KATIE BRITT, Senator for Alabama

U.S. sanctions policy must return to a ‘strategy of maximum pressure’

WASHINGTON, D.C., February 9, 2024 – U.S. Senator Katie Britt (R-Ala.) yesterday participated in a Banking, Housing, and Urban Affairs Committee hearing featuring the Secretary of the Treasury, Janet Yellen, who provided an annual report to Congress as Chair of the Financial Stability Oversight Council (FSOC).

Senator Britt’s line of questioning began by expressing her continued concern over several reckless rulemaking proposals by various federal financial regulators, which are FSOC members, and their harmful effects on Main Street America. Secretary Yellen noted that FSOC was not currently evaluating the cumulative costs or risks of rulemakings to the financial sector and the U.S. economy at-large, despite noting that Senator Britt had raised a “valid issue.”

Subsequently, Senator Britt highlighted her alarm over the Biden Administration’s lax sanctions enforcement policy, especially considering the atrocities committed by Hamas on October 7, 2023, and Iran’s continued financing of proxy terrorist groups, including militants in Iraq and Syria who have attacked U.S. troops at least 168 times since October and Houthi terrorists who continue to target international commercial vessels in the Red Sea. Secretary Yellen responded that the Treasury Department had been aware of Hamas’ financiers prior to the devastating attack on Israel. As Senator Britt noted, this Administration’s actions, or lack thereof, have been “too little, too late.”

A transcript follows:

BRITT:  Thank you, Mr. Chairman.

Late last year, I asked various regulators, who came before this committee, whether they believed our banking system was strong or not, and they all answered yes. So today, I would like to start with that same question for you. In your opinion, is the U.S. banking sector strong?

YELLEN:  On balance, the answer is yes.

BRITT:  What are you balancing there?

YELLEN:  Well, there are some risks and there are some institutions that will face stresses from commercial real estate that we know is significantly impacted, particularly office buildings, by the pandemic. Interest rates are higher, loans will have to be refinanced in an environment with higher interest charges, lower valuations, and rising vacancy rates.

So, you know, for some banks, this will be a concern. But on balance, I’d say the system is well-capitalized.

BRITT:  So, one of the things that we’ve been looking at – and I want to talk about you leading the council, you’re obviously the chair of FSOC and (lead) its efforts to monitor the risk and vulnerabilities within our financial system, of which you just named a few – I would certainly hope that part of this, and part of what you’re evaluating, is the potential risk that regulations and rules, new rules, coming out of the very own agencies that you oversee, what risk those may pose to our economy.

I think these regulations could fundamentally weaken the banking sector, and so (I) just want to talk to you about that. Are you assessing that, and the implications of these new regulations or rules, and what they will do to the American economy?

YELLEN:  Well, I think you’ve raised a very valid issue, but FSOC’s charge is to identify vulnerabilities in the financial system and threats that could lead to systemic financial consequences, and not to undertake an evaluation of the cost to the financial sector of actions that regulators have taken.

So I don’t think we’re the right agency to be…

BRITT:  I do hope, though, that you’re looking at the cumulative impact of all of these things. It seems that everything is moving so fast. We look at where our economy is right now, and I think that somebody needs to take a step back and take a look at how all of these things layer on to each other, what they do, and then what they do to the end user.

This is about everyday Americans. This is about people all across the state of Alabama. And so, I am certainly hopeful that there is somebody that is taking a look, in a broad way, at all of these things and how they work or don’t work, more importantly, together.

Speaking of risk, I do want to discuss the U.S. sanctions policy. While I appreciate you being here today, I was frustrated that the Treasury Department did not appear before this committee following the October 7 atrocities that we saw occur across the globe. That was, no doubt, a day where we saw pure evil. And I want to talk to you specifically about our relationship with Iran.

It’s no secret that Iran is the world’s leading state sponsor of terrorism, providing hundreds of millions of dollars to support terrorist organizations like Hamas, Hezbollah, the Houthis, as well as proxies in Syria and Iraq. They are actively carrying out other atrocities, including attacks on American civilians and servicemembers.

We know weakness invites aggression. If we want peace, we have to do that through strength. Terrorists are emboldened to target Americans and her allies. It seems that this Administration, in the face of that, has doubled down on a strategy of appeasement.

My question to you, Secretary Yellen, is, after the October 7 attacks, the Administration took actions to sanction a number of members of Hamas and operatives and financial facilitators, but obviously that was too little, too late.

How long had the administration known about the financiers of this terrorist attack prior to the actual date of October 7?

YELLEN:  Well, we have been focused on Hamas and other similar organizations and have been taking actions on sanctions before the attacks. We gained a lot more information in the aftermath of the attacks and have taken many more actions.

And we’ve also been cracking down on Iran with respect to oil shipments, with respect to their petrochemical sector, with respect to steel.

BRITT:  And, respectfully, my time is up. I would just say, it’s not working. We have to go back to a [strategy] of maximum [pressure], because right now the Middle East is on fire, Iran is having its [way], and we have three American servicemembers dead. We’ve got to move in a different direction.

YELLEN:  We’re very focused on it, and we’re doing a great deal.

A video of Senator Britt’s line of questioning can be viewed here.

In October of last year, Senator Britt, filling in for Ranking Member Tim Scott (R-S.C.) at a Senate Committee on Banking, Housing, and Urban Affairs hearing, helped lead questioning on enforcement actions the U.S. can undertake to ensure maximum pressure is exerted on Iran and their financial networks that fund terrorist groups like Hamas and Hezbollah. Senator Britt additionally outlined the Biden Administration’s inadequate usage of the existing tools at its disposal to financially constrain Iran, which has profited more than $80 billion from oil sales since President Biden took office.

Senator Britt has additionally sent numerous letters to Secretary Yellen and the Biden Administration regarding sanctions on Iran and expressing concern over this Administration’s continued pattern of appeasement.

Recently, Senator Britt joined a bipartisan group of her colleagues in calling on the Biden Administration to strongly enforce sanctions against Iran’s illicit oil trade. In December of 2023, she led 30 of her Senate Republican colleagues in a letter urging the Treasury Department to enforce existing sanctions on Iranian steel.

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High-quality video of Senator Britt’s line of questioning can be downloaded for media usage here.