Mr. Hill. I understand that. I understand where the assets 
are held. Thank you.
    Let me switch subjects to the Financial Innovation and 
Technology for the 21st Century Act (FIT21). I want to thank 
you, and I want to thank Under Secretary Liang for the work you 
did on looking at our digital assets regulatory framework, 
which we worked on mightily over the last year, on a bipartisan 
basis. I particularly want to thank the White House for the 
Statement of Administration Policy, which says that you are 
eager to work with Congress on developing legislation for 
digital assets to ensure a comprehensive and balanced 
regulatory framework.
    Do you continue to commit for the balance of this Congress 
to work with the committee and in the Senate to achieve a 
regulatory framework for digital assets?
    Secretary Yellen. Yes, very much so. I am happy to make 
that commitment, and we have worked productively together. It 
would be nice to see this reach a good conclusion.
    Mr. Hill. On another topic related to digital assets, the 
Securities and Exchange Commission (SEC) and the Commodity 
Futures Trading Commission (CFTC) are consistently taking 
opposite legal positions in Federal court on digital assets.
    In your capacity as the Financial Stability Oversight 
Council (FSOC) leader, what are you doing to bring the CFTC and 
the SEC together and be on the same page about this matter?
    Secretary Yellen. It is not the job of the Financial 
Stability Oversight Council to adjudicate----
    Mr. Hill. No, but you are supposed to quarterback for 
financial risk. Are you quarterbacking between the CFTC and the 
SEC on this dispute?
    Secretary Yellen. Not really. We have done a report on the 
risks connected with cryptocurrency and digital assets.
    Mr. Hill. Okay. In my final----
    Secretary Yellen. The risks have to do with holes where 
there is a lack of authority.
    Mr. Hill. Right. I agree. And you are working 
constructively with us. Thank you.
    I am going to submit some questions in writing for the 
record on the multilateral banks and what I think is a 
preference that China is seeking, and we need Treasury to push 
back on that.
    My time has expired.
    I recognize the gentlewoman from New York, Ms. Velazquez, 
for 5 minutes.
    Ms. Velazquez. Thank you, Mr. Chairman.
    And, welcome, Secretary Yellen. Thank you for being here 
this morning.
    As you know, many working-class families and small 
businesses are concerned about inflation. You recently told 
Yahoo Finance that you expect inflation to come down, and, as 
we get into next year, you believe inflation will get back to 
the 2-percent target, and you do not see the basis for a U.S. 
recession.
    Can you explain how the policies of the Biden-Harris 
Administration have helped temper the rate of inflation and 
given you this sense of optimism?
    Secretary Yellen. I am optimistic, because I believe that 
the big inflationary impulse that we saw in 2022 largely was 
global, and it largely reflected supply problems stemming from 
the pandemic and its impact around the world. And, due to the 
work of the Biden Administration, and firms in the economy, and 
the pandemic being resolved, many of those supply issues are 
now fully resolved. So, much of the pressure has diminished.
    On top of that, we have a strong labor market that has 
attracted many new people into the labor market. Labor supply 
has surged. And, although the labor market was initially very 
tight, now we have a strong labor market, but one with fewer 
pressures that would create inflationary concern. Inflation is 
coming down.
    The measure the Fed focuses on is now running at 2.6 
percent over the last year, and I believe that it will continue 
to come down over time.
    Rents and housing costs continue to be higher than we would 
ideally like.
    Ms. Velazquez. Yes.
    Secretary Yellen. And it will be a while before housing 
costs come down to a more normal level, but that process is 
in----
    Ms. Velazquez. Thank you.
    Madam Secretary, in his opening statement, Chairman McHenry 
mentioned the IMF's warning about the U.S. debt burden. 
However, in the same Yahoo Finance interview, you were also 
critical of the tax cuts passed by Donald Trump and 
Congressional Republicans, saying that decision was responsible 
for many of the problems that we face now with our fiscal 
trajectory.
    Can you explain the fiscal problems that arose from Donald 
Trump's tax cuts and how the Biden Administration is working to 
reduce these effects?
    Secretary Yellen. It was a tax cut that had a very large 
impact on the deficit and the national debt. It was costly. It 
was regressive. It did not pay for itself. And, in a way, it 
concealed its true cost by including delayed raisers, 
phaseouts, and sunsets, some of which Congress will have to 
deal with next year. We did not see the investment boom that 
was promised by the Act. And President Biden believes it is 
important to be on a fiscally-sustainable path.
    Ms. Velazquez. Thank you. I hope the other side is 
listening.
    Secretary Yellen, millions of businesses are required to 
report their beneficial ownership information to FinCEN by 
January 1st. Yet, according to several conversations I am 
having with businesses in my district and across the country, 
many legitimate businesses are unaware that this requirement 
exists.
    How are FinCEN and the Treasury Department working to 
increase awareness of this requirement, particularly amongst 
rural and underserved businesses in which English is not a 
primary language?
    Secretary Yellen. FinCEN has a very active program of 
outreach and of education, and I believe that you 
participated--and I want to thank you for that--by hosting an 
event designed to inform people and business owners about what 
the requirements entail. There is other language to support----
    Ms. Velazquez. If I could just make a suggestion? I would 
like to see better coordination--Mr. Chairman, please give me 
just a second--to work closely with the Small Business 
Administration (SBA). We have a network of Small Business 
Development Centers (SBDCs) across the country----
    Mr. Hill. The gentlewoman's time has expired.
    Secretary Yellen. I will do that.
    Ms. Velazquez. Thank you. I yield back.
    Mr. Hill. The gentleman from South Carolina, Mr. Norman, is 
recognized for 5 minutes.
    Mr. Norman. Thank you, Mr. Chairman.
    And thank you, Secretary Yellen, for being here today.
    I think the Chair mentioned beneficial ownership. How is 
your office going about educating the 32.6 million businesses 
that have never heard of FinCEN? You have a penalty of a 
quarter of a million dollars plus 2 years imprisonment on 
something that has been ruled unconstitutional by a court in 
Alabama. What are you doing to: one, inform the businesses who 
are the lynchpin for this economy; and two, is there any 
thought to extending the 12-month deadline to another year, to 
2 years?
    Secretary Yellen. As I mentioned, there is an extensive 
outreach and education program that is taking place across the 
country. People with FinCEN are hosting events. And we are 
happy to work with Members of Congress to explain what this is 
about in different parts of the country. So, if you have an 
interest in that, please just contact us. But there is an 
extensive outreach effort. It is a very simple process; it 
takes 15 or 20 minutes, I believe, for most firms to be able to 
file. There is a very user-friendly website where the 
information can be input. It is not a difficult process. We 
have seen a good response so far and I don't think it is going 
to be necessary to extend the timeframe. It goes through the 
end of this year.
    Mr. Norman. What are the numbers that have already 
complied, in your opinion?
    Secretary Yellen. I believe 2.7 million is the most recent 
number.
    Mr. Norman. 2.7 million out of 31 million. That is kind of 
a low percentage.
    Now, if the penalty is going to stay in place--you say this 
is simple. But, for the businesses, these businesses are 
struggling. They are just trying to make ends meet with this 
Biden Administration, what they are doing with inflation, what 
they are doing with the supply chain, all of the above. And to 
put another regulation on them at this point in time and not 
know--put me on your list for what FinCEN is doing.
    Secretary Yellen. Okay.
    Mr. Norman. Your average plumber is not going to go on a 
website and try to find out how to comply with the beneficial 
ownership. So, if you could supply--and I will send you a 
letter after this, if you could comply and consider extending 
it. A quarter of a million dollars fine is ridiculous.
    Secretary Yellen. The fine is for, ``willful violation,'' 
as I understand----
    Mr. Norman. Define, ``willful violation?''
    Secretary Yellen. ----the rules. And your plumber example 
is not somebody who is willfully violating the rules. FinCEN is 
not going to prioritize going after small businesses who are 
unaware----
    Mr. Norman. Secretary Yellen, you realize that is in the 
print? You realize the fine is printed?
    Secretary Yellen. For, ``willful.''
    Mr. Norman. How do you define, ``willful?''
    Secretary Yellen. Someone who knows they have an obligation 
and fails to----
    Mr. Norman. Does that apply to the plumber who doesn't know 
what FinCEN is? In the example I used, does that contractor, 
that plumber, that welder, if he has a business, is it willful 
if he just doesn't comply?
    Secretary Yellen. There is a massive education and outreach 
effort. And personally, I wouldn't regard that as willful.
    Mr. Norman. Okay. Well, if you could clarify that in 
writing, not just verbally, I think that would mean a whole 
lot.
    Now, on another subject, I am in South Carolina. The 
Chinese are buying up farmland all over this country. What is 
the role of the Secretary of Agriculture, and what is your role 
in, I guess, allowing this to take place, if any?
    Secretary Yellen. The Committee on Foreign Investment in 
the United States (CFIUS) has the ability to ban land purchases 
or, in some cases, even insist on divestiture of activities 
taking place----
    Mr. Norman. Are they doing that now? Define how they ban 
it. It is taking place now. They are doing it through separate 
entities, LLCs. I only have 12 seconds, so I will write you a 
letter, if you could define for me what, ``banning,'' means and 
how specifically you stop this.
    Secretary Yellen. We work closely with the Defense 
Department. This is national security-oriented. And yesterday, 
we issued a new proposed rule that adds 50 additional military 
bases to the existing ones and changes some of the perimeters 
of some of them.
    Mr. Hill. The gentleman's time has expired.
    Secretary Yellen. It follows a thorough Department of 
Defense review.
    Mr. Hill. The gentleman's time has expired.
    The gentleman from California, Mr. Sherman, is recognized 
for 5 minutes.
    Mr. Sherman. Madam Secretary, I want to commend you and the 
entire Biden economic team. Over the last couple of years, we 
have seen the greatest decline in the inflation rate at any 
time this century, and at the same time, we have kept 
unemployment at historically-low levels. I want to thank you 
and the entire team for that effort.
    I also want to compliment you for the Direct File system 
that has allowed millions of taxpayers to be able to file their 
tax returns in an electronic form without paying $130 to Turbo 
Tax. To quote your good words before the Senate, you said that 
one day, information that taxpayers receive on the W-2 forms 
and the 1099s could be used to prepopulate the program, and I 
look forward to the day when the majority of Americans can file 
their tax return in less than 2 minutes simply by seeing the W-
2 form and the 1099 information. They have already achieved 
that in about a dozen countries in Europe.
    The gentleman from Arkansas mentioned the REPO Act. Those 
assets should be used to go to Ukraine, but there are Americans 
who have claims against those assets, judgments against those 
assets, and I would hope that we wouldn't send all of the money 
to Ukraine, and then tell the Americans with claims that they 
are out of luck.
    The anti-money laundering laws are important. I want to 
bring to your attention that Florida, and now Tennessee, have 
laws designed to--and it is perhaps a good purpose of these 
laws--say that you shouldn't be denied financial services 
because of your political opinions or religious beliefs. But I 
hope that you will work with those States and preempt those 
laws as necessary to protect the Bank Secrecy Act (BSA). We 
shouldn't be in a circumstance where you lose your account 
because you have all of these suspicious activity reports 
(SARs), and the bank can't tell you about the suspicious 
activity reports, and all of a sudden you think it is because 
of your political beliefs.
    In the past, when you have come here, I have talked to you 
about how China has incentives for its domestic taxpayers to 
invest in Chinese companies but denies those for investments in 
the United States, but we have incentives for Americans to 
invest--we call it capital gains allowance--and we provide it 
to those who invest in China.
    But I want to focus instead on India. India has cut its 
corporate tax rate from 40 percent to 22 percent, but they have 
excluded branches of foreign companies. So many U.S. companies 
can just form a subsidiary and take advantage of that 22-
percent rate, but American financial institutions have 
branches, and as a technical matter, they can't form a 
subsidiary. Can I count you on you to bring this up with the 
Indian Ministry of Finance, that American companies should have 
the same tax rate as Indian companies in India?
    Secretary Yellen. I would be glad to have my staff discuss 
this with you in greater detail to understand the issue.
    Mr. Sherman. I look forward to that.
    I want to commend you for sanctioning individuals who use 
sexual violence as a weapon of war in Sudan, the Democratic 
Republic of the Congo (DRC), and South Sudan. But the greatest 
use of sexual violence in war this century is the 100,000 
Tigrayan women who have been subjected to sexual violence in 
northern Ethiopia.
    Can you commit to applying the same standards that you did 
for Sudan, the DRC, and South Sudan to individuals, 
particularly in the Ethiopian and Eritrean military, who have 
carried out this campaign of sexual violence against Tigrayan 
women? Can I count on you to use the same standards?
    Secretary Yellen. This is really a determination that has 
to be made by the State Department rather than Treasury. But 
certainly, human rights violations have been a concern.
    Mr. Sherman. And finally, the Russian Central Bank has 
urged the use of crypto to evade Western sanctions. A 
stablecoin offers no particular advantage in that it is stable. 
You can't make money by holding it, and it usually doesn't pay 
interest, certainly not the interest you get on money market 
funds. Its sole advantage is evading our sanctions and other 
laws, including tax laws. And I hope that in enforcing our 
sanctions on Russia, you will not facilitate that by 
facilitating a stablecoin.
    Secretary Yellen. We are very attentive to the use of 
crypto currencies and stablecoins. We don't think it is a very 
substantial thing that Russia is doing. But, as our sanctions 
bite more and more, it becomes a concern.
    Mr. Hill. The gentleman's time has expired.
    The gentleman from New York, Mr. Garbarino, is recognized 
for 5 minutes.
    Mr. Garbarino. Thank you, Mr. Chairman.
    And thank you, Madam Secretary, for being here today.
    Back in September, the Consumer Financial Protection Bureau 
(CFPB) announced that it is considering a Fair Credit Reporting 
Act (FCRA) SBREFA that includes a broad and novel definition 
of, ``data broker.''
    Secretary Yellen. Of what?
    Mr. Garbarino. As I mentioned to CFPB Director Chopra, I am 
very concerned that this proposal may not recognize how 
consumer data is used for identity verification and fraud 
prevention. Use of data for these purposes is not the same as 
using it for credit eligibility purposes and, therefore, 
shouldn't be subject to the FCRA.
    Further, the companies that provide identity and fraud-
prevention technology to financial institutions should not be 
regulated under the FCRA, as they already fall under the Bank 
Secrecy Act, the USA PATRIOT Act, and the Gramm-Leach-Bliley 
Act. It would be a serious mistake to limit our fraud-
prevention tools in the system.
    Secretary Yellen, given that the CFPB's proposal may 
severely impact the ability to prevent fraud and conduct 
identify verification, has the CFPB spoken to anyone at FinCEN 
or Treasury regarding its SBREFA proposal?
    Secretary Yellen. I would have to ask. I don't know what 
contact there has been. I have not talked to Director Chopra 
about this, but my staff may well have done so.
    Mr. Garbarino. If they haven't, will you commit to engaging 
with the CFPB on this?
    Secretary Yellen. Certainly. I would be happy to look into 
it.
    Mr. Garbarino. Okay. Wouldn't it make sense for the CFPB to 
minimize its impact on the Bank Secrecy Act compliance and 
other law enforcement and privacy statutes?
    Secretary Yellen. If it has that impact, it would make 
sense.
    Mr. Garbarino. Okay. I appreciate that. Thank you very 
much.
    Over the last 2 decades, China has unleashed a global 
lending spree, mainly through its Belt and Road Initiative, 
showering mostly developing countries with hundreds of billions 
of dollars in an effort to expand its influence and become a 
political and economic superpower.
    China has opaque loans, different from most other loans to 
developing countries by advanced nations or institutions like 
the World Bank, that usually carry higher interest rates and 
shorter maturities, requiring financing every couple of years 
and frequently using national assets as collateral.
    As more countries are on the cusp of default, rising 
interest rates are only going to make it more expensive to pay 
off debt denominated in dollars and other key currencies.
    Secretary, what should the role of international financial 
institutions be in addressing the needs of those that have 
outstanding Chinese debt and are currently in desperate need of 
relief from Beijing?
    Secretary Yellen. We are working extremely hard to relieve 
the debt burdens of low-income countries that clearly need to 
restructure their debt and are trying to do so in the context 
of an IMF program. And, as you say, China is often the holdout 
and the most difficult lender to deal with, and we have been 
addressing that in all that we do. It is a topic I have raised 
in all of my bilateral meetings with my Chinese counterparts. 
We have raised this with the IMF and the World Bank. A 
sovereign debt roundtable has been created to deal with some of 
the issues that China continues to raise in multiple debt 
restructurings. And while I still have serious concerns, some 
progress has been made in the context of Common Framework debt 
restructurings. Zambia and Ghana, for example, are countries 
where progress has been made; China has come to the table. But 
there is clearly more to do.
    Mr. Garbarino. You have said that you have spoken with the 
World Bank and the IMF about this. Estimates peg China's 
lending to the developing world at a trillion dollars, which 
makes them a bigger lender than the World Bank and the IMF, but 
China is still considered an emerging and developing economy 
under the eyes of the IMF.
    Do you believe that the U.S. should now use its influence 
in international organizations to change China's status as a 
developing country specifically at the IMF?
    Secretary Yellen. I guess I need to look at that. I am not 
prepared to give you an answer on that.
    Mr. Garbarino. Again, it is my understanding that the IMF 
considers China an emerging and developing economy, which 
allows them better terms under certain loans. And, if they are 
giving out a trillion dollars a year to other countries, I 
think we should look at it.
    Secretary Yellen. We oppose, in the World Bank and all of 
the MDBs, any lending to China whatsoever given China's income 
level and extensive lending around the world. And we have 
pushed, and they have reduced very substantially the lending 
that they do. We vote against all of it.
    Mr. Garbarino. Thank you.
    I just to want say this: International banks play an 
important role in our nation's economy, particularly in New 
York. I recognize that the Basel III Endgame is not in your 
current jurisdiction, but the financial impact of these rules 
cannot be understated. I would encourage you, as Treasury 
Secretary, to talk with banking regulators and other FSOC 
members about the impact of this rule.
    Mr. Hill. The gentleman's time has expired.
    The gentleman from Georgia, Mr. Scott, is recognized for 5 
minutes.
    Mr. Scott. Thank you, Mr. Chairman.
    Secretary Yellen, you remember the last time you were here, 
I raised concerns about the balloon going over the United 
States by China and how concerning that was, and since that 
time, this issue of national security and agriculture is going 
hand in hand. Our farm bill--my good friend, Chairman Thompson, 
and I, as two leaders on the House Agriculture Committee, have 
framed this as a national security issue. And here's why: The 
FBI has now labeled the Chinese Government's action as the 
greatest threat. FBI Director Christopher Wray warned us in 
April that, ``Chinese hackers have infiltrated U.S. critical 
military infrastructures and are now poised to cause 
significant damage at any given moment's notice.'' So, we have 
a national security issue here of soaring magnitude, and we are 
working in a bipartisan way, obviously, to solve this problem.
    I want to ask you some specific questions here. Under your 
proposal going forward, you now have more than 50 new 
facilities that will be added to the lists of sites where 
surrounding property transactions may be reviewed by the 
Committee on Foreign Investment in the United States (CFIUS) 
and now is totaling 227. So, I want to thank you. You all are 
moving.
    Secretary Yellen. We are.
    Mr. Scott. And this has to be our number-one national 
security issue, largely because it is a delicate dance. Many 
people don't know--we do know China is our greatest threat, but 
it is also our greatest and largest trading partner. So, it is 
a very delicate dance that we have to do.
    Now, tell me, how did you ultimately decide which military 
bases would be included in this latest expansion?
    Secretary Yellen. We worked very closely with the 
Department of Defense in issuing the notice of proposed 
rulemaking that came out yesterday, and they undertook a 
comprehensive assessment of military installations and 
considered a number of factors--operations, assets, missions, 
training at each installation, and what was appropriate in 
terms of coverage under CFIUS----
    Mr. Scott. Pardon me. I want to get to a couple more 
questions. My understanding is that three or more military 
installations were removed from that list.
    Secretary Yellen. Congressman, my understanding is that 
nothing is actually removed from the list, but when areas were 
expanded or new bases were added to the list, some existing 
bases may have fallen within the radius of another base that 
either was expanded or added. I don't think that there were any 
bases that were actually removed.
    Mr. Scott. Okay. Now, let me ask you this. To the best of 
your knowledge, is there any indication that the Chinese 
Government is looking beyond land purchases and farm land and 
expanding into buying other types of small businesses around 
military bases?
    I also want to thank you for working with my staff on this 
issue, and I hope that we continue to work together, because it 
is now the number-one issue facing us as far as agriculture is 
concerned, and now, as far as the national security of our 
nation.
    Secretary Yellen. I can get back to you on whether or not 
we are looking at small businesses, but----
    Mr. Scott. Thank you.
    Secretary Yellen. ----I believe that would be within the 
scope of CFIUS's----
    Mr. Scott. I look forward to working with you on that.
    Mr. Luetkemeyer. [presiding]. The gentleman's time has 
expired.
    I now recognize the gentlewoman from California, Mrs. Kim, 
for 5 minutes.
    Mrs. Kim. Thank you, Mr. Chairman.
    Secretary Yellen, thank you for joining us today. As you 
know, the House unanimously passed my bill, H.R. 540, the 
Taiwan Non-Discrimination Act. This will support Taiwan's 
membership at the IMF where statehood is not a prerequisite to 
join the international organizations, and the IMF has no 
conditions where statehood is not a requirement.
    And as you know, Taiwan belongs to the World Trade 
Organization (WTO) and the Asian Development Bank. So if Taiwan 
seeks its membership at the IMF, would you support it?
    Secretary Yellen. Taiwan has not expressed any interest in 
joining the IMF. This is not a decision that the United States 
Government----
    Mrs. Kim. With all due respect, Secretary Yellen, that is 
why we passed the Taiwan Non-Discrimination Act, and we are 
hoping that you will work with us and fully support Taiwan's 
membership in the IMF. And obviously, it goes without saying 
that the world would benefit from having the input and 
expertise of the world's 21st-largest economy. So, I hope you 
will work with us, and the legislation has already passed out 
of the House.
    Secretary Yellen. Sure. I guess what I can say is that we 
have supported greater engagement between the IMF and Taiwan, 
even with Taiwan being a nonmember.
    Mrs. Kim. Thank you.
    Secretary Yellen. We have urged surveillance activities----
    Mrs. Kim. Yes.
    Secretary Yellen. ----and other IMF activities to work with 
Taiwan to include them.
    Mrs. Kim. Taiwan has indicated their expressed interest to 
join, so when that happens, I hope you will support that.
    Let me move on to my next question. This is something that 
I know Representative Garbarino mentioned earlier, so I echo 
his comments to address the growing problem of indebtedness of 
low-income countries. G20 nations and the Paris Club agreed to 
the Common Framework with the Chinese Communist Party (CCP). 
Can you speak of any of your efforts to force the CCP to make 
its sovereign lending more transparent through the Common 
Framework?
    Secretary Yellen. We have engaged thoroughly over a long 
period of time, and deeply, in every way we can, with China to 
bring them to the table to participate actively in 
restructuring through the Common Framework. It has been 
frustrating, but I think that there has been some progress. We 
have urged the IMF and the World Bank--they have set up a 
sovereign debt roundtable, which is a forum to discuss issues 
that China routinely raises that aren't really case-specific, 
but broader.
    Mrs. Kim. Thank you.
    Secretary Yellen. And I think we have made some progress 
there.
    Mrs. Kim. Thank you.
    Secretary Yellen. And there are several countries where we 
have achieved----
    Mrs. Kim. Thank you, Secretary. Let's continue to be more 
vigilant in making sure that with like-minded countries, and 
with our allies, we can force the CCP to be more transparent.
    I am going to move on to the next question. We cannot 
afford to cave in to CCP demands that private creditors should 
be ignored in debt restructuring negotiations. There should be 
comparable treatment between public and private creditors. As 
you know, private capital is a powerful tool to counter the 
CCP's debt diplomacy.
    Earlier this year, the U.S. and the CCP launched a 
bilateral U.S.-PRC Counternarcotics Working Group to counter 
the manufacturing and trafficking of all illicit synthetic 
drugs, but I am afraid that we are giving away some of our 
leverage by lifting some sanctions, and once again, we are 
yielding to the empty promises made by CCP officials. Can you 
tell us about the role of Treasury and your role in the Working 
Group?
    Secretary Yellen. We participate in the Counternarcotics 
Working Group. And Treasury has also--under the auspices of a 
financial working group, we have established, with our 
counterparts led by the People's Bank of China, an anti-money 
laundering forum where we are working on best practices, which 
also relates to counternarcotics. We have seen China take some 
action against firms that are involved in producing precursor--
--
    Mrs. Kim. I know late last year, when Xi Jinping and 
President Biden met, they also started the fentanyl working 
group and the narcotics working group early this year. But we 
know from experience that we cannot solely rely on commitments 
made by Xi Jinping and CCP officials. So, I hope that you will 
do more to ensure that the CCP abides by the commitments that 
are established by the Working Group. I know you are 
participating, but please be more firm.
    Secretary Yellen. Yes. And we have taken sanctions actions 
ourselves against Chinese firms on this.
    Mrs. Kim. Thank you. My time is up. I yield back.
    Mr. Luetkemeyer. The gentlelady yields back.
    With that, we go to the gentlelady from Ohio, Mrs. Beatty, 
for 5 minutes.
    Mrs. Beatty. Thank you, Mr. Chairman, and Ranking Member 
Waters.
    Secretary Yellen, I would just like to make a quick comment 
about FinCEN's beneficial ownership reporting rule, which has 
been discussed by many of my colleagues this morning. I know 
you are collecting the data to protect our national security 
and our financial system, and you are doing it because Congress 
actually mandated it in the Corporate Transparency Act. 
However, I, too, am concerned that many of our small businesses 
don't know about this new requirement, but I am going to do my 
part to spread the word and to educate the business owners in 
my district.
    As a matter of fact, I am excited about hosting Treasury 
Under Secretary Nelson and FinCEN Director Gacki in Columbus 
next week for our FinCEN small business information test. We 
may want to get a little quote from you in light of your words 
today to help relax some of them that this is not an attack on 
them.
    Secretary Yellen. Thank you for participating in this. It 
is much appreciated. And we want them to know about it, but we 
are not looking to penalize small businesses that learn about 
it and take the actions they need to file.
    Mrs. Beatty. Okay. Well, thank you for that. We will 
certainly, in my opening remarks, include that and share that 
with the businesses, because we found out that many of them 
absolutely have no idea about this reporting.
    Secretary Yellen. Right.
    Mrs. Beatty. But the good news is there were some who not 
only knew about it; they had actually completed their 
transparency forms. So, we are going to continue----
    Secretary Yellen. It is pretty simple, filing for a small 
business.
    Mrs. Beatty. Thank you.
    Let me now go to the first question I have. Secretary 
Yellen, the World Bank's International Development Association 
(IDA), as you know, is undergoing a replenishment this year. As 
the largest single provider of development finance to the 
poorest countries, the IDA is essential to addressing the most 
critical development challenges and setting high standards 
across the field.
    What role does IDA play in addressing the critical 
challenges caused by climate change in developing countries, 
and how is Treasury pushing IDA to advance its development 
priorities for the next 3 years?
    Secretary Yellen. It plays an absolutely critical role in 
providing concessional demands to the poorest countries, and it 
addresses a wide range of needs from food insecurity to 
education, to climate, to pandemic preparedness, and other 
things. We look forward to an ambitious IDA21 refinancing, and 
we want to make sure that the funds are used effectively, given 
the enormous pressures that these countries are under, given 
all that has happened in terms of climate change, and also, in 
terms of pressures on food and energy prices.
    Mrs. Beatty. Okay. Thank you.
    Secretary Yellen, under President Trump, the United States 
became more isolationist as it exited the North Atlantic Treaty 
Organization (NATO) and engaged in close contact with 
dictators. How has the United States Treasury, under the Biden 
Administration, helped restore and reassert U.S. leadership in 
the global economy?
    Secretary Yellen. Thank you. Since day one, it has been a 
priority at Treasury for us to work closely and collaboratively 
with other countries around the globe to address common 
problems, whether it is food insecurity, development aid for 
countries so that they can grow, addressing debt problems, or 
addressing pandemic preparedness. We have worked closely on 
trying to set a floor on corporate income tax rates globally to 
stop what has been a decades-long race to the bottom.
    And certainly when it comes to our support of Ukraine, the 
United States has shown global leadership, and we have worked 
very closely with our global colleagues on support for Ukraine 
and sanctions against Russia. So, a wide range of things that 
is just a very partial list, and we really try to turn the 
clock 180 degrees in terms of cooperation and involvement in 
international fora.
    Mrs. Beatty. Thank you. And my time is up.
    Mr. Luetkemeyer. The gentlelady's time has expired.
    The gentleman from Nebraska, Mr. Flood, is recognized for 5 
minutes.
    Mr. Flood. Thank you, Mr. Chairman.
    And thank you, Madam Secretary, for being here today.
    Before I begin, I want to make a brief statement on 
something that is admittedly not within the scope of this 
particular hearing but is very important to my district and 
agriculture producers across the country. With the 45Z Clean 
Fuel Production Credit going into effect in less than 5 months, 
Nebraska's agriculture and energy producers need full and 
accurate guidance promptly.
    I was disappointed to see Treasury release guidance in 
April for the 40B Sustainable Aviation Fuel Credit that 
rejected the best available scientific data and tied the hands 
of our nation's agricultural producers with an unworkable, one-
size-fits-all limitation.
    Nebraska's farmers don't need the Federal Government to 
come in at the eleventh hour and dictate which practices are 
acceptable and not acceptable. And I will continue to advocate 
for greater flexibility that fully recognizes the role 
Nebraska's producers play in the future of transportation fuels 
and for an all-of-the-above energy policy that puts our farmers 
first. I plan to submit some questions, Madam Secretary, for 
the record on this issue, and I would appreciate a quick 
response.
    Switching gears, Secretary Yellen, in response to a letter 
from Chairman McHenry, among others, regarding FSOC's calls to 
fill the spot market gap in digital assets, it was noted that, 
``crypto asset platforms engage in practices commonly subjected 
to greater regulation, including operating order book style 
markets and custody crypto customer assets.''
    Those activities sound a lot like activities undertaken by 
centralized intermediaries, and centralized intermediaries are 
undoubtedly an important piece of the regulatory puzzle for 
digital asset regulation. That is why this committee and the 
Agriculture Committee collaborated together on the Financial 
Innovation and Technology for the 21st Century (FIT21) Act, 
which provides a new regulatory framework with sufficient 
responsibility and resources for the CFTC to effectively 
regulate spot markets for digital assets that are not 
securities.
    However, I think it is important that we think about some 
of the unique characteristics in decentralized systems as well. 
These protocols will allow willing buyers and willing sellers 
to find one another and make a trade based on the rules of the 
protocol to any of the market participants.
    Here is my question: What do you think about decentralized 
trading protocols that do not create order book style markets 
or involve the custody of customer's crypto assets? Wouldn't 
these markets, which are unique relative to most of our 
understanding of traditional centralized markets, require a 
different approach to regulation?
    Secretary Yellen. You are talking about decentralized 
finance (DeFi) type of activities and----
    Mr. Flood. We have to recognize there is going to be a 
decentralized angle to all of this in digital assets, and so 
far, everything seems very centralized, so yes.
    Secretary Yellen. And your question is, what about the 
regulatory approach to those markets?
    Mr. Flood. When you look at this whole regulatory regime, 
how do you think about decentralized trading protocols 
basically that do not create order book style markets, or 
involve the custody of a customer's crypto assets? Have you 
given that a lot of thought?
    Secretary Yellen. This is certainly something that the 
regulators are looking at, the SEC, and, to some extent, the 
CFTC. Perhaps, some of these activities may fall under the 
regulatory umbrella of the banking agencies as well and----
    Mr. Flood. And I would add this, Madam Secretary. FSOC 
released a report in late 2023 which dedicated an entire 
section to the risks associated with digital assets. One such 
risk the report mentioned was, ``concentrated risk.'' I would 
like to focus on a couple of aspects of concentration risk on 
which I would like your views.
    If there are only a small number of entities that are able 
to serve as custodians of digital assets for registered 
investment advisors, would you agree that such an arrangement 
could constitute a concentration risk?
    Secretary Yellen. It could potentially, but I would need to 
know more about the details.
    Mr. Flood. I will note that a witness representing the 
registered investment advisors spoke in front of Our Digital 
Assets Subcommittee early last year and testified that his firm 
had, ``three, maybe four,'' options for digital assets custody 
currently, and indicated the number could reduce what the SEC's 
custody rulemaking.
    I guess, Madam Secretary, in the time I have left, if there 
are only a small number of entities that are able to serve as 
custodians of the now-approved spot Bitcoin's ETFs, would you 
view that arrangement as a potential concentration risk?
    Secretary Yellen. I just have to know more about the 
details. I would need to really look carefully at the case you 
have in mind.
    Mr. Flood. I will leave you with this: I emphasize that 
there are only a handful of custodians for spot Bitcoin ETFs, 
and most issuers only have one custodian.
    With that, Mr. Chairman, I yield back. And thank you for 
your time.
    Mr. Luetkemeyer. The gentleman yields back.
    The gentleman from Illinois, Mr. Casten, is recognized for 
5 minutes.
    Mr. Casten. Thank you, Mr. Chairman.
    Madam Secretary, it is so nice to see you here again. I am 
grateful for your time today. I want to chat about this ongoing 
risk from climate change to our financial markets, and 
specifically to what is happening in insurance sectors. There 
has been a lot of reporting that I am sure you have seen--The 
New York Times said that homeowners' property insurance firms 
lost money in 18 States in 2023, so a third of our union----
    Secretary Yellen. Yes.
    Mr. Casten. ----at least as far as the Senate counts 
things. In Texas, home insurance rates went up 23 percent in 
2023. We have seen 15 companies that just left Florida after 
Hurricane Ida, and 12 insurers went totally insolvent after the 
hurricanes in 2021, and 20 in Louisiana. And I know we have had 
this conversation with you, and with your staff. Whether this 
presents a systemic risk to the G-SIBs is one question, but 
with over a third of Americans' wealth tied up in their homes, 
it is clearly disruptive.
    I am grateful for what the Federal Insurance Office (FIO) 
is doing to try to get the data. I have some concerns, though, 
that the data call from FIO is relying on the National 
Association of Insurance Commissioners (NAIC). And I have 
heard--I don't think this is public, but I have heard 
anecdotally and privately from folks whom I trust, that there 
are at least nine States that are not participating in that 
data call, and that those States tend to be ones that are most 
exposed to climate risk.
    So, my first question is, are you aware of those data gaps 
in the FIO data call, and what can FIO do to fill in those gaps 
to make sure we get a robust picture of where the financial 
risks are now?
    Secretary Yellen. I knew that a couple of States were not 
participating, but I thought it was the case that most of the 
States, where there are great concerns, are participating. I am 
happy to look into that in greater detail and get back to you.
    Mr. Casten. Okay. I don't know if that is public, but maybe 
we can share with staff what we are hearing, and we can just 
compare notes and see what we are seeing.
    Secretary Yellen. FIO and NAIC were able to collaborate, 
and we thought that was a better approach to trying to collect 
detailed, meaningful data that would give us insight into this 
problem. And so, that is the route we have taken.
    Mr. Casten. Okay.
    Secretary Yellen. We expect to learn a lot from this data 
collection. And as you say, it is potentially a very serious 
problem.
    Mr. Casten. Are you able to get--I don't know if you saw, 
there was a New York Times story today that referred to a 
National Bureau of Economic Research paper from last month, I 
think Keys and Mulder were the authors, but they essentially 
looked at insurance payments that are made and were able to 
subtract out public information on property tax and mortgages 
to get the inferred insurance that was paid as part of the 
escrow.
    Secretary Yellen. I'm sorry, I haven't seen that.
    Mr. Casten. Well, check out the New York Times today. It is 
fascinating, because it would seem to imply that there is a way 
to back into the data, at least as far as what is happening 
with----
    Secretary Yellen. We infer it----
    Mr. Casten. ----rates and where some of the exposures are, 
and we can get wonkier here than our time will allow, but it 
seemed to suggest that there is a real dichotomy between States 
that have a very pro-consumer regulatory structure, that 
therefore are not keeping rates high enough to attract 
business, and States that have a very pro-insurer regulatory 
structure that are letting antitrust issues run amuck and 
driving rates up. And meanwhile----
    Secretary Yellen. The State regulatory regime, I think, 
definitely matters to what is happening in individual States.
    Mr. Casten. Sometimes, 5 minutes bothers me. We should have 
longer conversations. The concern I have is that insurance is 
going to be this canary in the coal mine, except it is more 
like a gorilla in a very small closet, I guess. It is all 
regulated at the State level. In theory, we have FIO. In 
theory, I think this committee has jurisdiction over insurance 
generally, whatever that means. But it just feels like this 
huge Whack-A-Mole when we are trying to get data. And I am 
curious if you think that you or FIO, or maybe more broadly, 
FSOC--do you have the authority just to go and ask the right 
questions so that we can understand where these risks are 
pooling, or do we need to find other workarounds, maybe even 
more regulatory fixes?
    Secretary Yellen. FIO has looked very carefully at this and 
considered whether the collaboration with the insurance 
commissioners was an adequate way to collect this data, and on 
balance felt this was the best approach, and that we would 
collect information that would be very useful and provide a lot 
of insights.
    As you know, this is normally a State matter, and not a 
Federal matter, but there have been increasing calls. And given 
what is happening, I think the Federal Government should be 
looking very carefully at this, not just to provide 
information, but because there may be a call for Federal 
action.
    Mr. Casten. Yes, exactly. And I see where the risk is 
pooling.
    I am out of time, so I yield back. Thank you very much.
    Mr. Luetkemeyer. The gentleman yields back.
    The gentleman from Iowa, Mr. Nunn, is recognized for 5 
minutes.
    Mr. Nunn. Thank you, Mr. Chairman.
    And thank you, Madam Secretary, for being with us today. I 
want to highlight--I think we all agree that national security 
is at the top of the list, certainly at Treasury and here in 
Congress as well, and national security means standing up to 
Russia, China, and Iran. It is not about overly burdening small 
businesses in my home State of Iowa.
    So, let's get started today. I want to thank Secretary 
Yellen. My home State has 270,000 small businesses. In fact, it 
makes up 99 percent of our business in Iowa. And they are 
facing a tremendous amount of paperwork coming largely from 
Treasury, which is why we invited FinCEN Director Gacki to come 
out and hear directly from Iowans, and she did a great job, but 
she also got an earful. She heard and admitted that FinCEN has 
alerted only 2 million of more than 3.2 million small 
businesses of their obligation to fill out beneficial ownership 
information. That is an abysmal number, particularly when we 
have less than 6 months left in your timeline to help be able 
to execute.
    So here is my ask today, Madam Secretary: Would you support 
our bipartisan Small Business Red Tape Relief Act, which would 
extend the deadline for small businesses to be able to be 
compliant with Treasury?
    Secretary Yellen. FinCEN has 2.7 million reports so far, 
and they are engaging in a very extensive outreach and 
education effort. And it is their judgment that it is not 
necessary to extend the deadline, but----
    Mr. Nunn. Madam Secretary, I appreciate that. Let me share 
with you what was delivered directly to Ms. Gacki. The very 
fact that we have only alerted 2 million out of more than 30 
million is harmful. If they fail to meet it in the next 6 
months, it will be $500-a-day to small businesses. We are not 
going after the bad guys; we are going after small businesses 
in Iowa. I would ask you, as the Treasury, to extend this 
deadline and work on a bipartisan level with us to make sure 
that our small businesses are taken care of. I hope you hear me 
on that.
    Secretary Yellen. Look, we are not trying to go after small 
businesses that do their best to meet their responsibilities, I 
think because they don't----
    Mr. Nunn. Most of them don't know what their 
responsibilities are because they have not been informed by 
FinCEN at this point.
    Secretary Yellen. The CTA penalizes willful violations of 
the law, and we are not looking to take some sort of, 
``gotcha,'' enforcement actions against small businesses that 
are doing their best.
    Mr. Nunn. I certainly hope that is the case, because my 
folks back home see a $500-per-day fine as not only, 
``gotcha,'' but as a very painful impact.
    In that vein of setting deadlines, one of the things I 
would ask is, will Treasury be able to meet their November 1, 
2024, rulemaking deadline on 45Z, the Clean Fuel Production 
Credit?
    Secretary Yellen. This is the successor to the Sustainable 
Fuels.
    Mr. Nunn. That is correct.
    Secretary Yellen. That is something that Treasury is 
working on but I can't give you an exact--there are many----
    Mr. Nunn. I hope you meet your deadline, Madam Secretary, 
because you have laid out a very strict $500-a-day deadline for 
small businesses in Iowa that work largely in renewable fuels. 
I hope that Treasury can meet its own deadline that you have 
laid out of November 1st.
    I would like to change briefly now to Iranian illicit oil 
sales. I think we have all seen the threat in the Middle East, 
what it has done for Hamas, Hezbollah, and the Islamic 
Revolutionary Guard Corps (IRGC). Americans have died; 
Americans are still in the firing line; Treasury is the lead 
for sanctions. Can you tell us today, are there any U.S.-based 
firms providing insurance to Iran's illicit ghost fleet of oil 
tanker ships?
    Secretary Yellen. I can't speak to particular entities. 
What I can say is that we are working to crack down----
    Mr. Nunn. Let me give you what the New York Times has, 
Madam Secretary, which is a list of 27 tankers currently 
supporting the illicit sale of oil from Iran to some of our 
worst adversaries. General Michael Kurilla of U.S. Central 
Command (CENTCOM) noted that Iran continues to sell 90 percent 
of its oil directly to China and fund a terrorist war in his 
area of responsibility (AOR) as a result of this.
    I have asked 5 times now for Treasury to be able to find a 
list, both in the classified and unclassified versions, of how 
we are cracking down on insurance violators here in the United 
States. Are we going to be able to do anything, or are you 
going to be able to have an answer for us on the insurance 
companies here domestically based that are providing insurance 
to a terrorist regime?
    Secretary Yellen. Most of the insurance companies that I am 
aware of that do this are outside the United States.
    Mr. Nunn. But there are some here in the United States, you 
would agree?
    Secretary Yellen. I am not able to comment on specifics of 
investigations that we are doing.
    Mr. Nunn. I would like a follow-up.
    Thank you, Mr. Chairman. I yield back.
    Mr. Luetkemeyer. The gentleman's time has expired.
    With that, we go to the gentleman from New Jersey, Mr. 
Gottheimer, for 5 minutes.
    Mr. Gottheimer. Thank you, Mr. Chairman.
    Secretary Yellen, the average price of childcare in this 
country is now higher than the average cost of rent. In my home 
State of New Jersey, the average family pays more than $440-a-
week in childcare costs. What forms of tax relief are available 
for hardworking families struggling with these high costs, and 
what is the Biden Administration doing to combat the effects of 
these rising costs, please?
    Secretary Yellen. We certainly have proposed extending the 
Child Tax Credit, which was immensely helpful, and we are 
supportive of the legislation that has gone through the House, 
and would urge action in the Senate that would extend the Child 
Tax Credit along with other provisions.
    Mr. Gottheimer. Thank you. And I think it would be great if 
we could actually get that passed. It would lift 400,000 
children above the poverty line.
    Switching gears a little bit following on the questions 
that were just asked, I applaud your recent decision to impose 
additional sanctions on a shadow banking network that has 
enabled Iran to fund proxy terrorist groups, including Hamas, 
Hezbollah, and Houthis. Holding Iran accountable has been a top 
priority for me, and for many of us, which is why I was proud 
to help pass the bipartisan Iran-China Energy Sanctions Act and 
the Stop Harboring Iranium Petroleum (SHIP) Act. Can you 
elaborate more on these sanctions and additional actions the 
Administration is taking to reduce the risk of Iran-funded 
terrorism against America and our allies?
    Secretary Yellen. We have taken a wide array of sanctions 
actions to try to stop the flow of illicit funds from Iran that 
funds terrorist groups--the Houthis, Hezbollah, and others. We 
have worked jointly with other countries to impose--we are 
really using every tool that we have to crack down on that as 
well as sources of revenue, including oil revenues that enable 
Iran to have the funds to distribute to these terrorist groups.
    Mr. Gottheimer. Do you think we need to do more to address 
cooperative sanctions of Asian between Iran and our other 
adversaries, including Russia, China, and Venezuela?
    Secretary Yellen. I'm sorry, what specifically do you have 
in mind?
    Mr. Gottheimer. Are we doing anything there? Is that 
something that is on your front burner, that you are concerned 
about, the sanctions of Asians?
    Secretary Yellen. We note that there are oil shipments that 
Iran has, and we have systematically tried to shut that down 
and recently taken very significant actions that military 
groups in Iran have used to support their activities, oil 
shipments.
    Mr. Gottheimer. Thank you.
    Madam Secretary, are you familiar with the recent State 
laws that require banks to provide an explanation with specific 
reasons for closing or denying an account, including in 
situations where the decision was related to financial crimes 
risk?
    Secretary Yellen. Yes.
    Mr. Gottheimer. I am concerned that these State laws may 
conflict with Federal requirements, especially the obligations 
that banks have under the Federal anti-money laundering laws 
that prevent terrorists and illicit financing of the U.S. 
financial systems. I presume you share those concerns?
    Secretary Yellen. It is a Federal obligation to file 
suspicious activity reports and comply with the requirements of 
the Bank Secrecy Act, and that is something that we require and 
expect all banking organizations to do.
    Mr. Gottheimer. Are you doing anything to address this 
issue, this conflict here?
    Secretary Yellen. I am certainly stating that it is an 
obligation of banks and that we would enforce it.
    Mr. Gottheimer. Mr. Chairman, I would like to enter into 
the record a bipartisan letter signed by my colleagues on this 
committee, Representatives Luetkemeyer and Sherman, please.
    Mr. Luetkemeyer. Without objection, it is so ordered.
    Mr. Gottheimer. Thank you.
    We urge you and your counterparts at the OCC and FinCEN to 
look into this issue, please, and act. And I hope--if it is 
okay, I would love for our teams to sit down together and talk 
about actions that we can take.
    Secretary Yellen. I would be glad to do that.
    Mr. Gottheimer. Thank you so much.
    In my last 30 seconds, I just want to zoom in on a terror 
financing issue for just a minute. With respect to Iran, do you 
agree that the IRGC's designation as a Specially Designated 
Global Terrorist organization, as a foreign terrorist 
organization, should not be lifted until such time that it has 
demonstrated that it has permanently ceased the conduct for 
which it was designated in the first place?
    Secretary Yellen. I haven't looked into the exact 
requirements, but that is probably reasonable.
    Mr. Gottheimer. Yes, I am concerned about that, and, of 
course, looking at the United Nations Relief and Works Agency 
(UNRWA) employees who participated on October 7th, and I hope 
you are looking that as well.
    Secretary Yellen. We think that those who were responsible 
for the atrocities should be held to account.
    Mr. Gottheimer. Thank you. I yield back. Thank you.
    Mr. Luetkemeyer. The gentleman's time has expired.
    With that, we will go to the gentleman from New York, Mr. 
Lawler, for 5 minutes.
    Mr. Lawler. Thank you, Mr. Chairman.
    Madam Secretary, when was the last time you met with 
President Biden in person?
    Secretary Yellen. I meet with President Biden over a wide 
range of issues--the economy, China, Russia.
    Mr. Lawler. When was the last time you met with him in 
person?
    Secretary Yellen. I am not going to comment on my meetings 
with the President. Those are private.
    Mr. Lawler. Well, as a Cabinet Secretary, have you noticed 
any mental or cognitive decline in any of these meetings?
    Secretary Yellen. The President is extremely effective in 
the meetings that I have been in with him. That includes many 
international meetings that are multi-hour, like his meetings 
with President Xi. I have met with him with other leaders who 
are in----
    Mr. Lawler. So, are you testifying that you have not seen 
any mental or cognitive decline?
    Mrs. Beatty. Mr. Chairman, a point of inquiry. She is not a 
physician.
    Mr. Lawler. She is a member of the Cabinet.
    Mrs. Beatty. You are asking her a medical question.
    Mr. Luetkemeyer. Let's keep the comments to the subject of 
today.
    Mr. Lawler. It is not a medical question; it is her 
interpretation as a Member of the Cabinet.
    Mrs. Beatty. And I move to have those words taken down. Mr. 
Chairman, I move to have those words taken down. She is not a 
physician.
    Mr. Luetkemeyer. Will people please not go between the 
witness and the committee? Okay.
    Mr. Lawler, she has answered the question. Let's move on. 
You are recognized for the balance of your time.
    Mr. Lawler. Thank you, Mr. Chairman.
    Madam Secretary, have there been any discussions among 
Cabinet Secretaries about invoking the 25th Amendment?
    Secretary Yellen. No.
    Mr. Lawler. Okay. The supplemental appropriations bill 
enacted in April contained two of my bills, the SHIP Act, which 
requires the imposition of sanctions on foreign ports and 
refineries that knowingly process Iranian oil, and the Iran-
China Energy Sanctions Act, which requires you to close 
corresponding accounts for Chinese banks if they are involved 
in petroleum transactions with the Central Bank of Iran or 
another sanctioned Iranian financial institution. This applies 
no matter how minor or infrequent the transaction may be.
    In March, General Kurilla, the head of CENTCOM, testified 
before the Armed Services Committee that Iran continues to sell 
90 percent of its oil to China, funding Tehran's subversive 
activities across the region. That is a quote. Anyone who 
participates in the sale of Iranian oil plays a role in helping 
the regime evade U.S. sanctions. Engaging in this trade is 
tantamount to aiding and abetting a terrorist state, and it 
must end.
    These sanctions create a significant financial incentive 
for ports and refineries to stop dealing in Iranian oil, or 
else lose access to the U.S. economy. Since Joe Biden took 
office, Iranian oil sales are up over $100 billion, a $100 
billion increase. Can you speak to where you are in 
implementing these laws, the SHIP Act and the Iran-China Energy 
Sanctions Act, and will you commit to swiftly implementing 
these sanctions as required by the law?
    Secretary Yellen. I need to look into the details of where 
we are with respect to these particular Acts, but we have put 
in place a wide array of sanctions on Iran, including for oil 
dealings. We have sanctioned firms in other countries that are 
involved with the Iran oil trade, and we are constantly 
evaluating additional sanctions to put in place----
    Mr. Lawler. Since the supplemental aid package passed, have 
you had any meetings on the SHIP Act or the Iran-China Energy 
Sanctions Act?
    Secretary Yellen. I have regular meetings with my staff----
    Mr. Lawler. Have you had any discussions on those two 
provisions of the supplemental?
    Secretary Yellen. I have discussed Iranian sanctions with 
them.
    Mr. Lawler. Specifically, the SHIP Act and the Iran-China 
Energy Sanctions Act?
    Secretary Yellen. That is not the way we organize our 
discussions. We talk about our Iranian program and what we are 
doing.
    Mr. Lawler. I am going to interpret your answer to be, no, 
you have not had discussions on the SHIP Act and the Iran-China 
Energy Sanctions Act, and the Treasury Department has not 
advanced sanctions with respect to those two laws.
    Secretary Yellen. I have not said that.
    Mr. Lawler. Well, is it yes or no?
    Secretary Yellen. I have had discussions with them, and it 
has covered a wide array of sanctions issues in connection with 
Iran. I am not sure specifically which actions have to do with 
which aspects of the law----
    Mr. Lawler. Okay. I sent a letter----
    Secretary Yellen. ----and that is not how it is presented 
to me.
    Mr. Lawler. I sent a letter specifically on the SHIP Act 
and the Iran-China Energy Sanctions Act to you and Secretary of 
State Blinken a few weeks ago. We have not heard back. We 
certainly would appreciate a detailed response as to what has 
been done to implement the law that was passed under the 
supplemental aid package.
    And in my remaining time, have you communicated the 
sanctions risk to Beijing at all with respect to the Iran-China 
Energy Sanctions Act?
    Secretary Yellen. We have discussed with them our concerns 
about Chinese businesses and others involved with these 
matters.
    Mr. Lawler. But not specifically on the Iran-China Energy 
Sanctions Act?
    Secretary Yellen. We have discussed an array of sanctions 
issues.
    Mr. Lawler. Okay.
    Mr. Luetkemeyer. The gentleman's time has expired.
    Just a reminder to the committee that getting into the 
personal business of the President, as well as Mr. Trump, is 
inappropriate for this committee.
    With that, Ms. Tlaib from Michigan is recognized for 5 
minutes.
    Ms. Tlaib. Thank you, Mr. Chairman.
    And thank you, Secretary, for being here. As you probably 
know, many of the countries in the global south are facing a 
tremendous debt burden, almost--I think that is almost half of 
the world's population right now, 3.3 billion people are 
impacted by this, living in countries that spend more on the 
interest on their debt than the healthcare or education in 
their communities. And you know the IMF issues fees called 
surcharges on heavily-indebted countries.
    Secretary Yellen, do you believe that developing countries 
suffering through a perfect storm of global crises, including 
shocks to the food and fuel prices, soaring interest rates, 
climate change, and so much more, should be required to pay 
these fees on top of the interest they pay on their debt?
    Secretary Yellen. The surcharges framework we think is 
important to create appropriate incentives to repay the IMF in 
a timely way and to contain borrowings. But the IMF, with our 
support, is currently reviewing this policy.
    Ms. Tlaib. Do you support that review?
    Secretary Yellen. Yes, we are supportive of the review.
    Ms. Tlaib. Perfect.
    Can you explain to our residents what the Special Drawing 
Rights (SDRs) are at the IMF?
    Secretary Yellen. Special Drawing Rights are essentially a 
system in which countries agree to provide lines--the way I 
think of it is providing countries with additional lines of 
credit that are in proportion to their quotas at the IMF, and--
--
    Ms. Tlaib. I love telling my residents that it actually 
is--it would provide immediate relief to countries across the 
globe while costing the U.S. taxpayer nothing, absolutely 
nothing. Is that correct? Does it cost our U.S. taxpayer any 
money?
    Secretary Yellen. No. No, we earn interest on special if we 
provide hard currency for Special Drawing Rights. We earn 
interest on that, and it doesn't cost us anything.
    Ms. Tlaib. And, Secretary Yellen, is the United States 
actually standing in the way of new issuance or looking at the 
Special Drawing Rights?
    Secretary Yellen. We thought at the onset and after the 
pandemic struck, which hit so many countries, and created a 
global shortage of liquidity, that an SDR allocation was 
appropriate, and one took place, a large SDR allocation. At 
this point, we don't think an SDR allocation is needed or 
appropriate----
    Ms. Tlaib. So, you don't think a new issuance is required?
    Secretary Yellen. ----but we have----
    Ms. Tlaib. I don't want to send a message that our country, 
Secretary, doesn't--that our message to developing countries is 
that the U.S. is unwilling to respond to the debt crisis.
    Secretary Yellen. We have been very supportive of an 
expansion of the poverty reduction in growth trust. Congress--
--
    Ms. Tlaib. But why not just help them? I don't understand.
    Secretary Yellen. It does help them because it gives 
interest-free loans to the countries that are most in need.
    Ms. Tlaib. So, more debt. The way the international 
financial institutions are governed is inconsistent----
    Secretary Yellen. It is that SDRs are, in a way, debt too--
--
    Ms. Tlaib. I know, but----
    Secretary Yellen. ----because countries that use them do 
have to pay interest on them. So, it is not that different.
    Ms. Tlaib. Yes. The way the international financial 
institutions are governed is inconsistent with the democratic 
ideals we seek at home. And in the IMF, for example, the U.S. 
and other G7 countries get 41 percent of votes despite only 
having 10 percent of the global population. So, Secretary 
Yellen, what would you say to countries who feel we don't 
practice what we preach when it comes to democratic decision-
making and to international financial institution?
    Secretary Yellen. We have certainly been supportive of 
governance reforms that increase the role and the voice of 
borrowing countries so that they have more say and 
representation. We have supported adding directors who 
represent low-income countries. And we have supported the idea 
of reviewing the formula that would determine quota allocations 
in the future. We have been opposed to an ad hoc quota review 
that would reallocate in a sort of ad hoc way voting rights, 
but we are supportive of the IMF reviewing the formula that 
determines voting rights.
    Ms. Tlaib. Thank you. Thank you, Secretary.
    I yield back.
    Mr. Luetkemeyer. The gentlelady's time has expired.
    The gentlelady from Indiana, Mrs. Houchin, is recognized 
for 5 minutes.
    Mrs. Houchin. Thank you, Mr. Chairman. And thank you to the 
ranking member.
    And thank you, Secretary Yellen, for your testimony and for 
being here today. Like many of my colleagues, I have concerns 
about the ways in which this Administration continues to 
support policies and practices at international financial 
institutions that do nothing to further American interests, and 
instead, seem to only help China and our competitors continue 
to make gains at our expense. From allowing mission creep into 
social and climate issues, to giving our adversaries the upper 
hand in key geostrategic regions, this Administration has been 
allowing America's influence abroad to be undermined, and it 
has to stop.
    Starting with the first of this month and running until the 
end of next June, the World Bank is aiming to devote 45 percent 
of its financing to climate-related programs. In the Bank's 
latest annual report, climate was referred to some 200 times, 
largely in the context of the Bank's green energy investments 
and reducing the reliance of developing countries on fossil 
fuels.
    At the same time, China has been taking an all-of-the-above 
approach to energy investments, pushing renewable energy while 
also developing oil and gas resources. One of our foremost 
concerns when it comes to China and the CCP is the extent to 
which they exert their influence over developing countries by 
providing funding for basic necessities. When half the 
population of Sub-Saharan Africa does not have access to 
electricity to begin with, it is not hard to see why China's 
influence in that area might be growing.
    Secretary Yellen, if 45 percent of the Bank's resources are 
chasing arbitrary climate targets, why wouldn't developing 
countries keep looking to China and to Chinese lenders to meet 
their core developmental needs?
    Secretary Yellen. The World Bank and the MDBs are heavily 
focused on broad development goals, relieving poverty, and 
ensuring sustainable growth. But achieving those goals is also 
linked to addressing climate, which is increasingly 
compromising the development goals, especially in the poorest 
places, and climate and access to electricity are linked.
    At the spring IMF World Bank meetings, President Banga----
    Mrs. Houchin. Secretary Yellen, I'm sorry, I only have 5 
minutes, so I am going to go on to another question.
    Sixty percent of the U.S. electricity generation does come 
from fossil fuels, but as part of this Administration's climate 
agenda you are voting against virtually all World Bank fossil 
fuel projects in Africa. Why is the Treasury holding Africans 
to a standard that the wealthiest countries in the world cannot 
meet?
    Secretary Yellen. This reflects the goals that Africa 
itself has that very often, most often, renewables aren't the 
cheapest way of developing energy, and it is a question of 
bringing electricity in Africa--six hundred million Africans 
lack electricity and renewables. Both address climate change 
and resilience, and are the cheapest way of bringing 
electricity to those who don't have it.
    Mrs. Houchin. Okay.
    Secretary Yellen. There is a goal of bringing----
    Mrs. Houchin. One of the most egregious examples of the 
World Bank empowering China in its efforts to expand its 
geopolitical influence has been through allowing the CCP to 
overbuild its production capacity in certain products in order 
to flood the markets in other countries. They have done that 
with industries like aluminum extrusion and now, they have done 
it with solar technology.
    Last May, the President doubled U.S. tariffs on Chinese 
solar cells. And since the World Bank is aiming to direct 45 
percent of its financing in the next year to climate projects, 
the Bank's money may still just go to purchase Chinese solar 
panels, batteries, and the like. This seems to be supporting 
China financially in their efforts to expand their geopolitical 
footprint. Why is the Treasury supporting this if the 
Department is concerned with Chinese overcapacity and the CCP 
dominating the market in green energy industries?
    Secretary Yellen. We are very concerned about and attentive 
to procurement strategies and make sure that all of the MDBs 
have open processes and that American firms know--American 
firms rarely bid on these contracts, and we want them to do so.
    Mrs. Houchin. Does Treasury intend to roll back the 
reliance on Chinese solar panels in order to prevent them from 
profiting financially from the United States in this way?
    Secretary Yellen. If American firms or other firms can 
provide these solar panels and bid on those contracts, then 
certainly, there would be less use of Chinese products in 
those----
    Mrs. Houchin. We would certainly hope that U.S. companies 
would be chosen over Chinese companies when it comes to solar 
panels. Thank you very much. I yield back.
    Mr. Luetkemeyer. The gentlelady's time has expired.
    With that, we go to the gentleman from New York, Mr. 
Torres.
    Mr. Torres. Thank you.
    Madam Secretary, what impact on Treasury rulemaking do you 
expect from the loss of Chevron deference? Do you expect the 
impact to be disruptive, minimal, or is it too early to tell?
    Secretary Yellen. I am concerned about the Chevron 
decision. As the White House has indicated, it limits the use 
of agency expertise in designing rules or deferring to rules 
that we put in place subject to congressional legislation, but 
we intend to go on with rulemaking efforts, and protect the 
American people through those rulemakings, and our legal team 
is evaluating whether or not there is specific implications. I 
am not aware of anything specific so far.
    Mr. Torres. I have a question about the semiconductor arms 
race with China. According to a report by the Boston Consulting 
Group and the Semiconductor Industry Association, by 2032, the 
United States will account for 30 percent of advanced 
semiconductor production, compared to only 2 percent for China. 
Do you believe, as I do, that these projections demonstrate the 
success of the Biden strategy, the combination of chips 
investment in America and the export controls on China?
    Secretary Yellen. I do. Yes, I would agree with that.
    Mr. Torres. And Madam Secretary, you have been sounding the 
alarm about China's overcapacity----
    Secretary Yellen. Yes.
    Mr. Torres. ----of legacy chip making. According to the 
same report, by 2032 China will account for one-fifth of chips 
in the range of 10 to 22 nanometers and one-third of chips 
above 28 nanometers. What actions should the United States take 
to combat China's overcapacity of legacy chip making, and when 
should we take those actions?
    Secretary Yellen. The recent actions of putting tariffs in 
place did include some legacy chips. And of course, the 
semiconductor in the CHIPS Act is designed to promote 
additional production in the United States to secure our supply 
chains and to gain the dynamic benefits that come from 
producing and learning in the process of production, and 
developing new technologies.
    Mr. Torres. On a separate topic, the Financial Times has 
reported that Chinese organized crime operates a network of 
underground banks that launder money for both Mexican cartels 
who are trafficking in fentanyl and Chinese nationals whose 
capital is fleeing China. Chinese money laundering is 
essentially financing the deadliest drug crisis in American 
history, a crisis whose latest death toll surpasses 100,000 
Americans. What role is the Treasury Department playing in 
policing the illicit finance at the heart of America's 
deadliest drug crisis?
    Secretary Yellen. I certainly agree that it is a national 
tragedy, what has happened with drugs, particularly fentanyl 
and other synthetic opioids, and Treasury is using every tool 
at its disposal to try to crack down and reduce the flow of 
illicit drugs into the United States. That includes by direct 
sanctions that we put on firms in China and elsewhere that are 
providing precursors.
    We have an agreement to work collaboratively with China to 
reduce the activities of Chinese firms in supplying precursors 
to Mexico. We are working collaboratively with Mexico. We have 
announced many new sanctions actions, and are cracking down----
    Mr. Torres. I do worry that the CCP is stringing us along--
97 percent of the fentanyl precursors are manufactured in 
China. Xi Jinping has the power to unilaterally shut down the 
supply chains that account for almost all of those fentanyl 
precursors. At what point does the United States impose 
sanctions on China for perpetuating the deadliest drug crisis 
in American history?
    Secretary Yellen. We have seen China take some positive 
steps in recent months, and we will try to build on that, but I 
wouldn't rule out anything in the future.
    Mr. Torres. Okay. Thank you, Madam Secretary.
    Mr. Luetkemeyer. The gentleman yields back.
    The gentleman from Oklahoma, Mr. Lucas, is recognized for 5 
minutes.
    Mr. Lucas. Thank you, Mr. Chairman.
    Secretary, thank you for appearing before the committee 
today. I think you would agree that the health and resiliency 
of the global financial system is tied to the capital levels of 
global banks. Treasury's core mission is, of course, to provide 
for a strong economy and to protect the integrity of the 
financial system.
    During our discussion when you last appeared before the 
committee, you largely deferred to the Fed, the FDIC, and the 
OCC on the details of the Basel Proposal. I have been 
particularly focused on the negative impact the proposal would 
have on our capital markets, which are critical to the U.S. 
economy, and I hope this is an area to which you are also 
paying close attention.
    We are in a situation where the Chairman of the Fed today, 
during Senate testimony, said he still expects major revisions 
and would like to reopen the proposal for comment. At the FDIC, 
the current Chairman has announced that he will resign to 
restore confidence in the agency, while his replacement is 
awaiting Senate confirmation hearings. And at the OCC, we have 
an Acting Comptroller who has not been confirmed by the Senate. 
At the very least, given the expected revisions, reopening the 
proposal for further comment seems reasonable.
    Secretary Yellen, is it still your stance not to take a 
public position on the details of the Basel Proposal?
    Secretary Yellen. I am not going to take a stand on the 
details. I think that is up to the banking agencies and the 
rulemaking process that they will go through. As you noted, the 
agencies are planning significant revisions in response to all 
of the comments that they have received, and I am certainly 
supportive of their going through that process and revising as 
appropriate.
    Mr. Lucas. Secretary, I appreciate the position you are in, 
and given your history at the Fed, you are uniquely positioned 
to understand the far-reaching impact of the Basel Proposal and 
the potential for unintended consequences.
    Now, shifting focus, I would like to discuss the U.S. 
Treasury market. The global financial system depends on a well-
functioning Treasury market, the deepest and most-liquid market 
in the world, where any disruptions could create risk across 
capital markets. You have heard my concern about the Basel 
Endgame's impact on the Treasury market, paired with 
significant market structure reforms coming from the SEC. You 
have assured the committee that you are monitoring this, along 
with your interagency counterparts. Given the importance of the 
Treasury market to the United States and the world, we should 
ensure robust participation.
    Under Secretary Liang has suggested that excluding excess 
reserves held in the Federal Reserve System from the leverage 
ratio would be effective during times of market distress. The 
Fed did this in 2020, and it was effective.
    Secretary Yellen, do you agree that there are beneficial 
reforms that could increase participation in the U.S. Treasury 
markets?
    Secretary Yellen. That certainly is a reform that was 
worthy of discussion. And at the time, I thought it was very 
appropriate to take that step and would be supportive of 
greater liquidity in the Treasury market. But again, this is a 
decision for the banking regulators, but I would hope that they 
would take this into account.
    Mr. Lucas. The U.S. Treasury market is the most important 
market in the world and the bedrock of the global financial 
system, and I would encourage you to support those efforts to 
boost market liquidity and resilience.
    One last question. Two pieces of legislation led by myself 
and Representative Luetkemeyer officially added the Secretary 
of Agriculture to CFIUS, and improved the referral process of 
the agricultural transactions for review. Could you describe 
how CFIUS scrutinizes transactions in the agriculture sector 
and the relationship with the USDA, if you can?
    Secretary Yellen. For land transactions that occur in the 
vicinity of military installations that have been identified as 
the Department of Defense's critical ones, there is scrutiny of 
transactions, and, in some cases, there has even been 
outright--I think that in the MineOne case, the President 
ordered divestment of activities that were going on in the 
vicinity of a military installation. And yesterday, Treasury 
issued a notice of proposed rulemaking that follows a 
comprehensive study by the Department of Defense that adds 50 
additional military bases, and changes the geographic 
limitations of others.
    Mr. Lucas. Thank you, Secretary.
    And thank you, Mr. Chairman, for the effort that you and I 
have put into making this possible.
    Mr. Luetkemeyer. Thank you.
    The gentleman yields back. I think it is very important 
that we address this situation. I appreciate your working with 
us, and I appreciate the Secretary's work on it as well.
    The gentleman from Nevada, Mr. Horsford, is recognized for 
5 minutes.
    Mr. Horsford. Thank you very much, Mr. Chairman, and thank 
you to the ranking member.
    Madam Secretary, it's good to see you again.
    Housing remains the number-one issue in my district that I 
hear about from my constituents, but that should be no 
surprise, as Nevada is currently bearing the brunt of this 
country's affordable housing crisis. Supply or, rather, a key 
lack of supply remains the driver behind our affordability 
emergency, which has left southern Nevada with only 13 
affordable and available rental units for every 100 low-income 
households. This is an unconscionable level of scarcity, and 
incentivizing construction is the only feasible path forward. 
It is going to take strong public-private partnerships, as well 
as coordination with housing developers, to spur the investment 
necessary to make housing affordable for everyone.
    To do so, we must work with the tools available to us to 
leverage our Tax Code and make increased construction of these 
projects feasible across the country.
    Under your purview is the Low-Income Housing Tax Credit 
(LIHTC) program, one of the most powerful incentives that we 
have to provide the necessary support for the development of 
affordable housing. However, I have heard from my local 
developers that this effective credit could be more efficient, 
which would expand the population that it can serve.
    There are necessary improvements that the program could 
achieve which are included in my legislation, the Housing 
Market Transparency Act. The bill would create a central 
repository for State housing agencies to provide critical 
information on housing developments, such as the construction 
costs, quality of living spaces, health and safety information, 
and ownership data. The public-private partnerships of the 
LIHTC program that make it such an effective method of bringing 
affordable units to a community also create inherent issues 
with transparency.
    So, Madam Secretary, could Treasury and the IRS make LIHTC 
more efficient if you were able to capture comprehensive data 
on these properties? And, additionally, what other improvements 
to the LIHTC program do you recommend to help further 
incentivize the badly-needed construction of more affordable 
developments?
    Secretary Yellen. Treasury certainly supports efforts to 
improve transparency and accountability that are consistent 
with legal requirements. And we are very happy to review the 
bill that you have introduced and try to provide technical 
assistance. We could work with the IRS on administration of the 
LIHTC and see if there are interactions there that would be 
favorable.
    I completely agree that we have a real crisis with respect 
to affordable housing. I would say generally, Treasury is 
trying to think of how it can use every single tool at our 
disposal to improve the supply of affordable housing.
    I was in Minneapolis a few weeks ago and was able to 
announce that we are using $100 million that is income from our 
investments in the CDFIs to plow it back into affordable 
housing. And, of course, with respect to LIHTC, the President's 
budget proposes increased funding of LIHTC, which would be very 
important. The President proposed a program that would expand 
affordable housing by 2 million units, and I would love to see 
that become law.
    Mr. Horsford. I agree with the need to build more housing 
to address the affordability housing crisis.
    Madam Secretary, I also wanted to note the incredible 
success from the Direct File program, and I am pleased that 
Treasury recently announced that you will be making this Direct 
File program permanent. Nevada had the fifth-best uptake of the 
program of any State in the country. Notably, 90 percent of the 
respondents rated the program as excellent or above average. 
So, I believe that we need to continue to promote the Direct 
File program and expand and permanently reauthorize it so that 
Nevadans will be able to have that support all year to learn 
about their options to direct file and to earn the tax credits 
and benefits that they deserve. Especially as we have debates 
about who should get the tax benefits, it should be the working 
people of America, not big corporations or billionaires.
    Secretary Yellen. Thank you.
    Mr. Horsford. With that, I yield back.
    Mr. Luetkemeyer. The gentleman yields back.
    I will now recognize myself for 5 minutes.
    Welcome, Secretary Yellen. It's good to see you again 
today.
    We have discussed this issue in the past. My concern 
initially was a very slow response with regard to sanctions 
that were put on all things that could be helpful to Russia 
whenever they invaded Ukraine, and I asked you the last couple 
of times you have been here, in your position as head of FSOC, 
is there a committee or a group that is being put together to 
be able to have sanctions immediately ready to put on China 
when China invades Taiwan? Our own generals say it is going to 
happen over the next 3 years.
    Therefore, I think we need to have a plan in place so it 
doesn't take several months like it did with Russia, because I 
think, in order for us to be impactful, we have to do this very 
quickly. You indicated the last time you were here that there 
is a committee that is working on this. Would you like to 
discuss that a bit more?
    Secretary Yellen. Sure. There are interagency discussions 
around Taiwan.
    Mr. Luetkemeyer. Do those discussions include working with 
our allies to be able to identify different entities, different 
groups, to be able to sanction and make it more difficult for 
China to economically continue once they invade, and we put 
sanctions on them?
    Secretary Yellen. I'm sorry. I am not really able to 
discuss what----
    Mr. Luetkemeyer. I don't want specifics; I just want 
generalities here. I understand. But I think it is important 
for us to know as a committee, in order to provide our 
oversight, that there is a concern about this, number one, and, 
number two, that there are discussions going on, and that they 
include allies to be able to address this issue when and if it 
occurs.
    Secretary Yellen. We have many discussions about common 
issues with our allies.
    Mr. Luetkemeyer. Okay.
    Secretary Yellen. And I would include this in that list, 
but I am not able to provide any specifics.
    Mr. Luetkemeyer. I understand. Thank you very much.
    The next question is a bit different. What is your greatest 
concern when it comes to foreign finance issues like this?
    Secretary Yellen. When it comes to what?
    Mr. Luetkemeyer. With foreign finance. We are talking about 
foreign financial institutions and different issues today with 
regards to the international financial system. What is your 
greatest concern about all of this?
    Secretary Yellen. About foreign financial institutions?
    Mr. Luetkemeyer. Yes. Things that you are involved with, 
things that are concerning to our country, whether it be CFIUS 
or whether it be sanctions or whether it be artificial 
intelligence. What is the biggest concern you have when it 
comes to international financial relationships and issues?
    Secretary Yellen. I have many different concerns, but in 
the realm of sanctions, we have very powerful sanctions that 
are available because of the important role of the dollar in 
international transactions. The ability to cut off foreign 
banks or other businesses or individuals from the ability to 
transact through the U.S. financial system and to participate 
in the dollar rise----
    Mr. Luetkemeyer. Okay. So basically, your protection of the 
dollar is one of your greatest concerns?
    Secretary Yellen. I think that is important, and the more 
we have used sanctions, the more countries look for ways to 
engage in financial transactions that don't involve the dollar.
    Mr. Luetkemeyer. Okay. According to Executive Order 13818, 
a foreign person is to be sanctioned if the Treasury Secretary 
finds them responsible for, or complicit in, or directly or 
indirectly engaged in serious human rights abuse.
    With regards to Russia, we sanctioned Vladimir Putin and 
the Foreign Minister following the invasion of Ukraine. With 
respect to the Uyghur genocide, is it Treasury's position that 
the standard for sanctions applies to--with respect to the 
Uyghurs, is it Treasury's position that this standard applies 
for sanctions against Xi Jinping? And, if not, why has the 
Chinese leadership been spared?
    Secretary Yellen. We have engaged in sanctions related to 
the Uyghurs under the forced----
    Mr. Luetkemeyer. My question is, you sanctioned the 
leadership of Russia, but you haven't sanctioned the leadership 
of China. Why? That is the basic question.
    Secretary Yellen. This is a basic foreign policy issue that 
is better addressed----
    Mr. Luetkemeyer. Well, sanctions fall under your 
jurisdiction. So, the Administration and you working together 
have not felt that this is important yet?
    Secretary Yellen. This is a question I would suggest that 
you refer to the State Department.
    Mr. Luetkemeyer. Okay. I know that one of our Members 
talked about the sanctions against various banks in China with 
regards to drug money and the laundering of Mexican cartel 
money. I think it is important that we continue that. I sit on 
the Chinese Select Committee, and it is a really big deal that 
we continue to sanction those banks that facilitate the money 
laundering of money from the drug cartels because that is one 
of the ways we can kind of thwart that.
    With that, I yield back.
    The gentleman from North Carolina, Mr. Nickel, is 
recognized for 5 minutes.
    Mr. Nickel. Thank you so much, Secretary Yellen, for being 
here today.
    I was very glad to hear you commit to Congressman Hill that 
you will continue to work with Congress to create a regulatory 
structure for digital assets and that you hope it will reach a, 
``good conclusion.''
    I think it is especially important that we continue to work 
on this issue in a bipartisan way. This Congress is on track to 
be one of the least-productive in our nation's history, but 
this is a place where we have had good bipartisan agreement, 
and I hope you will continue to make it a priority for this 
Administration.
    I also want to talk about your role as Chair of FSOC and 
want to echo Congressman Flood's concerns with the 
concentration risk in the market for crypto custody due to the 
SEC's misguided Staff Accounting Bulletin No. 121 (SAB 121) 
which makes crypto less safe for consumers. We have the best 
banks in the world. They ought to be able to take care of this 
custodial banking piece. But I appreciate your attention to 
these important issues. And I certainly want to applaud you and 
your agency's important leadership on the global stage so that 
you can move forward American interests, repair alliances, and 
isolate dictators.
    My first question is about Russian oil. In April, I joined 
a bipartisan fact-finding mission in Ukraine to show our 
support in their war against Putin's aggression and unprovoked 
attack on their country. After I met with President Zelensky, 
it was clear to me that we need to do as much as we can to 
prevent Russia from fueling the war with profits from their oil 
exports. If we fail, we hand over Ukraine to Russia, and we 
know an emboldened Putin will continue on to eastern Europe.
    The U.S.-led oil price cap has reduced Russian export 
earnings significantly, but there is a lot more to do. On the 
whole, we are seeing countries comply with the price cap 
restrictions, but China, India, and Russia have access to 
limited non-G7 shipping and insurance services which don't have 
to comply with the cap.
    Secretary Yellen, what is the strategy to address the price 
cap circumvention? And how do you propose that we hold these 
countries and entities accountable?
    Secretary Yellen. As you said, at first, we had a very big 
impact on Russian revenues. And then, to circumvent the price 
cap, they invested very heavily in the shadow fleet of vessels 
and insurance coverage so they would free themselves of 
dependence on Western services, including shipping. That is 
expensive, and they have really diverted a lot of resources 
from other uses in order to build that fleet.
    Then, we took the step this past year of sanctioning some 
of the ships, the Sovcomflot ships that are involved in this 
trade and that appeared to be effective in widening the 
discount that they received on Russian oil. And we continue to 
look at expanding those sanctions.
    Our goals from the outset with respect to the price cap 
were twofold: we want to reduce Russian revenues or, 
alternatively, raise their costs of selling oil; and we want to 
keep the market well-supplied. And so, as we contemplate 
additional sanctions, we really also look at what impact do we 
think that our actions could have on the global oil market. If 
our sanctions raise global oil prices significantly, that would 
be a negative not only to American drivers but also to 
countries around the world that are dependent on foreign oil. 
So, we are going to be careful about doing it, but we continue 
to look at additional sanctions.
    Mr. Nickel. Thanks so much.
    As the world looks for alternatives to Russian and Iranian 
oil, nuclear energy must play a role. Governments around the 
world are shifting policies toward nuclear power as a clean, 
reliable source of 24/7 electricity. I am very glad the 
Administration has rallied the world and secured pledges from 
22 countries to triple their nuclear energy capacity by 2050.
    Unfortunately, Russia and China continue to dominate the 
global nuclear market. Meanwhile, U.S. companies are competing 
against foreign governments without meaningful support from the 
Federal Government. When countries in key strategic areas 
around the world need civil nuclear energy, I don't want them 
to rely on Russia and China.
    What should Congress be doing to assist the Administration 
in deploying nuclear energy around the world?
    Secretary Yellen. All I can really say here is that 
Treasury is supportive of using all available technologies, 
including nuclear. Our role is with the multilateral 
development banks. They, with the exception of the European 
Bank for Reconstruction and Development (EBRD), don't touch 
nuclear, and we have been supportive of having them review 
their policies in this area.
    Mr. Nickel. My time has expired.
    Mr. Luetkemeyer. The gentleman's time has expired.
    The gentleman from Michigan, Mr. Huizenga, is recognized 
for 5 minutes.
    Mr. Huizenga. Thank you, Mr. Chairman.
    And, Madam Secretary, it's good to see you again. I want to 
start with an issue that is important to a sizable population 
in my district, in the Battle Creek-Springfield area of 
Michigan, which is home to about 5,000 Burmese citizens. Last 
year, the Office of Foreign Assets Control (OFAC) issued a 
directive that prohibited Americans from providing any such 
services directly or indirectly that would benefit the Myanma 
Oil & Gas Enterprise, also known as MOGE. And actually, I would 
like, Mr. Chairman, to submit a copy of that for the record.
    Mr. Luetkemeyer. Without objection, it is so ordered.
    Mr. Huizenga. And last year as well, in consultation with 
the State Department, Treasury--you--determined that MOGE is a 
political subdivision of the military junta in Burma, in other 
words, the Burmese Government. The MOGE generates a billion 
U.S. dollars annually, and is by far their largest foreign 
revenue for Burma and, by extension, the junta.
    Unfortunately, late last year, Treasury stopped short of 
listing the MOGE as a Specially Designated National (SDN) 
which, as you know, not only blocks the assets but then puts 
other countries on notice that they shouldn't be doing business 
with this designated entity.
    So, Madam Secretary, why hasn't Treasury used its authority 
to block the MOGE from receiving financial support from around 
the world which is funding an abuse of government? And, 
frankly, what I would like to know is what would you have to 
say to my constituents, and what am I supposed to tell these 
folks, many who have fled the civil war in Burma, the genocide 
that is happening, the continued bombings that are happening, 
for their family members who are still living in these horrific 
conditions?
    Secretary Yellen. We absolutely are committed to denying 
the Burmese military sources of funding that they are using to 
suppress the restoration of democracy.
    Mr. Huizenga. So, why would you leave them off that 
particular list?
    Secretary Yellen. We did announce sanctions relative to 
MOGE, and we issued a directive that prohibits U.S. persons 
from providing financial services to MOGE for its benefit.
    Mr. Huizenga. I understand. But again, you left them off a 
list that would have toughened those up. And frankly, in 
response to that, last week, along with my colleagues from this 
committee, Mrs. Wagner and Mr. Sherman, we introduced the 
bipartisan BRAVE Burma Act, which requires the President to 
determine on an annual basis whether to impose stronger block 
sanctions on MOGE, on the Myanma Economic Bank, and on foreign 
persons operating in the jet fuel sector of the Burmese 
economy. That is where those bombings are coming from, and jet 
fuel is a critical piece to the junta continuing the genocide 
that is there.
    So, Mr. Chairman, clearly, I believe more work needs to be 
done, and I look forward to having this bill actually be a part 
of a markup.
    But, Madam Secretary, I need you to take a closer look at 
that because we, frankly, need your support.
    Secretary Yellen. I promise that I will do that. And we 
certainly are concerned with the situation in Burma, and are 
contemplating additional sanction actions, and we will work 
with you on that.
    Mr. Huizenga. Yes. I am not going to get into this right 
now, but we have seen some of those sanctions slip in other 
areas like Iran and Russia, and I am concerned about that. And 
we can continue that conversation.
    I am not expecting you to know details about this. This was 
from a letter we sent yesterday.
    And, Mr. Chairman, I would like to submit that for the 
record as well.
    Mr. Luetkemeyer. Without objection, it is so ordered.
    Mr. Huizenga. The letter is concerning significant problems 
with the enforcement of U.S. sanctions against the Taliban 
officials. In May, the Special Inspector General for 
Afghanistan Reconstruction, also known as SIGAR, highlighted 
that since the failed withdrawal from Afghanistan in August of 
2021, $10.9 million in U.S. taxpayer money has been paid to the 
Taliban in the form of taxes, fees, duties, and utilities.
    First of all, is there any reason to doubt the Inspector 
General and his report?
    Secretary Yellen. I have not had a chance to review it. And 
without looking at it----
    Mr. Huizenga. The report was from May. Our letter was from 
yesterday, and I would appreciate a quick response to our 
inquiry on this. I think this is a significant problem. And I 
know, in D.C., we talk about trillions and billions, but $10.9 
million of U.S. taxpayer dollars being used to pay the Taliban 
government taxes, fees, duties, et cetera, seems outside the 
bounds.
    Mr. Chairman, I know my time is up, but I do appreciate the 
opportunity to continue this conversation with you, Madam 
Secretary.
    I yield back.
    Mr. Luetkemeyer. The gentleman's time has expired.
    With that, we will go to the gentleman from Texas, Mr. 
Gonzalez, for 5 minutes.
    Mr. Gonzalez. Thank you, Mr. Chairman.
    And thank you, Madam Secretary, for being with us this 
morning.
    I am pleased that the Treasury Department noticed the 
proposed rulemaking concerning the outbound investments 
screening program. There is no doubt that U.S. money should be 
kept out of the hands of Chinese and Russian firms.
    I also want to add another angle concerning foreign 
investment that is a concern to us in south Texas, and I think 
along the border. Many of our constituents are seeing Chinese 
money flooding into Mexico where manufacturing facilities are, 
and are being developed south of the border so goods can be 
shipped to the United States as a Mexican product instead of a 
Chinese product.
    And I worry that, if we consider only the direct U.S. 
investments into Chinese or Russian factories that can produce 
technology of concern, those investments may be directed 
instead to factories overseas and Chinese-owned companies in 
third nations.
    Will the Treasury Department consider or have you already 
considered those sorts of nonlinear investments that aim to 
evade the goals of the President's outbound investment 
screening program? If not this mechanism, in what capacity 
could we work together in order to prevent U.S. investments 
from funding, for example, the semiconductor factory in Mexico 
that is owned by Chinese entities?
    Secretary Yellen. I think you raise an important issue, and 
it is one that we are aware of at Treasury.
    I made a visit to Mexico last year, and this is a matter 
that I have discussed with senior Mexican officials. We are 
having discussions with them about developing their own 
investment screening mechanism similar to our CFIUS. They are 
open to discussing and working with us on that, and I think 
that is a first step in looking at these issues. We realize the 
North American market is highly integrated and that we have a 
common interest in this----
    Mr. Gonzalez. That is what my next question was going to 
be. Have they been forthcoming in wanting to work with us?
    Secretary Yellen. They have been. And I discussed this when 
I was in Mexico at a press conference that I gave there.
    Mr. Gonzalez. It is a huge concern not only to our direct 
investments but a lot of things that are happening with the 
Chinese moving into that region.
    Secretary Yellen. You are right, and it is an important 
issue.
    Mr. Gonzalez. Thank you.
    Also, in 2023, Mexico received a record $63 billion in 
remittances, a 7.6-percent increase from 2022, 95 percent of 
which came from the United States. With the recent surge in 
remittances, I am concerned that this has inadvertently made it 
easier for some of the Mexican cartels to launder drug money, 
and for cartels to use civilians as conduits for remittances, 
who then hand the money back to the cartels, a practice known 
as, ``smurfing.''
    What is being done to limit the use of remittances as an 
avenue to finance illicit activities? How can we identify and 
monitor laundering schemes run through legitimate financial 
transactions? And I feel there is an increase--there was a 
recent report by a Reuters journalist who was down there and 
actually followed one of the ladies in Sinaloa who went to one 
of these places to collect the money, and then kept a very 
small slice of it and gave the majority of it back to the 
cartels. It is a huge concern as remittances grow, and I think 
certainly, they are harder to monitor and police.
    What are we doing and what cooperation do we have from 
Mexico? I think that should be a clear area of concern. I just 
see it as very unregulated.
    Secretary Yellen. We have certainly been focused on Mexican 
drug cartels and have been cracking down on them with Mexico's 
cooperation. With respect to remittances, many of them occur 
through money services businesses. And those businesses are 
subject to the Bank Secrecy Act's Anti-Money Laundering/
Countering the Financing of Terrorism (AML/CFT) compliance 
regime.
    Mr. Gonzalez. There has been a spike in the resources 
coming into Mexico, and it is just a concern being on the 
border. Seeing all of the activity and the growth of Mexican 
cartels on the other side of the border is really worrisome, 
and I think we should pay closer attention to this.
    There is a Mexican think tank that just said that $4.4 
billion of the money that we remitted to Mexico last year was 
sent directly to cartels, so I hope that we can continue to 
work on this issue.
    Secretary Yellen. It is an important issue. Of course, we 
want to work on it.
    Mr. Gonzalez. Okay. Thank you so much.
    Mr. Luetkemeyer. The gentleman's time has expired.
    Just a reminder, the Secretary does have a hard stop at 
1:00 today, so we are going to try and squeeze in as many 
Members as we can here.
    The gentleman from Kentucky, Mr. Barr, is recognized for 5 
minutes.
    Mr. Barr. Thank you.
    Madam Secretary, I want to drill down into the Treasury 
Department's ineffective sanctions strategy when it comes to 
Russia. A June 26th Wall Street Journal article highlighted a 
collision of foreign energy policies within the Biden 
Administration and frustration among Treasury staffers over the 
lack of action against oil trading networks that ferry Russian 
and Iranian oil. While on the one hand, Treasury sanctions are 
attempts to, ``throw sand in the gears of Russia and Iran's oil 
export machines,'' the article identifies attempts by the 
National Economic Council (NEC), led by Lael Brainard, to keep 
global oil output up to ward off pressures on inflation and, 
``keep gas prices stable ahead of the election by encouraging 
oil to flow into global markets.''
    Secretary Yellen, who is running the show in the 
Administration? Those who want to be tough on our adversaries 
like Russia and Iran or those who want to ensure that global 
oil flows keep gas prices stable ahead of the election?
    Secretary Yellen. It is a very good question. I think the 
article is, frankly, very misleading because the NEC and 
Treasury are really on the same page. We have been working 
together closely, and we really have identical goals.
    Mr. Barr. So, you're on the same page in terms of trying to 
defend this failed oil price cap scheme?
    Secretary Yellen. I'm sorry. I don't think it is a failed--
--
    Mr. Barr. Let me reclaim my time. Bloomberg reported last 
week that Russia's government revenues from oil sales rose 
almost 50 percent compared to last year. If this is not an 
indictment of Treasury's licensing policy and the failure of 
the oil price cap scheme, I don't know what is.
    Secretary Yellen. It worked very well in the first year----
    Mr. Barr. Not anymore, Madam Secretary.
    Secretary Yellen. ----when they should--okay.
    Mr. Barr. Let me reclaim my time. I offered an amendment to 
the Financial Services Appropriations bill. I got 30 Democrats 
to vote to sanction Russian oil exports--30 Democrats, mostly 
climate-oriented Democrats. This Administration, which has this 
massive climate focus, wants to punish American energy 
production. That is the whole strategy, through ESG and climate 
disclosure and no permitting, no licenses, no Keystone 
Pipeline. But, when it comes to Putin's oil machine, license 
it, allow exports of Russian energy. What on Earth are you all 
doing?
    Secretary Yellen. We have said explicitly from the very 
outset that we had two goals with the price cap program: number 
one, to apply pressure of revenue; and number two, to make sure 
the global oil market is well-supplied----
    Mr. Barr. You failed at them both, Madam Secretary, because 
you are waging a war against American energy, but you are 
green-lighting Russian energy. You are weak on Russia. I want 
this Administration to revisit the failed oil price cap scheme 
and sanction the crap out of Vladimir Putin's energy, which is 
financing the war effort.
    Secretary Yellen. We are----
    Mr. Barr. And the oil price cap is not working.
    Let me shift to China. Treasury has prohibited U.S. 
dealings with the publicly-traded securities of certain 
companies connected to the Chinese Military-Industrial Complex 
(CMIC). But, since being put on the CMIC list, Hikvision 
revenues have risen 30 percent, China Mobile stock prices shot 
up 90 percent, and Huawei, SMIC went on to develop an advanced 
5G chip, and Huawei isn't public to begin with.
    Clearly, regulating the trading of publicly-traded 
securities has proven irrelevant. Why doesn't Treasury impose 
blocking sanctions on these CMIC companies?
    Secretary Yellen. I can't discuss particular cases, 
certainly not in this venue. We are always looking at entities 
that are engaging in activity that could merit sanctions.
    Mr. Barr. Well, Madam Secretary, would Treasury welcome the 
opportunity by legislation, my bill, on China outbound? You all 
have issued an Executive Order. I think it is Congress' 
responsibility to create an outbound investment framework. 
Would Treasury welcome an opportunity through legislation to 
explain on an annual basis why it has refrained from imposing 
full blocking sanctions on Chinese entities on the CMIC list? 
And it could perhaps be addressed in a Sensitive Compartmented 
Information Facility (SCIF).
    Secretary Yellen. We can discuss it with you. I will have 
my staff be in touch with yours to understand what----
    Mr. Barr. We have a list of Chinese Military-Industrial 
Complex companies, but Treasury hasn't sanctioned any of them. 
That is a really good question for Treasury to answer for the 
American people through their elected Representatives in 
Congress.
    And with that, I yield back.
    Mr. Luetkemeyer. The gentleman's time has expired.
    We will now go to the gentleman from Illinois, Mr. Foster, 
for 5 minutes.
    Mr. Foster. Thank you.
    Secretary, was there anything you wanted to add about the 
oil cap policy that you didn't have a chance to during the 
previous round of questioning?
    Secretary Yellen. Thank you. What I wanted to say is that 
an objective is to keep the oil market well supplied so neither 
Americans nor residents of many countries around the globe, 
including the poorest, are faced with spiking energy prices. 
And we are considering additional sanctions on Soviet chips now 
that Russia has taken this approach, but we want to evaluate 
what the potential impact could be on global oil markets, and 
we are discussing that in an interagency basis.
    Mr. Foster. And I would also like to congratulate the 
Administration on having made a significant amount of money 
with the Strategic Petroleum Reserve (SPR), whereby you are 
sort of monetizing your ability to store oil and to be able to 
sell at a high price and refill at a low price and make the 
taxpayer a whole pile of money. So, to the extent you were at 
the table there, good work.
    I would also like to second my congratulations on your 
successful pilot program for the IRS Free File System and 
believe it should be an option available to taxpayers at all 
income levels. I have been introducing legislation in this area 
for more than a decade, so it is really nice to see it come to 
pass.
    And, as a next step, in February, I reintroduced the 
Autofill Act, which would allow individuals who choose to 
download tax forms that are automatically populated with 
information that the IRS already collects from employers, from 
the Social Security information, and from financial 
institutions. Our Tax Code is complicated enough, and we 
shouldn't force people to keep shoeboxes full of all of these 
stubs they get, and then have to use them for their tax forms. 
This would be a common-sense solution in most countries, to 
just have the government fill out part of the forms with 
information they already have, so please consider that as a 
next step in strengthening this very successful pilot program.
    On April 24th, President Biden signed the REPO Act, which 
gives the Administration the authority to seize Russian assets 
and use them for the benefit of Ukraine's war effort and their 
eventual reconstruction. Last month, the G7 agreed in principle 
to use the interest earned on frozen Russian assets to back a 
$50-billion loan for Ukraine.
    And following that meeting, you said that the logistics was 
a little more complicated and that you could not provide a 
timeline for getting that money to Ukraine. Since you made 
those comments a few weeks ago, has progress been made to get 
the money to Ukraine? And what challenges are you running into 
from our G7 allies? Is there anything that Congress can do to 
speed this process along?
    Secretary Yellen. Thank you for that. The leaders in the G7 
asked that we be ready by the end of the year to transfer 
money, so we are working very closely now that the leaders have 
endorsed this general concept to work out the details. There 
are steps that the European Union needs to take to make sure 
that the windfall revenues will remain available to service 
these debts. We are discussing the allocation of the loan among 
G7 members. These are very intense discussions taking place 
right now.
    Mr. Foster. Okay. If there is anything we can do to provide 
additional leverage in those negotiations, we are, on a 
bipartisan basis, willing to do so.
    Secretary Yellen. Honestly, this is a collaboration. The G7 
is working together constructively. There are some complex 
issues here, but we are working constructively to get this 
done.
    Mr. Foster. And I would also mention that the $50 billion 
loan could be the first of several, that this is the first 
tranche and, if necessary, there could be more behind it?
    Secretary Yellen. Yes.
    Mr. Foster. How far can this strategy go and on what 
timeframe to support Ukraine? What fraction of the amount of 
money you get by simply seizing and liquidating the Russia 
assets?
    Secretary Yellen. We think all options should remain on the 
table, and the REPO Act is a----
    Mr. Foster. But if you have to stick to this business with 
the loans and using the interest income, what are the limits to 
that?
    Secretary Yellen. We believe that a global approach 
strategy where the G7 and the European Union act jointly 
together is effective and appropriate. So, we are looking for 
strategies that other countries can also endorse and the issue 
of simply seizing assets, whereas we have been very clear that 
we believe there is a sound legal basis to do so in the United 
States and elsewhere. This has been something of a bone of 
contention, so the approach that the G7 leaders have endorsed 
is an alternative which doesn't raise all of the same issues as 
seizing the assets would, and it lets us act together as a 
coalition.
    Mr. Foster. Thank you, and keep at it.
    Mr. Luetkemeyer. The gentleman's time has expired.
    The gentleman from Texas, Mr. Williams, who is also the 
Chair of the House Small Business Committee, is recognized for 
5 minutes.
    Mr. Williams of Texas. Thank you, Mr. Chairman.
    And, Secretary, it's good to see you again.
    The last time you were here, I asked you what actions 
Treasury was taking to educate small businesses on their 
obligations regarding compliance with FinCEN's beneficial 
ownership information. And you acknowledged the burdens that 
small businesses will face with compliance surrounding this 
rule and committed to working with businesses to better educate 
them on compliance. However, from what I have been hearing from 
small business owners as I travel around, and being on the 
ground, is that they are still unaware of FinCEN's beneficial 
ownership requirements.
    FinCEN Director Gacki recently said that only 2 million 
small businesses out of over 32 million had filed beneficial 
ownership information. This shows that something needs to be 
done, because you cannot hold these small businesses 
responsible for something they have never heard of or are even 
aware of the rules of the road.
    My question would be, could you expand on how Treasury will 
work with small business to educate them on beneficial 
ownership? And is there any possibility for Treasury to provide 
more time for small businesses to come into compliance? That is 
important.
    Secretary Yellen. At this point, we are engaged--FinCEN is 
in a very broad outreach effort. It has received 2.7 million 
filings already. The filing requirements are easy to do, and 
FinCEN believes that the timeframe is adequate. The companies 
in existence before this year have until January 1st to file. 
But that is their current view. If things don't go according to 
plan, it will be considered.
    Mr. Williams of Texas. Well, small businesses are burdened 
right now, so please take a look at that.
    And the Biden Administration's climate agenda is forcing 
the IMF and the World Bank to take their eyes off the ball and 
channel resources and funding for climate-related projects and 
not projects that would enhance the overall well-being of a 
country or region.
    The World Bank is working to devote 45 percent of their 
financing to climate, and you are voting in opposition to any 
fossil fuel projects. Developing countries need access to 
electricity and other vital resources, not some unelected 
bureaucrats telling them that they can't finance an energy 
project in their country because it would support fossil fuels. 
Because of this, many developing countries will be forced to 
turn to Chinese financing. How is Treasury going to combat 
growing Chinese influence around the globe if your policies are 
enabling them to grow their influence?
    Secretary Yellen. What we see in countries in Africa and 
elsewhere is, for example, in Africa, you have 600 million 
people who don't have electricity at all, and actually want to 
use renewables to expand access and to address climate and to 
have systems that over time will be more secure and less 
dependent on fluctuations in global markets. And this is the 
strategy that they prefer.
    Our policy in terms of lending is that if it is not 
possible to use renewable energy--we want that to be looked at 
first--or if it is unduly expensive, we will vote in favor of 
projects that use natural gas, and, in fact, in those that have 
been presented, the great majority we have been supportive of. 
But climate is a very serious concern. In so many countries 
around the world, it is impeding the goals of sustainable 
development and poverty reduction. And it is a priority of 
borrowing countries as well as the World Bank and other MDBs.
    Mr. Williams of Texas. In business, you don't want to sell 
off an empty shelf, and you want to have products that people 
want to buy. So, I think we need to have all options available.
    There have also been developments at the IMF under the 
Biden Administration that I find extremely concerning, 
specifically the IMF proposed that billions of dollars in 
Special Drawing Rights assets be generally allocated as global 
membership. Now, this is alarming as hostile actors like China, 
Iran, and Russia can receive the funding to use as they please, 
all of which can be done without congressional approval.
    So, quickly, Secretary, you should be using your influence 
in the IMF to protect U.S. influence, ensure transparency, and 
prevent malign actors from exploiting resources. How could 
increasing IMF resources and allocating SDRs to China, Russia, 
and Iran affect U.S. national security? And what steps are you 
taking at Treasury to protect our U.S. interests?
    Secretary Yellen. We oppose allowing malign countries to 
use SDRs that they receive as allocation. We will not exchange 
them for dollars, which must be done in order for them to be 
used, and we work with other countries that have that capacity 
to make sure that it doesn't occur, and it hasn't occurred.
    Mr. Williams of Texas. Thank you.
    Mr. Luetkemeyer. The gentleman's time has expired.
    With that, we will go to the gentleman from New York, Mr. 
Meeks, for 5 minutes.
    Mr. Meeks. Thank you.
    Secretary Yellen, let me just say I greatly appreciate the 
work that you have done with the State Department, with the 
National Security Council, and with the whole Biden 
Administration in isolating Russia in the wake of its illegal, 
unjustified, and immoral invasion of Ukraine. Just yesterday, 
the Russians bombed the Children's Hospital in the center of 
Kiev with absolutely zero evidence of any military targets 
within the vicinity of that site.
    And then, I heard some Members of Congress rudely 
addressing you, talking about Russia when, in my opinion, what 
they should be talking about is the candidate of their choice, 
who has a bromance with Vladimir Putin, who gave away top 
secrets to Russia in the White House, who said that the Iran 
intelligence is better than the U.S. intelligence, who has said 
that he wants to be an ally and wants to emulate what Russia 
does with its parades and everything else, that he likes a 
strongman.
    So, they shouldn't be talking to you--a word about you and 
your policy. They better be talking to their candidate of 
choice as the rest of the world is worried about him being the 
President----
    Mr. Luetkemeyer. Mr. Meeks, we just had this conversation a 
while ago.
    Mr. Meeks. Well, if you are going to do it, I have to come 
back----
    Mr. Luetkemeyer. We had this conversation a while ago, and 
the conversation is that you stay away from the personalities 
and individual activities of the candidates, whether it be Mr. 
Trump or President Biden. Therefore, direct your comments to 
the Secretary----
    Mr. Meeks. I am.
    Mr. Luetkemeyer. ----with the issues of the day. You are 
going into the personalities, sir.
    Mr. Meeks. Well, I am talking facts.
    Mr. Luetkemeyer. We have already gone down this road. We 
have already gone down this road today. It is going to stop. Go 
back to questions with regards to other issues that you think 
are----
    Ms. Waters. Mr. Chairman?
    Mr. Luetkemeyer. Yes.
    Ms. Waters. The gentleman from New York was speaking about 
facts. He was not----
    Mr. Luetkemeyer. He was getting into personalities.
    Ms. Waters. He was not making up anything. He was talking 
about facts.
    Mr. Luetkemeyer. I have ruled on how this is going to go, 
okay.
    Mr. Meeks, you are recognized for the balance of your time 
to address issues that are important to this committee with 
regards to the Secretary's responsibilities for today.
    Mr. Meeks. I am talking about facts here, Madam Secretary, 
and the record will reflect that.
    Now, I have two bills, Madam Secretary--and I think this is 
the way that we should look at that--that I believe would 
further strengthen sanctions on Russia, both of which have been 
sent to your team and have garnered broad bipartisan support, 
because I try to work in a bipartisan way, except when I hear 
the other side not doing that. Then, we have to make sure that 
we step up.
    One bill would sanction leaders of the Russian nuclear 
company, Rosatom, and the other bill would preemptively ensure 
that no People's Republic of China (PRC) or other foreign 
company could work to build a tunnel from the Russian mainland 
to Crimea. I am hopeful that we can do some work together to 
get those bills into law, and I hope that we can do it this 
year.
    But I know that you have put in a lot of work in this area, 
so could you just please discuss the work that you and the 
Administration have done to hold Russia accountable as well as 
its enabler, China?
    Secretary Yellen. We have been focused, even before 
Russia's brutal invasion of Ukraine, when we realized that it 
was likely to happen, on creating the toughest possible 
sanctions regime that we could to deny Russia the military 
equipment it would need to carry out this war.
    And, as time has passed, we have strengthened our 
sanctions. We have sanctioned individuals, entities, and 
banking organizations, virtually the entire military-industrial 
complex of Russia, and have been seeking to reduce Russia's 
access to these goods that it gets from China and other 
countries that are suppliers. Iran is a supplier of drones, 
Unmanned Aerial Vehicles (UAVs). And we have an extensive 
sanctions regime which we are constantly tightening.
    Most recently, with respect to China, not only have we 
cracked down and placed sanctions on Chinese entities and firms 
that are involved in applying military-related goods, we have 
now gone after, with the President's new Executive Order, 
financial institutions that are processing payments involved in 
this trade trying to--basically threatening to cut off banks' 
access to the dollar-based trading system if they facilitate 
these transactions. And we have recently broadened it so that 
any foreign bank, Chinese or in other countries, that engages 
in transactions with any sanctioned entity in Russia, and that 
includes all of the largest Russian banks, Sberbank, VTB, and 
others, all of those financial institutions are subject to our 
sanctions. And we have put a price cap on Russian oil to try to 
reduce their revenues----
    Mr. Meeks. You did a lot of work, and you are continuing to 
do so.
    I wanted to ask you a question about outbound investments, 
et cetera, but I don't have the time. Thank you for the facts. 
Thank you for the work that you are doing to hold Russia 
accountable----
    Secretary Yellen. Thank you.
    Mr. Meeks. ----and China.
    I yield back.
    Mr. Luetkemeyer. The gentleman's time has expired.
    With that, we will call a stop to the hearing here with 
regards to the Secretary's wish to be able to stop at 1 
o'clock. We are going to get you out, Madam Secretary, I 
believe, in time. I would like to thank you for being here 
today and for your testimony.
    The Chair notes that some Members may have additional 
questions for this witness, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to this witness and to place her responses in the record. Also, 
without objection, Members will have 5 legislative days to 
submit extraneous materials to the Chair for inclusion in the 
record.
    I ask you, Secretary Yellen, to please respond to those 
questions no later than August 30, 2024.
    With that, the hearing is adjourned.
    [Whereupon, at 12:59 p.m., the hearing was adjourned.]

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