[Senate Hearing 119-065]
[From the U.S. Government Publishing Office]


                                                      S. Hrg. 119-065

               FINANCIAL SERVICES AND GENERAL GOVERNMENT 
                  APPROPRIATIONS FOR FISCAL YEAR 2026
=======================================================================

                                HEARINGS

                                BEFORE A

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                    ONE HUNDRED NINETEENTH CONGRESS

                             SECOND SESSION

                                   on

                           H.R. 5166/S. 3290

    AN ACT MAKING APPROPRIATIONS FOR FINANCIAL SERVICES AND GENERAL 
GOVERNMENT FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2026, AND FOR OTHER 
                                PURPOSES

                               __________

                     Small Business Administration
                    U.S. Department of the Treasury
                U.S. Securities and Exchange Commission

                               __________

         Printed for the use of the Committee on Appropriations
         
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]         

        Available via the World Wide Web: http://www.govinfo.gov

                               __________
                               
                U.S. GOVERNMENT PUBLISHING OFFICE
60-261 PDF             WASHINGTON : 2026
=======================================================================
                             
                      COMMITTEE ON APPROPRIATIONS

                     SUSAN M. COLLINS, Maine, Chair
MITCH McCONNELL, Kentucky            PATTY MURRAY, Washington, Vice 
LISA MURKOWSKI, Alaska                   Chair
LINDSEY GRAHAM, South Carolina       RICHARD J. DURBIN, Illinois
JERRY MORAN, Kansas                  JACK REED, Rhode Island
JOHN HOEVEN, North Dakota            JEANNE SHAHEEN, New Hampshire
JOHN BOOZMAN, Arkansas               JEFF MERKLEY, Oregon
SHELLEY MOORE CAPITO, West Virginia  CHRISTOPHER A. COONS, Delaware
JOHN KENNEDY, Louisiana              BRIAN SCHATZ, Hawaii
CINDY HYDE-SMITH, Mississippi        TAMMY BALDWIN, Wisconsin
BILL HAGERTY, Tennessee              CHRISTOPHER MURPHY, Connecticut
KATIE BOYD BRITT, Alabama            CHRIS VAN HOLLEN, Maryland
MARKWAYNE MULLIN, Oklahoma           MARTIN HEINRICH, New Mexico
DEB FISCHER, Nebraska                GARY C. PETERS, Michigan
MIKE ROUNDS, South Dakota            KIRSTEN E. GILLIBRAND, New York
                                     JON OSSOFF, Georgia

                  Elizabeth McDonnell, Staff Director
                  Evan Schatz, Minority Staff Director

                                 ------                                

       Subcommittee on Financial Services and General Government

                   BILL HAGERTY, Tennessee, Chairman

JOHN BOOZMAN, Arkansas               JACK REED, Rhode Island, Ranking 
SUSAN M. COLLINS, Maine                  Member
MARKWAYNE MULLIN, Oklahoma           RICHARD J. DURBIN, Illinois
DEB FISCHER, Nebraska                CHRISTOPHER A. COONS, Delaware
                                     CHRIS VAN HOLLEN, Maryland

                           Professional Staff

                               Dan Brandt
                              Winnie Chang

                      Jen Becker-Pollet (Minority)
                         Erin Dugan (Minority)
                         Maddie Dunn (Minority)
                       Maria Calderon (Minority)

                         Administrative Support

                              Brian Gutro

                            C O N T E N T S

                              ----------                              

                                hearings

                        Wednesday, May 21, 2025

                                                                   Page

Small Business Administration....................................     1

                         Tuesday, June 3, 2025

U.S. Securities and Exchange Commission..........................    23

                        Wednesday, June 11, 2025

U.S. Department of the Treasury..................................    43

                              ----------                              

                              back matter

List of Witnesses, Communications, and Prepared Statements.......    61

Subject Index:

    Commodity Futures Trading Commission.........................    63
    U.S. Department of the Treasury..............................    63
    U.S. Securities and Exchange Commission......................    63

 
  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2026

                              ----------                              


                        WEDNESDAY, MAY 21, 2025

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

    The subcommittee met at 2:30 p.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Bill Hagerty (Chairman), 
presiding.
    Present: Senators Boozman, Mullin, Fischer, Reed, Murray, 
Coons, and Van Hollen.

                     SMALL BUSINESS ADMINISTRATION


               opening statement of senator bill hagerty


    Senator Hagerty. Today, we welcome the Administrator of the 
Small Business Administration, my friend and former colleague, 
Kelly Loeffler. Thank you very much for being here. I'd like to 
also extend a warm welcome to Senator Reed as the new Ranking 
Member of the subcommittee. I look forward to working with you, 
Senator Reed, in a productive and bipartisan manner to address 
the important issues that face our Nation.
    Small businesses employ 61.7 million people, nearly 46.4 
percent of the U.S. workforce, and generate a comparable share 
of U.S. economic activity. To thrive, these businesses must 
constantly innovate, remain agile, and manage the resources 
carefully. Failure to do so can mean failure to survive. In 
contrast, some Federal agencies seem to expand regardless of 
physical constraints, often without making difficult trade-offs 
that small businesses have to confront every day.
    Administrator Loeffler brings with her a distinguished 
career in business. She understands what it takes to succeed 
and the challenges that entrepreneurs face. I trust she'll 
apply her vast experience to ensure the SBA operates 
efficiently and uses taxpayer dollars wisely.
    The Small Business Administration's initial budget request 
proposes total funding of $600 million in 2026 to manage its 
operations, its grants, and its loan programs. This direct 
appropriation supports a massive lending portfolio as well.
    In the current fiscal year, the SBA will guarantee 
approximately $72 billion in business loans. This includes $35 
billion under the 7(a) loan program, which is SBA's flagship 
tool. It's estimated to back over 50,000 loans through private 
lenders with SBA guarantees. The 504 loan program focused on 
real estate and equipment will provide another $16 billion. The 
Small Business Investment Company program will support $6 
billion in private investment capital for small businesses. 
Finally, the Secondary Markets Guarantee program will provide a 
$15 billion backstop to help lenders securitize SBA-backed 
loans and maintain liquidity.
    Since most manufacturers in the United States are small 
businesses, the SBA is uniquely positioned to assist them in 
rebuilding their domestic supply chains. In addition to 
business lending, the SBA also plays a critical role in 
disaster recovery, and I want to thank the SBA for their 
critical work in helping Tennesseans recover from Hurricane 
Helene in East Tennessee.
    Disaster loans help individuals and businesses rebuild 
physical assets and recover lost income. Applicants must be 
located in federally-declared disaster areas and meet credit 
criteria, and repayment standards. These programs collectively 
represent an important source of credit helping both 
entrepreneurs and disaster survivors.
    Thank you, again, Administrator Loeffler for testifying 
today. I look forward to hearing how you plan to manage your 
portfolio efficiently and responsibly. And now, I'd like to 
turn to Senator Reed for his opening statement.


                 opening statement of senator jack reed


    Senator Reed. Well, thank you very much, Mr. Chairman, and 
thank you for holding this hearing. It is our first hearing, as 
you noted, and I look forward to working together as we advance 
the 2026 bill on a productive and very bipartisan basis. Thank 
you, Mr. Chairman.
    Thank you, and welcome, Administrator Loeffler, and 
colleague Loeffler. Thank you for your service. You are here on 
behalf of Small Business Administration, and we look forward to 
your testimony.
    As we all know, small business makes up nearly 44 percent 
of America's GDP. In total, there are 34.8 million small 
businesses in the United States, which employ nearly half of 
American workers. In my home State of Rhode Island, there are 
over 100,000 small businesses employing the majority of Rhode 
Island workers.
    But the uncertainty created by President Trump's tariff 
regime is putting many of these businesses at risk. Indeed, 
where margins are tight, disruptive tariffs can sink a small 
business. And despite the recent 90-day timeout on some of 
these tariffs, Yale University researchers say that our 
Nation's tariffs are currently at their highest level since the 
Great Depression. These blanket taxes and tariffs are also 
raising costs directly or indirectly on every good that small 
business needs.
    Indeed, I recently heard from Mills Coffee Roasting 
Company, a coffee roaster located in Providence, that was 
founded in the 1890s, the President's blanket 10 percent tariff 
will increase Mills Coffee's cost by around $400,000 this year. 
That's a big number for small business.
    And coffee can only be grown in certain climates, meaning 
there is almost no domestic alternatives to the coffee beans 
they import. In other words, despite the President's claims, 
his tariffs on Mills Coffee simply punish American companies 
that provided jobs for over 150 years without bringing the 
production of their imports, coffee beans, back to the United 
States.
    As the President's on and of tariffs roil supply chains and 
small business finances, the question is, what is the Small 
Business doing to meet the moment? What we're seeing is cutting 
staff that respond during disasters, closing offices that help 
coordinate local businesses access to SBA programs in times of 
economic uncertainty, freezing and canceling millions of 
dollars in grants that help small businesses stock grow and 
thrive.
    And further, in President Trump's fiscal year 2026, skinny 
budget, the administration proposes cutting SBA by over 30 
percent, including the elimination of nearly all of SBA's 
training, counseling, mentorship programs that support small 
businesses across the country. And one asks the question, ``How 
does slashing these resources for small business help local 
companies grow or outcompete their foreign rivals?''
    And it is obvious that this skinny budget eliminates 15 of 
the 16 entrepreneurial development programs retaining only 
Small Business Development Centers. And one of those 15 
programs slated for elimination is the SBA Veterans Outreach 
Program, which provides targeted veteran small business 
programming.
    And frankly, this is unacceptable. Veterans have served, 
they've earned the respect and more than the respect of the 
American people, and they're uniquely positioned to be small 
business owners given their leadership skills and what they've 
learned from the military service. And in fact, we have to do 
much more, not less for these veterans.
    And Administrator Loeffler, I look forward to working with 
you, but we all understand, as you did, particularly as a 
Senator from Georgia, that the power of the purse and 
responsibility to conduct oversight of the executive branch 
rest with Congress. So, we would ask that you, and your 
colleagues, and fellow workers be responsive to us in terms of 
any requests we make for information. And, in fact, Section 713 
of the Financial Services General Account Government Act 
explicitly bars any agency from preventing its employees to 
converse with Members of Congress.
    And we were a bit troubled when SBA didn't bother to brief 
the subcommittee staff following its March 21st announcement 
that it would be slashing the agency's workforce by 43 percent. 
And the responsiveness has to be approved, frankly, Madam 
Director, and you appreciate that as a former Senator. I'm sure 
many times you were frustrated and please remember those days. 
There's a lot of work to do and we want to do it together, and 
we want to make progress for the country.
    And thank you, Madam Administrator, for being here, and 
thank you, Mr. Chairman.
    Senator Hagerty. Thank you. All right, I'm going to turn to 
the Administrator now for her opening statement.

STATEMENT OF HONORABLE KELLY LOEFFLER, ADMINISTRATOR, 
            SMALL BUSINESS ADMINISTRATION
            
    Senator Loeffler. Thank you, Chairman, and Ranking Member 
Reed. And Chairman Hagerty, certainly my thoughts are with 
Tennesseans as they endure the fallout from this crisis. The 
SBA will be on the ground with them.
    I want to say thank you to all the Members of the 
Committee. Thank you for the opportunity to appear before all 
of you today to discuss the President's fiscal year 2026 
discretionary budget request for the U.S. Small Business 
Administration. This budget reflects our agency's return to its 
mission with a clear strategy; streamlined services, eliminate 
waste, and ensure every taxpayer dollar delivered measurable 
results for America's small businesses and taxpayers.
    It consolidates duplicative operations, shifts resources to 
our field offices on the front lines, and refocus the agency on 
proven solutions, including our Capital Access Program and 
nationwide network of Small Business Development Centers.
    It reflects the President's belief that small businesses 
are not just part of the economy, they are the engine of it. 
And that to build a stronger, more secure, and more prosperous 
America, we must put Main Street and our job creators first.
    I'm pleased to report that under President Trump's 
leadership, and through the reforms we've implemented at the 
SBA, that's exactly what's happening. Main Street is making a 
historic comeback. Since January, President Trump has cut core 
inflation to its lowest level since 2021. He's secured over $10 
trillion in private sector investment, and he is delivered half 
a million new jobs while deregulating after the last 4 years of 
massive bureaucratic expansion of the regulatory State.
    He's brought dozens of countries, including China, back to 
the negotiating table for fair trade deals. Job creators and 
workers once again know that they have a seat at the table, and 
they know this administration has their back. Our economy is 
spring-loaded for growth, especially on Main Street, and I'm 
pleased to report that the SBA has never been more prepared to 
help small businesses lead the America First economic comeback.
    Since January 20th, we've undertaken a sweeping overhaul of 
the agency to refocus it on its statutory mission of supporting 
small business and fueling economic growth. Through free 
enterprise, we're committed to cutting red tape, restoring 
accountability, and delivering capital to the job creators who 
power economic opportunity growth and innovation.
    When we arrived at the SBA, it was bloated and 
dysfunctional, weighed down by a work-from-home bureaucracy 
that promoted a partisan political agenda. The Biden 
administration presided over unprecedented levels of fraud and 
4 straight years of failed audits.
    Our flagship 7(a) loan program was mismanaged to the tune 
of $400 million in negative cash flow in just 1 year, oversight 
and accountability had broken down along with any sense of 
fiscal responsibility to taxpayers. Common sense had left the 
building along with our workforce. That era is over and it is a 
new day at the SBA.
    I come to this role with three decades of private sector 
experience. Following an extensive review of the financials and 
operating metrics, I launched a full-scale reorganization to 
rightsize this agency. Returning to pre pandemic staffing 
levels, our team is unleashing resources that had been 
consolidated in Washington back into the field among our 68 
district offices and local communities.
    We canceled wasteful contracts for total cost savings of 
more than $3 billion. I'm proud that we're working alongside 
the DOGE team, who are not partisans, but Patriots and business 
leaders who care deeply about the financial future of this 
great Nation.
    We also took urgent action to restore the financial 
integrity of our core loan programs by reinstating the lender 
fees and restoring underwriting standards, eliminating the ``do 
what you do'' criteria that put taxpayers on the hook for 
billions of dollars. We implemented new identity and 
citizenship verification protocols to ensure that loans only go 
to eligible businesses, not illegal aliens, or fraudsters.
    We made it a priority to depoliticize the agency and in the 
era of picking winners and losers based on race or ideological 
belief, replacing that with our Nation's strong tradition of 
free enterprise. We eliminated DEI mandates, terminated the 
Green Lender Initiative, and withdrew SBA from voter 
registration schemes. We began relocating SBA offices out of 
sanctuary cities that refuse to enforce Federal immigration 
law.
    At the same time, we're helping rebuild American industry 
through the SBA's Made in American manufacturing initiative. 
We're backing new legislation, bipartisan legislation, to give 
small manufacturers additional capital. And just yesterday, we 
introduced a first-of-its-kind onshoring portal to help small 
businesses find American made supply chains and partners.
    The results are immediate and they're measurable. In our 
first 100 days, SBA loan approvals have skyrocketed by 80 
percent compared to the same time under the last administration 
loans to the smallest businesses. Those with five or fewer 
employees have nearly doubled, and the share of Federal 
contracts going to small businesses is now 23 percent up from 
just 18 percent when we came into office. With new opportunity 
and a strong economic agenda, demand for capital is up. 
Businesses are growing and confidence is rising across the 
country.
    I'm proud to say this is not the SBA of the past. This is a 
leaner, stronger, and unapologetically pro-small business 
agency. It's one that supports American industry and its 
workers, that respects taxpayer dollars, and will deliver 
results.
    I have seen the impact of these reforms firsthand from Bay 
City to Boise. Small business owners are expanding, hiring, and 
reinvesting in their communities. They know that for the first 
time since the first Trump administration, this administration 
is on their side.
    The SBA is once again serving the people who built this 
great Nation, not the globalist bureaucrats or partisan 
political interests, but the small defense manufacturer, the 
local construction company, and the tech company founders who 
put everything on the line to live the American Dream.
    Chairman Hagerty, and Members of the Committee, as a former 
small business owner and employee myself, I believe firmly in 
the dignity of work, the American dream, and the power of free 
enterprise to uplift every job creator across this country. 
That's what guides our work at the SBA. And I'm proud to say 
it's also the vision that we're returning to at the SBA.
    Thank you so much, and I look forward to your questions.

    [The statement follows:]
          Prepared Statement of Kelly Loeffler, Administrator,
                     Small Business Administration
    Chairman Hagerty, Ranking Member Reed, and Members of the 
Committee: thank you for the opportunity to appear before you today to 
discuss the President's FY 2026 discretionary budget request for the 
U.S. Small Business Administration.
    This budget reflects our agency's return to its mission with a 
clear strategy: streamline services, eliminate waste, and ensure every 
taxpayer dollar delivers measurable results for America's small 
businesses. It consolidates duplicative operations, shifts resources to 
our field offices on the frontlines, and refocuses the agency on proven 
solutions, including our capital access program and nationwide network 
of Small Business Development Centers.
    It reflects the President's belief that small businesses are not 
just part of the economy--they are the engine of it. And that to build 
a stronger, more secure, and more prosperous America, we must put Main 
Street and our job creators first.
    I'm pleased to report that under President Trump's leadership, and 
through the reforms we've implemented at the SBA, that is exactly 
what's happening.
    Main Street is making a historic comeback. Since January, President 
Trump has cut core inflation to its lowest level since 2021. He has 
secured over $10 trillion in private-sector investment. He has 
delivered half a million new jobs, while deregulating after the last 4 
years of massive bureaucratic expansion of the regulatory state. And he 
has brought dozens of countries--including China--back to the 
negotiating table for fair trade deals. Job creators and workers once 
again have a seat at the table, too--and they know this Administration 
has their back.
    Our economy is spring-loaded for growth, especially on Main Street. 
And I am pleased to report that the SBA has never been more prepared to 
help small businesses lead the America First economic comeback.
    Since January 20th, we've undertaken a sweeping overhaul of the 
agency to refocus it on its statutory mission of supporting small 
business and fueling economic growth through free enterprise. We are 
cutting red tape, restoring accountability, and delivering capital to 
the job creators who power opportunity, growth, and innovation.
    When we arrived, the SBA was bloated and dysfunctional, weighed 
down by a work-from-home bureaucracy that promoted a partisan political 
agenda. The Biden Administration presided over unprecedented levels of 
fraud and four straight years of failed audits. Our flagship 7(a) loan 
program was mismanaged to the tune of $400 million in negative cash 
flow. Oversight and accountability had broken down along with any sense 
of our fiscal responsibility to taxpayers. Common sense had left the 
building, along with our workforce.
    That era is over--and it is a new day at the SBA.
    I come to this role with three decades of private sector 
experience. Following an extensive review of the financials and 
operating metrics, I launched a full-scale reorganization to right-size 
the agency, returning to pre-pandemic staffing levels. Our team is 
unleashing resources that had been consolidated in Washington back out 
into the field, among our 68 District Offices in local communities. We 
cancelled wasteful contracts for total cost savings of more than $3 
billion. I'm proud that we are working alongside the DOGE team, who are 
not partisans, but patriots and business leaders who care about the 
financial future of this nation
    We also took urgent action to restore the financial integrity of 
our core loan programs by reinstating lender fees and restoring 
underwriting standards--eliminating the ``Do What You Do'' criteria 
that put taxpayers on the hook for billions of dollars. And we 
implemented new identity and citizenship verification protocols to 
ensure loans go only to eligible businesses--not illegal aliens or 
fraudsters.
    We made it a priority to depoliticize the agency and end the era of 
picking winners and losers based on race or ideological beliefs--
replacing that with our nation's strong tradition of free enterprise. 
We eliminated DEI mandates, terminated the ``Green Lender'' initiative, 
and withdrew SBA from voter registration schemes. And we began 
relocating SBA offices out of sanctuary cities that refuse to enforce 
Federal immigration law.
    At the same time, we are helping rebuild American industry through 
the SBA's Made in America Manufacturing Initiative. We're backing new 
legislation to give small manufacturers additional capital. And just 
yesterday we introduced a first-of-its-kind Onshoring Portal to help 
small businesses find American-made supply chains and partners.
    The results are immediate and measurable. In our first 100 days, 
SBA loan approvals have skyrocketed by 80% compared to the same time 
under the last Administration. Loans to the smallest businesses--those 
with five or fewer employees--nearly doubled. And the share of Federal 
contracts going to small businesses is 23%, up from just 18% when we 
came into office.
    With new opportunity and a strong economic agenda, demand for 
capital is up. Businesses are growing. And confidence is rising across 
the country.
    I'm proud to say that this is not the SBA of the past. This is a 
leaner, stronger, and unapologetically pro-small business agency--one 
that supports American industry and its workers, that respects taxpayer 
dollars, and delivers results.
    I've seen the impact of these reforms firsthand. From Bay City to 
Boise, small business owners are expanding, hiring, and reinvesting in 
their communities. They know that--for the first time since the first 
Trump Administration--this Administration is on their side.
    The SBA is once again serving the people who built this country. 
Not the globalists, bureaucrats, or partisan political interests--but 
the small defense manufacturers, the local construction companies, and 
the tech company founders putting everything on the line to live the 
American Dream.
    Chairman Hagerty and Members of the Committee: as a former small 
business owner and employee myself, I believe firmly in the dignity of 
work, the American Dream, and the power of free enterprise to uplift 
every job creator across this country. That's what guides our work at 
the SBA--and I am proud to say, it is also the vision we are returning 
to at the SBA.
    Thank you. I look forward to your questions.

    Senator Hagerty. Thank you, Administrator. And I want to 
particularly applaud the SBA's efforts in the Made in America 
manufacturing initiative. And I especially want to thank you 
for spending National Small Business Week in my home State of 
Tennessee in Nashville, meeting with small businesses across 
the State. They really appreciated your presence there helping 
Tennessee small business owners, and I think everybody knows 
this, but these small businesses are the backbone of America. 
And I appreciate your commitment to helping our small 
businesses thrive.
    To advance the subject with the President has proposed 
moving new lending of up to $10 million per small U.S. 
manufacturer from the SBA. Are you intending to provide this 
funding from an existing program or from a new program?
    Senator Loeffler. Chairman, thank you for the question. And 
it was a great honor to celebrate National Small Business Week 
in Nashville, and talk to everyone from contractors to 
restaurants and see the businesses thriving. And that's what 
the Made in America Manufacturing Finance Act is about. Is to 
help our businesses thrive even more.
    The last time that a loan size increase happened was about 
15 years ago. So, we're raising our manufacturing loan limits 
under the proposed bipartisan legislation from $5 million to 
$10 million. That would be provided still at zero subsidy to 
taxpayers like our entire 7(a) and 504 loan program operates, 
meaning no cost to taxpayers because those loan programs are 
supported by annual lender fees and guarantee fees.
    Senator Hagerty. So, no new appropriation required?
    Senator Loeffler. No additional appropriation. 
Unfortunately, the Biden administration had waived some of 
those fees and reduced them. So, that loan program under the 4-
year cohort of the Biden administration is negative cash flow 
to the tune of $2.2 billion. We will never let that happen, and 
we will alert this committee should we have any further issues 
beyond that. But our program will operate at zero subsidy for 
taxpayers.
    Senator Hagerty. Got it, got it. As Congress examines tax 
policy, can you explain how immediate expensing and tax cuts on 
domestic production will be able to strengthen domestic 
manufacturing?
    Senator Loeffler. Well, absolutely. That's what I hear as I 
travel across the country meeting with manufacturers. They are 
telling me that their business is spring-loaded for investment. 
These tax cuts are absolutely critical to not just 
manufacturers, but to all small businesses who want to invest 
that next dollar, but have the uncertainty that the tax bill 
still has not been passed.
    So, small businesses are telling me they need that tax bill 
more than anything. And we know that it's not just spring-
loaded, but between the access to capital, we're providing the 
tax cuts, the deflation, the counter-inflationary economic 
environment where investment is encouraged that this economy is 
spring-loaded once the tax cuts come through.
    Senator Hagerty. I couldn't agree with you more. And I 
frankly think that as the investment occurs, more jobs will be 
created, more economic activity therefore occurs. This positive 
feedback loop is going to be extraordinary for the American 
economy. And we'll be back on the same track we have been in 
the past, and I look forward to seeing your leadership in that.
    Administrator, the Biden administration's rulemakings, 
incurred nearly $1.4 trillion in incremental compliance cost. 
That's a drag on economic growth. The Trump administration and 
Congress have a clear mandate to streamline government 
operations and roll back excessive regulations. And I don't 
think this is deregulation for its own sake; it's about making 
the government serve our citizens more effectively.
    But some have raised concerns that streamlining at SBA, 
including some reductions in force that you mentioned earlier, 
could undermine the agency's ability to function. I want to 
know how you respond to this question and how ongoing 
streamlining efforts actually contribute to SBA's efficiency
    Senator Loeffler. Chairman, this is an important question. 
Taxpayers want to know that government is serving them and 
serving them efficiently, and that's what we're doing at the 
SBA. The agency had doubled under the last administration in 
terms of size and workforce, but yet, as we come into President 
Trump's administration, we've increased loan volume by 80 
percent in our 7(a) loan program.
    We're doing more with less, just like small businesses 
across Main Street have to do. We're more accountable to 
taxpayers. We're reigning in waste, fraud, and abuse. And so, 
what small businesses can expect to see is more of the SBA on 
Main Street. We're consolidating it out of Washington back into 
the field so small businesses will actually have more resources 
where they're located. We're working for Main Street, not the 
bureaucracy.
    Senator Hagerty. Much appreciated. I'll turn it over to 
Ranking Member Reed.
    Senator Reed. Thank you very much, Mr. Chairman, and thank 
you, Administrator. Earlier this month, you indicated that 
President Trump's tariffs will bring a period of change for 
small business, and I think that is right. Many, as I indicated 
in my opening statement, are very, very concerned about the 
cost of these tariffs.
    More than that, the National Federation of Independent 
Businesses in their monthly business index have saw that small 
business confidence levels have dropped every month since 
President Trump took office, which indicates that small 
business people are not exactly feeling yet, or even expecting 
many of the things you described.
    What are you doing right now to help businesses get through 
this period of change?
    Senator Loeffler. Ranking Member Reed, thank you for your 
question. Look, President Trump believes in the American worker 
and American industry. We have to have that back in this 
country, and the SBA is going to support him in those efforts 
completely because what we have seen across this country is a 
hollowing out of our productive capacity that didn't just cost 
us 7,000 factories, it cost us 5 million jobs in small towns 
where I grew up, where our union training center in a town of 
600 closed, it was one of the last major employers. And 
manufacturing jobs have left.
    We can never let that happen again, and we can never let it 
happen again. That small businesses rely on the Chinese 
Communist Party for their productive supply. We can do better. 
That's why the SBA is looking to increase onshoring through our 
lending programs. But also, yesterday announced our Make 
Onshoring Great Again portal that connects small businesses 
with 1 million suppliers across this country.
    As I've traveled from East Coast to West Coast, I have seen 
the incredible productive capacity and capabilities of our 
hardworking men and women in our factories across this country. 
And while the media narrative likes to say we can't make things 
in this country, I'm seeing it done in real time, and I'm 
seeing in investment in these factories. I'm seeing a skilled 
workforce being created. I'm seeing jobs and economic 
opportunities.
    Just on the factory floor last week, I met a young man. 
He's 21 years old. He had been in this at the CNC, a machine 
operator for 2 years. He just got married and bought a house. 
He has no student loan debt. He has a great future ahead of him 
as a skilled technician. And this is the new color boom that 
President Trump is going to bring to this country where we can 
make things in this country again, where we can export again.
    Well, we will have open export markets for small businesses 
who have 400 pages stacked against them in the U.S. trade 
report against our small businesses that no one has fought back 
on. And so, I'm excited to see what's happening across this 
country. It's a manufacturing renaissance, and I'm grateful to 
President Trump.
    Senator Reed. Well, thank you. It's going to take many 
years to reshore a significant number of businesses, and 
frankly, many small businesses will not be able to last that 
long unless SBA actively engages with them, helps them. And I 
hope you're appreciative of that point.
    And one of the major reasons we've had a diminution of a 
manufacturing was the NAFTA Agreement, the CAFTA Agreement, and 
the USMCA. And I opposed all those agreements, but it was both 
Republican and Democrats that passed them. We have to make up 
for that right now, and SBA has to be in the lead.
    You indicated that DOGE is working with you, and you also 
indicated it's non-partisan. Elon Musk is non-partisan, ss that 
your conclusion?
    Senator Loeffler. I'm really proud of the work we've done 
with our DOGE team.
    Senator Reed. No, I'm going to ask a specific question, 
Director. I know you've learned the filibuster in the United 
States Senate and you've demonstrated it quite well, but is 
Elon Musk nonpartisan?
    Senator Loeffler. Look, our DOGE team is a group of young 
men who are supporting our efforts, and I call the shots at the 
SBA. I'm the one calling the shots at the SBA, and I appreciate 
the support I've gotten in terms of some of the quantitative 
work that I wanted done in analyzing the financial and 
operational metrics. And I have made all those decisions, and 
they're not--they're based on the business skills I learned 
over three decades.
    Senator Reed. Does DOGE have access to data of American 
small businesses?
    Senator Loeffler. I can only speak to my--my team are 
members of the Small Business Administration, and they comply 
with all the laws that apply to all Small Business employees.
    Senator Reed. So, they're not DOGE people. They've been----
    Senator Loeffler. They're members of the Small Business 
Administration.
    Senator Reed. They're hired members of the----
    Senator Loeffler. Correct. They're employees of the SBA.
    Senator Reed. SBA. Temporary employees, or?
    Senator Loeffler. They're active and current employees.
    Senator Reed. Okay. Have DOGE reimbursed the SBA for any 
support they received from you?
    Senator Loeffler. Ranking Member, could you please clarify 
your question?
    Senator Reed. Yes. DOGE goes in, they do quite a bit of 
work and encounter cost. Do they turn to you and ask to be 
reimbursed, or what is the salaries typically of these young 
men?
    Senator Loeffler. They are employees of the SBA. I can come 
back to you----
    Senator Reed. Please.
    Senator Loeffler [continuing]. With regard to any 
compensation details as an employee, but.
    Senator Reed. I would appreciate that.
    Senator Loeffler. Happy to.
    Senator Reed. Thank you, Administrator, and I look forward 
to the second round.
    Senator Hagerty. Thank you, Ranking Member Reed. I'll open 
the floor up to questions right now, and I will turn to Senator 
Mullin.
    Senator Mullin. Thank you, Chairman. And Administrator, 
thank you so much for being here. You know, my Democrat 
colleagues continue to rail on President Trump's tariffs, and 
it seems like a lot of my colleagues forgot that of the 
literally hundreds of thousands of manufacturing jobs that have 
left the United States and the trillions of dollars of not just 
income throughout our communities, but also the billions of 
dollars of investments that we've lost over the last 30 years.
    And yet, they're completely silent on the fact that over 
the last previous administration, they averaged 4.95 percent 
inflation at a high point of 9.71 percent, which was a greater 
cross than these tariffs will ever be on our economy. And so, I 
appreciate you standing strong and fighting and this 
administration for fighting the way that they have.
    But with that being said, while you were on your 
manufacturing tour across America, which I love, I'm actually a 
little jealous of, I think that'd be absolutely awesome to walk 
into all these manufacturing plants and see these proud workers 
making a living and developing tomorrow's future. What did you 
hear about the tariffs?
    Senator Loeffler. Senator, first of all, it is such an 
honor to work for the SBA in terms of supporting the 
manufacturing initiatives, because you're exactly right. As we 
walk onto factory floors and we see the pride in American made, 
we see the American flag hanging in that factory. We're talking 
to apprentices coming in to manufacturing. It's absolutely 
encouraging. And they're encouraged by the Trump 
administration's belief in the American worker and restoring 
this industry because we did lose millions and millions of 
jobs.
    And that's why the SBA got to work as soon as President 
Trump unleashed what is a brilliant, fair trade agenda. We have 
to have this in this country. It's the first President that has 
had the backbone to stand up for the American worker. So, that 
is why we immediately responded with providing more capital. 
We've already set records for manufacturing loans in President 
Trump's first 100 days, issuing 1,120 manufacturing loans, an 
increase of 74 percent of the 7(a) loans compared to Biden's 
first 100 days. So, we continue to do that.
    We're working with manufacturers around skilled workforce. 
I was at a great technical and trade school last week where we 
saw students learning everything from welding, to CNC machine 
operating, to composites materials.
    And then finally, ensuring that we are advocating for those 
important tax cuts that will affect everyone, and that will 
allow us to enable this boom in manufacturing made in America 
through the not just the 199A deduction, but the 179A 
accelerated depreciation and immediate expensing, so.
    Senator Mullin. In your opening statement, you had talked 
about partisan funding that had been riddled through the SBA. 
Can you expand on that?
    Senator Loeffler. Senator, what we found was an agency that 
was almost aimed at social engineering through its loan 
programs. We saw DEI programs that crowded out our veterans' 
programs for small business statutory goals in contracting. We 
saw the use of trying to expand loan limits for Green New Deal 
companies which are obviously a scam. And we ended that. We saw 
lending companies giving licenses so that they could do DEI-
based lending.
    We recently reformed that announcing that Community 
Advantage SBLCs licenses would be rescinded if they didn't meet 
capital requirements. These are mission-based non-profit 
undercapitalized groups such as the Black Investment Fund, the 
Progress Fund, the People's Fund. And we saw some of their 
delinquencies as high as 30 percent when our portfolio runs at 
roughly 3 percent, including those terrible data points.
    So, we're really reigning that in for the benefit of small 
businesses who qualify all across this country, and to make 
sure they don't disadvantage or advantage anyone unevenly.
    Senator Mullin. You're starting to actually have loans 
based on merit not based on----
    Senator Loeffler. Yes.
    Senator Mullin [continuing]. Political ideas? That's great, 
that you're finally getting politics out of the SBA. That's 
where it should be.
    Senator Loeffler. And that's why the loans are growing. 
That's why the lenders are coming back to the program. They 
trust that these are fair and qualified loans.
    Senator Mullin. Thank you so much for being here, and thank 
you for the job for doing.
    Senator Loeffler. Thank you, Senator.
    Senator Hagerty. Senator Coons.
    Senator Coons. Thank you. Chairman Hagerty, Ranking Member 
Reed. Thank you, Administrator Loeffler, good to be with you 
again. It is unfortunate we don't have in front of us a full 
budget. That's the case of all the appropriation subcommittees 
on which I serve. What's the timeline on which you'll be 
providing us with an actual budget for us to review and work 
with you on?
    Senator Loeffler. Senator, we hope to have it to you in the 
coming weeks. I don't have a hard deadline for you, but as soon 
as we have it, we will be providing that to you.
    Senator Coons. As you can imagine, it's sort of difficult 
for us to do our work if the budget hasn't arrived and we can't 
have it in front of us. I think my small home State is typical. 
Small businesses are 98 percent of all the businesses and 
employ two-thirds of our workforce, and the SBA is crucial for 
those who want to start a new business. It provides a great 
resource for new and existing businesses.
    And I want to briefly at the outset recognize the service 
of Michelle Harris, the SBA State director who is retiring 
after 35 years of Federal service and know dedicated her career 
to lots of small businesses. I am concerned by actions you've 
taken to cut over 40 percent of the workforce at SBA and close 
regional offices. And from what we have in the skinny budget, 
you're proposing fairly significant cuts to an agency that I 
think does very important work.
    I wanted to focus for a moment, if I could, on a small but 
mighty part of SBA, which is the SCORE program. SCORE, as you 
know, was founded in my hometown of Wilmington by DuPont 
volunteers. And it is the definition of an efficient government 
program. There are 10,000 SCORE volunteers all over the country 
in every SBA office and district that help new small businesses 
launch.
    In fact, last year, these 10,000 volunteers helped launch 
63,000 small businesses, and Congress appropriated $17 million 
to it with a full year continuing resolution. This program 
should receive another $17 million.
    In your confirmation hearing, you agreed you'd want to work 
on a bipartisan reauthorization of this program, and the most 
recent study said that for every dollar we appropriate to 
SCORE, it generates $45, just in new Federal tax revenue. So, I 
think this is a wonderful program well worth saving.
    I understand you're here defending a budget that is not 
complete or finished, and that choice is not your own, just 
that's always true. Could you provide us with an update on the 
funding that's been appropriated and whether it's being 
dispersed, and tell me anything about how you see SCORE fitting 
into the mission of the agency to deliver highly efficient and 
effective support for small business?
    Senator Loeffler. Senator, thank you for your question, and 
congratulations, Michelle. And Senator, I also want to thank 
you for your support of the Made in America Manufacturing Bill.
    Look, as I've traveled across the country and done dozens 
of round tables with our resource partners or that provide 
technical assistance, be it SCORE Women's Business Centers, our 
Small Business Development Centers, and others, I've seen a 
fair amount of confusion by small businesses about who they 
should be working with.
    And within the budget constraints, it's important that we 
unify and streamline this agency so that small businesses have 
the benefit of going direct to the agency, which we have 1,000 
Small Business Development Centers that operate across the 
country, that provide direct access to our resource partners, 
as well as direct access to our lenders and the SBA.
    And so those SBDCs are critical in delivering those 
services to our small businesses. And we think that unifying 
and streamlining will create a better user experience for our 
small businesses, and have more accountability for taxpayers of 
eliminating overlapping services that often result in confusion 
for our borrowers.
    Senator Coons. But if I might, I think SCORE fits a unique 
niche in that it is seasoned, experienced, often retired 
business executives. People who've got personal experience 
financing, running, whether it's a manufacturing business, a 
service business and at very little cost of the Federal 
Government. They provide a service.
    I hear you on the--potentially, we could debate it, 
confusing array of different centers and missions. But I think 
SCORE fits a unique window.
    If I might, with your forbearance, one more question, Mr. 
Chairman. We also discussed during your confirmation hearing 
the SBIR program. I recently introduced with Senator Curtis the 
RAMP for Innovators Act, which expedites the application 
process, improves technical and business assistance, and 
focuses more on commercialization. Some have rightfully 
criticized SBIR grants as leading to circular, not moving 
towards the workplace. This is a bill that Senator Rubio and I 
previously worked on.
    SBA plays a critical role in the success of SBIR. Can you 
assure us when we get your full budget, that your agency will 
have the staffing to successfully implement this valuable 
program that takes research and innovation to the marketplace?
    Senator Loeffler. Senator, we've been reviewing the SBIR 
program, and we feel that it's languished in the last 4 years 
and needs attention to achieve the important aims of the 
program so that critical technologies can be brought to market. 
And in this reauthorization year for SBIR, I look forward to 
working with you and your office to understand how those 
programs can be strengthened across all agencies that utilize 
its important effort.
    Senator Coons. Thank you. Great. Thank you. Thank you, Mr. 
Chairman.
    Senator Hagerty. Thank you, Senator. I'll turn to Senator 
Fischer now.
    Senator Fischer. Thank you, Mr. Chairman. Welcome, 
Administrator Loeffler, it is such a pleasure to see you again. 
And I want to congratulate you on your nomination confirmation, 
and also thank you for all the good work you are already doing 
in this position. Your enthusiasm is evident, your passion is 
evident, and I know you will continue to provide the services 
that this administration has focused on, and that our need to 
happen for the small businesses across this country. So, thank 
you for that.
    As you know, in the 2017 tax bill, it included my bill to 
create a tax credit for employers who offer paid family and 
medical leave to their employees. The credit is the only 
national paid family medical leave policy that has ever been 
enacted into Federal law. The credit expires at the end of this 
year, and I've introduced legislation to make a couple of 
tweaks to make the credit permanent.
    I was pleased to see that the House included my bill in 
their tax package, and I look forward to working with my Senate 
colleagues to see that it is included in the final product. I 
believe that the SBA can play a critical role in increasing 
awareness of the credit.
    One of the tweaks we made in the bill was to require SBA to 
do targeted education, outreach, and technical assistance on 
the credit, and how employers can use this. And when we 
designed the bill, our hope was that small businesses would be 
able to take advantage of it to offer their hourly employees a 
paid family medical leave that many of them do not have the 
opportunity to have as employees from larger businesses and 
corporations have that. We know that over 75 percent of small 
business owners support a Federal financial incentives for 
small employers to provide paid leave benefits.
    Another survey tells us that for small business owners who 
don't offer paid leave, over 58 percent reported that while 
they wanted to, they couldn't afford to. So, I think awareness, 
education, assistance, are keys here, and I think the SBA will 
play a large role in helping to get the word out. Again, this 
is a tax credit, pro-business, pro-family not a mandate, not a 
new entitlement.
    Like, in fiscal year 2025, I also intend to secure funding 
for the SBA to conduct that outreach. Can you commit to me that 
SBA will carry out this work diligently and quickly once we're 
able to get the authority and the funding to do the work?
    Senator Loeffler. Well, Senator, thank you for your 
leadership in this important area, and you brought it to my 
attention during my confirmation process. So, I'm pleased to 
hear that it's progressed and it's timely because we at the SBA 
have refocused on our field organization and our 68 regional 
offices. And as you just heard, our 1,000 Small Business 
Development Centers, that would be an excellent conduit to 
support awareness, and implementation, and support. It's one 
more reason that this tax bill is so critical to small 
businesses across this country. So, I look forward to learning 
more about that with you and your team, and welcome the 
conversation.
    Senator Fischer. Thank you. Earlier this year, I joined 
with my Alaska colleague, Senator Sullivan, and Murkowski, in 
sending you a letter requesting the SBA issue guidance on SBA's 
contract program, 8(a) contract program, clarifying that the 
recent executive order that eliminates the DEI programs does 
not impact contracting with native-owned companies.
    And I appreciate your response that we have gotten 
guaranteeing that tribes will not be impacted by that executive 
order. It is important that we provide support to and for our 
native-owned companies through the 8(a) contract program, 
including conducting outreach through the Office of Native 
American Affairs.
    As we look at this program, , will you, first of all, 
commit to continuing to work with me on ensuring that SBA 
Tribal efforts are protected, but also to be able to stress the 
importance of this program in our outreach and support for our 
native tribes?
    Senator Loeffler. Absolutely, Senator. We look forward to 
talking with you further about this and actually visiting your 
State to learn more about the key issues there for small 
businesses and our Native Americans. Thank you.
    Senator Fischer. Thank you. We look forward to welcoming 
you to Nebraska, and once again, good to see you.
    Senator Loeffler. Thank you.
    Senator Hagerty. Vice Chair Murray.
    Senator Murray. Thank you very much, Mr. Chairman, for your 
accommodation. I'm running between several appropriation 
committees this afternoon, so I appreciate the opportunity to 
ask Administrator Loeffler a few questions.
    Now, first of all, I've been hearing from small businesses 
in my State about the SBA grants that have been canceled and 
frozen. One example is you canceled $2.5 million regional 
innovation cluster contract in Washington State that would've 
supported small businesses that were working on carbon capture, 
and utilization, and storage. It's not an isolated case, but 
that is a program that Congress historically funded with strong 
bipartisan support.
    I wanted to ask you today, why have you canceled funding 
for a program that has bipartisan support and really drives 
small business growth in our emerging sectors?
    Senator Loeffler. Vice Chair, thank you for the question. 
Our regional innovation clusters are certainly mechanisms to 
deliver support, technical assistance to small businesses in 
various regions based on expertise in that region and the needs 
of that region. I have brought authority in this administration 
to reshape the regional innovation clusters, and we are 
undertaking a review of those programs to rightsize them and 
form them to where the needs are most urgent.
    Right now, we've just announced that we have a regional 
innovation cluster centered around manufacturing because of the 
skills, and efforts, and the focus needed on that right now. 
But we intend to continue to pursue these programs based on the 
regional needs, and we'll be working----
    Senator Murray. Well, I would just say this is a regional 
need, and I would just ask you to go back and look at that one. 
Happy to provide you information, but it really is a critical 
one for our region.
    Senator Loeffler. I'd be happy to work with your office.
    Senator Murray. Okay. And I wanted to say I met with some 
small business owners in Seattle a few weeks ago. One of them 
runs a coffee shop and imports green tea. And like a lot of 
small business owners that I'm talking to, and you know, they 
operate on very thin margins, so the current tariffs are 
hitting them really hard. We don't grow green tea in the United 
States. I doubt we ever will. And given that the increased 
costs imposed by those tariffs could really--he told me shutter 
his business. What should they do in this situation?
    Senator Loeffler. So, this period of negotiation you know, 
is not one where we don't acknowledge their near-term effects. 
But for the long-term, we want to have a situation----
    Senator Murray. This is a small business. They can't last 
much longer.
    Senator Loeffler. Well, what we're focused on, is ensuring 
that we never get in the position of--again, of having unfair 
trade. And that's what President Trump's fighting for. That's 
what we're fighting for. We just yesterday put out our Make 
Onshoring Great Again directory to ensure that small businesses 
have access to a million suppliers across this country that can 
offer alternatives to them.
    Senator Murray. But this country doesn't produce green tea, 
and this small business is not going to last more than a few 
months. I hear your bigger scheme is that someday this will all 
pay off. This small business won't be there. What I'm just 
asking you----
    Senator Loeffler. Yes.
    Senator Murray [continuing]. What are they supposed to do? 
Are you going to having--do you have anything drafted or are 
you looking at anything that can help these small businesses 
who are on the verge of closing right now and they can't wait 
2, 3, 5, 6 months from now?
    Senator Loeffler. Well, what the SBA is offering is 
certainly the capital, the counseling that they need, as well 
as import and export loan financing to deal with these times of 
uncertainty. But the uncertainty is going to be short-lived. 
President Trump already has 75 countries at the negotiating 
table. We've already cut deals with China and the UK, and 
there's more to come, and small businesses are benefiting 
because inflation is down, because we're having $10 trillion of 
investment that we've never had in this country. We have 
economic opportunity on the horizon at that is really 
unprecedented.
    Senator Murray. I appreciate that you have an optimistic 
view. I'm just telling you, having sat down and met with these 
small businesses, whether it's shutting the regional SBA office 
or canceling these grants to support our entrepreneurs or these 
tariffs that are having impact on, there are small businesses 
that will not make it based on your optimism.
    Senator Loeffler. And there are small businesses that are 
going to be struggling if we don't pass this tax bill, too. So, 
small businesses unfortunately bear a lot of headwinds of 
uncertainty right now, specifically with regard to the tax bill 
that will affect 100 percent of all small businesses.
    Senator Murray. I'm not here to talk about the tax bill. 
I'm talking, I'm talking about our little shop owners that 
aren't going to make it well----
    Senator Loeffler. But small businesses obviously face a 
number----
    Senator Murray [continuing]. But I appreciate your 
response. Thank you.
    Senator Loeffler. Thank you.
    Senator Hagerty. Thank you, Vice Chair Murray. I'll turn to 
Senator Boozman now.
    Senator Boozman. Thank you. It's great to have you here, 
Administrator Senator Loeffler. We miss you, but we're very, 
very proud of the great work that you're doing, and I know that 
your heart is certainly in this, and you are doing a very, very 
good job.
    I guess the first question I'd have is just as a committee, 
what tools can we give you in your toolbox? You've been out and 
about and touring and trying to figure out. The world is very 
different now than it was a year or so ago. What additional 
authorities do we need to give here? How can we help you?
    Senator Loeffler. Well, Senator, thank you for the 
question. You know, it is humbling to serve our Nation's 34 
million small businesses, and then to be able to walk their 
restaurant floors, their showroom floors, their factory floors 
with them, and listen to what their needs are. And their needs 
are really along the lines of reduced regulation.
    They've suffered from 4 years of trillions of dollars of 
burdensome regulation. They almost faced a $4 trillion tax 
increase if we don't get this tax bill passed. The uncertainty 
from that they're focused on skilled workforce. They really 
need support on attracting that workforce into these, what we 
call new collar jobs for the fusion of technology and 
manufacturing, which is very exciting and is going to provide 
an on-ramp into the economy for towns that have been hollowed 
out by the prior three decades of shipping our jobs overseas.
    And so, obviously, our focus is on deregulating, supporting 
the tax cuts, providing capital, which we're doing at record 
levels for small businesses who are investing in themselves and 
ensuring that they have the access to the counseling through 
our Small Business Development Centers. I'm also really pleased 
of with our work to support our veterans who had been virtually 
left behind during the Biden administration. And so, what we 
are seeing is an opportunity to get the social engineering out 
of the SBA get back to Main Street, leave behind the 
bureaucracy that had been built up over the last 4 years.
    And then finally, small businesses want us to pursue the 
fraud that has happened in this agency that was swept under the 
rug the last 4 years and get back to focusing the resources on 
them. They're already seeing the impact in the field. They said 
that they feel that the Small Business Administration is now 
there for them again. And so, you know, continuing to support 
our funding, and certainly, the bipartisan Made in American 
Manufacturing Finance Act would be tremendous to continue to 
put America first.
    Senator Boozman. One of the things I'm always amazed at as 
you learn about the small business program is just how broad it 
is and the tremendous things that can be offered to small 
businesses. A lot of small businesses simply don't know. And I 
guess my question would be, you know, how can we help you? How 
can you help yourselves? What are we doing to make it such that 
small business is aware that there's this great vehicle out 
there, that this committee, you know, has worked hard to 
support through the years so that they can actually benefit 
from the opportunities?
    Senator Loeffler. Well, we certainly take that 
responsibility very seriously to get the word out. That's why 
we've put 30 percent of our staff into the field. We'd love to 
partner with your offices in the field to make sure that they 
know the resources available. We'll be working with the 
Veterans Administration to reach our veterans in the field 
collaboratively, the USDA as well. So, we would look forward to 
visiting Arkansas.
    We've certainly--our hearts go out to those impacted by 
recent disasters, and we've been on the ground serving 
disasters. In fact, we've put out more disaster loans in the 
first 100 days of President Trump's administration than all of 
the last year of President Biden's administration. So, we are 
back on the ground in local communities, and would welcome the 
opportunity to work with your office to support Arkansas small 
businesses.
    Senator Boozman. Tell me about the small business loan 
volumes. What is SBA being able to accomplish in the first 100 
days regarding small business loans?
    Senator Loeffler. Yes. So, you're asking specifically about 
the loan program?
    Senator Boozman. Yes.
    Senator Loeffler. Yes. So, we operate two core loan 
programs. The 7(a) loan program, we've seen tremendous increase 
in interest in that program. That's largely because we've put 
the guardrails back on the lending standards. Our lenders were 
very confused by the rolling back of the guardrails around 
underwriting during the Biden administration that unfortunately 
for that 4-year cohort drove a $2.2 billion negative cash flow 
for a program that should operate at no cost to taxpayers. So, 
we've cleaned up the underwriting standards and tightened that 
so that all small businesses that qualify have access to that, 
but that we aren't funding businesses that don't qualify.
    Our 504 loan program is also one that will benefit from the 
increased from $5 to $10 million in manufacturing. That's a 
fixed capital asset program, really are aimed at restaurants 
and manufacturers. Asset-based businesses. We're probably going 
to have the second highest year in that loan program in terms 
of volume. So, we see an interest in Main Street businesses, 
rural communities investing and growing thanks to President 
Trump's economic agenda.
    Senator Boozman. Good. Thank you. Thank you, Mr. Chairman.
    Senator Hagerty. Thank you, Senator. I'll call on Senator 
Van Hollen now.
    Senator Van Hollen. Thank you, Mr. Chairman. And it was 
good to work with you when you were Ranking Member. And I can't 
say that I'm happy we switched places, but congratulations. 
Senator Reed, thank you for taking on the Ranking Member 
position.
    Administrator Loeffler, welcome. I want to pick up actually 
on the SBA's role when it comes to disaster relief. I was out 
in Western Maryland on Friday. It's a beautiful part of our 
State, but it just got hit really hard by massive floods. The 
waters rose at an incredible rate, three feet per hour. In some 
places the waters rose as high as 23 feet. You may have seen 
some of the images of students at Western Port Elementary 
School being evacuated by boat. So, lots of damage done.
    I was out there surveying sort of the aftermath. The great 
news is communities are pulling together, and the emergency 
responders were doing a great job. But lots of damage to small 
businesses, to homes, to personal property. I have been 
concerned to hear Secretary Noem talking about the possible 
elimination of FEMA. That's a debate for another a day and 
another hearing. And I've been concerned about their talking 
about not allowing smaller disasters qualify for some of the 
FEMA declarations and relief because, as you well know, it may 
be small on the larger scheme things nationally, but they can 
be very intense locally, and the losses can be huge relative to 
the local jurisdictions, town's ability to handle them.
    So, I just did want to get your reassurance with respect to 
the SBA disaster loan program. When we had the collapse of the 
Key Bridge in Baltimore, because that wasn't a natural 
disaster, that didn't qualify for a FEMA declaration, but the 
Small Business Administration was there. And I do want to thank 
all the men and women of the Small Business Administration that 
played an important role there.
    And so, my question to you today is very straightforward. 
Given what just happened in Western Maryland, can I get your 
commitment that you will work with us? I think the governor's 
likely not final to make a damage assessment and declaration 
based on the surveys that they've been doing, and I would just 
like your assurance that you would work with us to make sure 
that if it qualifies, if the damage qualifies for the current 
criteria for SBA damage relief, that we could try to expedite 
that.
    Senator Loeffler. Absolutely, Senator. And my prayers are 
with all who are impacted. Our team is already actively 
evaluating that. And as you know, an SBA declaration can be 
made even if there's not a FEMA declaration. So, we will be on 
that very quickly as we have been and ensure that we provide 
whatever relief we possibly can.
    Senator Van Hollen. I appreciate that. You know, like the 
local library, the mud was three feet deep, the book collection 
pretty much wiped out. Same with the local fire department was 
in better shape, but lots of damage.
    If I could turn to student loans, because you mentioned 
some of the SBA traditional loan programs like the 7(a) 
program. We've been hearing, although I haven't heard this, 
confirmed, there's a possibility that people are trying to move 
the student loan programs from the Department of Education to 
the Small Business Administration. You know, my understanding 
is I think it's pretty clear that would require Congressional 
action. Number one, do you share that view, and are you 
expecting to make that request as part of the upcoming budget 
or through other legislation?
    Senator Loeffler. Senator, at this time, you know, the 
repayments on the student loans have just started under the 
Department of Education. And we will be working closely with 
the Department of Education, Treasury, the White House, and all 
of you in Congress to determine the best path forward. And I do 
strongly support President Trump's decision to return 
educational funds to the States where they belong with students 
and local education officials. But at this moment, there has 
been no final decision, and we will all be working closely 
together on that.
    Senator Van Hollen. Okay. I appreciate it. I don't want to 
get into debate about this, but you do agree that in order to 
make those changes, that would require a change in the statute. 
Right?
    Senator Loeffler. Senator, I'll defer to the White House as 
to the path that they're going to take to make those changes. 
At this time, I don't have anything to announce.
    Senator Van Hollen. Okay. And just to make sure I 
understood your answer correctly, you're not planning to make 
those proposed changes as part of the SBA budget request, full 
budget request?
    Senator Loeffler. Until I have further conversations with 
the White House, I don't have any budget request to announce at 
this time.
    Senator Van Hollen. Okay. Anyway, thank you.
    Senator Reed. Administrator, just let me follow-up on 
Senator Van Hollen. Last March, the President said, in the Oval 
Office, ``I've decided that the SBA, the Small Business 
Administration, headed by Kelly Loeffler, a terrific person, 
will handle all of the student loan portfolio. We have a 
portfolio that's very large.'' That's a quote from the 
President. He is reconsidering this decision now?
    Senator Loeffler. Senator, what we're focused on is 
supporting the White House's decisions and ensuring that we 
were able to take on whatever the President would ask us to do, 
and we would be working with the Department of Education and 
with Treasury should such a transition be made.
    And, you know, our agency operates a $444 billion loan 
portfolio that performs very well. It's a public-private 
partnership through lenders much like the Department of 
Education's program is with outsourced servicing and so forth. 
But we will be working with the White House on next steps.
    Senator Reed. Well, this portfolio is $1.6 trillion, and it 
has 43 million borrowers. And one, it'd be very difficult, I 
think, for any agency to assume that, particularly as we 
progress into the year and we don't have any direction and also 
if you're cutting your workforce by 43 percent, where will you 
get the people to run this very complicated loan program?
    And I must reemphasize what Senator Van Hollen said, you 
need Congressional authorization to make this transfer. And so, 
if you don't propose it, then it can't be done. And I hope you 
can communicate that back to the White House.
    One final point here on veterans. You're cutting veterans' 
programs, and it seems to me inappropriate. You're cutting the 
veterans outreach programs, which include Veterans Business 
Outreach Centers, the Boots to Business Program, and the 
Service-Disabled Veteran Entrepreneurship Training Program. I 
think we should be doing more for veterans, not less. So, why 
are you cutting aid to Veterans?
    Senator Loeffler. Ranking Member, I'm glad you asked. There 
is no stronger champion of veterans than President Trump, and 
that's why he plused up the Veterans Administration budget by 
$5 billion. And as the daughter and granddaughter of veterans, 
my father actually started a business based on what he learned 
in the military for trucking, and I'm proud of the work we're 
doing at SBA to actually grow our veterans' outreach.
    What we had seen was our veterans work had been crowded out 
by the DEI initiatives. We've rectified that. We're getting the 
small business contracting targets for veterans met again by 
reducing arbitrary DEI limits that the Biden administration had 
put in.
    This week alone, we're conducting 15 veterans outreach 
efforts for Boots to Business Reboot to serve our veterans in 
their local communities. And I'm excited to partner with 
Secretary Collins at the VA for an MOU. We have to streamline 
the VetCert and VetBiz on-ramp into the small business 
ecosystem, and then also working with the Department of Defense 
Transition Assistance Program as veterans come into that 
transition phase and looking at starting a small business.
    So, veterans are going to find that we are not cutting the 
VBOC. We are simply ensuring that they're working with our 
Small Business Development Centers, of which there are a 
thousand across the country, along with our PCRs, which are our 
procurement center representatives, putting them on base at 
military installations to better support that small business 
ecosystem. So, I'm really optimistic that we are going to make 
small business more accessible to more veterans than has ever 
been true before.
    Senator Reed. Well, I don't think the numbers are quite as 
supportive. You are planning to integrate these veterans' 
programs into the SBDCs and providing a $10 million increase 
this year. Last year, or fiscal year 2024, the level of 
congressional funding was $18.5 million. So, what you're 
proposing is a 46 percent decrease in funding direct to the 
veterans. And the numbers, I don't think lie.
    Senator Loeffler. Ranking Member, if you will, that's a 
floor. That's a $10 million floor minimally that we are putting 
into VBOC. But also, note that we talked about our district 
outreach at 68 district offices in addition to 1,000 SBDCs. So, 
we have quite a network and those are already delivering those 
Boots to Business Reboot efforts and the outreach on base.
    So, we are going to supercharge the resources that we have 
and make them front and center for veterans as opposed to what 
happened in the last administration where everything was 
brought back to Washington, and the Veterans outreach was 
basically non-existent. There's no stronger champion of 
veterans than President Trump and myself, and we are going to 
make sure that we make a difference working alongside Secretary 
Collins and the Department of Defense.
    Senator Reed. Well, thank you, Madam Administrator. 
Appreciate your testimony. Thank you, Senator.
    Senator Hagerty. Thank you, Madam Administrator, for 
appearing before our subcommittee today. Our members will have 
one week to submit questions for the record, due May 28th. I 
would appreciate it if your office could respond to those 
questions as soon as possible.

                     ADDITIONAL COMMITTEE QUESTIONS

    [The following questions were not asked at the hearing, but 
were submitted to the agencies for response subsequent to the 
hearing:]
    No questions were submitted for the record.

                          SUBCOMMITTEE RECESS

    Senator Hagerty. With that, the subcommittee is adjourned. 
Thank you.
    [Whereupon, at 3:33 p.m., Wednesday, May 21, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]


  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2026

                              ----------                              


                         TUESDAY, JUNE 3, 2025

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

    The subcommittee met at 2:33 p.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Bill Hagerty (Chairman), 
presiding.
    Present: Senators Reed, Coons, and Van Hollen.

                   SECURITIES AND EXCHANGE COMMISSION

               OPENING STATEMENT OF SENATOR BILL HAGERTY

    Senator Hagerty. Good afternoon, everybody. The 
subcommittee will come to order. This is the second of our 
fiscal year 2026 budget hearings for agencies under the 
jurisdiction of the Subcommittee on Financial Services and 
General Government.
    Today, we welcome the Chairman of the Securities and 
Exchange Commission, my good friend, Paul Atkins. Paul, thank 
you for being here. I'd also like to extend a warm welcome to 
the other Senators that have joined us here today.
    I don't know how well attended your hearing will be today, 
Paul, but we're going to have a little bit of motion in and 
out, but please know that's no lack of interest, it's just the 
voting schedule that we've got here. But I look forward to 
working with all of my colleagues here, in a bipartisan manner 
to advance the ball.
    You know, access to deep liquid markets is a pillar of 
American economic strength. It supports innovation, job 
creation, and prosperity. And regulators like the SEC play a 
vital role in preserving market integrity, but they must do so 
without stifling innovation or in duly burdening investors with 
excessive compliance costs.
    Chairman Atkins, today, the SEC is requesting approximately 
$2.2 billion in appropriated funding for 2026. This funding 
supports the SEC single appropriations account salaries and 
expenses, which has remained relatively flat since 2023.
    While enforcement is a necessary tool, it must be used 
responsibly. Too often, past chairmen have aggressively pursued 
unrelated social or political goals, such as climate change or 
diversity that have really little bearing on the fiduciary duty 
of corporate officers. I'm confident that under your 
leadership, the SEC will refocus on its core mission, that is 
protecting investors, maintaining fair and orderly markets, and 
importantly, facilitating capital formation here in America.
    This hearing also provides an opportunity to clarify the 
SEC's funding structure. While the agency is funded through 
appropriations, these amounts are paid for by transaction fees 
that the SEC collects pursuant to section 31 of the Exchange 
Act. Over the last decade, the SEC has collected approximately 
$20 billion in such fees. These costs are ultimately borne by 
investors and market participants, and as such are simply 
another form of taxation.
    As Congress considers future funding levels, we must weigh 
the benefits of prudent regulations against the economic burden 
that's imposed on the American public. Every dollar Congress 
takes from investors to operate the SEC is a dollar not 
invested in a new product, or not returned to retirees in the 
form of pension income.
    Critically, I want to explore the SEC's evolving role in 
digital assets. Under the previous Administration, the 
commission imposed a regime of regulation by enforcement, and 
frankly, that chilled U.S. innovation and drove it overseas.
    Chairman Atkins, I commend your leadership in providing 
regulatory clarity for digital assets, and I look forward to 
working together with you as matters proceed. Congress today 
and in days to come, I hope we will be advancing my stablecoin 
legislation. We're undertaking careful consideration, and much 
needed action on digital asset market structure soon to come.
    As a steward of taxpayer dollars, and as the vanguard of 
maintaining marketing integrity, it's incumbent upon the SEC to 
ensure that the regulatory environment supports growth, 
investment, and financial resilience.
    I want to thank you again, Chairman Atkins for testifying 
today. I look forward to discussing your approaches to these 
objectives and my questions. I now want to turn to my 
colleague, the Ranking Member, Senator Reed for his opening 
statement.

                 OPENING STATEMENT OF SENATOR JACK REED

    Senator Reed. Thank you very much, Mr. Chairman. And 
welcome, Chairman Atkins. It was a pleasure sitting down with 
you yesterday and discussing. Thank you so much, and I look 
forward to hearing about the SEC's fiscal year 2026 budget 
request, which we received Friday afternoon.
    Since the Great Depression, the SEC has worked to make the 
financial markets more transparent, fair, and efficient for 
investors. It has also worked to promote capital formation so 
that businesses can grow and contribute to our Nation's 
economic success.
    The SEC meets its mandate by making sure that public 
companies are truthful and honest in their disclosures, by 
making sure that investors are not defrauded by their stock 
broker or their financial advisor. And by making sure that when 
fraud does happen, investors get their money back. 
Unfortunately, the Trump administration has placed, in my view, 
at risk the SEC's ability to do all of these things.
    In some ways, this hearkens back to the 2000's when an 
underfunded SEC eager to please industry utterly failed to 
detect and address the Enron debacle Bernie Madoff's fraud, and 
ultimately, the Wall Street collapse in the Great Recession.
    Today, our financial markets are even more complex than 
ever, and the Trump Administration's chaotic economic policies 
that roiled the markets for investors. The resulting volatility 
opened up fresh avenues for insider trading and for market 
manipulation and it creates a perception among American people 
that the market is rigged.
    Throughout the government, there appears to be special 
rules for those with close political and financial ties to the 
President. As an independent agency, the SEC should be acting 
independently. However, it has dismissed pending cases against 
individuals and companies that do business with the president 
and have been major political donors. And I'd like to hear the 
rationale for these missiles. It's important, I think, to 
establish again, to reaffirm the independents and the integrity 
of the SEC.
    While holding vast amounts of market moving information, 
the ex-SEC, as we discussed yesterday, has invited DOGE inside 
the building. It has done so at the same time; there has been 
an open case involving DOGE's--chief Elon Musk. In view of the 
potential conflict of interest, I'd like to hear what vetting 
the DOGE representatives received, what information they can 
access, what restrictions they placed in their activities, what 
conflicts they may have, and what influence they have over 
commission and staff actions.
    Finally, the SEC appears willing to approve new financial 
products that could have significant risks for investors in the 
broader economy. For example, the SEC has just approved new 
products that package opaque, illiquid, and complex loans into 
securities that are supposed to be highly liquid and safe 
enough for retail investors.
    I'd like to hear how investors will be able to get their 
money out when the loans backing these products perhaps go 
south. In this environment, the SEC should be building its 
strength and expertise, but over 4 months, it appears to be 
disarming itself. The agency has cut its headcount by at least 
15 percent, including some of its most experienced employees. 
I'd like to get your impressions of what this rapid brain drain 
rather is impacting the SEC.
    And again, the bottom line here is, does the budget request 
provide the sufficient resources the SEC needs to carry out its 
critical responsibilities? Again, thank you and I look forward 
to the testimony.
    Senator Hagerty. Chairman Atkins.
STATEMENT OF THE HONORABLE PAUL S. ATKINS, CHAIRMAN, 
            SECURITIES AND EXCHANGE COMMISSION
    Chairman Atkins. Thank you, Chairman Hagerty, and Ranking 
Member Reed, and Members of the Subcommittee, thank you for 
inviting me to testify today. This testimony reflects my 
individual views as chairman of the commission and does not 
necessarily reflect the views of the commission or my fellow 
commissioners. I'm grateful for the opportunity to discuss the 
SEC, including our important mission on behalf of our fellow 
citizens, investors, and taxpayers, and to speak to some of my 
priorities as chairman.
    First and foremost, it is a new day at the SEC. I am 
determined that we return to our core mission that Congress set 
out for us more than 90 years ago. The SEC's three-part mission 
was enunciated by Congress in the Exchange Act, and that's 
first, investor protection, which is vital to our mission. 
Holding accountable those who lie, cheat, and steal. Second, 
capital formation is at the root of what we do. Fostering a 
direct economical route for investors' capital to find its way 
to entrepreneurs and industry to create products and services 
that the market needs.
    And the third core part of our mission is maintaining fair, 
orderly, and efficient markets. Congress calls on the 
commission to ensure that our regulations balance costs and 
benefits, that they do not become too burdensome by adding 
needless friction to the marketplace, undermining the capital 
formation that yields so much benefit.
    On the 30th of May, I submitted to Congress the agency's 
fiscal year 2026 budget request. I'm pleased to support 
President Trump's request of $2.149 billion for the SEC 
operations. This request reflects the focus on returning to the 
core mission that Congress set for the agency, as well as 
resource needs for the crypto task force. This budget level is 
flat as compared to both fiscal year 2025 and 2024 enacted 
funding levels.
    My time in public service and the private sector has 
allowed me to see firsthand how regulations affect markets and 
investors. They can stoke innovation, facilitate investment 
goals, and create opportunities or burdens on business's 
ability to compete and serve their customers. How we implement 
regulations at the SEC is crucial. It's one thing to write a 
regulation quite another for it to achieve its intended goal. 
Regulations should be smart, effective, and appropriately 
tailored within the confines of our statutory authority.
    A key priority of my chairmanship will be to develop a 
rational regulatory framework for crypto assets and the crypto 
markets that establishes clear rules of the road for the 
issuance, custody, and trading of crypto assets while 
continuing to discourage bad actors from violating the law. 
Clear rules of the road are necessary for investor protection 
against fraud.
    Policymaking will be done through notice and comment 
rulemaking, not through regulation-by-enforcement. The 
commission will utilize its existing authorities to set fit-
for-purpose standards for market participants. The commission's 
enforcement approach will return to Congress's original intent, 
which is to police the violations of these established 
obligations, particularly as they relate to fraud and 
manipulation.
    The SEC is returning rulemaking to regular order. Our 
comment periods will not be artificially short, and the public 
will have ample time to provide feedback. The SEC will also be 
sure to take into consideration how rules overlap and how 
regulatory burdens build in keeping with our obligation to 
consider their costs and benefits. There will be targeted 
common sense reorganizations to come at the SEC.
    To start, I'm seeking approval from Congress that this 
span, what is known as FinHub innovation, should be ingrained 
into the culture of the SEC wide and not limited to a 
relatively small office. We've begun a process to review our 
technology infrastructure and our contractual obligations in 
that regard.
    And so, to close, we will work with our colleagues in the 
Administration, especially other financial services regulators, 
and with you all here in Congress to bolster the economy and 
build on U.S. leadership of global markets. This SEC will make 
every effort to ensure that the U.S. is the best and most 
secure place in the world to invest and to do business.
    So, thank you all very much.

    [The statement follows:]
            Prepared Statement of Paul S. Atkins, Chairman,
            United States Securities and Exchange Commission
    Chairman Hagerty, Ranking Member Reed, and members of the 
Subcommittee. Thank you for inviting me to testify today.\1\
    I am grateful for the opportunity to discuss the Securities and 
Exchange Commission, including our important mission on behalf of our 
fellow citizens, investors, and taxpayers. I also appreciate the 
opportunity as well to speak to some of my priorities as Chairman.
    On April 22, I was sworn in by Secretary of the Treasury Scott 
Bessent in the Oval Office with President Donald Trump; my family was 
by my side. I am honored by the trust and confidence that the President 
and the Senate placed in me to lead the SEC.
    I have returned to the SEC where I was a Commissioner from 2002 to 
2008. In that time, I advocated for greater transparency at the agency 
and emphasized robust cost-benefit analysis when considering new 
regulations. I also previously served on the staff of two SEC 
chairmen--Richard Breeden, appointed by President George H.W. Bush, and 
Arthur Levitt, appointed by President Bill Clinton.
    With my fellow Commissioners, Congress, and SEC staff, I look 
forward to working to ensure that the United States is well-positioned 
to seize on the new excitement for investment and economic opportunity 
that President Trump's leadership and pro-growth policies have 
inspired.
                              sec mission
    First and foremost, it is a new day at the SEC. I am determined 
that we return to our core mission that Congress set for us more than 
90 years ago.
    The SEC's three-part mission was enunciated by Congress in the 
Exchange Act: protecting investors; facilitating capital formation; and 
maintaining fair, orderly, and efficient markets.
    Investor protection is vital to our mission--holding accountable 
those who lie, cheat, and steal. The SEC will remain vigilant in our 
important role to ensure that investors have confidence to participate 
in the markets.
    Capital formation is also at the root of what we do--fostering a 
direct, economical route for investors' capital to find its way to 
entrepreneurs and industry to create products and services. This engine 
of growth employs people, helping them to work and save to achieve 
their dreams.
    The third core part of our mission is maintaining fair, orderly, 
and efficient markets. Congress calls on the Commission to ensure that 
our regulations balance costs and benefits, that they do not become too 
burdensome by adding needless friction to the marketplace, undermining 
the capital formation that yields so much benefit.
    During my tenure as Chairman, the SEC will not stray from this core 
three-part mission.
    My time in public service and the private sector, both earlier in 
my career and more recently, has allowed me to see firsthand how 
regulations affect markets and investors. They can stoke innovation, 
facilitate investment goals, and create opportunities--or burdens--on 
businesses' ability to compete and serve their customers.
    How we implement regulations at the SEC is crucial; it is one thing 
to write a regulation, quite another for it to achieve its intended 
goal. Regulation should be smart, effective, and appropriately tailored 
within the confines of our statutory authority.
    It takes market experience and focused application to ensure that 
customers and investors of financial services firms benefit from 
efficient, effective, and well-designed regulation. Our goal at the SEC 
must be to facilitate those efforts, analyze their effectiveness, and 
use our enforcement power to cure and rectify wayward actions.
    In short, clear rules of the road benefit all market participants.
    The SEC is returning rulemaking to regular order. Our comment 
periods will not be artificially short, and the public will have ample 
time to provide feedback. The SEC will also be sure to take into 
consideration how rules overlap and how regulatory burdens build, in 
keeping with our obligation to consider their costs and benefits. The 
SEC also looks forward to working with the Office of Information and 
Regulatory Affairs on our rulemaking.
    I am grateful to Commissioner Mark Uyeda for his stewardship of the 
agency as acting Chairman of the SEC from January to April, a very 
productive 3 months.
    During this transition, he brought clarity to some urgent policy 
issues that we faced in the courts and some organizational issues as 
the new Administration came into office.
    He established the Crypto Task Force together with Commissioner 
Hester Pierce, which has worked with staff to provide necessary 
guidance to the industry. He normalized the agency's stance regarding 
materiality of disclosure requirements to comply with Supreme Court 
rulings and backed agency actions to extend certain compliance dates 
and remove personally identifiable information (PII) from the 
Consolidated Audit Trail (CAT).
    As we look ahead, I am confident in the direction of our work. My 
experience over the decades will naturally inform my approach as 
Chairman.
    The Commission will focus on providing meaningful pathways for 
entrepreneurs to obtain the capital that they need to execute their 
innovative ideas and grow their companies in both the private and 
public markets. At the same time, investors that provide such capital 
must be able to continue to depend on effective enforcement against 
fraudulent activities.
                    fiscal year 2026 budget request
    On May 30, I submitted to Congress the agency's fiscal year (FY) 
2026 budget request.\2\ I am pleased to support President Trump's 
request of $2.149 billion for SEC operations. This request reflects the 
focus on returning to the core mission that Congress set for the agency 
as well as the resource needs for the Crypto Task Force. This budget 
level is flat as compared to both the FY 2025 and FY 2024 enacted 
funding levels.
    The budget request contemplates approximately 4,100 full-time 
equivalents (FTEs), which is a net reduction of 447 FTEs compared to 
the FY 2025 level due to attrition following early retirement and buy-
out offers in calendar 2025. At this lower FTE level, the budget 
request actually is approximately $100 million more than the amount 
that would be required to maintain our current state of operations. 
There is some uncertainty regarding the FY 2026 budget, including the 
potential transfer of the functions of the Public Company Accounting 
Oversight Board (PCAOB) into the SEC.\3\ If Congress approves this 
budget request, we anticipate that this funding could support such a 
transfer of the PCAOB functions into the SEC in FY 2026.
                                sec fees
    The SEC's funding is deficit neutral, as by law any amount 
appropriated to the agency will be offset by fees on securities 
transactions under Section 31 of the Securities Exchange Act of 1934 
(Exchange Act).
    On April 8, 2025, the SEC announced that starting on May 14, 2025, 
the fee rates applicable to most covered sales would be set at $0 per 
million in securities transactions.\4\ The Commission determined this 
new rate in accordance with the Exchange Act.
    The Commission collected its entire FY 2025 appropriation before 
the new fee rate of $0 per million became effective on May 14. The 
prior fee rate was $27.80 per million. The Commission is required to 
set the fee rate to a level that generates fees equal to the 
Commission's appropriated amount, so no further collections for fiscal 
year 2025 are required.
    The Commission will continue to keep this committee, and the 
public, informed of developments relating to fees on the SEC website.
                           sec staff numbers
    The SEC's Offices and Divisions have decreased headcount by 15% 
since the beginning of the current fiscal year. Many of our colleagues 
at the SEC elected to take advantage of the Administration's Fork in 
the Road, Voluntary Early Retirement Authority (VERA), or Voluntary 
Separation Incentive Payments (VSIP). Some left to pursue other 
opportunities. These departures leave vacancies that in many cases need 
to be filled. When I left the agency in 2008, we had approximately 
3,600 employees. At our height a year ago, we had approximately 5,000 
employees plus 2,000 contractors. Today we are at approximately 4,200 
employees and 1,700 contractors.
                             digital assets
    From 2017 until my nomination, I worked to help develop best 
practices for the digital assets industry and saw firsthand how 
ambiguous or nonexistent regulations in this space created uncertainty 
and inhibited innovation. That lack of regulatory framework also 
invites fraud.
    A key priority of my Chairmanship will be to develop a rational 
regulatory framework for crypto asset markets that establishes clear 
rules of the road for the issuance, custody, and trading of crypto 
assets while continuing to discourage bad actors from violating the 
law. Clear rules of the road are necessary for investor protection 
against fraud--not the least to help them identify scams that do not 
comport with the law.
    Policymaking will be done through notice and comment rulemaking not 
through regulation-by-enforcement. The Commission will utilize its 
existing authorities to set fit-for-purpose standards for market 
participants. The Commission's enforcement approach will return to 
Congress' original intent, which is to police violations of these 
established obligations, particularly as they relate to fraud and 
manipulation.
    This undertaking requires coordination across multiple offices and 
divisions within the Commission, which is why I am pleased that 
Commissioner Uyeda and Commissioner Hester Peirce have worked together 
to establish the Crypto Task Force. For too long, the Commission has 
been hindered by policymaking silos. The Crypto Task Force exemplifies 
how our policy divisions can come together to expeditiously provide 
long-needed clarity and certainty to the American public.
    I am confident that Commissioner Peirce, known for her principled 
and tireless advocacy for common-sense policy, is the right person to 
lead the Crypto Task Force's effort to come up with a rational 
regulatory framework for crypto asset markets.
    The task force has held four roundtables so far on further defining 
security status, tailoring regulation for crypto trading, custody 
considerations, and tokenization. I look forward to the input from 
industry and additional public feedback during the next roundtable on 
decentralized finance.
    This is important work. Entrepreneurs across the United States and 
around the world are harnessing blockchain technology to modernize 
aspects of our financial system. I anticipate benefits from this market 
innovation for efficiency, cost reduction, transparency, and risk 
mitigation.
                         sec commissioner roles
    In addition to Commissioner Peirce's continued leadership of the 
Crypto Task Force, I have asked Commissioner Uyeda to be our 
``ambassador'' to the International Organization of Securities 
Commissions (IOSCO). Commissioner Caroline Crenshaw has agreed to take 
on the SEC's administrative law proceedings framework and the 
procedures in adjudications used by our administrative law judges in 
light of Supreme Court rulings that oblige us to rethink and reform 
this area.
                             reorganization
    Under Acting Chairman Uyeda, the reporting lines in the Divisions 
of Enforcement and Examinations were realigned to better reflect each 
Division's national programs to improve efficiency, management, and 
oversight of the Divisions. There will be targeted, common-sense 
reorganizations to come at the SEC. To start, I am seeking approval 
from Congress to disband what is known as agency's Strategic Hub for 
Innovation and Financial Technology (FinHub). Innovation should be 
ingrained into the culture SEC-wide and not limited to a relatively 
small office. Established in 2018, FinHub was created during a critical 
period of emerging technologies. The rapid development of distributed 
ledger technology, including digital assets, artificial intelligence, 
and machine learning, required a centralized effort to build 
understanding at the SEC. The principles and priorities under which it 
was established are being integrated into the very fabric of the SEC.
              technology review and optimizing efficiency
    We have begun a process to review our technology infrastructure and 
our contractual obligations. This review is long overdue--call it a 
spring cleaning and reassessment of contracts, especially regarding 
information technology.
    We publicly announced last month that the Commission determined 
that certain masked data fields on publicly available reports on Form 
N-PORT submitted between Feb. 3, 2025, and May 8, 2025, were 
inadvertently made public on the SEC's EDGAR system. This was the 
result of a software update effective Feb. 3. The masking error has 
been corrected and did not affect Form N-PORT filings made after May 8, 
2025.
    This situation is not acceptable. I have directed the initiation of 
a comprehensive review of the EDGAR system to ensure for data 
integrity. We need to evaluate what we have, where our vulnerabilities 
are, and how we can shore up and improve our systems. We will work on 
optimizing our efficiency and eliminating redundancy.
                    sec regional offices and leasing
    The SEC has 10 regional offices across the country. In late 
February, the General Services Administration (GSA) informed the SEC 
that it would terminate leases utilized by the SEC's Los Angeles 
Regional Office and the Philadelphia Regional Office. Discussions with 
the GSA and the landlords are ongoing, and I will keep this Committee 
apprised of those developments. In the meantime, the leases are in 
their ``soft term'' and are not terminated.
    I firmly believe in the SEC's regional office concept. We cannot 
and should not have all of the SEC's staff in Washington and New York. 
Risk management, human resource development, and practicality for our 
examination teams--as one example--provide ample reinforcement for the 
need to maintain these offices.
                               conclusion
    As I said at the outset of this testimony, it is a new and brighter 
day for the SEC.
    We will work with our colleagues in the Administration, especially 
other financial services regulators, and with Congress to bolster the 
economy and build on U.S. leadership of the global markets.
    This is a pivotal moment for our economy. Entrepreneurs, 
businesses, and individuals here at home and across the globe are eager 
to invest in America.
    This SEC will work to protect investors from fraud, keep politics 
out of how our securities laws and regulations are applied, and advance 
clear rules of the road that encourage investment in our economy to the 
benefit of all Americans.
    This SEC will work to ensure that regulations promote capital 
formation rather than stifle it. We will work together to ensure 
American investors get disclosures that actually help them understand 
the true risks of an investment.
    This SEC will make every effort to ensure that the U.S. is the best 
and most secure place in the world to invest and do business. Americans 
should always have utmost confidence when investing their hard-earned 
dollars to save and provide for their future and the future of their 
families.
    Thank you.
---------------------------------------------------------------------------
    \1\ The views expressed in this testimony are those of the Chairman 
of the U.S. Securities and Exchange Commission and do not necessarily 
represent the views of the Commission, or any Commissioner.
    \2\ See Securities and Exchange Commission, ``Fiscal Year 2026 
Congressional Budget Justification and Annual Performance Plan, Fiscal 
Year 2024 Annual Performance Report'' (May 30, 2025), available at 
https://www.sec.gov/about/reports-publications/secfy26congbudgjust.
    \3\ See Congress.gov, ``One Big Beautiful Bill Act,'' Section 
50002, available at https://www.congress.gov/bill/119th-congress/house-
bill/1/text.
    \4\ See Securities and Exchange Commission, ``Section 31 
Transaction Fee Rate Advisory for Fiscal Year 2024'' (April 8, 2025), 
available at https://www.sec.gov/rules-regulations/fee-rate-advisories/
2025-2.

    Senator Hagerty. Thank you for your testimony, Mr. 
Chairman. Before we turn to questions, I'm going to recess this 
committee for about 10 minutes so we can go to the Senate floor 
and vote. When we return, we'll resume with questions for our 
witness. Thank you.
    [Recess.]
    Senator Hagerty. Chairman Atkins, under the previous 
administration, the SEC engaged in a regulation by enforcement 
approach, that chilled U.S. innovation and digital assets. It 
took away our leadership position in the digital assets arena 
and frankly drove digital asset innovation overseas.
    Now, thanks to your leadership and that of acting Chairman 
Uyeda, the SEC has taken important steps toward providing 
regulatory clarity for digital assets. Likewise, Congress is 
taking action right now by advancing my stablecoin bill, the 
GENIUS Act, and by undertaking that legislation, we're going to 
open the door to undertake even further legislation on market 
structure.
    Chairman Atkins, if you could just take a moment, and 
explain why swiftly providing rules for the road for digital 
assets is important to America.
    Chairman Atkins. Well, thank you, Chairman. Yes, it's I 
think vitally important because innovation cannot occur in a 
vacuum. Innovation and new products depend on certainty. And 
the more certain the rules of the road are, the better then 
people can go and get legal opinions in order to do things, and 
make investments so that they're sure of what they're investing 
in, and that the rules won't change down the road.
    So, unfortunately, because we have for now, almost a 
decade, lack of certainty in this area, I think that has 
chilled the investment climate at least in the digital asset 
space in the United States.
    Senator Hagerty. Yes, I certainly agree and I sadly have 
seen innovators leaving America, telling me they're going to 
start their next business in another country, this type of 
thing, simply because they lack the clarity that you're 
describing. So, I think it's much needed.
    I'd like to turn our conversation now, though to another 
area, that I think is something that has an issue here at 
America that's gone on far too long. And that has to do with 
the dominant proxy advisory firms. That's ISS and Glass Lewis 
to be specific. And they've been able to operate here in the 
United States with very little regulatory oversight.
    The firms have exploited their duopoly, and they've used it 
in as a means to basically hijack corporate governance. And 
what they're doing is they're pushing costly and destructive 
partisan agendas through as they provide their recommendations.
    You think about it, U.S. public companies and their retail 
investors pay the price, as shareholder returns take the 
backseat to ``woke partisan agendas.'' These agendas are 
advocated by the so-called proxy advisors and the 
recommendations that they put forward for their clients.
    The firm's perverse influence on capital markets is only 
made more concerning by the fact that they're both foreign 
owned. ISS is 80 percent owned by a German entity that openly 
claims to ``Allocate capital to sustainable initiatives.'' 
While Glass Lewis is owned by a Canadian private equity firm, 
which is stated that ESG remains a ``Key factor in investment 
decisionmaking.''
    Chairman Clayton attempted to address the problem by 
amending the proxy rules definition of solicitation, to include 
proxy voting advice. His rulemaking imposed a baseline level of 
transparency and accountability on these firms. However, 
Chairman Gensler arbitrarily and capriciously reversed key 
parts of Clayton's 2020 rule. This allowed ISS and Glass Lewis 
to continue their shakedown of American companies.
    Chairman Atkins, broadly speaking, do you have concerns 
about the activities of these proxy advisory firms? And I'm 
curious what measures the SEC might have taken thus far to 
address those concerns?
    Chairman Atkins. Well, thank you, Mr. Chairman. Yes, I do 
have concerns about gamesmanship, and abuse of the corporate 
governance process, and the back and forth that's gone on over 
the last few years. So, I want to be sure that we are able to 
address that and look into it, and that's going to be part of 
our program going forward.
    Senator Hagerty. Good. I'm glad to hear it's a priority. 
ISS previously sued the SEC over Clayton's 2020 rulemaking; 
under Gensler the commission dropped its defense of that rule. 
If the SEC were to resume its defense of the rule and do so 
successfully, the reasonable regulatory requirements imposed 
under Chairman Clayton would be restored. I urged the 
commission to consider defending Clayton's rule and to explore 
every possible avenue, to terrain in the proxy advisors and 
shield the competitiveness of our U.S. capital markets.
    Now, I'd like to turn to CSDDD, another favorite. The 
European Union has adopted the Corporate Sustainability Due 
Diligence Directive, also known as CSDDD, to impose 
extraterritorial regulation on U.S. companies, motivated by ESG 
and other progressive policy goals, and arguably a desire to 
use regulators to kneecap more successful jurisdictions like 
ours. The rule imposes significant compliance burdens that will 
hamstring U.S. competitiveness.
    The U.S economic growth is evaporating, thanks to the 
massively increased regulatory burdens that it is imposed on 
itself. Rather than reform its own failed regulatory state, the 
EU would prefer to undermine our economy by imposing growth 
killing rules on U.S. businesses. Beyond its massive compliance 
cost, the CSDDD is an affront to U.S. sovereignty. Major 
policies impacting our businesses ought to be debated and 
decided by U.S. lawmakers, not faceless bureaucrats in foreign 
capitals.
    In recent weeks, even President Macron and Chancellor Merz 
have acknowledged that these extraterritorial regulations 
should be repealed. Chairman Atkins, I'd just like to know 
whether you're concerned about the extra territorial regulation 
that's going on, and if so, if you could describe the harmful 
effects that will have on U.S companies that are ensnared by 
the EU's rule.
    Chairman Atkins. Well, thanks, Chairman. Yes, I do. I am 
very concerned about the extraterritorial effect of these 
rules, and particularly to small businesses in the supply 
chain, vendor chain, to multinational companies because by the 
terms of some of these directives, some of these requirements, 
especially third-party rights of litigation and action is very 
threatening to manufacturers and other suppliers here in the 
United States. So, I will definitely take steps with our 
counterparts abroad to make them understand how concerned we 
are and to push back on those effects on the United States 
Company.
    Senator Hagerty. I appreciate you making that a priority on 
the Executive Branch side. I think you can make a great deal of 
progress on the legislative branch side. I've introduced the 
Protect Act, which is reciprocal, and it would push back on 
this sort of extra territorial jurisdiction as well. So, thank 
you for making that a priority. I'll turn now to Ranking Member 
Reed.
    Senator Reed. Well, thank you very much, Mr. Chairman, and 
thank you Chairman Atkins. As we've proceeded there have been a 
significant number of cases, well, several at least, that have 
been dismissed by the SEC and the individuals have associations 
with the President or his family. And it raises the question, 
the public, you know, is there some connection between their 
political connections and their legal standing?
    The most probably notable of these is Mr. Justin Sun who 
was sued by the SEC for fraud. Mr. Sun is the biggest investors 
in Trump's meme coin, funding at least $40 million to the Trump 
family. He invested $75 million in Trump's other crypto project 
called World Liberty Financial. He's affiliated with Crypto 
Exchange, HTX, which was the first to list Trump's stable coin, 
USD1. He created the Tron blockchain, and according to a crypto 
research firm, the overwhelming majority of Hamas 
cryptocurrencies seized by Israeli authorities, has been 
tethered on the Tron network.
    In addition, Mr. Sun was reportedly under investigation by 
the Department of Justice for financial crimes, and yet his 
case was dropped. What was the rationale for dropping the case 
against Mr. Sun?
    Chairman Atkins. Well, thank you, Senator. So, I believe 
that case was dropped before I got to the SEC, or if not, I 
didn't participate in it. But I can't speak to the specifics of 
that case. But as far as--you know, a lot of these cases that 
were brought by the SEC as we are looking, again, at the rules, 
and looking to bring some order to the crypto markets and the 
rules that govern those. We're trying to square our enforcement 
stance with what's our stances with respect to those assets.
    Senator Reed. Well, I think you appreciate at least the 
impression that is generated here. On calculation, over $100 
million dollars was given to the President directly and 
indirectly, and suddenly a case that was brought, I'm sure not 
frivolously, but with evidence, et cetera, was suddenly 
dropped. How would you reassure the American people that there 
will be no political interference in the operations of the SEC?
    Chairman Atkins. Well, Senator, this is now my third time 
at the SEC, so I've been in and around the agency for 30 some 
years. And so, working with many chairmen and commissions over 
the years, I can tell you that the commission addresses issues 
forthright and without fear of favor and under both parties. 
And so, I'm proud of the record of the SEC and assure you that 
we will continue to do that while I'm Chairman.
    Senator Reed. We had an opportunity yesterday, again, thank 
you for coming by. It was a not great opportunity to talk about 
some of these issues. One is the presence of DOGE within the 
SEC and also the staffing cuts that have been initiated across 
the government, but also at SEC. So, starting with the staffing 
cuts, how many staff do you have left the division of corporate 
Finance? Do you have those numbers?
    Chairman Atkins. What I can tell you is that overall, 15 
percent of the staffing of the agency have left voluntarily. 
So, they took voluntary retirement. So, 11 percent, so Corp fin 
is a bit below the average of 15 percent.
    Senator Reed. Right. So, again, this is the division of SEC 
that looks at filings for companies, IPOs, et cetera. I presume 
since they left in retirement, these are senior personnel, 
probably some of the most experienced members. Can we assure 
the public and the corporate community that they'll still be 
efficient, effective, and timely review?
    Chairman Atkins. Well, yes, Senator. So, again, I've been 
in and around the SEC now for 30 years, and I have to say I'm 
very proud of the staff. I think they're very competent, and I 
think there's a deep well of competency there. And so, the good 
thing, I mean, one thing that comes of retirements is that it 
allows junior people who are competent to move up the ranks. 
So, I think that circulation is good. I miss the former folks 
who have left, but they took that voluntarily as far as the 
retirement goes.
    Senator Reed. Well, my time expired, so let me yield back 
to the Chairman. Thank you.
    Senator Hagerty. Thank you, Ranking Member Reed. I'll now 
turn to Senator Coons.
    Senator Coons. Thank you, Chairman Hagerty, and Ranking 
Member Reed. And to Chair Atkins, thank you for being here, and 
for your service. I appreciated finally receiving more details 
on the President's budget request, and I hope more broadly, 
this is not the new normal for this administration. We need 
timely cooperation in order to draft our appropriations bills. 
I appreciate your appearance here today, and the directness and 
clarity of your presentation.
    Taking a look at your proposed budget, it does include some 
cuts. Particularly of concern to me is the enforcement 
division. And as you were just discussing with Ranking Member 
Reed, the number of career officials who've taken buyouts or 
have been pushed to retire, how many people have left the 
enforcement division over the last 6 months?
    Chairman Atkins. Well, so there's been a nationally for 
enforcement, 15 percent decrease, so it's right at the average 
for the agency overall. And again, we have a deep well of 
experience and not just in here in Washington, but throughout 
the regions. And so, we have very competent people.
    And as we look at you know, going forward, our request is 
stable as in your previous years, and so where there are gaps, 
we'll fill them in. And I have confidence that we'll be able to 
do the job that we need to do with what we have.
    Senator Coons. President Trump signed an executive order 
that paused all future investigations and enforcement actions 
under the Foreign Court Practices Act, for at least 9 months, 
if I'm not mistaken. No, for 180 days, forgive me. I recognize 
this applies to the DOJ, but the SEC also plays a critical role 
in helping implement FCPA. You're authorized to share 
information obtained with the DOJ if they uncover potential 
criminal activity.
    I'm troubled that the President in this action seems to be 
deciding which laws will be enforced and which laws will have 
their enforcement suspended. Is the SEC under your leadership 
still prioritizing enforcement of the FCPA, and has the SEC 
offered any evidence to the DOJ that's been rejected due to 
that executive order?
    Chairman Atkins. Well, I can't speak to any particular 
investigation or activity.
    Senator Coons. I understand you can't speak to any 
particular investigation, but you certainly can report on 
whether or not that executive order has resulted in the SEC 
stopping all investigation or enforcement of the FCPA.
    Chairman Atkins. Well, many of these cases involve many 
different aspects of the securities laws. So just that one 
you're----
    Senator Coons. I am familiar with section.
    Chairman Atkins. Yes. And so, to my knowledge, nothing has 
been directly affected, but I'm happy to get back to you on 
that.
    Senator Coons. I'd appreciate it. Earlier, you said the 
core mission of the agency you now lead is to protect investors 
against those who would lie, cheat, or steal. Which I would 
agree with you is in some ways the really the core mission.
    The FCPA, although some have decried as putting American 
business at a competitive disadvantage, I think actually puts 
us at a competitive advantage because foreign governments, 
foreign companies know that they can count on American business 
to secure its business advantage around the world, fair and 
square, not through underhanded ways or not through bribery. 
So, I certainly would appreciate your following up with me on 
what you see as the enforcement trajectory for the FCPA.
    Last, cryptocurrency is a very pressing issue, an issue you 
have a lot of experience with. And I come at this topic through 
the lens of course, of my home State, which has long been an 
established financial services and banking center.
    You've endorsed allowing crypto exchanges to handle both 
traditional securities and crypto, in one entity. If exchanges 
like Coinbase, that are crypto exchanges, are permitted to 
offer their services as well as a more traditional things, 
stocks, and bonds, how do you ensure they're held to the same 
rigorous standards as more traditional banks and investment 
firms?
    Chairman Atkins. Well, so that's part of our task now to 
try to come up with regulations that make sense for the 
industry and that allow for innovation. And so, our task force, 
you know, is holding round tables and we will come out with a 
report here in the next couple months. And we'll come up with 
proposed rules of the road to take comment in that regard, and 
then go ahead and go through with a rulemaking process.
    Senator Coons. Well, as you go through that process, I just 
urge you to hold to that core understanding of the role of the 
SEC to protect crypto investors from being harmed by fraud and 
market manipulation. The traditional financial services 
industry is subject to comprehensive regulation. And I think 
there's an understandable anxiety on their part about facing a 
direct competition from a financial sector that is lightly 
regulated or not at all.
    And while I recognize the value of innovation, and of 
making sure that the United States remains on the cutting edge 
of innovation and financial services, I think that also has to 
be balanced with protecting investors and thus retaining the 
confidence that global investors have, and the credibility of 
the American capital markets. And you have a unique role; I 
think your background and experience will be relevant. I very 
much look forward to staying in touch on this because I think 
this crypto task force you've put together is going to be 
critical.
    Last question. Do you believe the SEC needs any new 
statutory authorities to regulate crypto and carry out the 
recommendations of the task force?
    Chairman Atkins. Well, thank you for that. It would be 
great to be undergirded by statute. But in the meantime, I 
think we have enough authority under the securities laws to be 
able to come out with regulations in this regard. But it's 
always best to have that firm foundation.
    Senator Coons. Agreed. Thank you, Mr. Chairman. Thank you, 
Mr. Chairman.
    Senator Hagerty. Thank you, Senator Coons. Chairman Atkins, 
we're awaiting Senator Van Hollen's arrival. This gives me an 
opportunity to ask you another question that broadly addresses 
what I think you and I have discussed before, my viewpoint that 
our capital markets remain one of the greatest sources of 
competitive advantage for the United States of America.
    And in my view, staying on the cutting edge of innovation 
in the capital markets is going to be a critical aspect of that 
competitiveness. I mentioned earlier in our discussion, the 
fact that I'm introducing stablecoin legislation, the GENIUS 
Act, to begin to move us down that road to create rules of the 
road for digital currency that would essentially take the 
United States into a modern-day payment system. It's got many 
benefits, particularly among those are extending the position 
of the dollar, is the world's reserve currency stimulating 
demand for U.S. treasuries and providing critical protection 
for U.S. consumers.
    I would very much be interested in your thoughts as to how 
we look at providing the statutory underpinning that you just 
described. And if you had a chance to look at the stable coin 
legislation that I've proposed, whether that gets you moving in 
the right direction.
    Chairman Atkins. Well, thank you. I salute you for 
advancing that bill and having it considered by the Senate. I 
think that one of the primary use cases for digital assets is 
stablecoin and for payments and the rapidity of the 
transactions that are able to be done through that. And so, I 
think that to have a bill such as yours that would provide for 
both protections and to set forth that foundation, I think is 
really important.
    Senator Hagerty. We have strong bipartisan support. I look 
forward to working with you and your team to advance this area. 
And I'll turn to Senator Van Hollen.
    Senator Van Hollen. Thank you, Mr. Chairman. Mr. Chairman, 
good to see you again. At your confirmation hearing you and I 
discussed the issue of the Public Company Accounting Oversight 
Board, the PCAOB, which was formed as you know, after some 
major companies like Enron failed after cooking their books and 
none of their auditors stepped in to correct the issues. And 
Enron's failure alone costed shareholders about $67 billion.
    So, Congress created the PCAOB in effect to audit the 
auditors, and make sure they stop fraud at companies they audit 
before we have catastrophic failures like we witnessed in the 
Enron case. When you and I talked about this before in the 
Banking and Housing Committee, you agreed that the function 
played by the PCAOB was essential. Is that still the case?
    Chairman Atkins. Yes, sir.
    Senator Van Hollen. So, one of the reasons I raised it then 
was I was concerned about efforts to fold the PCAOB into the 
SEC, because of concerns that it would lose its punch and its 
ability to do the job. The house reconciliation bill, as you 
know, does fold the PCAOB into the SEC. I think that it will 
fail under the bird rule but I want to talk for a moment about 
the merits of that proposal.
    Because my understanding from the SEC itself, is that at 
least as of last month, the SEC does not have the personnel 
with the experience conducting those in-depth examinations or 
inspections of registered public accounting firms. That's based 
on information from the Office of the Chief Accountant. Do you 
have any reason to think otherwise?
    Chairman Atkins. No, because we don't have that function, 
but if it's folded into the SEC and we get the funding, we 
could take over that function using the examiners, I would 
imagine, from the PCAOB and not miss a beat.
    Senator Van Hollen. Well, I want to press you a little bit 
on that, Mr. Chairman. How many of the 600 PCAOB employees does 
the SEC plan to hire to keep this important function going?
    Chairman Atkins. Well, we haven't done any study on that 
yet, so----
    Senator Van Hollen. But you say very easily that you could 
absorb them. That obviously requires additional funding, does 
it not?
    Chairman Atkins. Exactly. But the way I understand it, that 
funding is contemplated by the----
    Senator Van Hollen. So, it's interesting you say that 
because the PCAOB right now is funded by a firm, a fee on the 
firms that overseas, right?
    Chairman Atkins. Well, and also on public companies, 
there's basically a wealth tax on companies.
    Senator Van Hollen. But it's a fee, a fee generated revenue 
fee generated, right.
    Chairman Atkins. That the SEC approves and----
    Senator Van Hollen. Yes. But the reconciliation Bill, Mr. 
Chairman, eliminates that authority. It eliminates the 
authority of the PCAOB. I mean, it eliminates the PCAOB, it 
folds it in the SEC, it does not include the authority to have 
fee-based revenue. Were you aware of that?
    Chairman Atkins. Yes, but what I understand is that there 
is contemplated funding for that. And built into our budget, we 
do have since it's an even budget from last year, when you 
account for people who have left voluntarily from SEC, we have 
about $100 million or so that could help tide it over the 
thing.
    Senator Van Hollen. Right. Are you aware of what the 
current PCAOB budget is?
    Chairman Atkins. That's perhaps 400. I don't know----
    Senator Van Hollen. You got it right. It's 400 million. 
You've got $100 million in your budget. That's a $300 million 
gap. If you want to maintain, in my view, the same 
functionality which is something that I think all of us should 
be very interested in, not just with respect to U.S. companies. 
But as you and I discussed, Senator Kennedy and I passed 
legislation to make sure that companies based in China, that 
are publicly listed on U.S. exchanges are subject to this audit 
procedure. I assume you think that's a good thing that they're 
subject to that.
    Chairman Atkins. Well, I think the functions of the PCAOB 
are vital, as we spoke of before. And should that be folded 
into us, we'll be back to you all for the proper resources to 
carry it forward. So, we won't miss a beat on that.
    Senator Van Hollen. I'm just saying, Mr. Chairman, it's 
pretty clear that the resources are not there in this budget if 
it gets folded in. I mean, as you pointed out, you've got $100 
million extras, we're both pointing out. The current budget is 
$400 million. So, unless you really think you can fire or get 
rid of a lot of people and still do the job, we have an issue 
here.
    But in my view, when something is not broken, we shouldn't 
try to come up with a different fix. If there are reforms to 
the PCAOB that you recommend, maybe that would be a better 
route to take if we want to make sure that they continue to 
have the capacity to oversee companies in China and elsewhere.
    I would also just point out in closing, Mr. Chairman, that 
a number of other countries have raised concerns about this 
contemplated change in the house because their agreements, 
their audit agreements are with the PCAOB, and they point out 
that it is not a U.S. government entity, right? It's a separate 
independent entity. And as soon as that role is taken over by a 
more of a government entity, all those agreements will need to 
be renegotiated if they're willing to renegotiate them.
    So, thank you, Mr. Chairman. I hope we can continue to 
pursue this issue because I think that what the house did, is 
essentially breaking a system that is actually working quite 
well right now.
    Senator Hagerty. Thank you for raising that, Senator Van 
Hollen. Chair Atkins, I want to thank you for your testimony 
today. The record will remain open for one week, and members 
will be able to submit questions for the record during that 
time until June the 10th.

                     ADDITIONAL COMMITTEE QUESTIONS

    [The following questions were not asked at the hearing, but 
were submitted to the agencies for response subsequent to the 
hearing:]
      Questions Submitted to The Honorable Paul Atkins, Chairman,
                   Securities and Exchange Commission
              Questions Submitted by Senator Bill Hagerty
    Question 1. This subcommittee appropriated roughly $2.2 billion to 
the SEC in the FY25 year- long Continuing Resolution (CR). However, 
this is not the only source of funding Congress provided to the SEC. In 
2010, Section 991 of the Dodd-Frank Act established the Securities and 
Exchange Commission Reserve Fund. It authorized that registration fees 
collected by the Commission under section 6(b) of the Securities Act of 
1933 or section 24(f) of the Investment Company Act of 1940 be 
deposited into the Reserve Fund, limited annual deposits to $50 million 
and established a maximum fund cap of $100 million. The SEC must notify 
Congress when it obligates these funds.

  --(a)  From 2012 to 2024, the SEC spent $603 million from the Reserve 
        Fund. What were these funds generally used to purchase?
  --(b)  Were there years in which Congress rescinded a portion of 
        these funds?
  --(c)  Can you tell the committee how much is currently unobligated?

    Answer. During those 12 years, the SEC obligated amounts from the 
Reserve Fund to support technology and modernization projects that were 
intended to enhance the agency's security posture, expand the use of 
risk and data analytics, and migrate legacy applications to modern 
enterprise solutions. These programs include:

  --Cybersecurity
  --Data Analytics (including AI/ML)
  --EDGAR Modernization
  --Enforcement Investigation and Litigation Support
  --Examination Management
  --Modernizing the .gov site
  --Tips, Complaints, and Referrals (TCR) Modernization
  --Business Process Improvements

    A portion of the Reserve Fund ($25M) was temporarily rescinded in 
FY 2012 and in FY 2014--FY 2017. As of June 30, 2025, the FY25 
unobligated reserve fund balance is $22.6 million.

    Question 2. This subcommittee provides an appropriation to the SEC, 
limits the amount of fees the SEC can collect, and sets spending limits 
on its overall operations. The SEC's largest division is Enforcement. 
The SEC's FY25 operating plan proposes to spend $698 million on 
Enforcement. For a relatively large agency, this subcommittee does not 
set many limits on how the SEC spends its appropriation. At other 
agencies within our jurisdiction, the bill establishes limits on how 
much of the overall spending can go toward specific activities. For 
example, our bill sets a limit on how much the IRS can spend on 
Enforcement. This subcommittee doesn't set similar limits at the SEC, 
and yet the SEC's Enforcement Division alone is larger than either the 
FTC or the FCC.

  --(a)  If the subcommittee were to establish a limit on the 
        Enforcement Division, what factors should we consider?

    Answer. The SEC's FY2026 budget seeks approximately $683 million 
for ENF. We believe this budget is sufficient and will be happy to work 
with Congress on the appropriate amount of funding to execute our core 
mission efficiently.
    I would note, however, that the number and complexity of securities 
law violations are highly variable. It can be helpful for the SEC to 
have flexibility to shift some amount of funds to meet the needs of 
unexpected investigations or cases, within reprogramming limits set by 
Congress.
                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin
    Question 1. The Securities and Exchange Commission (SEC) dismantled 
the crypto unit in its Division of Enforcement, reassigning and 
demoting key personnel. Approximately 20 of the 50 staff in the unit 
reportedly have been moved out of their prior jobs. Additionally, the 
SEC moved to strip enforcement attorneys of subpoena authority for 
documents and testimony, requiring a cumbersome vote of the full 
Commission for investigations to move forward. In April, the Federal 
Bureau of Investigations reported that crypto-related crime was up 66 
percent year- over-year. The latest available data we have from the SEC 
showed that crypto represented 20 percent of all investor complaints to 
the agency, even though it is only two to 3 percent of all capital 
markets. Why are you cutting enforcement staff when crypto-related 
misconduct and harm is spiking?

    Answer. The SEC is fully committed to enforcement efforts against 
fraud and schemes in all areas, including crypto. Within the Division 
of Enforcement, we announced in February 2025 the formation of a new 
Cyber and Emerging Technologies Unit to keep pace with this rapidly 
changing field. Measures like this help the Division of Enforcement to 
remain agile in the face of change and technological developments, and 
ensures we are able to fulfill our investor protection mission to hold 
accountable bad actors who use innovation to defraud others. Moreover, 
cases against misdeeds in the crypto/digital assets area are not solely 
brought from any particular group in Enforcement.
    A key priority of my Chairmanship will be to develop a rational 
regulatory framework for crypto asset markets that establishes clear 
rules of the road for the issuance, custody, and trading of crypto 
assets while continuing to discourage bad actors from violating the 
law. Clear rules of the road are necessary for investor protection 
against fraud--not the least to help them identify scams that do not 
comport with the law.
    Policymaking will be done through notice and comment rulemaking not 
through regulation-by-enforcement. The Commission will utilize its 
existing authorities to set fit-for-purpose standards for market 
participants. The Commission's enforcement approach will return to 
Congress' original intent, which is to police violations of these 
established obligations, particularly as they relate to fraud and 
manipulation.
    This undertaking requires coordination across multiple offices and 
divisions within the Commission, which is why I am pleased that 
Commissioner Uyeda and Commissioner Hester Peirce have worked together 
to establish the Crypto Task Force. For too long, the Commission has 
been hindered by policymaking silos. The Crypto Task Force exemplifies 
how our policy divisions can come together to expeditiously provide 
long-needed clarity and certainty to the American public.

    Question 2. In just a few short months, President Trump and his 
family have made billions from questionable crypto investments. The 
President has made a fortune promoting the $TRUMP memecoin, even as 
most investors in the coin--approximately 764,000--have lost money on 
their investments. President Trump sold seats to a dinner with him to 
customers willing to spend millions on his memecoin--which amounts to 
auctioning off access to the President of the United States via crypto. 
The Trump family's crypto firm, World Liberty Financial (WLF), secured 
a $75 million investment from Justin Sun, a crypto platform founder 
with a shady past, who has since seen his fraud case settled with the 
SEC. WLF also has issued its own stablecoin and inked a $2 billion deal 
between an investment arm of the United Arab Emirates and disgraced 
crypto platform Binance using WLF's stablecoin--even as former Binance 
CEO Changpeng Zhao publicly acknowledges he has requested a pardon from 
the President.

  (a)  How will the SEC address applications from President Trump, his 
        family, and his friends for creating, trading, and handling 
        crypto?
  (b)  What are your plans to hold President Trump and his business 
        associates accountable for harming investors through fraud and 
        manipulation?
  (c)  Please provide the rationale for why the SEC dropped its case 
        against Binance and its former CEO Changpeng Zhao? Did the SEC 
        conduct a cost-benefit analysis on the potential benefits to 
        investors and the markets versus the costs of litigation? If 
        so, could you please share that with the Committee? If not, why 
        not?
  (d)  Did the White House, the Treasury Department, World Liberty 
        Financial, or anyone from or affiliated with the Trump 
        Administration contact you regarding the Binance matter before 
        the case was dropped? If so, please share the timing and 
        contents of the investigation?

    Answer. On February 27, 2025, the Division of Corporation Finance 
issued a staff statement regarding meme coins, stating that 
transactions in certain meme coins do not involve the offer and sale of 
securities under the Federal securities laws. The Division of 
Enforcement continues to monitor these markets for fraud and abuse.
    The crypto markets have been languishing in SEC limbo for years. 
Initially, the SEC first pursued what I call the ``head-in-the-sand'' 
approach--perhaps hoping that crypto would go away. Then, it pivoted 
and pursued a shoot-first-and-ask- questions-later approach of 
regulation through enforcement. The ``just come in to visit'' entreaty 
often meant coming home to a subpoena. It seemed like a catch-22 for 
market participants. This environment did not create trust. In reality, 
the message was, ``You go figure it out.'' That is a fine approach if 
the regulator plays an active role in interacting with the marketplace 
to encourage solutions and adapt existing rules and practices if the 
existing approaches are inapposite to new developments in technology. 
Old ways of doing things should not be immutable, especially if 
Congress has granted an agency discretion to make changes consistent 
with Congressional intent and in the public interest. While the SEC 
must be faithful to its statutes in any effort to be innovative, it 
should use its available authority and discretion to adapt to and 
accommodate new developments.
    The SEC's claim at the time that it was willing to talk to 
prospective registrants proved ephemeral at best because the SEC made 
no adaptations to registration forms or other regulatory requirements 
to accommodate this new technology. I have been told that market 
participants would in good faith enter what they thought were policy 
meetings with Commission staff only to receive enforcement inquiries 
shortly after their meeting. If that culture were not bad enough, SEC 
leadership for too long prevented staff from communicating with market 
participants when complicated legal questions arose. I am pleased to 
announce that I recently directed Division of Corporation Finance staff 
to maintain transparent interactions with the public. When staff is 
allowed to talk openly with industry, market participants can move more 
nimbly and allocate capital to productive uses.
    It is a new day at the SEC.

    Question 3. Central to the SEC's mission is to protect investors 
and ensure that our capital markets are fair, orderly, and efficient. 
U.S. capital markets are the most liquid, robust, and trusted in the 
world because of the laws and regulations that have been carefully 
established over the decades, many after lessons learned from earlier 
financial crises. Yet, since January 2025, the Trump Administration has 
purged staff in key divisions of the agency, dropped important 
enforcement cases, and rolled back rules established after lengthy 
notice and comment periods that considered input from a wide range of 
interested parties. For example, the Trump Administration dropped its 
defense of a rule ensuring that public companies are transparent with 
investors about the climate-related risks they face, as well as a rule 
requiring that investment advisers provide information about the fees 
they charge. These rules would have provided critical information to 
investors. What analysis did the SEC conduct to determine the amount of 
funding you are requesting will enable the Commission to protect 
investors and the public from instability in our capital markets?

    Answer. As part of our budgeting process, discussions are held with 
divisions and offices to understand the resources needed to pursue the 
agency's mission and the Administration's priorities. As Chairman, I 
benefit from these discussions when determining how to prioritize our 
mission and what to include in our budget request.

    Question 4. The SEC anticipates having a role in the regulation of 
stablecoins and other crypto assets. Given the ongoing and repeated 
scams, hacks, money laundering, and other criminal uses of crypto, 
including scams facilitated by cryptocurrency ATMs, does the SEC 
require additional resources to prevent scams and conduct oversight?

    Answer. As you may know, Commission staff and the Crypto Task Force 
have worked to provide clarity as to when certain crypto assets are not 
within the authority of the Commission. For example, on February 27, 
2025, the Division of Corporation Finance issued a staff statement 
regarding meme coins, stating that transactions in certain meme coins 
do not involve the offer and sale of securities under the Federal 
securities laws. On March 20, 2025 the Division also issued a statement 
that certain proof-of-work mining activities do not involve the offer 
and sale of securities within the meaning of Section 2(a)(1) of the 
Securities Act of 1933 and Section 3(a)(10) of the Securities Exchange 
Act of 1934. In addition, on April 4, 2025, the Division stated that 
certain stablecoins do not involve the offer and sale of securities 
within the meaning of Section 2(a)(1) of the Securities Act of 1933 or 
Section 3(a)(10) of the Securities Exchange Act of 1934. Finally, on 
May 29, 2025 the Division issued a statement regarding protocol staking 
activities, stating that they do not involve the offer and sale of 
securities within the meaning of Section 2(a)(1) of the Securities Act 
of 1933 or Section 3(a)(10) of the Securities Exchange Act of 1934.
    We believe that the FY 26 budget request is sufficient to allow the 
SEC to regulate crypto assets that are subject to its rules. Should we 
find that additional funds are needed as we advance much-needed 
regulatory clarity, I will let you know.

    Question 5. The Trump Administration has sought to reduce SEC 
staffing by almost 20 percent. Further, the House and Senate 
reconciliation bills would eliminate the Public Company Accounting 
Oversight Board (PCAOB) and assign the SEC those responsibilities. The 
SEC already has reduced staffing, and there will be no replacement for 
the PCAOB's 1,200 employees or $400 million budget.

  (a)  How is the SEC planning to carry out its mission, 
        responsibilities, and duties with fewer staff? Is the SEC 
        planning to scale back any of its priorities and initiatives? 
        If so, which ones?
  (b)  How will reduced oversight harm and destabilize our nation's 
        multi-trillion-dollar securities market?
  (c)  Does undermining trust in our markets, along with President 
        Trump's chaotic and unstable economic policies, damage the 
        dominance of the dollar as a reserve currency?
  (d)  How will the SEC oversee accountability of the auditors 
        previously at the PCOAB without any additional resources?
  (e)  By how much would the SEC have to expand if it takes on the 
        PCOAB's functions?

    Answer. The Reconciliation legislation signed by the President did 
not transfer PCAOB responsibilities to the SEC. The SEC will utilize 
the oversight authority provided in the Sarbanes-Oxley Act to help 
ensure that the PCAOB deploys its resources and efforts towards 
activities that promote investor protection and audit quality. This 
includes finding ways to improve the focus of the Board's inspection 
and standard setting activities, evaluating its enforcement program, 
and looking for efficiencies in its budget.

                          SUBCOMMITTEE RECESS

    Senator Hagerty. Now, this meeting is adjourned. Thank you.
    [Whereupon, at 3:28 p.m., Tuesday, June 3, the subcommittee 
was recessed, to reconvene subject to the call of the Chair.]


  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2026

                              ----------                              


                        WEDNESDAY, JUNE 11, 2025

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

    The subcommittee met at 4:04 p.m., in room SD-134, Dirksen 
Senate Office Building, Hon. Bill Hagerty (Chairman), 
presiding.
    Present: Senators Reed, Coons, and Van Hollen.

                    U.S. DEPARTMENT OF THE TREASURY

               OPENING STATEMENT OF SENATOR BILL HAGERTY

    Senator Hagerty. The Subcommittee meeting will come to 
order. Secretary Bessent, welcome. I know that you've had an 
extremely long day, long travel. I appreciate your hard work on 
behalf of the United States and the toll that it takes on one. 
Just back from an overseas trip, having testified in the House 
of Representatives today, Ranking Member Reed and I both 
decided that we'd like to put our opening comments in for the 
record to spare you the time and exhaustion.

    [The statements follows:]
               Prepared Statement of Senator Bill Hagerty
    Good afternoon, everyone. The hearing will come to order.
    After a marathon hearing with the House Ways and Means Committee 
this morning, the Secretary of the Treasury, Mr. Scott Bessent is 
spending the afternoon with us to review the Department's fiscal year 
2026 budget request.
    Welcome Mr. Secretary, I want to congratulate you on your stamina 
and thank you for being here today.
    I would also like to extend a warm welcome to Senators Fischer and 
Mullen, who joined our Subcommittee this Congress, and a warm welcome 
to Senator Collins, who is rejoining our Subcommittee.
    The Department's request for fiscal year 2026 proposes a 19 percent 
reduction--or $2.7 billion--less than was provided in 2025. This 
budget, correctly, acknowledges that resources are limited--and makes 
deliberate tradeoffs among competing priorities to achieve the 
President's America First agenda. Some bureaus would receive increases, 
some decreases, and others remain flat.
    There are many constituencies, however, who prefer to avoid making 
difficult choices. They would rather do more with more, so I applaud 
your leadership and appreciate the tough decisions that went into this 
budget request to make our government more efficient.
    The oldest executive branch agencies are the Departments of State, 
War, and Treasury. Congress created them in 1789 as the foundational 
components of an executive branch.
    The Department of the Treasury's authorizing legislation requires 
the Secretary of the Treasury to, among other things, manage public 
revenue and credit, report on revenues and expenditures, decide on the 
forms of keeping and stating accounts, and grant warrants for monies to 
be issued from the Treasury, in pursuance of appropriations law.
    While the instruments for revenue, credit, and expenditures have 
evolved over centuries, the Department and this Subcommittee are still 
closely linked.
    That relationship is especially important when considering the 
safeguarding of sensitive taxpayer data. The privacy of more than 
400,000 taxpayers was violated when an IRS contractor stole and 
publicly released the tax returns of then--candidate Donald Trump. This 
individual also leaked sensitive tax information to two news 
organizations. Protecting the Department from insider threats must 
remain an urgent and unwavering priority.
    Tax policy is another critical area. The House has passed 
legislation that extends pro-growth tax policies and includes new 
provisions advocated by the President to provide relief to tipped 
workers, seniors, and workers earning overtime pay. These policies are 
aimed at easing the tax burden on working families.
    Prior to 2017, America had the highest corporate tax rate in the 
world. Thanks to tax reform, the U.S. is now more competitive. If these 
tax reforms were permitted to expire, then American families and 
businesses would face higher taxes, particularly manufacturers who 
would lose the benefit of full expensing. This would severely 
disadvantage American businesses against foreign competitors, 
especially China.
    At the same time, unequal trade policies handicapped American 
businesses, leading to persistent trade deficits and the erosion of our 
industrial base. Decades of asymmetric policies have also undermined 
our nation's capacity to produce critical goods--like ships and 
pharmaceuticals--and made us increasingly dependent on China. There is 
an urgent need for a significant trade rebalancing. Under your 
leadership, the Administration is working to reduce tariffs and non-
tariff barriers including currency manipulation, punitive regulation, 
and state sponsored subsidies. If we fail to correct course now, the 
future economic and national security consequences will be severe.
    Digital assets and their related technologies present new 
opportunities for economic growth, value storage, and capital 
formation, as well as facilitating safe, secure, and instantaneous 
payments. America needs to be the global leader in this sector if it 
wants to retain its position as the reserve currency of the world. Our 
nation has demonstrated that it can and will lead innovation in any 
industry if it is provided the regulatory clarity required to innovate, 
grow, and invest in the future. That is why the Senate is currently 
debating my stablecoin legislation that will move us in the right 
direction.
    President Trump understands the crucial role that this industry 
will play in our nation's economic development, as well as our nation's 
international leadership. The President has asked Congress to provide 
clarity built on technology-neutral regulations and transparent 
government decisionmaking in order to foster a robust and vibrant 
digital economy. I am encouraged by the multiple efforts underway at 
the Treasury Department to carry out that mission and I am grateful for 
your support of my legislation as we seek to promote United States 
leadership in digital assets and financial technology while protecting 
the economic liberty of Americans.
    Our Nation also benefits from constructive relationships with our 
allies, and this Subcommittee is grateful for your daily work 
negotiating tariffs to that end. The other side of that coin is 
countering our adversaries through financial intelligence and 
sanctions. While Treasury's role in the intelligence community is 
rarely in focus, its unique capabilities help safeguard the integrity 
of the American financial system and, ultimately, strengthen American 
military power.
    Thank you for appearing before the Subcommittee today, Mr. 
Secretary. I look forward to your testimony.
    I now turn to my colleague, the Ranking Member Senator Reed, for 
his opening statement.
                                 ______
                                 
                Prepared Statement of Senator Jack Reed
    Thank you, Chairman Hagerty, for convening today's hearing. 
Secretary Bessent, thank you for joining us. I know you have been 
traveling extensively over the last several days and this is your 
second hearing of the day.
    I look forward to your testimony, which comes at a pivotal moment 
for our country and our economy, as we deal with the impacts of the 
Administration's up-and-down trade policy, another looming debt crisis, 
and a reconciliation bill that will do great harm to average Americans.
    Mr. Secretary, there is a growing sense among the American people 
that the Trump Administration . . . an Administration that is run by 
billionaires . . . is rigging the system for its own benefit and 
against the interests of average citizens. It's hard to argue with that 
view.
    Your budget request is $2.7 billion below the fiscal year 2025 
level and would slash the IRS by 20%.
    These proposed cuts come in addition to reports that the IRS has 
lost nearly a third of its tax auditors this year. While the IRS is 
often the object of ridicule, it secures 96% of Federal revenue.
    This morning, you indicated before the House Ways and Means 
Committee that there have been no impacts to the tax filing season, 
implying that IRS is functioning smoothly after cutting 11,000 staff, 
31 percent of which were revenue agents. That's simply inaccurate. 
First, the IRS forced critical filing staff who are taking early 
retirement or buyouts to stay on the job through the end of the income 
tax season.
    Second, IRS individual income and payroll tax collections through 
April 2025 are $83 billion below CBO projections. Third, any increase 
in overall revenue is largely the result of the tariff taxes that the 
Administration has imposed.
    The fact is that cutting IRS staffing and funding, particularly its 
enforcement budget, is a proven windfall for the rich.
    Each year, wealth taxpayers are able to dodge around $375 billion 
in taxes and accounting for around 65% of our nation's unpaid taxes.
    The last time IRS enforcement funding dropped precipitously . . . 
IRS audits of the wealthiest taxpayers dropped by around 75% and unpaid 
taxes in our country jumped by $200 billion.
    Gutting IRS funding once again will help the wealthy pass the buck 
to average Americans.
    The story is the same for the President's huge billionaires-first 
tax bill.
    The Joint Committee on Taxation, a nonpartisan committee currently 
led by Republican tax leaders, has found that most of the bill's tax 
cuts will go to the top 10% richest Americans. Similarly, University of 
Pennsylvania researchers estimate that 70% of the benefits of the 
entire bill will also flow to the richest 10%.
    And for all the lip service given to the national debt, the bill 
will actually increase the debt by another $3 trillion, according to 
the Congressional Budget Office.
    The projections are much less rosy for the rest of America.
    Indeed, around 11 million people will go uninsured because of this 
bill: 7.8 million people would be kicked off Medicaid and millions more 
would lose insurance through the Affordable Care Act's marketplace. In 
total, the President's bill will make the lowest-income Americans $820 
poorer next year. It's no wonder Americans are fed up with the 
President's economic policies.
    Even the President's trade war disproportionately hurts working 
Americans. Tariffs are tax increases that hit every household, but they 
take a much larger bite out of middle-class Americans' budget than they 
do for billionaires. Researchers at Yale estimate that the President's 
tariffs will cost households $2,500 this year.
    Meanwhile, the Administration has given DOGE and Elon Musk 
extraordinary access to the Treasury Department's most sensitive 
systems. Musk and DOGE orchestrated the ouster of nonpartisan career 
staff responsible for making sure that the government makes payments 
correctly and on time. These career public servants have been replaced 
by unqualified and untested representatives with clear conflicts of 
interest.
    It's been reported that these individuals have attempted to stop 
authorized payments because the recipients of those funds are 
politically disfavored. If this is how the Administration is operating, 
how can the American people have confidence that their own payments . . 
. their Social Security benefits or tax refunds . . .  won't be 
tampered with by these political appointees?
    I am deeply concerned the Administration is attempting to undermine 
the independence of the Fed and bank regulatory agencies. These 
agencies are meant to operate independently in order to protect 
depositors and taxpayers, but the Administration is pushing on monetary 
policy and urging agencies to take a light touch on capital 
requirements, supervision and other matters in a way that will corrode 
confidence in these agencies.
    Secretary Bessent, suffice it to say, I believe the path the 
Administration has embarked on is one that will put our economy and the 
economic security of average Americans at risk. Nonetheless, I want to 
thank you for being here. I look forward to your testimony and your 
candid answers to our questions.
    Thank you, Mr. Chairman.

    Senator Hagerty. And if you'd like to do the same, 
Secretary, we'd welcome that in.
    Secretary Bessent. Have it put in the record, sir.
    Senator Hagerty. Okay. We will do that and proceed.

    [The statement follows:]
          Prepared Statement of Secretary Scott K. H. Bessent,
                United States Department of the Treasury
    Chair Hagerty, Ranking Member Reed, and members of the 
subcommittee--I'm grateful to join you today. Treasury is committed to 
working with Congress to improve our Nation's finances, create new 
jobs, and strengthen the economy. The President's Budget request for 
Treasury demonstrates our commitment to boosting growth, promoting 
efficiency within our agency, and targeting illicit actors that 
threaten our national security. We look forward to coordinating with 
you on the President's Budget and his tax priorities in the coming 
weeks.
    As part of this effort, I wish to highlight today the Treasury 
Department's efforts to advance President Trump's economic agenda on 
tax and trade.
    First, tax.
    I am pleased to report that Treasury has just completed its most 
successful tax filing season in years--and we did so while improving 
efficiencies and cutting costs at the IRS.
    Critics of the President's efforts to modernize the IRS warned that 
the effort would result in a 10% shortfall in receipts.\1\ Instead, the 
opposite happened. April receipts this year were up 9.5% over the 
previous year. And receipts in May were up 14.7% over the previous 
year. Most remarkably, the President was able to achieve these results 
while reducing $2 billion in waste and planned IT spending at the IRS.
    This success has taken place against the backdrop of one of the 
most consequential tax proposals ever to come before Congress: the One 
Big Beautiful Bill Act. The One Big Beautiful Bill will make the 2017 
tax cuts permanent. This will provide individuals and businesses with 
certainty and build economic momentum. The legislation is squarely 
aimed at boosting the working and middle class and reinvigorating 
American manufacturing.
    According to the Council of Economic Advisers, the One Big 
Beautiful Bill will raise take-home pay between $7,800 and $13,300 for 
the average family of four. It will increase wages between $6,100 to 
$11,600 for the average worker. And it will cement no tax on tips, no 
tax on overtime, and tax cuts for seniors.\2\
    The One Big Beautiful Bill will also incentivize unprecedented 
investment in U.S. manufacturing. The legislation will provide 100% 
expensing for new factories, as well as existing factories that expand 
operations and support Made-in-America. And it will streamline 
burdensome permitting processes that often stand in the way of new 
manufacturing projects. It's time for this country to start building 
things again--and the One Big Beautiful Bill makes this possible.
    The administration is grateful for the House's efforts to advance 
the One Big Beautiful Bill. We now look forward to working closely with 
this subcommittee and other members of the Senate to get this 
legislation to the President's desk.
    Trade is the second topic I wish to highlight.
    The progress we have made on tax issues over the last 4 months 
complements the significant progress we have made in rebalancing the 
global economy.
    Since I last testified before Congress in May, the President 
announced the historic U.S.-UK trade deal. This arrangement--which 
creates a $5 billion export opportunity for American ranchers, farmers, 
and manufacturers--is a preview of what's to come. Dozens of countries 
have engaged the administration thus far with offers to improve their 
trade relations with the United States. This includes China.
    China has a singular opportunity to stabilize its economy by 
shifting away from excess production towards greater consumption. But 
the country needs to be a reliable partner in trade negotiations. If 
China will course-correct by upholding its end of the initial trade 
agreement we outlined in Geneva last month, then a big, beautiful 
rebalancing of the world's two largest economies is possible.
    By challenging the decades-old status quo on tax and trade, 
President Trump is breathing new life into the American economy. More 
than 500,000 private-sector payroll jobs have been added since January. 
Most importantly, inflation in the U.S. is at its slowest pace since 
2021 on decelerating cost increases for shelter, food, and energy. 
After 4 years of price increases diminishing the U.S. standard of 
living, inflation is showing substantial improvement due to the 
administration's policies. Furthermore, the labor market remains strong 
with low unemployment and plentiful labor demand as job openings remain 
high. This strength has been exemplified in the recent performance of 
the stock market and consumer confidence data.
    The President's bold leadership on these issues has laid the 
foundation for a Golden Age economy. With your help, we can build on 
that foundation to create even greater prosperity and abundance for the 
American people. We hope you will join us in this endeavor.
    Thank you.
---------------------------------------------------------------------------
    \1\ Fox, Michelle, CNBC, Tax Revenue Collected by the IRS Set to 
Plummet, Report Says (Mar. 24, 2025), https://www.cnbc.com/2025/03/24/
tax-revenue-collected-by-the-irs-set-to-plummet-
report-says.html.
    \2\ The Council of Economic Advisers, Preserving and Expanding Low 
Tax Rates to Create American Economic Prosperity (May 2025), https://
www.whitehouse.gov/wp-content/uploads/2025/03/Preserving-and-Expanding-
Low-Tax-Rates-to-Create-American-Economic-Prosperity.pdf.

    Senator Hagerty. I would like to start with first round of 
questions, Mr. Secretary, and then I'll turn it over to Ranking 
Member Reed. Just one second here. I know you're really glad 
that we didn't go through all of our opening statements.

                             DIGITAL ASSETS

    Mr. Secretary, the Senate is currently considering the 
GENIUS Act, you're familiar with that legislation, that's 
designed to promote and regulate innovation and payment 
stablecoins. The bill aims to bring our payment system into the 
21st century. Unlike slow and costly wire transfers, 
stablecoins enable direct peer-to-peer transactions that settle 
nearly instantaneously.
    The potential benefits are immense. These digital assets 
can remove friction in global payments. They can unlock working 
capital for more productive deployment, and improve settlement 
and settlement and efficiency in financial markets. The 
adoption of these innovative digital assets is soaring, growing 
from around $4 billion in early 2020, to more than $200 billion 
today. If Congress can provide long due regulatory clarity, 
this remarkable growth trajectory will only accelerate.
    So, my first question, Secretary Bessent, my legislation 
requires that stablecoins be backed by cash or short-dated U.S. 
treasuries. One investment bank estimates that the GENIUS Act 
would expand the stablecoin market from its current value of 
$240 billion to $2 trillion by the end of 2028, with most of 
the reserves likely to be held in U.S. treasuries. What are the 
benefits of having a new and expansive source of demand for 
U.S. treasuries in the years ahead?
    Secretary Bessent. Senator, thank you for your leadership 
on this important matter. As you know, the administration led 
by President Trump has made digital assets a priority, in 
making the U.S. the world leader in digital assets. It's 
essential for our goals.
    Your question is a very important one. In the history of 
the U.S. dollar as a reserve currency, there have been the 
numerous passages along the way where many people assume that 
the U.S. dollar would lose reserve currency status, and there's 
always been a new mechanism that has cemented that.
    This administration is committed to keeping the reserve 
currency status and enhancing that. And I believe that 
stablecoin legislation backed by U.S. treasuries, or T-bills, 
will create a market that will expand U.S. dollar usage via 
these stablecoins all around the world. And I think that 2 
trillion is a very reasonable number, and I could see it 
greatly exceeding that.

                           CAPITAL STANDARDS

    Senator Hagerty. You've previously spoken about the need to 
reverse some of the overregulation in capital standards, 
including a reduction in the supplementary leverage ratio. That 
ratio penalizes banks or the level of today penalizes banks by 
requiring them to hold excess capital against low-risk assets 
like treasuries and reserves.
    So, my question, Secretary Bessent, is how soon could we 
see changes to the SLR ratio, and how could yields be affected 
by a more tailored approach to capital requirements for risk-
free assets?
    Secretary Bessent. Well, Senator, risk assets are like 
cholesterol. There's good cholesterol and bad cholesterol. That 
some risk assets are riskier than others and the problem with 
the SLR is it doesn't differentiate. So, we have been working 
via FSOC and the regulators--OCC, the FDIC, and the Fed-- to 
coordinate a change in the supplementary leverage ratio for the 
purchase of treasuries.
    We don't know the exact magnitude in terms of how it might 
affect yields, but what we have seen in the past is that when 
this requirement was removed, it had a substantial effect. So, 
we don't know the effect, we do know the direction of travel. 
We don't know the magnitude.
    Senator Hagerty. Got it. I do think that a tapering 
approach, I'm pleased to hear it, will have a very positive 
impact on the markets. Thank you for that. And I know this has 
been in front of mind for you. Certainly, in recent days you've 
been playing an incredible role in negotiating terms of trade 
for our Nation with other nations. You're just returned from a 
big trip in that regard.

                           TRADE AND TARIFFS

    And to the extent you could comment in a public arena on, 
what sort of update you might be able to give us on trade in 
tariffs, I think we'd be very interested to hear that.
    Secretary Bessent. Yes. So, as I've said several times 
before, there are 18 important trading relationships. They 
constitute between 90 and 95 percent of our trade deficits 
also. So, our largest trading partners definitionally are also 
some of the worst offenders in terms of trade deficits. We are 
finding that these trading partners have come to us, many of 
them with robust proposals. Some have been a little slower to 
come, like the European Union, but have now shown better faith.
    The Administration put a 90 day hold on the reciprocal 
tariffs and took everyone down to a global baseline of 10 
percent. It is my belief that countries that are negotiating in 
good faith could be rolled forward. Our negotiations with the 
Chinese were extensive, deliberative, done with respect between 
the two countries, but also the understanding on my part that 
China is the most imbalanced economy in the history of the 
world, and that at 30 percent of global manufacturing this is 
not sustainable.
    So, we are looking to insert fairness into our relationship 
with the Chinese, and that can be done via them exporting less 
to us, or it could be done with what I would paraphrase from 
Ray Dalio, a big beautiful rebalancing, where President Trump 
would like to rebalance the U.S. more in favor of 
manufacturing. We're down to about 9 percent of the U.S. 
workforce is involved in manufacturing.
    The Chinese economy is imbalanced on the manufacturing 
side. They need to increase domestic consumption substantially. 
So, if we could do that together, then the two largest 
economies in the world could get into better equilibrium that's 
fair for the American people.
    Senator Hagerty. Thank you very much for that thoughtful 
response. Now, I'd like to turn to my Ranking Member and 
partner, Senator Reed.
    Senator Reed. Well, thank you very much, Mr. Chairman, and 
welcome home, Mr. Secretary.
    Secretary Bessent. Senator Reed, it's nice to meet you. I 
don't believe we've ever met.
    Senator Reed. Well, today's the beginning of a beautiful 
relationship. Didn't Humphrey Bogart say that?
    Secretary Bessent. We can quote Ray Dalio, big beautiful--
--
    [Laughter.]

                       ACCESS TO PAYMENT SYSTEMS

    Senator Reed. Mr. Secretary, Treasury distributes about 
$5.4 trillion a year in payments, social security benefits, tax 
refunds, military salaries, and all these payment systems 
contained some of the most personal information of every 
American. And you have had in Treasury, a DOGE representative 
who have reputed to have access to lots of information.
    And I've been asking questions, not just of you, but of 
other cabinet members about the extent of the information they 
have. Have your staff, or any DOGE representatives in terms of 
the distribution payments, started to stop or block any 
payments?
    Secretary Bessent. Not to my knowledge.
    Senator Reed. Well, it turns out that in emails filed by 
the Treasury Department, your chief of staff emailed that, 
``Mr. Krause and his team needed access to the Federal payment 
system so they could pause USAID payments, and comply with Mr. 
Trump's January 20th executive order to hold foreign aid.'' Did 
that take place?
    Secretary Bessent. I believe that may have been before I 
arrived on January 28th. And I also believe if that's a 
Washington Post story or the New York Times story, they were 
actually quite selective with the email that was leaked to 
them.
    And, Senator, just to be clear, what I discovered on my 
arrival, was that we process about 1.5 billion payments a year 
that sums to the total you mentioned. Approximately one-third 
of that do not have what is known as a TAS, Treasury Account 
Symbol. We found that. Having a TAS is the only way to tie a 
payment back to an appropriation. So, we have been working very 
hard to make sure that all 1.5 billion payments can be tied 
back to an appropriation.
    I think a good mental model for this is to think of what's 
called the Treasury General Account, the TGA, is the checking 
account for the U.S. government. And above that, sits between 
400 and 450 entities, whether it's the big departments, the 
agencies, the smaller entities, and they put in requests for 
payments. Treasury is just the pay master. So, in general, we 
do not try to stop payments if they are properly notified or 
authorized.
    Senator Reed. Well, You're right. The occurrence of this 
stoppage was January 24th, 4 days. But in fact, payment was 
stopped because of a political motivation. USAID was deemed to 
be an inappropriate agency in the government. And which begs 
the question, how could you stop someone or could you stop 
someone that decided to stop payments to an individual 
organization for reasons that were not meritorious at all?
    Secretary Bessent. I'm not familiar with the litigation 
around that, but I can tell you since January 28th, none of 
that has happened, and that everyone--I think there's some 
conflation and much of it's due to the media, on what is a DOGE 
employee? What is a Treasury employee? Anyone who works in the 
Treasury building is a Treasury employee. So, they may have 
come there at the suggestion of DOGE, but they are properly 
trained and compliant just as any other Treasury employee would 
be.
    Senator Reed. Well, I think you've touched on an issue of 
conflation of different jobs. On February 3rd, you wrote in 
response to my letter that one of your colleagues, Tom Krause, 
started as a DOGE representative but then was brought on as an 
expert/consultant. But then 2 days later on February 5th, you 
installed him as the Fiscal Assistant Secretary, which the top 
official charged with running the Bureau of Fiscal Services. At 
any time during his employment at Treasury, was he a member or 
a play of another company?
    Secretary Bessent. He may have been and if he were an SGE, 
I think he's allowed to have outside employment.
    Senator Reed. Well, in fact, again, another transcript from 
a court case, he was the chief executive officer of Cloud 
Software Group, which presents interesting or potential 
conflicts of interest.
    Secretary Bessent. But, Senator, I believe, as an SGE, that 
is permitted, to be seconded for a limited period of time with 
proper control.
    Senator Reed. Is he still involved with Cloud Computing?
    Secretary Bessent. I believe he's left Treasury.

                       ACCESS TO TAX INFORMATION

    Senator Reed. So let me just switch to another area of 
data. I'm very much concerned because of the DOGE penetration 
of the entire government. Again, the IRS has extraordinarily 
confidential, deeply personal taxpayer information, social 
security numbers, et cetera. And if compromised, this could 
threaten Americans financial security, as well as even more 
sinister aspects.
    DOGE's staff members have attempted to access the 
integrated data retrieval system at the IRS. Secretary, does 
DOGE staff, have they ever had, or do they have access to the 
Integrated Data Retrieval System?
    Secretary Bessent. Not to my knowledge, sir. And again, any 
information they would've had access to would have been via--
and I'm new to this, but I'm going to throw a lot of acronyms 
at you. It would've been through an MOU between IRS and OMB. 
So, we put the proper controls, prophylactics around any 
activities that they had in the building.
    Senator Reed. Are you confident that no information has 
been exported from the Treasury Department by those personnel?
    Secretary Bessent. Not to my knowledge, Senator.
    Senator Reed. Have you investigated it to ensure us that 
that's absolutely, correct?
    Secretary Bessent. Well, we have strict protocols around 
that, so there's no reason to believe that there was. Now, in 
the previous administration, a contractor went to jail and 
paid, I can't remember either a $5,000 or $10,000 fine, is 
serving a stated five-year term. We don't know the terms of his 
plea agreement for exporting, I believe, the files of, it was 
40, 50, 100 of the highest taxpayers in America, including 
President Trump.
    Senator Reed. Well, one of the issues here is, these are 
temporary. Their employee or employer status is kind of up in 
the air, particularly if they're not full-time employees. They 
work for other companies, et cetera. And they certainly have 
the technical talents to copy and exploit and expropriate any 
information they want.
    Secretary Bessent. Well, Senator, that's why we took this 
very seriously in terms of there was a push for them to come in 
the building. Our staff at Treasury and IRS was very mindful 
and diligent of everything you've said. So, we were very 
mindful of having proper balances, protocols in place.
    Senator Reed. Thank you, Mr. Secretary.
    Senator Hagerty. Thank you for clarifying that for us. Mr. 
Secretary. I think that was very helpful to have that.
    Secretary Bessent. And Senator, my staff just told me all 
the details there are in the litigation.
    Senator Hagerty. Yes. Thank you very much again, Mr. 
Secretary, for illuminating us with that explanation. I'll turn 
to Senator Van Hollen, please.
    Senator Van Hollen. Thank you, Mr. Chairman.

                           TRADE NEGOTIATIONS

    Welcome, Mr. Secretary. And I know you've just returned 
back from London, I believe, where you're engaged in the trade 
negotiations. And I've been trying to keep up with reports as 
to where those stand.
    I just have one question regarding that, and that's a 
headline here that reads that Trump eyeing easing U.S. chip 
export restrictions to secure Chinese rare earths. I think all 
of us recognize the vulnerability the United States has with 
respect to rare earths. It's something that China has decided 
to limit much more since this trade war got launched in the 
most recent iteration. But many of us have been very concerned 
about the diffusion of very high-end chip technology and AI 
technology to China. So, I'm wondering if you can comment on 
that.
    Secretary Bessent. Yes, sir. Senator Van Hollen, to the 
extent that article makes it seem as though there is some quid 
pro quo, there is none. We have done an extensive analysis 
within Treasury, Commerce and all the technology, the White 
House Office of Science and Technology, on any technology 
transfer. And we have been very judicious in that. So, there is 
no quid pro quo in terms of chips for rare earths.
    Senator Van Hollen. Okay. I'm listening carefully. And I 
understand you're saying there's no quid pro quo. I take it to 
mean from that, that you're not saying that we won't increase 
the access to China of our highest end chip technology, I'm not 
saying you're saying we are. I'm just asking, you haven't ruled 
that out? Is that--am I interpreting you right?
    Secretary Bessent. What I'm saying, there's no intent. 
You're referring to NVIDIA chips, mostly?
    Senator Van Hollen. I'm referring to NVIDIA chips, and the 
other high-end chips, and the manufacturing equipment to 
produce those chips.
    Secretary Bessent. Yes, but in fact, we have done just the 
opposite. We put export controls on the NVIDIA H20, which I 
would regard as a very upper-end chip, but not the highest end 
chip. So, if anything, we have set--
    Senator Van Hollen. No, I appreciate the measures you've 
have taken, I would argue building in some cases on the Biden 
Administration, but this is why this caught my eye. I just 
returned from the Senate floor where I have been raising very 
deep concerns about the deal that was done with the UAE, where 
on the day before the President left on his trip, rolled back 
the safeguards that had been put in place by the previous 
Administration, which with I should add, strong bipartisan 
support, including the bipartisan joint committee in the house 
looking into China.

                        INTERNAL REVENUE SERVICE

    So, this is an area I think many of us are very concerned 
about, which is why this headline caught my eye. If I could 
turn to the cuts to the IRS, and I've followed your comments 
about how you're able to continue to bring in revenues despite 
the changes that have been made, I would suggest, Mr. 
Secretary, that it's way too early to tell.
    First of all, as you know, a lot of people were fired as 
probationary employees only to have to be brought back on an 
emergency basis for tax filing season. So, I think it's 
important we understand that. And the idea that people can 
really turn around a ship and implement all these new 
technology and AI changes, to expedite IRS collections, 
especially for very wealthy people, is something many of us 
have been pushing for, for many years. But the notion that this 
has happened in a very short time, I think defies logic.
    So, are you predicting that the changes that you've made 
this year will not result in the IRS collecting less revenue, 
especially from higher end individuals than would be predicted 
this year? Obviously, as the economy continues to grow, 
revenues grow, but I'm saying I'm sure you've seen the CBO 
projections. The CBO says, when you make these cuts, you will 
bring in less revenue from very wealthy people than you 
otherwise would. Do you agree with that analysis?
    Secretary Bessent. I don't, because I could tell you a 
couple of things. In discussing with my personal tax advisors, 
that they say that anyone you could bring in with 2 to 3 years 
of training is virtually worthless. I would say it is like 
putting me on a basketball court with Steph Curry. And we have 
from a whistleblower in Atlanta, and this was before I arrived, 
under Secretary Yellen, there was a problem with the rapid pace 
of hiring to the quality of individuals hired. If there were 
two criteria, two high criteria, many only satisfied one. And 
then, there were a few examples of people who were not 
qualified at all.
    Senator Van Hollen. I appreciate that. I would just 
emphasize, again, it'd be helpful if your team could get back 
to me and Members of the Committee, as to what specific 
assumptions, premises, and conclusions in the CBO report you 
disagree with. Can you provide us with that?
    Secretary Bessent. Yes, sir.
    Senator Van Hollen. Because I'd like to--the CBO is like 
our umpire here. They really don't wear a party hat; they call 
it as they see it. And in this case, we're seeing very 
different projections that have very meaningful consequences 
for our deficit. So, I'd appreciate that.
    Secretary Bessent. Yes. And, what I would point out in our 
technology innovation, the IRS technology stack update began in 
1990. I believe $50 billion has been spent. We were due to 
spend three and a half billion this year. We have cut that back 
because so much of it is wasted, or it's just patches on 
patches on existing systems.
    Also, as I've said repeatedly, I have three goals: 
collections, privacy, and customer service. And you know, I 
believe we can enhance all of those, as you clearly, they are 
well versed in AI, and I think that we are at the dawn of being 
able to greatly increase individual and experienced auditor 
productivity via AI. So, for the upper end tax auditors that 
you brought up, that is what would be considered a plumb job. 
It is something that takes many years of experience. So, our 
goal is to actually be able to enhance their productivity and 
collections ability with AI.
    Senator Van Hollen. Thank you. I look forward to getting 
the analysis that looks at what the CBO has done and where you 
disagree. Thank you, Mr. Secretary.
    Senator Hagerty. Senator Coons.
    Senator Coons. Thank you, Chairman Hagerty, Ranking Member 
Reed. Secretary Bessent, welcome. Thank you for being here 
today.
    Secretary Bessent. Senator, nice to meet you.
    Senator Coons. Chairman Hagerty, I'm impressed that you're 
streamlining this hearing.
    [Laughter.]

                            DEFICIT AND DEBT

    Senator Coons. It was striking. And I'm glad we're able to 
get right into the meat of the conversation. We are today 
spending more on the interest on our national debt than we are 
on our national defense. And I applaud your stated support for 
reducing the Federal deficit and trying to get a handle on our 
national debt.
    But I struggle to square that with your support for tax 
policies that will under CBOs analysis, add at least $2.4 
trillion to our debt in the next decade. And given that credit 
rating agencies have just downgraded U.S. debt, I am concerned 
that by continuing to pile debt onto our national balance 
sheet, we will undermine growth. We will damage our ability to 
borrow and we will lay the foundation for the next fiscal 
crisis. Do you share any of those concerns and how do you see 
us making progress in improving our overall fiscal balance 
sheet?
    Secretary Bessent. Senator, I don't think you and I have 
met in person. I think we had a long----
    Senator Coons. We have met.
    Secretary Bessent. Yes. We did meet and we also had a very 
long phone conversation, I remember. The reason I'm sitting 
here today is because I became very concerned about our 
government's finances, and that in the trailing year we will 
have had the highest deficit to GDP when we were not at war and 
not in a recession. And so, this is what we have inherited.
    If we look at the CBO scoring, and I'm not making a 
judgment on the good people who work at CBO, I'm making a 
judgment on their models. The models assume a static 1.7 or 1.8 
percent growth, whether we pass the One Big Beautiful Bill or 
it fails, no matter what, we always grow at 1.8 percent. I 
believe through higher growth and the cost cutting that we are 
doing, that we can bring that under control.
    And I would note that if we want to use CBO scoring, which 
I don't agree with, is at $2.4 trillion over the 10-year 
window. The CBO also scores the President's tariffs at $2.8 
trillion. So that would be a surplus of 400 billion.
    Senator Coons. Let me move on to some more focused 
questions on specific things in your agency. I would welcome a 
chance about the broader economic picture because I frankly 
don't believe the tariff income assessment. I do believe that 
the tax, but we literally could debate this longer than I 
believe I have.
    Senator Coons. Let's move to sanctions.
    Secretary Bessent. If we want to agree on CBO, we have to 
agree on CBO.

                               SANCTIONS

    Senator Coons. And I'll take that point. Secretary Rubio 
testified recently the Trump Administration has not lifted any 
sanctions against Russia. Is that true?
    Secretary Bessent. Not to my knowledge.
    Senator Coons. And sanctions, which I've long followed, 
I've served on this subcommittee for many years. It's not a 
static game. For every company that's sanctioned, typically, 
they then move to set up a front company to find another 
avenue. And with the Russians in particular, they're quite 
skilled at sanctions of Asian, by setting up new companies in 
other countries, including in the PRC. And for every sector 
that sanctions, there's a whole cottage industry devoted to 
evading them.
    Effective sanctions depend on follow up, enforcement and 
pursuit, which is why you have a whole talented team at 
Treasury focused on finding evaders and front companies, 
redesignating them publicly, closing the loopholes. Treasury 
and state were rolling out new sanctions' designations every 
few weeks, much of last year. How many new Russian entities 
have you designated under your sanction's authority since 
January?
    Secretary Bessent. I will get back to you with that number.
    Senator Coons. The answer's zero. How many entities 
worldwide have you sanctioned for doing business with Russian 
companies, in ways that undermine our sanctions and export 
controls?
    Secretary Bessent. I'll get back to you with that number.
    Senator Coons. I believe the answer is zero. I hope I'm 
wrong. I'd love it if you'd get back to me and tell me I'm 
wrong. But the PRC is helping Russia's defense industry by 
providing dual use components and advanced technologies. Last 
week, Chancellor Mertz briefed a bipartisan group of us on 
Russia's alarming rearmament with help from China, Iran, and 
North Korea. How many Chinese firms have been designated for 
doing work directly with Russia's defense industry?
    Secretary Bessent. I will get back to you on that. I will 
tell you that we have sanctioned numerous Chinese companies for 
receiving Iranian oil, and we have been working on--the shadow 
fleets are not independent. And I believe, and what you said, 
the Russians and the Iranians are very good at evading 
sanctions with these so-called shadow fleets.
    So, we are working on a large--we have been pushing on 
those. We have sanctioned what are called teapot refineries in 
China. So, these are nonstate-owned, privately-owned 
refineries. This is a new innovative measure that we have done. 
We have chosen not to go after Chinese government owned. We are 
also working on tracking down the owners of these refineries, 
whether they have any assets in the U.S., in Western Europe, 
and moving on those very quickly.

                      INTERNATIONAL MONETARY FUND

    Senator Coons. I look forward to talking to you further 
about sanctions enforcement. Two last questions, Mr. Chairman, 
since I'm the only Senator remaining. I will make them brief. I 
just met with the head of the IMF. The IMF is a sound 
investment in global financial stability. We receive billions 
in interest every year from them on credit that they extend. In 
2023, members agreed to increase quota capital contributions to 
the fund. It's my understanding that the Treasury Department 
and the White House have shown support for a measure to 
increase quota. Can you just confirm it is in fact the 
Administrations priority to increase our IMF quota?
    Secretary Bessent. Yes. So, across the multilateral 
development banks, we believe that it is a very good way of 
leveraging tax dollars for U.S. power. And the managing 
director would've told you, or you may have seen that I gave a 
speech about eight weeks ago, during IMF World Bank Week, that 
we are going to go back to basics. And we believe that they 
should be helping developing countries when they have a sudden 
stop and with development issues. Same for World Bank.

                           TAX FILING OPTIONS

    Senator Coons. I would love to work with you, Mr. 
Secretary, on making sure that the authorization for that 
increase actually happens this year so that we can move forward 
in our partnership. The direct file program allows Americans 
with very simple tax returns to file their taxes for free. It's 
been a great success.
    According to IRS research, 94 percent of direct file users 
rate their experience as excellent or above average, for 
government tool for paying taxes, that's pretty darn good. 
You've expressed support for streamlining IRS operations and 
direct file seems to support that mission. Do you continue to 
support direct file, or should I be concerned about rumors that 
the Administration plans to end it?
    Secretary Bessent. We are looking at direct file, we wanted 
to wait until we got beyond the window of tax filing season. 
So, we are doing an assessment of that now. I will get back to 
you on that. One of the goals is to have more electronic filing 
because, I am cuffing the numbers, but in order of magnitude, 
an electronic filer who doesn't get a refund, may cost us under 
a dollar. A paper filer who does, get maybe up to $80. So, I 
will get back to you on that.
    Senator Coons. Thank you. Because I do think it's a 
successful program and reduces costs and makes it easier for 
taxpayers. Thank you for your forbearance, Mr. Chairman.
    Senator Hagerty. Thank you. And thank you, Secretary 
Bessent, for appearing before our subcommittee today. We 
appreciate your time, and your attention, your hard work, and 
being here with, I'm sure, extensive jet lag, and then 
testifying all day. So, thank you again for being here.
    Senator Reed and I know will be submitting some additional 
questions for the record.
    Senator Hagerty. Our effort is to get you back when you get 
a little bit of rest, and we need you at your best, and I'm 
sure you are. And our members, I'll remind you, you have a week 
to submit questions for the record. Mr. Secretary, we'd 
appreciate it if the Department could respond to the questions 
that you received for the record as soon as possible.

                     ADDITIONAL COMMITTEE QUESTIONS

    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
          Questions Submitted to The Honorable Scott Bessent,
                       Secretary of the Treasury
              Questions Submitted by Senator Susan Collins
    Question 1. Under current U.S. policy, Canadian products that are 
USMCA-compliant can be sold into the U.S. with no tariff. However, 
those same goods being made here in the U.S., meeting the same 
requirements under the USMCA, are currently subject to a 25% tariff 
when sold into Canada. This places U.S. companies at a significant 
disadvantage. What steps is the Administration taking to resolve this 
issue and to reach a broader trade deal with Canada, Maine's most 
important trading partner?

    Answer. Fair and reciprocal trade is a top priority for President 
Trump and for Treasury as we engage with our counterparts in Canada on 
leveling the playing field for American workers, manufacturers, and 
businesses.
    The Administration has engaged in negotiations with Canada to make 
progress on bilateral trade issues. Effective September 1, 2025, Canada 
removed its retaliatory tariffs on most U.S. goods in recognition of 
this progress. There have also been significant breakthroughs on topics 
such Canada agreeing to remove its digital services tax (DST). The core 
aim of the Administration's policies is to better shape the 
international economic system to benefit the United States in the long-
term. The realignment of the international economic system to better 
serve the interests of the American people, along with the 
implementation of pro-growth regulatory and tax policies, and the 
freeing of American energy production, will unleash the American 
economy.

    Question 2. The medical technology sector plays a critical role in 
advancing healthcare innovation, protecting public health, and driving 
economic growth--particularly in states like Maine, where the $2.3 
billion life sciences industry supports job creation and public health 
infrastructure. These investments in the U.S. are especially important 
as China's dominance in global medical supply chains continues to pose 
a serious threat to U.S. national security and public health. Are U.S. 
officials considering targeted tariff relief and solutions for certain 
sectors with national security implications, including the medical 
technology sector, especially for companies that have moved supply 
chains out of China and are actively reshoring manufacturing to the 
United States?

    Answer. For several decades, the international economic system was 
built on faulty assumptions which led to a significant buildup of 
economic imbalances that have harmed American workers, families, and 
businesses, and threatened our national security. President Trump is 
focused on implementing a robust and reinvigorated trade policy that 
defends our economic and national security, promotes investment and 
productivity, and benefits American workers, manufacturers, and 
businesses. Persistent trade deficits have created dependencies on 
China for critical parts of the supply chain for everything from basic 
consumer goods to high-tech national defense products. COVID-19 was a 
real-life demonstration of the risks in our supply chains. The core aim 
of the Administration's policies is to better shape the international 
economic system to benefit the United States in the long-term. The 
realignment of the international economic system to better serve the 
interests of the American people, along with the implementation of pro-
growth regulatory and tax policies, and the freeing of American energy 
production, will unleash the American economy.
                                 ______
                                 
              Questions Submitted by Senator Bill Hagerty
    You have stated that one of your major priorities for the IRS is 
strengthening taxpayer privacy protections. The privacy of more than 
400,000 taxpayers was violated when an IRS contractor stole and 
publicly released the tax returns of then-candidate Donald Trump. This 
individual also leaked sensitive tax information to two news 
organizations.

    Question 1. Can you describe how the Department, especially with 
regard to the IRS, is protecting the privacy of taxpayers against 
insider threats, and whether the IRS continues to rely on the 
contractor in question?

    Answer. Cybersecurity is a priority for this administration. 
Treasury is currently conducting a reassessment of cyber protections at 
IRS to ensure that all threat vectors have been captured. With respect 
to the contractor you referenced, he has been prosecuted for his 
actions and was sentenced to a term of 5 years in 2024.

    Question 2. Are the two news organizations that published this 
information still in possession of it, or have they returned it to the 
IRS? If not, what options does the IRS have to retrieve the stolen 
taxpayer information?

    Answer. My understanding is that the investigation and criminal 
referral was managed by the Treasury Inspector General for Tax 
Administration, which would have the most current information on this 
question.

    Question 3. The Committee on Foreign Investment in the United 
States review process is important for protecting our national 
interests. However, it is also critical to protect national security 
interests without imposing unnecessary and burdensome regulations on 
our allies.

    What steps has the Department taken to develop the Known Investor 
program? What is the timeline for rolling out this program?

    Answer. Treasury, working with the rest of CFIUS, is actively 
focused on ways to increase efficiencies in the CFIUS process to 
facilitate greater investment from allies and partners while ensuring 
that any process changes do not diminish CFIUS' ability to identify and 
address national security risks. On May 8, 2025, Treasury announced our 
intent to launch a process, called the Known Investor program, where 
CFIUS can collect information from foreign investors in advance of a 
filing, and our plan is to conduct a pilot of this process and build 
from it over time.

    Question 4. How will the Department evaluate the program's 
effectiveness?

    Answer. Our experts are working to determine the best way to 
structure this pilot to increase process efficiencies for Known 
Investors, while also ensuring that these changes do not diminish our 
ability to fulfill our statutory mandate to identify and address 
national security risks that can arise from foreign investment.
                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin
    Question 1. Americans lose tens of millions to crypto ATM scams 
every year, with older Americans particularly susceptible. According to 
data from the FBI's Internet Crime Complaint Center (IC3), there were 
$246.7 million in losses due to crypto ATM scams in 2024. IC3 received 
10,956 complaints about crypto ATM scams, including nearly 2,700 
complaints from individuals aged 60 and older. My Crypto ATM Fraud 
Prevention Act would help the Treasury Department and the Financial 
Crimes Enforcement Network (FinCEN) crack down on crypto ATM operators. 
Specifically, my bill would require operators to register with FinCEN, 
which would include identifying the physical location of each crypto 
ATM and providing contact information for a compliance officer of the 
crypto ATM company. My bill also would require crypto ATM operators to 
develop and submit a comprehensive anti-fraud policy to FinCEN; provide 
physical, printed receipts to customers that include sufficient 
information to allow law enforcement to trace transactions; provide 
clear warnings to customers about common types of scams; provide live 
customer support during all operating hours; use blockchain analytics 
to identify potentially fraudulent transactions; and require daily 
transaction limits, voice confirmation, and full refunds for new 
customers (those who made their first transaction within the last 14 
days).
    a. Please share any data FinCEN has collected from crypto ATM 
operators or other sources on the number of fraudulent transactions, 
amounts lost, impact on senior citizens, type of customer support 
offered, and fraud rates that occur on these machines.

    Answer. Please refer to FIN-2025-NTC1, a notice issued by FinCEN on 
August 4, 2025, regarding the use of CVC kiosks for scam payments and 
other illicit activity.\1\

    b. What steps have the Treasury Department and FinCEN taken to 
prevent crypto ATM scams?

    Answer. CVC kiosks, commonly called crypto ATMs, are money services 
businesses (MSBs) and therefore subject to various obligations under 
the Bank Secrecy Act (BSA). Specifically, CVC kiosks are required to 
maintain an AML program, register with FinCEN, and meet recordkeeping 
and reporting requirements, including to report suspicious transactions 
(which may include those involving scams and elder financial abuse). 
All MSBs undergo routine BSA examinations by FinCEN's delegated 
examiner, the IRS's Small Business/Self-Employed Division. FinCEN 
issued a notice on August 4, 2025 regarding the use of CVC kiosks for 
scam payments and other illicit activity.\2\
    To further counter scams, in May 2025, FinCEN issued a finding and 
notice of proposed rulemaking (NPRM), pursuant to Section 311 of the 
USA PATRIOT Act, identifying Cambodia-based Huione Group as a financial 
institution operating outside of the United States that is of primary 
money laundering concern. Huione Group serves as a critical node for 
laundering proceeds of cyber heists carried out by the Democratic 
People's Republic of Korea and transnational criminal organizations in 
Southeast Asia perpetrating CVC investment scams and other types of 
CVC-related scams. Given the money laundering risk posed by Huione 
Group, the NPRM proposes to prohibit U.S. financial institutions from 
opening or maintaining correspondent or payable-through accounts for or 
on behalf of Huione Group. On October 14, 2025, FinCEN issued a final 
rule severing Huione Group from the U.S. financial system by 
prohibiting covered financial institutions from opening or maintaining 
correspondent accounts for or on behalf of Huione Group and requiring 
covered financial institutions to take reasonable steps not to process 
transactions for the correspondent account of a foreign banking 
institution in the United States if such a transaction involves Huione 
Group.

    c. What resources do the Treasury Department and FinCEN need to 
help crack down on crypto ATM scams?

    Answer. Combating fraud is one of FinCEN's AML/CFT National 
Priorities \3\ and, since 2015, Treasury has assessed in its National 
Money Laundering Risk Assessment that fraud is the top proceeds-
generating crime for money laundering activity.\4\ In addition to 
coordinated efforts with law enforcement, interagency partners, and 
private sector stakeholders, Treasury maintains a resource focus on 
combatting fraud and related illicit finance.

    d. What resources do the Treasury Department and FinCEN provide to 
local law enforcement to help investigate these scams and warn 
communities of the harms of these scams?

    Answer. Treasury uses a range of authorities and initiatives to 
support law enforcement and communities in combatting scams. For 
instance, FinCEN leverages its FinCEN Exchange information-sharing 
program to bring together financial institutions, law enforcement, 
national security agencies, and relevant private sector entities to 
address priority financial fraud threats. On July 15, 2025, FinCEN 
hosted a FinCEN Exchange event on advancing digital assets innovation 
while safeguarding consumers against fraud and scam risks. This public-
private partnership event was convened in support of Executive Order 
14178, which strengthens American leadership in digital financial 
technology. FinCEN also maintains a dedicated page on its website 
devoted to educating the public on best practices to avoid imposter 
scams from individuals or entities purporting to from FinCEN.\5\ FinCEN 
also issues advisory products to financial institutions on new and 
emerging fraud typologies and red flag indicators to support their 
suspicious activity reporting to law enforcement. Relatedly, Treasury 
conducts regular engagements with financial institutions to discuss the 
findings of the risk assessments and solicit their feedback on any 
emerging trends and typologies. Further, Treasury will also continue to 
work with civil society and other intergovernmental agencies to educate 
consumers of evolving financial fraud schemes, as, for example, it has 
already done in the past with the American Bankers Association 
Foundation, Department of Justice, and others by providing infographic 
pamphlets on these scam typologies.
    Additionally, the Rapid Response Program (RRP) is a collaborative 
partnership that leverages FinCEN's relationships with law enforcement, 
U.S. financial institutions, and foreign Financial Intelligence Units 
to secure the recovery of funds stolen through cyber-enabled financial 
crimes. FinCEN, in partnership with approximately 91 different 
Financial Intelligence Units, has assisted in the recovery of over $1.6 
billion in proceeds since 2014. In Fiscal Year 2024, the RRP froze 
$126.4 million, and helped recover $82.6 million in funds to victims of 
financial fraud and scam activity. Further, the RRP has successfully 
recovered over $355 million in cyber-enabled financial crime proceeds 
for Financial Intelligence Unit partners abroad.
---------------------------------------------------------------------------
    \1\ FinCEN Notice, FIN-2025-NTC1, August 4, 2025.
    \2\ FinCEN Notice, FIN-2025-NTC1, August 4, 2025.
    \3\ See FinCEN, Anti-Money Laundering and Countering the Financing 
of Terrorism National Priorities, at 8 (June 30, 2021), https://
www.fincen.gov/sites/default/files/shared/
AML_CFT%20Priorities%20(June%2030%2C%202021).pdf.
    \4\ See Treasury, National Money Laundering Risk Assessment, at 11 
(2015), https://home.treasury.gov/system/files/246/National-Money-
Laundering-Risk-Assessment-06-12-2015.pdf; National Money Laundering 
Risk Assessment, at 5 (2024), https://home.treasury.gov/system/files/
136/2024-National-Money-Laundering-Risk-Assessment.pdf.
    \5\ FinCEN, Recognizing Imposter Scams, https://www.fincen.gov/
resources/scams.
---------------------------------------------------------------------------
                                 ______
                                 
                Questions Submitted by Senator Jack Reed
    Question 1. Since 2010, Community Development Financial 
Institutions (CDFI) Fund CDFI Program award recipients have originated 
more than $298 billion in loans and investments to revitalize 
communities, financing over 1.3 million businesses and 557,000 
affordable homes. CDFI Fund investments are matched around 8:1 by 
private investment and help CDFIs expand local economies by supporting 
small businesses, childcare centers, healthcare facilities, and new 
housing at little comparative cost to taxpayers.
    While Treasury's proposed Fiscal Year (FY) 2026 budget would 
eliminate all current CDFI Fund discretionary awards, Congress provided 
$324 million for the CDFI Fund in FY2025. Treasury closed its 
application window for FY2025 CDFI discretionary awards in March, but 
has not yet announced awards.

    Will Treasury obligate all discretionary CDFI award funding 
provided in fiscal year 2025 before these funds expire--yes or no?

    Answer. Treasury will obligate the appropriated CDFI funds for the 
fiscal year 2025 awards consistent with the President's policy agenda, 
current law, and apportionment actions.

    Question 2. IRS's Direct File program allows taxpayers to file 
their taxes for free directly with the IRS instead of having to pay for 
private sector programs. Yet the Trump Administration reportedly plans 
to end Direct File.

    What is the status of the Direct File program?

    Answer. Select states and eligible taxpayers were able to utilize 
the Direct File program for the previous year's filing season. Staff 
continues to review the details and results of Direct File's 
performance to determine the best path forward for taxpayers. The 
passage of the ``One Big Beautiful Bill'' provides additional resources 
to launch a task force focused on Direct File and other services for 
taxpayers. In August 2025, the IRS invited the public to provide 
feedback on this matter as well.

    Question 3. Earlier this month, President Trump said that:

        ``The Debt Limit should be entirely scrapped to prevent an 
        Economic catastrophe. It is too devastating to be put in the 
        hands of political people that may want to use it despite the 
        horrendous effect it could have on our Country and, indirectly, 
        even the World.''

    As you know, the debt limit does not create new spending. It simply 
allows the government to make scheduled payments as they come due.

    Do you agree with the President that the debt limit should be 
eliminated?

    Answer. I agree with President Trump that our country must never 
default on its debt. Honoring the full faith and credit of our debt is 
a critical commitment.

    Question 4. Tom Krause was simultaneously employed at Treasury, 
performing the duties of the Fiscal Assistant Secretary, and employed 
as the CEO of a private company called Cloud Software Group.

    During Mr. Krause's time in government service, approximately what 
percentage of his working hours did he spend on Treasury Department 
work and what percentage of his working hours did he spend on Cloud 
Software Group work?

    Answer. Treasury staff are required to follow all applicable laws 
and regulations, including ethics requirements. Mr. Krause complied 
with all applicable ethics training and filing requirements during his 
time at Treasury as a Special Government Employee.

    Question 5. Congress created the Office of Financial Research 
following the 2008 financial crisis and gave it a mandate to catalog 
the financial system, so that regulators can determine who owes what to 
whom in a crisis.

    What financial data does Treasury currently rely on OFR to provide?

    If OFR is eliminated, will Treasury need to spend money to acquire 
or maintain the data currently held by OFR?

    How many employees did OFR have at the time you were sworn in as 
Secretary and how many employees does OFR currently have? Please 
provide a break-down of staff reductions across the various parts of 
the organization, including the Office of the Director, the Data 
Center, the Research and Analysis Center, the Technology Center, the 
Operations division, and the Office of the Chief Counsel.

    Answer. OFR makes various financial data available to Treasury or 
other FSOC member agencies, including on short-term funding (repo 
markets), hedge funds, central counterparties, money market funds, and 
household credit. As with all of Treasury, we are working to ensure 
that OFR is operating efficiently and focused on its statutory mission 
and requirements.

                         CONCLUSION OF HEARINGS

    Senator Hagerty. And with that, the subcommittee meeting is 
adjourned.
    [Whereupon, at 4:40 p.m., Wednesday, June 11, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]

       LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                              ----------                              
                                                                   Page

Atkins, Honorable Paul S., Chairman, United States Securities and 
  Exchange Commission:
    Prepared Statement of........................................    27
    Questions Submitted to.......................................    38
    Statement of.................................................    25

Bessent, Honorable Scott K. H., Secretary, United States 
  Department of the Treasury:
    Prepared Statement of........................................    46
    Questions Submitted to.......................................    56

Collins, Senator Susan M., U.S. Senator From Maine, Questions 
  Submitted by...................................................    56

Durbin, Senator Richard J., U.S. Senator From Illinois, Questions 
  Submitted by 





Hagerty, Senator Bill, U.S. Senator From Tennessee:
    Opening Statement of 






    Prepared Statement of........................................    43
    Questions Submitted by 





Loeffler, Honorable Kelly, Administrator, Small Business 
  Administration:
    Prepared Statement of........................................     6
    Statement of.................................................     3

Reed, Senator Jack, U.S. Senator From Rhode Island:
    Opening Statement of 




    Prepared Statement of........................................    44
    Questions Submitted by.......................................    59

                             SUBJECT INDEX

                              ----------                              

                                                                   Page

                     SMALL BUSINESS ADMINISTRATION

Additional Committee Questions...................................    22
                               __________

                   SECURITIES AND EXCHANGE COMMISSION

Additional Committee Questions...................................    38
    Questions Submitted by Senators:
        Durbin, Richard..........................................    39
        Hagerty, Bill............................................    38
Digital Assets...................................................    29
Fiscal Year 2026 Budget Request..................................    28
Reorganization...................................................    29
SEC:
    Commissioner Roles...........................................    29
    Fees.........................................................    28
    Mission......................................................    27
    Regional Offices and Leasing.................................    30
    Staff Numbers................................................    28
Technology Review and Optimizing Efficiency......................    30
                               __________

                    U.S. DEPARTMENT OF THE TREASURY

Access to:
    Payment Systems..............................................    49
    Tax Information..............................................    50
Additional Committee Questions...................................    56
    Questions Submitted by Senators:
        Durbin, Richard..........................................    58
        Collins, Susan M.........................................    56
        Hagerty, Bill............................................    57
        Reed, Jack...............................................    59
Capital Standards................................................    47
Deficit and Debt.................................................    53
Digital Assets...................................................    47
Internal Revenue Service.........................................    52
International Monetary Fund......................................    55
Sanctions........................................................    54
Tax Filing Options...............................................    55
Trade:
    And Tariffs..................................................    48
    Negotiations.................................................    51

                                   [all]