00:00Thank you, Senator Blackburn.
00:02Thank you, Mr. Chairman, and congratulations to each of you on your nominations.
00:08Dr. Adams, if I can come to you.
00:12Sixty percent of child sex trafficking victims end up in the foster care system at some point,
00:22and many of these children, what we have learned, will undergo numerous interviews from Child Protective Services
00:32before they are ever placed or given appropriate services,
00:39and these interviews are absolutely so traumatic for these children.
00:46So I think this is an area where we need some transparency.
00:52We need some accountability, and I have the GRACIE Act that we are putting in place
00:59to make certain that we are recording these so that the child is not having to constantly relive this.
01:09So as Assistant Secretary, you're going to have the opportunity to design a more comprehensive system,
01:19and I want you to speak to how you would elevate this work within the Children's Bureau
01:26to make certain that these children are going to be protected and helped through this situation,
01:35and that the offenders are going to be held to account in a more efficient way and also more quickly.
01:48Senator, first, let me just say thank you for your advocacy for this issue.
01:52I think it's been a lot to protect children from trafficking and ensure that they have the resources.
01:58I look forward to working with you on that if confirmed.
02:02One of the things as I was studying this budget, it's about a $70 billion budget.
02:06The Office of Trafficking is somewhere between like $20 and $30 million,
02:10so it's a very small piece of the agency's overall pie.
02:14So I think integrating it into the work of the child welfare system is something that's going to be critical.
02:20It's an $11 billion system versus a $20 to $30 million program.
02:26To the extent there are ideas that you have, I'm happy to work with you on those
02:29because I share your commitment to wanting to protect these children.
02:32Have you previously done much work in this area?
02:35Senator, I haven't had much direct experience with this.
02:40I have met with Idaho's Trafficking Coalition and others to prepare for this role,
02:45but I don't have too much direct experience specifically.
02:48Thank you. Mr. McKernan, I want to visit with you a little bit about digital asset innovators.
02:57You know, Tennessee has become quite a hub.
03:00We've got several Bitcoin mining operations that are there.
03:04We have some of the hyperscalers that are there.
03:08Bitcoin Park is actually located in Nashville.
03:14And we are increasingly hearing from these individuals that are innovating in the digital asset space
03:25that they're concerned about Operation Chokepoint 2.0 and the broader trend that there is of debanking,
03:35where a financial institution begins to feel pressure and they directly or indirectly feel
03:45and begin to apply pressure to others and deny services to lawful businesses in the digital asset space.
03:55So these are valid concerns. They're valid concerns to innovators.
04:00And talk to me about what you would do to ensure, both in the supervisory and the regulatory space,
04:11that we are making certain that there is a level playing field for these legitimate digital asset businesses.
04:21Thank you, Senator. Debanking is certainly a challenge we need to address. It's wrong.
04:28It needs to not be something that the regulators are driving.
04:31And I think two approaches that Treasury, I think, should consider encouraging the other banking regulators to also look at.
04:41First, I think it's a bit technical, but I think there's been a practice where the bank regulators,
04:48the bank examiners, have used reputation risk as a way to encourage, even require banks to debank
04:56otherwise lawful businesses. Already, this administration has encouraged the removal of
05:02reputation risk from the supervisory framework. The banking regulators have executed on that.
05:07No longer should reputation risk be a basis for supervisory criticism. I think that's a big step forward.
05:12There's more work to be done. I think part of the rest is really around changing the culture of supervision.
05:18That's two parts. We need to be clear about what the supervisory policy is, namely that banks are
05:22encouraged to bank lawful businesses. There's certainly no expectation to not bank lawful businesses.
05:28And then second, maybe even more importantly, is that we have a process for monitoring examiners'
05:33compliance with that supervisory policy. It's not enough to just have it on paper, trust but verify.
05:40And I think that's something that the banking regulators should look very seriously at, is again,
05:43ensuring that they have a program for monitoring their examiners' compliance with the supervisory policy.
05:47Here, the banks may and indeed should bank lawful businesses. Thank you. Thank you, Mr. Chairman.
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