Patrick McHenryChairman

Washington, April 9, 2019 - WASHINGTON - Today, the House Financial Services Committee held its annual hearing to receive testimony from the U.S. Department of Treasury Secretary, Steven Mnuchin, on the state of the International Financial System. 

The Committee's Republican leader, Patrick McHenry (NC-10) delivered the following opening remarks:

"Welcome Secretary Mnuchin, welcome back to the Committee.

"You come before this Committee at a really precarious time for global markets. In fact, I wrote you in January right after the vote in the U.K. parliament regarding Brexit. In that letter, I raised questions about the uncertainty of a prolonged Brexit and that effect it would have on our financial institutions, derivatives market, cross border trading in financial services, and insurance contracts. 

"And after three failed attempts, the Prime Minister continues to work towards Friday’s deadline on Brexit. 

"In Europe, the long and uncertain path towards Brexit, is coupled with a possible slowdown in Germany. I’m particularly concerned by the overexposure of German Banks and what this means for U.S. financial institutions. This is a serious thing for systemic risk.

"For example, last month Forbes opined on the Deutsche Bank and Commerzbank merger indicating both banks were in such deep trouble that even a merger could not help either one of them. That’s problematic. 

"The global issues aren’t just limited to the U.K. and Europe. In China, the era of double-digit growth is seemingly at an end, thanks to the state-run allocation of capital, a disregard for the rule of law, and a regime that favors the theft of intellectual property over home-grown ideas, we see that coming home to roost. 

"Moreover, should we be concerned that China just joined the Bloomberg Barclay’s Global Aggregate Index, opening up their $13 trillion dollar debt market to investors. The move is expected to bring in more than $180 billion in investor capital to China.
What does this move mean for the global markets, what effect does it have? 

"Notwithstanding these risks, traditional threats to global stability remain, whether they emerge from international terrorism, weapons proliferation, or illicit finance flows. 

"Treasury plays a critical role by administering sanctions and protecting the U.S. financial system. Areas of bipartisanship on Capitol Hill and we view that Treasury is important to this, that’s why we’ve given you this authority and we think it should be used responsibly yet forcibly with clear objectives that serve our national interest.

"Finally, I want to make special note of the Committee on Foreign Investment in the United States, or “CFIUS,” which is quickly becoming a model for other countries looking to screen investments for national security risks. Treasury’s responsibility under this law has a significant impact on the global investment environment.

"Through bipartisan work here on Capitol Hill we made significant changes to CFIUS in a way that targeted legitimate national security threats while preserving – and even championing – the United States’ open investment climate. In fact, just last week, CFIUS unwound two deals involving Chinese investors. I look forward to working with the Chairwoman to ensure that piece of legislation is faithfully implemented and regulations conform with Congressional intent."