Transcripts For CNNW At This Hour With Berman And Bolduan 20170119

Strongly believe and understand that there are very, very important tools within the Treasury Department that can combat terrorism. And that many of these tools such as a sanctions are extremely effective and keep our Armed Services out of harm. So i am fully committed to the maximum amount of law, to both enforce the existing sanctions in a very strict way. And i will work with the president elect as he sees fit on additional sanctions. And there are also other programs within treasury that i believe are very, very effective in fighting terrorism. Its a very important part of the treasury. And i though that that has been done very effectively on previous we all agree its important. What were trying to do is assess your qualifications. And you havent been willing to talk about medicare. You havent been willing to talk specifics about terror. Let me take one more crack on qualifications on the committee of Foreign Investment, because this is Something Else as treasury secretary you would have responsibilities on to protect our country when a foreign investor makes an investment in the United States in a way that has National Security implications. If a Foreign Investors with advertise to a Foreign Government invests in President Trumps business, should the committee on Foreign Investment all automatically and with close scrutiny examine this transaction . Senator, first let me say, yes, i think that would be appropriate. But let me go back to your other question, because i apologize if i didnt answer the specifics on your terrorism and sanctions. I was searching for any specifics in order to be able to assess your qualifications. Well, senator, again, i believe there are some very important sanctions. As it relates to the sanctions against iran and other countries, i would absolutely enforce those and i would encourage the president to use additional sanctions when appropriate. And i also understand there are certain classified programs that i will be part of as the nsa and will also use that and work with the National Security group to the maximum amount as available by law. So we didnt hear what you would do to fight isis. We didnt get any specifics on medicare. So now lets hear about this most current question with respect to the committee on Foreign Investment. What would you do if you were dealing with President Trumps business . I would deal with President Trumps business no different than i would deal with any business that comes before the committee. And i would take my role as chair of that committee very, very significantly. I think its a very important issue. I think perhaps previous secretaries have not enforced some of these things necessarily as much as perhaps they should have in protecting the American Workers and the American People and american technology. I think this is one of the most important jobs that i would have as secretary of the treasury. Mr. Mnuchin, the president is not like everybody else. He is the commander in chief and foreign involvement in his business could compromise National Security. Im going to reflect on that answer as well. Can i pursue one other additional question, mr. Chairman . Yes, go ahead. Mr. Mnuchin, you ran a hedge fund for two years starting in 2004. Ive been trying to get my arms around the mnuchin web of Bank Accounts and shell companies, they were in the Cayman Islands and anguilla. How many employees did you have in anguilla . We didnt have any employees in anguilla. How many customers did you have there . We didnt have any customers that resided in anguilla. Did you have an office there . We did not have an office ourselves there. So you just had a post office box . Senator, let me explain just a yesorno answer. Im already over my time. Hopefully the other senators will defer some time so i can answer this for you, because i think its an important issue. Mr. Chairman. I think you should go ahead and answer it right now. He should have a chance to answer the question. Its a legitimate question. You go ahead and answer. I, like all other hedge funds and many, many private equity funds, set up offshore entities that are primarily intended to accommodate nonprofits and pensions that want to invest through these offshore entities. As it relates to my own tax situation, these entities were either taxed as u. S. Corporations or u. S. Partnerships and in no way did i use them whatsoever to avoid any u. S. Taxes. They were merely as an accommodation to Pension Funds and nonprofit institutions, and a small number of Foreign Investors. And as treasury secretary, if im confirmed, i would look at these rules and make sure. I think that you did a good job in stopping one of the abuses of offshore deferred fees. But i would diligently look at these things. And i can assure you, i paid all my taxes as was required. Well come back to this question of offshore deals or commonly called blockers. Again, im very troubled about this question of how youre going to unrig the system if youve got a record of taking advantage of tax shelters that in effect have zero percent tax rates. Thank you, mr. Chairman. Mr. Mnuchin, as you can see, youre going to get questions like this. And what was legal at the time is still being criticized. But im sure you have heard of allegations that you profited from predatory, quote, predatory lending, unquote, during the housing crisis. An Investor Group that you headed folder by reformed indy mac, a failed institution, responsible for many low and nodoc Mortgage Loans into a viable constitutiinstitution ca west, which youve described here, which offered Loan Modifications above and beyond what other institutions were doing to more than 100,000 borrowers, at least thats the way it looks to me. Meanwhile, during all of the foreclosure turmoil, Obama Administration officials set up a National Loan Modification Program called hamp. Many members of congress from both sides of the aisle and others have repeatedly fallen far short of its goals and it had significant design flaws. In testimony before congress, the special Inspector General identified that, quote, there have been countless published reports of hamp participants who end up worse off for having engaged in a futile effort to obtain sustainable relief that the program promised. Failed modifications often leave borrowers with more principal outstanding on their loans, less on equity, depleted savings and worse credit scores, unquote. Using provocative language that we have heard supporting your actions in the foreclosure crisis, i guess you could say that thensecretary, treasury secretary geithner was a, quote, predator loan modifier, unquote, using that type of logic. Now, mr. Mnuchin, did one west have any interplay with the Obama Administrations program, and was that Program Successful in preventing foreclosures on struggling american homeowners, or could more have been done by the administration . Senator, thank you very much for that question. That is a very important issue. When we did the indy mac deal with the fdic, we committed to the fdic that we would continue the fdic Loan Modification Program. It was after that that the Obama Administration came up with hamp. And we had no obligation to do hamp. We could have continued to do fdic Loan Modifications. But we felt it was the appropriate thing to voluntary go into the u. S. Treasury hamp program as were other major banks. So we voluntarily went into that program. The hamp Loan Modification Program was a very redescriptive program, including us having to follow net present valuations to see which was better, either foreclosing on a home or providing a loan modification. To the extent that the net present value was higher on foyer clo foreclosing, we unfortunately had to follow the hamp rules or we would have been severely penalized if we had not proceeded with foreclosures. These were not your rules. They were not our rules, senator. They were rules that were driven by the administration under hamp . Which administration. The Obama Administration. Oh, i see. Okay. Let me ask were you familiar. Theres a wide agreement that the tax laws have become much too complicated. When stories of people getting their Tax Liability incorrectly calculated are commonplace thus reducing sentences in the tax law and creating an evergreater tax gap or difference between what is owed versus what is actually paid, it is clear there is a major problem and something needs to be done to address the problem. To your credit, mr. Mnuchin, you have talked about your desire to simplify the tax code. Thank you, im glad youre talking about that, because i very much agree with you. So my question to you, mr. Mnuchin, is how to address this problem. Do you have any suggestions for how to make the Internal Revenue code less complex or at least keep it from getting more complicated and would you recommend a moratorium on tax regulations or legislation and should the tax law try to raise revenue for the government and stop trying to achieve social or societal goals . Yes, senator, i agree with you completely. And one of the things its been a great honor to travel with the president elect, and ive been one of the chief architects of his economic plans. One of the chief issues is creating Economic Growth and passing tax reform is a major component of that. Our tax reform plan, we believe the tax simplification and fewer deductions are absolutely critical. Now, you mentioned about the tax gap. Thats something ive been reading about and studying and something that im actually quite interested in. I was particularly surprised in looking at the irs numbers, that the irs head count has gone down quite dramatically, almost 30 over the last number of years. I dont think theres any other Government Agency thats gone down 30 , and especially for an agency that collects revenues, this is something that im concerned about. Now, perhaps the irs just started with way too many people. But i am concerned about the staffing of the irs, that is an important part of fixing the tax gap. And im also very concerned about the lack of first Rate Technology at the irs, the issue of making sure that we protect the American Publics privacy when they give information to the irs, Cyber Security around that, and also Customer Service for the many hardworking americans that are paying taxes. Senator grassley, youre next. Like i told you when we met in our office, i dont have any gotcha questions or i would let you know. Let me go along with the first statement i want to make. I dont expect you to answer unless you have some misunderstanding of our position discussed in my office. Progrowth tax reform will be a top priority for you, i agree and look forward to working with you and president elect trump on that point. As part of any tax reform proposal, it will be important that adequate transition rules are included to provide a smooth transition for businesses that may be unpredictably negatively impacted. As we discussed in our meeting, congress has already effectively put in place transition rules for some alternative energy, including wind. The production tax credit is currently scheduled to phase out over the next few years, ending in 2020. Based upon our conversation, i believe that we are in agreement that you would support the current phaseout as part of any tax reform proposal. Question two, ive been a strong proponent of the irs private Debt Collection program, as has senator schumer. In 2015, Congress Updated and made mandatory the irs private Debt Collection program. This program is designed to chip away at the tax gap by requiring the irs to contract with private debt collectors to collect inactive tax staff hold. These are the tax debts not being worked by the irs. And absent this program would likely never be collected. Adding up to 187 million in 2017. Out of that 187 million, the Treasury Department has provided debt collectors to collect a net of 11 million. This is not due to the inactive tax debt available for the irs to assign. According to the Government Accountability report, the irs has over 130 billion of outstanding debt on its books. So ham stringing that program by refusing to release inactive debt for the program ought to be considered unacceptable by anybody. So can you give me assurances that the department of treasury under your leadership will work to implement the program to the full extent of authorized law and bring in this tax money thats not being collected . Yes, senator. First of all, thank you for having spent time with me, i appreciate the opportunity to speak to you on a lot of important issues. On these issues, i absolutely agree with you we do need to have phaseout rules as we change things, i support the phaseout as you suggested. And then on the irs, i think that most aspects of taxes should be handled at the irs. As youve described, to the extent we have 100 plus billion of receivables that are just sitting there and that we can collect tens of millions or hundreds of millions of dollars for the American Public, particularly in an environment where were looking for money for so many programs, this to me, i agree with you, seems like a very obvious thing to do. This will have to be my last question. In 2006, i was successful in enacting legislation to enhance the irs Whistle Blower Program. Its been one of the most effective programs in addressing tax evasion, leading to the recovery of more than 34 10ths billion dollars in taxes that would have been lost to fraud. An ongoing concern has been poor communication with whistle blowers who often wait in the dark for years with no feedback from the bureaucracy. Another concern is that the irs has chosen to interpret the whistle blower law narrowly to the detriment of whistle blowers in several instances. For example, the irs has interpreted the terms collected proceeds, which is the base for determining the amount of an award to exclude criminal penalties and certain other proceeds such as a penalties assessed for undisclosed foreign Bank Accounts. Two questions, and ill state them both. Should you be confirmed, can i count on you to be supportive of the Whistle Blower Program and work to ensure its success . And additionally, would you be willing to review the irss administration of the Program Including its very narrow interpretation of the words collected proceeds . Absolutely, senator. You have my assurance. And let me further go on to say that the majority of americans voluntary file their tax returns honestly. But we are all aware there is tax fraud, and there is tax evasion, as you said, and we need to be diligent, and i believe the whistle blower laws are a part of that, i will work hard with you on that. Senator stabenow. Thank you very much, chairman. Welcome. Congratulations on your nomination. Welcome to your beautiful family as well. I do want to follow up on information that we just received last night that there were additions to your recent financial disclosures. I havent had a lot of time to take a look at that, we just received it last night. You failed to include your position as a director of Cayman Islands corporation as well as manager, chairman, or director of seven additional shell corporations and holding companies, nearly 100 million in real estate, as well as a number of other things including 906,506 of artwork held by your children among other things. As we go into tax reform, would you support closing tax loopholes in the u. S. Tax code that extremely wealthy people use, such as yourself, have used to avoid paying taxes . Weve heard about the Cayman Islands for years, and that the buildings that have had thousands of companies that have used it as addresses. Would you be willing to close those loopholes . First of all, let me just comment, i very much appreciated the opportunity to meet with you and, a i traveled to your state many times and have great admiration for your state. The president elect had a big address in detroit and i appreciate everything that youve done there. Let me just comment on i realize last night you did get a memo on some changes to my senate questionnaire, so thank you for giving me the opportunity to comment on that. I think, as you all can appreciate, filling out these government forms is quite complicated. There were many things i expected in this job, including having to sell everything. But the amount of paperwork in filling out the forms, even for me, having experience in business, was quite a job. In an effort to get the Committee Information early, we submitted a preliminary questionnaire priority us having the 278 form finished and priority signing the agreement with the ethics office. So let me first say, any oversight was unintentional. He did mention that there was 100 million of real estate. I was advised by my lawyer that we didnt need to disclose that on the questionnaire because it did not need to be disclosed on the 278. There was some confusion about the complexity. I want to thank the committee staff, i know they worked very, very long hours. As i said, they were extremely thorough. I appreciate the work. We delivered over 5,000 pages. And i can assure you, they actually read all those 5,000 pages because when i had the opportunity to meet with the staff, with my lawyers and accou accountants, we answered some very specific questions. Excuse me, mr. Mnuchin. I dont want to interrupt. I have very limited time. I appreciate the Additional Information and the clarification and all that. But my question goes to what you were actually disclosing, particularly the Cayman Islands. Did you use the Cayman Islands corporation to avoid paying taxes . Would you support closing tax loopholes that very wealthy people have consistently used in the Cayman Islands to avoid paying taxes . That really is my question. Let me just be clear. Again, i did not use a Cayman Islands entity in any way to avoid taxes for myself. I paid u. S. Taxes on all that income, okay . So there was no benefit to me from the cayman entity. As i said, the cayman entity was set up to accommodate nonprofit and Pension Funds that want to invest through offshore and a so you helped others avoid paying taxes. Again, im not going to make a comment again, they didnt avoid. They followed the law. Because i have experience as a hedge fund manager, i am committed to tax simplification. I think it makes no sense that we would encourage Hedge Fund Managers to set up entities in the Cayman Islands or anguilla. There are people who set up offshore businesses and put all their people offshore, and youve heard of inversions and those types of things are perfectly legal and hurt American Workers. In the hedge fund world, these have made the accountants rich. So you would support closing loopholes . I would support changing the tax laws to make sure theyre simpler and more effective, yes. Thank you. Senator crapo. Thank you very much, senator hatch. I appreciate your willingness, mr. Mnuchin, to go through this and serve the American People. We truly need the kind of vision that President Trump has enunciated for the country and that youve committed to help work with him to achieve for the country. As a part of that, one of the things that youve already mentioned today is that and im paraphrasing you here, i believe you said in essence, we have a regulatory excess in the United States in many circumstances that can and is inhibiting lending and inhibiting capital formation, two very important things that i think are critical to a progrowth economy. Could you elaborate on that . Sure. Let me first say i absolutely believe in proper regulation. And before i had the opportunity to put in a bid for indy mac bank, i had to be issued a charter. And i worked very closely with what was the ots at the time, and by the way, i was a big fan of you merging the ots is twith occ and getting rid of a regulatory agency. At the time i worked with the ots and the fed. The regulators explained to me at the time, and i told them i understood, the responsibility of being given a banking charter. I took that very, very seriously. I have very, very smart regulators. And i have tremendous respect for them. As a matter of fact, in one of the few things that the wall street journal actually wrote nice about me, they made a comment that i told everybody we had to treat the regulators like our best client, which i believe, the regulators and the relationships with them and following the regulations. Nothing was more important given the trust they had put in us. Having said that, i witnessed firsthand multiple regulators, the occ, the fdic, the Consumer Protection bureau, the Federal Reserve, in certain cases there was overlapping regulation. My biggest concern, and i fully support regulation for banks with fdic insurance, but my biggest concern is that this regulation is killing community banks. Were losing the Community Banking business. Were losing the ability for small and mediumsized banks to make good loans to small and mediumsized businesses in the community where they understand those credit risks better than anybody else. And i think that we all appreciate the engine of growth is with small and medium sized businesses. And in my role at fsoc and working with the different regulators, i would make sure that we did what we could to have proper regulation but eliminate overlap as well as make sure that the banks are lending to small and mediumsized businesses and we dont end up with a world where we only have four big banks in this country. Thank you. You actually led right into my next question, because in a very closelyrelated matter, as you know, as the secretary of treasury, youll have a very Important Role as the chairperson of fsoc. In my view, fsoc has focused on very heavily focused on some statutory mandates while ignoring others. One of the statutory mandates that the dodd frank act requires fsoc to do, and this is the statutory language, advise congress and make recommendation in such areas that will enhance the integrity, efficiency, competitiveness and stability of u. S. Financial markets. Today, frankly, im not aware of fsoc fulfilling that role. We dont get a lot of advice from fsoc. We get a lot of directive in the country. Will you pledge as the chairperson of fsoc that you will ensure that the Council Considers ways to make the u. S. Financial markets more efficient and then advise and work with congress to achieve those outcomes . I absolutely will, senator. And let me just comment on, for instance, the volcker rule, as an example. I do support that rule. The concept of proprietary trading does not belong with banks with fdic insurance. The Federal Reserve just put out its own report that the volcker rule has completely limited liquidity in many markets. And the Federal Reserve is concerned that the interpretation of the volcker rule doesnt allow banks to create enough liquidity for customers. So thats something i would absolutely want to look at. And senator wyden, by the way, i wanted to thank you, im now in greatly esteem of having the mnuchin rule with both the buffett rule and the volcker rule, i take that as a great compliment. Thank you for putting me in with these other great people. Thank you. Senator nelson. Good morning. I enjoyed our visit yesterday. Were you a director of Dune Capital International limited, a Cayman Islands corporation . I was. That is correct. Did you move a hedge fund, Dune Capital Partners llc, to anguilla . So senator, first let me just comment. When we talk about moving, okay, you know, its not as if i had 50 people sitting in offices, as weve talked about, and moving it. I understand. I do want to comment. And yes, so dune capital llc, which was our master fund, and not to get into the nuances of this, but when one runs an onshore fund and an offshore fund, there are certain efficiencies of keeping the assets in whats called a master fund. And because we set up the master fund in anguilla, i was required to change Dune Capital Partners to become a foreign entity. That was the reason for it. But let me just comment. No. Im running out of time. Ive got to get to the question. Sorry. The question is, both of those were for a tax consequence located in the caymans as well as anguilla. And so the question is, you said you support tax reform. Do you support closing those kind of tax avoidance provisions . The anguilla and the Cayman Islands type tax avoidance in the tax code. Let me just comment that when i did move it, i had to apply to the irs. And the irs approved it as a foreign eligible entity to be taxed as a u. S. Partnership. From my at some point, it made no difference to me whether it was located in delaware thats not my question. Im giving you a slightly longer answer, i apologize, its a complicated issue. Can you just answer the question . Short answer is yes, as ive said before, i think that i would work with the irs and with congress, okay, as ive said, it makes no sense, okay, that we have all these requirements to set up these offshore entities, which again, didnt benefit me, but did benefit certain nonprofits and pensions. And we should address the issues for nonprofits and pensions and understand why they need to invest through these offshore funds. Now, i wouldnt want to do anything thats detrimental to the pension holders or these nonprofits. But i would commit to work with your office, senator, and make sure that we fix the system. All right. We talked about indy bank yesterday, and becoming one west. And you said you bought, when you acquired indy bank, the portfolio of reverse mortgages. And to your credit, you said that once it became one west, that you did not sell any more reverse mortgages. And yet you as the ceo, i want you to comment on the fact that of the reverse mortgages that you acquired from indy bank, some of the folks were not treated very well. I mentioned to you yesterday a 90yearold lakeland woman was foreclosed on because of a 27cent payment error. I did not mention two others, foreclosing on an 80yearold orange park, florida woman that your bank claimed didnt live in the home when in fact she did and she happened to have the foreclosure papers served on her in the home that the bank said she didnt live in. Another example, a married couple in their 50s trying to make the best of everything, they asked for a loan modification of west bank, and then which they were eligible for, and instead, they were foreclosed on. Explain to the committee, if you would, and i think youre an earnest, wellintentioned person, but youre sitting there as a ceo, and this stuff is happening that is very unfair to little people. Why . First of all, senator, again, thank you for taking the opportunity to meet with me, i appreciated that, and the time to speak about these important issues. Let me first say, to the extent that we made any errors or we ever foreclosed on anybody, i completely understand that the hardship that created. As i mentioned, we did go through an independent foreclosure review and unfortunately there were some issues, very low rates relative to everybody else, but there were some issues. And we paid money to those people to make them home. I earnestly feel terrible for any mistakes at the bank. Let me comment on also that once a week, i chaired an internal committee that dealt with customer complaints. So any complaint that went to our regulators, that went to a senator, went to a member of the house or went to what we called the came through those, we had a special group of people that reviewed every single one of those complaints, responded to all of your offices, and responded directly to the borrower. We also routinely had the occ come in and monitor and test us and go through all those complaints. It was a very, very big concern, because as you can imagine from both the fdic and the occ, when we took over indy mac, the amount of complaints spiked dramatically. As i shared with you, the reverse Mortgage Business was not something we wanted to buy, that we agreed to buy that as part of an overall solution. What we were really trying to do is create a regional bank. And that business really had no part of it. There were about a billion in half reverse mortgages that the bank owned. There were over 20 billion of reverse mortgages that we didnt own that we serviced for third parties. And the majority of all those third parties were hud guaranteed mortgages. As ive pointed out, i think there are some very significant issues with the hud program. One is a problem with taxes and insurance that if theres a shortage on tax and insurance because somebody outlives their expectancy, that hud forced us to foreclose. There are another problem called a nonborrower spouse, if the spouse wasnt on the mortgage at the time, that you would have to foreclose on the spouse. We discussed these issues with hud. If confirmed, i would look forward to discussing these with dr. Carson in the hope that hud would seriously consider looking at these things, although its not under my responsibilities, i would share my concerns. These are government guaranteed programs where we are foreclosing on senior citizens. I can sure you, nothing was more painstaking to me in the whole place, okay, i will tell you, i cant talk about specific loans because of privacy, but there are certain things that were in the press, and the most troubling loan we had was actually to the octomom. We worked very hard. That was a terrible situation. We worked very, very hard to move her to another home that they could afford. But i can assure you that as chairman of the bank, i took these issues very seriously. Its not to say we didnt have certain mistakes. There were mistakes. We regret those mistakes. As i mentioned, we had hundreds of thousands of delinquent loans. And just as an aside, when you talk about Loan Modifications, banks are highly incented to do Loan Modifications. Anyone who thinks we made more money foreclosing on a loan than modifying a loan has no understanding of this. We were highly incented. Foreclosing is a terrible thing to do but its also costly to the bank. So we believed in Loan Modifications and were financially incented to offer them when we could. Mr. Chairman, i look forward to a second round. Senator menendez. Thank you, mr. Chairman. Mr. Mnuchin, congratulations on your nomination. I have to be honest, the information that came to us this morning makes me concerned. Youve addressed some of it but not all of it. On december 19th of last year you signed a notarized affidavit on your questionnaire to the finance committee certifying that it was true, accurate, and complete. Question 11 asked nominees to list all, all, positions held as an or other institution. That seems to be pretty pervasive. Its almost like an open book test. And yet you did not answer in that questionnaire listing your position as director of a Cayman Islands corporation, as manager, chairman, and director of eight additional shell corporations and holding companies, and nearly 100 million in real estate. And that questionnaire was corrected only after the committee staff, having done their due diligence, brought the missing information to your attention. Now, after that, you admitted to being the director of dune capital limited, you admitted to moving a Company Offshore to anguilla in 2005, even though all the business was conducted in new york city. So, you know, i have a ton of other questions on policy, but first and foremost is trust and veracity, what the americans need in their treasury secretary, to know theyll be asked to do difficult things or challenging things that they understand that theres a system. In essence, isnt it true that what you did here is take these companies, put them offshore, so you could help your clients who you were making money from avoid u. S. Taxation . No, thats not true at all. Then why would you thats not true, senator. You just described that the purposes of creating these offshore entities were to help pensions and other entities. And the only reason to go offshore, as senator grassley said when he was i think the chairman of the committee, is the difference between investing in the United States and the Cayman Islands is the possibility of avoiding u. S. Taxes. Your clients, youve made it very clear that you paid your taxes, okay, ill accept your word on that, but the people or the entities that you were helping and that you were making money from, you were helping them avoid u. S. Taxes, otherwise they could have invested here. Senator, let me first answer the first part of your question, which i will tell you, and ive said this before and i will repeat it again, i assure you that these forms are very complicated. I dont have the form in front of me but i believe it said best of my knowledge this is true. And when i certified these forms, i thought it was correct. Perhaps it was a mistake in giving the Committee Early and i should have waited until i had finished the 278 and the ethics office. It was not just a function of your office. We were in the process of correcting things. It doesnt take a Rocket Scientist to understand the word list all positions. All positions. Senator, with all due respect, i had a lot of complicated entities. Youre referring to i didnt list the director. I listed the entity. The fact that i didnt list that i was a director was not intended to hide anything. And as ive mentioned in regards to my 100 million of real estate, my lawyer, who is quite sophisticated in this stuff and actually has done this for many, many nominees before, believed that we filled out the form correctly and that lets get to the heart of my question. The heart of my question is, didnt you create these offshore entities that most americans cant create or take advantage of, in order to help your clients, who you were making money from, avoid u. S. Taxes . No. Not necessarily. Okay . So first of all, i want to say its important that the committee what were you doing it for . What are you doing it for, then . Understand that this was done so that different entities could invest. So sometimes it had nothing to do with taxes. It had to do with what they could invest in and couldnt invest in. As ive said to you, if you want to put me on for the entire hedge fund and pension fund, you know, we should have an irs session to go through these issues. And i would be more than happy to work with you and your offices to go through. These are very complicated issues. I appreciate that. We need tax simplification. Let me make it simple. One does not go and create offshore entities at the end of the day other than to avoid in some form or fashion the tax laws of the United States. Thats pretty simple. And so that may even be legal, in which case we should definitely close it. But you have to question whether or not that is the essence of what we want as leadership. And so i would like to hear you be more determinative to say, yes, were going to close all of those down, if i can convince the president elect and congress to do that, because what you did may have been legal but it was certainly to help entities avoid u. S. Taxes. Ive absolutely committed to work with you and your office, as ive said, on tax simplification and to make sure we dont let anybody avoid taxes. In certain cases this is not a function of avoiding taxes, it was to create eligible investments for certain nonprofits. But i agree with you completely, im on board with what you said. I would be happy to work with your office to simplify the tax code whose investments were ultimately therefore eligible to avoid u. S. Taxes. Again, it may have been an eligibility issue and not a tax issue. But i agree with you that this does not make sense and i will work with you and your office. Ive committed to do that, to make sure that, you know, why people need to move entities from anguilla to everywhere else. Were not creating jobs there, this is just where these entities are housed. I agree with you. It will create a lot less work for the Tax Accountants and the lawyers and make the American Public more money and move our irs resources otherwise. So i agree with you completely, senator, thank you. Your time is up, senator. Its ironic and i think a bit hypocritical of my friends on the other side of the aisle to suddenly find religion on offshore account holdings. Evidently, memories are short. At least two of president obamas nominees who now serve in his cabinet had Cayman Island holdings. That includes the current treasury secretary who also ran a Business Unit at citigroup, bailed out a mega bank from which he received close to a Million Dollars in bonuses. That unit has been sanctioned by the sec for selling toxic assets that, quote, harmed investors. Let me just say with regard to the nominees disclosures to the committee, as part of the committees bipartisan vetting process, mr. Mnuchin in good faith submitted answers that were later modified. Mr. Mnuchins file is now complete. To meet demands of some of my democratic colleagues, the disclosures now include Financial Information that is usually kept confidential, such as the value of personal residences. The committee appreciates mr. Mnuchins efforts to work through the multiple and complicated requests for information on what is by any reasonable measure an exhaustive vetting process. Lets be fair here. Mr. Chairman, just so were clear, the bipartisan staff called out these offshore investments of both democrats and republicans to secretary liu and others. I want it understood. Thats the reason that people even knew that mr. Mnuchin hadnt filled these forms out properly. We did it because the American People deserve to know about mr. Mnuchins offshore investments even though they hadnt been originally disclosed and disclosed fully. But our track record has been bipartisan and weve called out both democrats and republicans, as i mentioned. I think so, and thats the purpose of it. But lets be fair about it too. Senator enzi. Thank you, mr. Chairman, and thank you, mr. Mnuchin, for being willing to serve and to go through this process. I want to thank you for meeting with me in my office and going through many of the accounting functions and initiatives that youll be managing. I dont ask those in these kinds of meetings because ive noticed that it puts the audience to sleep. But they are very important. And i would really impressed with your answers. Im impressed with your private sector experience. Ive always said that every business looks really simple until you look at how far ahead you have to look and how you find and train employees and how you meet federal regulations. Youve actually worked with those rules. You actually have been forced to learn some things that are going to be essential to your job. And its a pretty unique situation. This is the biggest business in the world. And we dont even make decisions timely. Were still working on last october 1sts spending billings. There are things that have to be changed and some of them youll be in a position to do. Ive been impressed with the knowledge youve already shown with this committee on Different Things that most of us have never had any experience with. Very impressive. Now, ill cover a couple of specific things here. I think the Internal Revenue service has often strayed from its core function of responsible and efficient revenue collection. I hope the new Trump Administration will make sure that the Internal Revenue service stays on track with this purpose while also improving the recent record on how it people havent been able to get answers. But something thats been more disturbing to me to illustrate is in recent years the irs has inserted flyers with the tax refund checks, and those flyers, one of them was produced by the Consumer Financial protection bureau, which is outside of our oversight and solicited cases from the taxpayers about their money. Its not appropriate for the cfpb, an independent organization, or any other organization, to solicit information from taxpayers, nor is it appropriate for the irs to help facilitatehis. As the treasury secretary, would you stop this type of activity . Senator, thank you, and thank you for taking the time to meet with me and thank you for your Longstanding Service to our country. And, yes, i absolutely would work with you on that. I dont think it makes sense that the irs is doing that. Id want to understand what the reason is, but it seems to make no sense to me. And one of the big issues is around the irs is technology. And i would use my expertise in technology to make sure that we bring the irs up to date. And thats a function of, i understand old email systems, old privacy systems. We absolutely need to make sure. In this world of cybersecurity and being such a big issue, we need to protect american taxpayers information. And there should be simple pays the irs can interact with the american taxpayers. If you can get good service in the retail online business, theres no reason why we cant use that same type of technology for taxpayers to communicate and get their information securely with the irs. So i look forward to working with you and your office on that. Senator, if i can interject. You mean youll help us modernize the irs . It would be one of my great priorities, absolutely. That would be a wonderful thing. I hope thats at least a bipartisan issue that we can all agree on. In 2012 i introduced the job creation and International Tax reform act that would help fix our tax code and promote u. S. Economic and job growth. And that bill would help to right the ship by pulling our International Tax rules into the 21st century and make them more certain so that the u. S. Companies are not at a competitive disadvantage with foreign companies. It would give American Companies incentives to create jobs in the United States and undertake activities here at home so that they can win globally. I would encourage u. S. Companies to develop and keep rights to their ideas and inventions in the United States rather than shift them over offshore. Do you agree that our current International Tax system is outdated and places u. S. Companies at a competitive disadvantage with their foreign counterparts and would work with me on International Tax reform . Couldnt agree with you more. I think the fact that we have Companies Like apple that have hundreds of billions of dollars offshore because of the differential and tax rights and they are being penalized to bring back money. One of the things i think, you know, we all agree on. And ive talked to the president elect. He believes we can bring trillions of dollars back onshore so that that money is invested in american businesses and creating jobs, and i absolutely look forward to working with you in your office on tax reform, bringing down Business Rates for big businesses and Small Businesses and making America Business the most competitive in the world so that were not shipping jobs overseas and money overseas. Thank you. And i have some questions about the debt, how were going to handle that. And as budget chairman, im interested in that. But it gets into those number minutias so ill submit that. Thank you, mr. Chairman. Senator carper . Welcome, mr. Mnuchin. Recovering governor from delaware and a lot of my time as governor and i think a lot about how to create a nurturing environment for job creation and job preservation. I want to talk about that in a moment. Before i do, some of my colleagues have raised i think appropriately tax havens, Cayman Islands, an giguila. Irs. In the past couple of years, john koskinen, the commissioner of the irs. Its a position hes been selected to serve. He has maybe another year. He is in his 70s. He took this job not because he aspired to do it but because he was asked to do this for his country. One of the finest public servants. Hes often berated and has said to us many times as the General Office ofaccountability, he has said that you said. For every there are we invest in the irs we get at least 4 back. I think as much as 10. This is not so much a message for you. I think you got it. But the message is really for us, were interested in raising some revenues and not having to raise taxes, thats a good place to start. I was encouraged by what you had to say. Cfpb. Your take on that. Worth keeping . First of all just real quick. Okay. Thats a complicated issue, but, yes, okay. The Biggest Issue i have with the cfpb is i dont believe they should be funded out of profits from the Federal Reserve. They should be funded out of an proppion process. Okay. Thats good. Thanks very much. When i think of that nurturing environment for job creation, job preservation, a lot of component to it. Among them are funding research. Making sure were doing a good job protecting intellectual property. Sensible tax code. Common sense regulation. Affordable health care. Finding ways to get better results for maybe less money. Weve had people suggest that one of the components is substantial investments in infrastructure. Ive suggested for a number of years we use that an approach weve taken for years and thats the people, the businesses that use our Transportation System would pay for them. Weve done that for half century. I think that makes sense. There are other ideas as well. Vehicle miles traveled where sort of like figure out how many miles vehicles have traveled and assessing a fee. Theres some interest in the Incoming Administration in Infrastructure Investment and theres another time to talk about that. One of the things, ways to go, gdp or grow jobs is to export, do a better job of exporting our products and getting into other markets. The Transpacific Trade Partnership proposed to take down a lot of barriers overseas and enable us to have better access to those markets and also at the same time, renegotiated nafta as you may know. That seems like a pretty good deal. And i understand that theres an interest in the administration renegotiating nafta. We did that in tpp. But your thoughts on trade policies, especially Transpacific Trade Partnership. Well, first of all, thank you. You have raised a bunch of very, very important issues. Im going to ask you just to go to that one issue, if you would. Please. And its not a trick question. I wrote down five of them i wanted to comment on. We just dont have time. Just on trade agreements. On the trade agreements, the president elect is very much interested in free and fair trade. And as youve commented othis is not about limiting imports. This is about growing exports as much as we can be. Youve also commented on intellectual property. One of the biggest problem and certain of our trade agreements is our American Intellectual property is not being kept, and is being taken in foreign countries. Youve mentioned nafta. The president elect is very much interested in renegotiating nafta so that we can keep more jobs here. I think as you know, hes picked up the phone and called many ceos. I cant remember the last time a president or president elect did that and worked for the American Workers. And i look forward to working with you in your office. Youve raised some very important issues, and infrastructure, at the appropriate time, i am happy to comment on infrastructure because thats very important to the president elect. One last quick one. Comprehensive Immigration Reform. One of the things we learned is not only can it grow gdp by smart Infrastructure Investments but also comprehensive Immigration Reform. Were strongly urged by the Business Community for years to do that. Any take on that . Again, i think immigration and Immigration Reform is very important to the president elect. Its not completely in my lane but ive been with him so i understand his views on that. And i think he works looks forward to working with the house and senate on a very important issue there. If you dont share his views on comprehensive Immigration Reform, i would just suggest you mentor him a little bit. Mr. Mnuchin, thanks for being willing to serve your country. Appreciate it very much. I want to follow up quickly on senator carpers point on the irs. You do have allies on both sides of the aisle that will help you. Theres good professional people that work there under very difficult circumstances. Theres not enough people there. So i hope youll be effective with president elect trump because i understand hes calling on a freeze. Im not sure how that coincides with your desire to make sure you have adequate personnel at irs. But i assume youll have an opportunity to talk to the president and hopefully get the number of people you need because they cant do it with their current workforce. I can assure you the president elect understands the concept. Hell get that completely. Thats a very quick conversation with donald trump. I want to follow up on senator wydens point on a couple of issues. I wear another role in the senate. Im the ranking democrat on the Senate Foreign relations committee. I want to deal with the sanctions for one moment. I heard you in regards to enforcing the sanctions, particularly those that are