Transcripts For CSPAN3 Treasury Secretary Nominee Steven Mnuchin Testifies At Confirmation Hearing 20170125

Test. Test. Test. Thank you. Senator, if i could just interject, you mean, youll help us modernize the irs . It would be one of my great priorities. That would be a wonderful thing. I hope thats at least a bipartisan issue that we can all agree on. Since the chairman used part of my time, id like to get this question here. H in 2012, i used the International Tax reform act to help fix the tax code and promote u. S. Economic and job growth and that bill would help to right the ship and make more certain so that u. S. Companies are not at a competitive disadvantage with foreign companies. It would give American Companies ens incentives to create jobs in the United States so they can win globally. I would encourage u. S. Companies to develop and keep rights to their ideas and invenges in the United States rather than shift them over offshore. Do you agree it places u. S. Companies at a competitive disadvantage with foreign counterar counterparts and work with me on International Tax reform . I couldnt agree with you more. The fact that we have kaincompa like apples with hundreds of millions of dollars offshore. Theyre penalized to bring back money, one of the things well all agree on and ive talked to the president elect. He believes we can bring trillions of dollars back on shore 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 make America Business the most competitive in the world so that were not shipping jobs overseas and money overseas. Thank you, i have questions about the debt. But it gets into the number minut minutia, so ill submit that. Thank you. Thank you, senator carper . Senator from delaware and a lot of my time as governor and even now, i think a lot about how to create a nurturing environment for job creation and conservation. I want to talk about that in a moment but before i do, appropriate tax havens thats been mentioned. You mentioned irs. I just want to make clear. In the past year several times, john has sat where you sit and its a position hes been selected to serve. Its a 5 year term and maybe another year to run on it. And he is in his 70s and not because something but he was asked to do this toward his country and finest Public Servants i know and an attempt to impeach the house of representatives which i thought was lunacy and he said many times as has General Accountability Office and you said here today, we give the irs less money hay need. They don they need. Every dollar we invest, at least 4 back and some estimates as much as 10. I think you got it. But the message is really for us, were interested in raising revenues without raising taxes. Thats a good place to start. Your take on cfpd . Thats a cliktomplicated iss but the Biggest Issue i have with the cpbv is i dont think they should be funded out of profits from the Federal Reserve but the appropriation process. Thats good. Thank you very much. When i think of the nurturing environment for job creation, and job reservation, a lot of components to it. Among them, funding research, actually making sure were doing a good job protecting intellectual property and sensible tax code, common sense regulation. Health care and finding ways to get better results maybe for less money and people who suggested one of the components can actually be a substantial investment in infrastructure. Ive suggested for a number of years we use an approach weve taken for years and that is the people and businesses that use Transportation System would actually pay for them. Weve done that for half saefa l century that i think makes sense. And sort of figure out how many miles or vehicles traveling, excessive fee. Different approaches to that but theres some interest in the administration, Incoming Administration in Infrastructure Investment and i think theres another time to talk about that. One of the ways to build is to export. The tpp proposed to take overseas and gather access to the markets and renegotiated nafta. Seemed like a pretty good deal and i understand interested in renegotiating nafta. We tried doing that with tpp but your thoughts on transpacific trade partnership. Thank you. Youve raised a bunch of very important issues. Go to the one issue, if you would, please. Its not a trick question. I wrote down five i wanted to comment on. Just on trade agreements. On the trade agreements, you should note the president elect is very much interested in free and fair trade. As you mentioned on, its not lichlti limiting imports but growing exports. But also on intellectual property, one of the biggest problems 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. As you know, hes picked up the phone and called many ceos. I cant remember the last tile a president elect did that and worked for the American Workers and i look forward to working with you in your office. Youve raised very, very important issues. Okay. And infrastructure, again, at the appropriate time, im happy to comment on infrastructure. Thats very good to the president elect. Thank you. One last quick one. Comprehensive Immigration Reform. Not only can it go gdp by Infrastructure Investments and some of the other things i mentioned but also, comprehensive Immigration Reform. We were strongly urged by the committee for years to do it. Your take on that . I think immigration and Immigration Reform is very important to the president elect. I think he looks forward to working with the house and senate on very important issue there. If you dont share his views on comprehensive Immigration Reform, i ask that you mentor him a bit. Thank you. Senator cardin. Thank you, first of all, for being willing to serve your country and i want to follow up quickly on senator carpers point on the irs. You do have allies on both sides of the isaisle that will help y. 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 that the president elect understands the concept of where we add people and we make money and hell get that completely. Thats a very quick conversation with donald trump. I want to follow up on senator wiedens point. I wear another role this this 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 sanctions especially those aimed at dealing with those who sponsor terrorism and sanctions against countries that are violating our International Norms on democratic principles. Russia is the top one of that list and your views on the current sanctions and strengthening sanctions we have Bipartisan Legislation to strengthen the sanctions, particularly with russias attack against americas democratic election institutions. But i want to make sure i understand, you are committed to enforcing the sanctions against russia. 100 so and i think the president elect has made it very clear that he only would change those sanctions if he got, quote, a better deal and we got something in return whether it was on nuclear arms or other areas, but in response to the question asked about using irs to make sure its not used for partisan reasons, you will enforce these sanctions without regard to a persons Party Affiliation or office . Of course. I think terrorism and supporting terrorism and supporting illegal activities is the most important issue and i hope thats not a bipartisan, i hope that is a bipartisan issue and where there are sanctions i assure you, i will use them to the maximum amount allowable by law. I appreciate that answer. Senator warren and i will send you a letter if youre confirmed to investigate the allegations that mr. Skaramuchi who was recently named as Senior Advisor to the president may have violated the sanctions against russia in his dealings and i expect you would investigate this issue to see whether theres a file. Of course, anything you send to me, ill make sure you have your respect that i would do that 100 . I thank you for that. I want to follow up with the second point of senator wyden which has me concerned that you pointed out you would treat in your International Roles an American Company thats dealing in the foreign markets equally even if its a trump enterprise entity. Youre taking note to defend the constitution of the United States and the constitution of the United States, theres the e emolliee moll emoluments clause. So how do you go about knowing theres no special breaks being given to a trump enterprise if you dont have full access to that type of information . Well, senator, let me first say, and i think we all acknowledge this whichever side were on that were in a unique situation that we have a president who has the vast amount of money. We know that but hes not dealing with every other president has done. Set up a blind trust or divest which youre doing if youre confirmed, divesting. Thats whats required. Hes not doing that. So my question to you, how do you, if confirmed, deal with compliance to the constitution to make sure that a trump enterprise is not getting special treatment which would violate our constitution . Let me first say and i think this is an important issue for the american public, so i can understand why youre asking it but i know the president elect is absolutely following the law and is committed to following the law and has set out a series of, although its not a blind trust, he has removed himself from his business, put his sons this charge of his business. Excuse me, one second. Hes going to hire an ethics officer and i can assure you in my job of treasury secretary, whatever responsibilities i have to monitor these issues which are very important, i can assure you that i will do. What you didnt answer, how do you determine to make sure there isnt a break given to a trump enterprise which would violate our constitution . I understand comply with the law but constitution is the supreme law of the land. As you know, ive employed lots of lawyers but im not a lawyer but the good news is we have a big group of lawyers in the Treasury Department and a big ethics group and i can assure you well make sure that we absolutely follow the law and the constitution and i have every reason to believe that the president elect absolutely wants to adhere to it and will do so. Senator brown. Thank you for the conversation in my office. Thank you for meeting with me. China and banking issues. Lets start with this. Let me clear up. Banks highly incentived. Billions of dollars in fines and remediati remediation, so put that aside. I want to talk about your situation. I understand your defensiveness both in individual meetings, mine and others and in this committee about what happened at one west, but let me lay this out. In 2006, Businessman Donald Trump responded to a question about the possibility of a real estate crash by saying, i hope that happens because then people like me would go in and buy, unquote. You didnt just buy properties but bought the bank and bought the ability to help families stay in their homes. Thats not what you did so my questions are these. Youve been saying that one west is a success, look at the record. I really want yes or no answers because i have questions and what i will say is factual in my view and like you to confirm with yes or no. Is it true that Community Groups say one west, specifically the california reinvestment coalition, is it true communities say one west foreclosed on 60,000 families nationwide and denied threefourths of mortgage modification applications . I am not aware of that. They did. If you know they did . I dont have it in front of me. Im going to interrupt you. Is it true one west regulations say you had deficient mortgage practices without proper procedure on at least 23 who were current on their mortgages . What i would say is we followed the same procedure that the fdic followed. We inherited the fdic. Is it true that one west independent audit firm said it violated the Service Members civil relief act by initiating foreclosures on 50 active duty military families. You have the document in front of you. I dont. Im pretty surprised you dont know these things because youve been rather defensive for good reason about what happened at one west. Is it true that the california . I do want to just comment for the record, we unfortunately did foreclose on certain people in the military. It was quite unfortunate. It was inappropriate. We responded to those people and made them whole, as i said. Every Single Person had the opportunity to have their mortgage reviewed and we corrected any errors. Our errors less than anybody else, not that im being defensive. Im proud of our i wouldnt be proud of these findings. Sit true the California Attorney Generals Office said one west with 96 documents and you aggressively obstructed their investigation . So first, let me comment that i sought the memo and i think its highly inappropriate somebody at the attorney Generals Office. So is there no truth in that . Again, what i would say is the primary regulator was the occ. They were the ones who had the obligation to regulate. Occ. M you couldnt remember occ and now youre citing occ. Is it true one in charge is accused of not having any process in place to help the 3,000 fha and va mortgage borrowers of wake foreclosure and the same employee in charge has accused one west of not having a process in place to help those va mortgage borrowers in submitting false claims. It seems like you want to shoot questions at me and not let me i know one answer will take time. So ill let you explain when im done. Please understand, these are complicated questions. They are complicated. Let me at least explain them, otherwise, theres no point this shooting and i dont have the ability to respond. You dont, but all of these are factual things if you want to follow up with a response later in more detail. One example, and you can answer this and take as long as you need. One example of an insider loan was the media deal, the fbi denied the request related to relatively media. Were you cochair . Yes or not . I have not and i saw you wrote the letter and i assume the fbi did a thorough review of the report and no idea why they didnt approve the foia issue. We have no reason to believe its not any issue associated with me. Fair enough. But direct that to the fbi. I accept your answer, youre not being investigated. But i find it interesting that you know about the letter i sent yesterday, the letter i sent with all the questions detailing all the issues that i just asked about with the bank west, bank west one west. One west. My father forgot the names sometimes as well. But i sent the letter and youve not taken the time to answer and it really laid out. I think the issue is the one west purchase went well for the treasury saeblg deseecretary de it was a disaster for homeowners and for taxpayers. We can talk more about taxpayer cost on this whole process and the amount of money he bought it for and sold it for. Senator, your time is up now. You take as much time to answer. Thank you very much. First of all, i did enjoy meeting you. I dont believe we had the opportunity to meet before that time and if confirmed, i look forward to spending more time with you. Thank you for saying that. Although we may not agree on everything, there were certain things we did agree on when we met and i have a lot of respect as a senator to hear your issues. I did tell you and acknowledge you acceptability me the letter and i was advised by the staff that the the appropriate thing was for me to come here and answer questions or meet with all of you independently and answer questions that you have. And if i dont satisfy that, you have the ability to submit questions afterwards, which ill respond to. When i came to your office, i told you that and said id spend as much time with you as you wanted answering those questions, that they were quite significant and i knew they were complicated. So i did tell you, although i wouldnt respond to them in writing at that point, that i did understand your questions and i wanted to address them. Senator . Thank you, and welcome. We a lot of the Current Administration describes that as the new normal. Tell me, what do you think is a reasonable expectation in terms of the growth rate in our economy is this historically, if you go back to world war ii, about 3. 2 a year. What do you think is a reasonable growth rate . Hang on, im just looking at some of my notes. I mean, the short answer is ive said publicly and i believe that we should be able to get to 3 to 4 sustained gdp. I think that thats absolutely important. I think as a country, the most important issue we have is Economic Growth. That whatever issues we have as republicans or democrats, i think we can agree that with more growth, its a lot easier to solve these issues and we should all be focused on things that help grow the economy. In 1984, we had 7 and 1998, we had 5 and 2008 we had 3 . That was the last time we had appropriate growth rates. I share the president elects concern of low growth. Our number one priority from my standpoint is Economic Growth and i can assure you, ill work tirelessly if i am confirmed to create growth in the economy and pro growth programs and i commit to working with all of you on that. I believe the tax reform will be our first and most important part of that. And the president elect has identified a tax reform lessening the regulatory burden, two areas we can unleash the economy and achieve a high degree of growth. To what degree do you believe the volume out of this Administration Even up to right now, 277 page regulation came out of the Obama Administration that affects past businesses and farmers, businesses, the folks i represent and in september, we sent a letter to secretary lou basically trying to get him to withdraw some regulations that dealt with valuation discounts that impact the estates and makes it difficult for a Small Business or farmer or rancher to pass it on. When you get over there, are you going to, hopefully look at withdrawing those types of regulations and undoing a lot of the harm, economic harm, i think, and frankly, what has adversely impacted the growth rate in this economy as quickly as possible . Absolutely. And i will tell you both, i and the president elect believe in appropriate regulation but in many areas of the economy, not just in financial services, there is excess regulation inhibiting jobs and growth and hurting the American Workers and were committed, specifically on what youve mentioned and im committed to work with you in your office. We want to make sure we cover the appropriate loopholes so if people have businesses set up for taxes but any operating business, we need to make sure that people who own and operate businesses that the valuation for tax purposes are reflected appropriative and anybody who follows the markets and reflect fair valuations. Working on business tax income and one of the issues that came out of that is if we get into comprehensive tax reform and i hope that we do, how will you treat businesses . Thats one of the most important questions, 90 of the businesses in this country organizes pass throughs and 50 of net business income is generated by that and employ 55 of the people in this country, and so as we think about tax reform, i guess im asking you if youd commit to work with us to ensure that pass through businesses are treated fairly and whatever we come up with in terms of policy reflects the Economic Impact that llcs and partnerships businesses organized in that manner have on the economy. Absolutely. Not only committed to it but spent a lot of time on this issue already. Ive worked with the trade group that follows Small Businesses and not only did they support the trump economic plan which i helped design, but they were kind enough to write a letter of support for me to the committee and i think the important issue on pass throughs that we are committed is that we want to make sure that theres a business tax. This is not just a Corporate Tax. Theres a business tax. If there are large pass throughs that earn tens of millions or hundreds of millions of dollars, we want to make sure that they keep the money in the company as an incentive and dont use pass throughs as a way to get lower taxes than they would pay personal income tax and income managers dont use pass throughs to avoid what would be higher personal income taxes but absolutely committed and we have spoken to many Small Businesses and entrepreneurs to make sure that they are protected and they get the benefit of the business tax. I appreciate your concern and weve heard this loud and clear on the campaign trail and i can assure you. Keep the focus on growth. Thank you. Senator timmy is next. Thank you, mr. Chairman and mr. Mnuchin. Thank you f maybe my memory fails me but i dont remember the outrage from my colleagues on the other side. When it came to his circumstances so there seems to be selectivity on the part of that. I want to go back to a point you made earlier especially for those who have no experience in banking. I have never heard of a bank that wouldnt prefer loan modification every time over foreclosure. Not only to avoid the misery that that results for their customer, but also because foreclosure almost guarantees locking in substantial losses for the bank. Would it be fair to say that virtually anytime its possible, your bank would have preferred a loan modification for the borrower . Absolutely. We ran a net present value test that was established by the u. S. Treasury assumptions and we put in the assumptions anytime we could collect more money by doing a modification, we were allowed to do a modification and by definition, inscented to do modification and would have even without incentives from the u. S. Government and on fdic, we were back to the fdic. So banks are incented to do this whether they get the subsidies from the treasury or not. Thank you. On the trade front, the president elect has indicated an interest in revisiting trade agreements, some negotiated a long time ago and sure there are things that could be modernized and updated but would you agree that it would be a mistake to evaluate whether or not a trade agreement is a good one to solely look at whether or not we have a trade deficit with the country in question . Would it be a mistake to make that the sole criteria . I would agree with that. Also, would you agree that many of the periods of strong Economic Growth that weve had in recent decades have corresponded to periods of a strong dollar and often, if our economy is performing well and the world perceives our economy to have a Bright Future, the inevitable result will be a Bright Future . The u. S. Currency is the most attractive to be in for long periods of time and i think thats important and you see now more than ever the currency is very, very strong and what you see is people from all over the world wanting to invest in the u. S. Currency. I think when the president elect made a comment on the u. S. Currency, it wasnt meant to be a longterm comment. It was meant to be perhaps in the shortterm, the strength of the currency as a result of free markets and people wanting to invest here may have had some negative impacts on our ability in trade but agree with you. The long term strength over long periods of time is important and again, thats a reflection of, i believe, we have the most attractive in the future and so theyre not forced abroad. Last point to make, running low on time, the many failures of dodd frank in my view include title ii which i believe is a codification of a mechanism to require future bailouts from taxpayers in the event that a Large Financial Institution should fail again. Would you share my view its much more desirable for the Bankruptcy Code so we can handle the large for bankruptcy and not ever have to go to taxpayers to bail out big banks . I 100 agree with you that we should not be in the business of bailing out big banks and i 1 h agr 100 agree with you that i share certain concerns on title ii. We need to look at what we can do as an alternative but i would comment that the bigger issue is for long, long periods of time, the fdic was a able to take over and resolve banks when the regulators determined that there were issues and one of the big problems we had during the financial crisis was the the intermingling of banks and Holding Companies and complex securities so i dont necessarily, i think if we have proper regulation, a lot of the need for title ii also goes away. I see ive run out of time. M thank you, mr. Chairman. Thank you. For clarity, the wall street journal yesterday trump talks it down. Do you believe the dollar is too strong . Again, i believe that the shortterm, okay. As treasury secretary, are we going to ever hear you say that the dollar is too strong . As treasury secretary, i dont see it as my role commenting on the dollar on shortterm movements. I have commented on what i believe are the longterm. Let me ask you a different question. In 2011, due to the dysfunction in congress, we almost failed to raise the debt ceiling here and as a result, downgraded the nations debt for the first time in history and stock market lost 17 of its value and didnt recover for almost a year. Consumer confidence fell 22 in just a few months, a completely selfinflicted wound on the American Economy. Hurt americans, Retirement Savings and dealt a blow to growth and job creation. During the campaign, mr. Trump suggested he could somehow refinance or renegotiate our existing debt. While he walked away from the idea initially, later in the campaign, he again suggested the country to pay our creditors less than what theyre due specifically, get, you go back and say, the economy just crashed. Ill give you back half. He also suggested the United States never has to default, quote, because you print the money. Do you agree with these statements . First of all, thank you for asking the question about the debt ceiling, which i do want to comment on. Good, because i have another question. I think its an important issue for all of us and if im lucky enough to be confirmed, will be something. Please dont filibuster, but i appreciate that. On the president , hes made it perfectly clear and i think its perfectly clear that honoring the u. S. Debt is the most important thing. And that i hope when we get to the point if im confirmed that we have to have the debt ceiling, that we wont go through another one of these issues because certain things i would ahave the power to postpoe this but i believe the u. S. Has the obligation to honor its debt. Can you work with congress to pass a clean debt ceiling . I will commit to absolutely work with the congress, the house, and the senate so that we dont get to the last minute and run out of money. Is that a yes . I dont know your technical issue of what a clean debt ceiling. The debt ceiling . Let me be clear. I would like us to raise the debt ceiling sooner rather that be later. Thats enough for me. Im grateful for that answer. Found president elect trumps would increase by 7. 2 over the next ten years and increased defense spending and will not touch entitlements like medicare or Social Security. So far, hes only suggested reducing spending on nondefense Discretionary Spending. In 2015, nondefense Discretionary Spending comprised 16 of the budget, 583 billion. Includes veterans, national parks, research. Even if we didnt spend a single penny, that would only pay 8 of mr. Trumps tax plan. Is a tax plan to increase the debt by 7. 2 trillion an acceptable outcome to you . I believe the 7. 2 trillion number was the first tax plan and not the second tax plan. I believe it scored dynamic closer. The first was 11 trillion. The second, i think, was 7. 2 trillion. You must be referring to static and not dynamic. The dynamic number was closer to 2 trillion. In any case, were adding mountains of debt. Let me just comment that i have discussed debt with president elect. We are both concerned that weve gone from 10 trillion to 20 trillion of debt and we think the way to reduce the debt is Economic Growth and that will create the opportunity for us to pay down the debt. Let me just make a comment. To be clear on that though, senator said well that our history, in our history, the average growth rate weve seen is about 3. 2 . To 4 between 3 and 4 but theres no way thats going to fill the gap that is projected in these tax plans. And i can accept that the president elect may have changed his mind but whether you would find it acceptable to bury the American People under this kind of proposed debt. Again, i think as you know, we had a rather modest Campaign Staff relative to the other people out there. So one of the things i look forward to if im confirmed is having access to all the people in the treasury able to model these things. So we were forced, we had some internal models but forced to rely upon external models, certain to the assumptions we agreed to and certain assumptions, we didnt agree with. I think whats important is President Trump has a pro growth economic tax plan and we are sensitive to the cost of that plan. Yesterday, i did have the opportunity to meet with senator wyden and we talked about the process for tax reform. I will be the person from the administration taking the lead on that and i would look forward to working with the house and the senate, both the republicans and democrats to move forward on tax legislation. Mr. Mnuchin has twice praised the employees of the Treasury Department today and i want to say thats a refreshing and Welcome Change from what we have heard up until now in a lot of these hearings. Thank you. Welcome. Im sorry ive been in and out of the room, but ive been listening and up to date and ill audiocassette to something i have not prepared myself to talk about until i heard some of the other questions and testimonies that went on. I want to talk about a Mortgage Backed securities. Fannie mae and freddie mack in 2008. Your purchase in 2008 . Yes, in december of 2008 we committed to it. In the beginning of the crisis was really in july of 2008 when Merrill Lynch drove down their portfolio. I think thats correct. Started a domino effect around the world. That is correct. When you purchased indy mac, it had a number of those loans in the portfolio . It had Mortgage Backed securities. Which were included . Yes, thats correct. What wall street did is packaged loans into a Security Market and based on a high field. Is that correct . What happened in the case of indy mac, they created their own securities. The market backed up, couldnt afford to sell them and got stuck keeping them. So in many cases, most of the Mortgage Backed securities, most were failed sales. Is it not true the freddie and fannie guaranteed mature loans pretty much at the direction of the congress of the United States when it came to the Affordable Housing loans . Is it not true that congress directed them to have larger . Absolutely, and i believe thats unfortunately what led them to buy a lot of bad loans. What i want everybody to understand when theyre talking about these mortgage issues, i was in the real estate business for 31 years and in congress at the time this went on, but what happened in a lot of these loans is they were made because the direction of congress to take more of them and what was called Affordable Housing loan was a subprime loan, if you will which was a high risk loan and a high Interest Rate on it with a hi high coupon and all around the world. They should have been called bad loans, thats what they were. Your indy mac as i remember and recall, tried to restructure the loans and renegotiate those loans to keep as many as possible from going into foreclosure. Not only for the loans we owned but serviced for fannie mae and freddie mac. The one person who came to my home and protested at my home was a fannie mae loan and i wasnt able to do anything about that and it was through the multiple calls to fannie mae, that i was able to get a loan modification for the person but many times, people thought we could but they were owned by fannie mae and freddie mac and other security holders. The main point i want to make for the sake of argument, and im sure tyoull get, a lot wer encouraged by the congress of the United States. Thats what, and they were called Affordable Housing loans. A lot of people bought the loans made by somebody else when they bought an institution so inherited the problem and didnt originate the problem. Theres a big difference. Thats correct. I can assure you that the loans we originated on the mortgage side Going Forward were good loans and nothing to do with the terrible legacy loans, so thank you for pointing that out. Thats the important point. Because if you originate something, you own it. If your acquire something thats a bad debt and a bad piece of paper, shame on you for buying it but its not your problem for creating it. Thats the important thing to know, is that not correct . And i dont mean shame on you you did something wrong but you inherited something wrong by something that was good. I understood that. Thank you for pointing it out. One last point, i have been told by my state director for revenue that the irs is not sending out, that the federal government is not sending out w2 forms. I hope you Pay Attention and direct them to go back to do that because the only way to keep bogus loans and intrusion in our portfolios is people to get back their income, tied to their Social Security and federal government to get that at the same time. So if you would work on those practices are ended somewhere around the country. Ill be committed to work with your staff. Congratulations on your nomination. Thank you, senator. Senator heller. Welcome to the hearing today. Since the beginning of the great recession, no state was hit harder than the state of nevada. Probably well aware of that. We led the country of bankruptcies, foreclosures and unemployment. So you can imagine that were sensitive to the next treasury secretary having gone through that over the last 8 or 9 years. You came in my office on january 4th and i appreciate the visit. Id like to ask you the same questions today. How many nevada homes were in one wests banks portfolio . Unfortunately, and ill go back and request that information from the bank. I no longer have that information but i will work with the bank to try to get that for you. How many nevadians did one bank close on the bank . I have the information thats in public reports but im absolutely committed to go back and get that information for you from the bank, so i apologize i dont have that with me today and i do appreciate how hard your state was hit in the foreclosure crisis. Do you know how many nevadians one west bank provided assistance through Loan Modifications . Again, ill go back and try to get all of that thfgs. Information. Heres the reason why i ask. This is the seventh time ive asked. So i ask you when you were in my office and i had my staff follow up on it, three times by text and three times by fphone and still cant get the answers to these questions. Not sure with two weeks, well, your own comments were that you had responded to 5,000 pages. 5,000 pages of questions asked. Why were these not asked if he had 5,000 pages of questioned that you answered . First of all, let me apologize to you because i do recall you asking them in your office and theres no excuse they havent been answered. I was not aware of that my staff also got those questions, so i apologize to you and i assure you personally as soon as i get out of this hearing, i will request that information from the bank. But were responding to at lot of other information. But this is important to you so you have my commitment youll get that. In 2008 when one west purchased andy west, what motivated that transaction . Was it a way to save the bank . Was it a way to make money or keep people this their homes or some other reason . I think it was all three of the above. So, you know, we i saw the opportunity that i thought that there is going to be a banking crisis and i saw the opportunity that we thought we could turn around the Regional Bank and turn it from what was a lousy Mortgage Bank into an attractive Regional Bank and there was the opportunity both to have an attractive investment, obviously, i had to convince my investors that they would make money but i saw it as also a great goal of building a business. I just made comment and my investors made a lot of money on one west but i just comment if we had just invested in j. P. Morgan and bank of america and a handful of other stocks, we would have made a lot more money and i wouldnt have to have worked nearly as hard. So a big part of the financial return ultimately was we invested in the market at a very, very depressed period of time. Were you motivated, was it an objective to foreclose . Quite the contrary. From the inherent in these agreements. We committed to do loan modification. We bought the bank, that was the agreement. As i said before, we were proud of loan modification started there, and we actually had a bunch of incentives, whether it was hamp incentives or other things in the law share agreement where it was actually a much better for us to do loan modification. So as i said before, i can assure you that what prevented us from doing more Loan Modifications was either the net present value test, or was what was the qualification. So we were required to get updated income and people had to have had had to be able to effect ively requalify for the loan. As i said before, not only from a social basis did i want to keep people in their homes, but we were economically motivated to do that. How much did the fdic pay one west for the losses . What do you mean by how much did they pay us for the losses . What was the compensation from the fdic for closing on homes . Shared loss agreement. What we did, the way the shared loss agreement and, again, i would comment, i think there has been, like, 400 shared loss agreements. I think according to the fdics public data they believe they saved 40 billion by using the the answer is 1. 2 billion. 1. 2 billion. I know, but thats after we absorbed 2 billion of losses. So i just youre not saying thats not a motivation to foreclose on the home is 1. 2 billion . No, it is not a motivation because there were restructuring fees that were put through when we did Loan Modifications. And we wanted good loans. We were not, again, let me just be clear, we wanted good loans. Having good loans that performed under the law share agreement was absolutely critical. One more question, did one west bank specifically target minority communities in nevada for foreclosures . Absolutely not. Mr. Chairman, my time has run out. Senator casey . Mr. Chairman, thank you very much. Mr. Mnuchin, appreciate you being here with your family. And i wanted to start with a subject that you already answered some questions about. The issue of mortgage foreclosure, but also modifications. Im holding in my hand a i guess a fourpage, if you look at both sides, document entitled, and this is a channel 4 in pittsburgh, investigative report, Just Announced this week, quote, trump pick for treasury secretary foreclosed on hundreds of homeowners in western pennsylvania. It is dated january 16th. Mr. Chairman, i would ask consent to have this part of the record. Without objection. Let me just read you part of it, mr. Mnuchin because i know sometimes when the reports refer to individuals, you may know them, you may not. Im not going to ask you if you know this person, but heres just a couple of excerpts. According to channel 4 in pittsburgh. Nelly melonik lost her husband to cancer, lost her son to an overdose, and then she lost her home to one west bank. She says, and im quoting from her words here, one thing ill never get over is my sons death. She lives in westmoreland county, just a little bit east of pittsburgh in ruffsdale, the name of the community. Here is what nelly hoped would have happened. She said, and i quote, they, meaning one west, they should have worked with me to meet a payment that i could not that i could make. The report goes on to say she filed bankruptcy, but even then could not save her house. She said it cost her, quote, a lot of depression. And then it lists a couple of examples from other communities that were foreclosed on. House in white oak was foreclosed in 2014. A house in norther have sa er v. But the headline says, hundreds of homeowners in western pennsylvania, depending where you draw the line, thats probably 10 counties roughly. So one region of a state of 67 counties. One of the reasons i highlight that is to, number one, focus on the impact that those foreclosures had on one community and one state. But also to ask you some questions, just so i can make the record clear so we can get to this line of questioning about modifications and foreclosures. One of the statements you made in my office when we met, i appreciated the time we had, you said that one west, quote, did lots of modifications, unquote, and then on the question of foreclosure itself, you said, at the time we only did 30 to 35,000 foreclosures, unquote. Is that correct . That was for the period of time that were talking about, 20092010. Thats just 2009 and 10 number . I believe the 36 with 2009, 2010 versus 175,000. The 100,000 Loan Modifications was over a slightly longer period of time. Let me just get this, over the whole period that you were that you were the leader of one west, how many foreclosures total . Nationwide . I dont have that, but i can find the number. But let me just comment, since there is a lot of talk about this foreclosure business, 93 of the loans that we serviced, we serviced for third parties. We sold this business. So, again, i never wanted to be in the Mortgage Servicing business. I didnt want to be in the reverse mortgage business. I wanted to build a reverse a Regional Bank. So one west is no longer. We sold years ago the servicing business because we didnt want to be in that. We sold that business to auquin. It sounds like a horrible situation and i sympathize for that person. I only have limited time. Let me get to the second question on modifications. There seems to be some discrepancy here about the numbers on modifications. You say in the in the testimony today, and im quoting you here, at the bottom of page two, ultimately one west extended over 100,000 Loan Modifications to delinquent borrowers. Now, extended isnt the same as a modification. You would agree with me, wouldnt you . Ino, no, extended means they were put on modifications. That isnt a completed modification. They were offered and put on a loan modification. But, in fact, in fact, according to a document that also ill make part of the record, a onepage document from hamp, the Home Affordability modification program, that mr. , chairman, i ask it be made part of the record, making home affordable summary results. Thats the name of the document. In fact, let me just say one more, mr. Chairman, in terms of total modifications it was really only 22,908. Well put that into the record. And more questions later. But objection. Well now turn to senator cassidy. Mr. Mnuchin, nice to see you. Nice to see you. Thank you. As you can tell by where i am im fairly junior on this panel. I will note youve been somewhat assaulted by innuendo. And my sympathies for being assaulted by innuendo. Thank you. Yeah. Secondly in regards to Economic Growth, i wrote an editorial with a friend in the washington journal that showed if we had Economic Growth from 2001 to 2014 as we had from 93 to 2000, in 2014 we would have had a 500 billion surplus despite entitlement spending, despite whatever, as opposed to the 500 billion deficit we had. So i appreciate your acknowledgement that progrowth policies cover a multitude of sins. Good for you. Thank you. That said, i represent a lot of rural parriishes. And there is two things driving Economic Growth, utility companies, they want to sell more and Community Banks. Since dodd franks passed, the number of Community Banks just plummeted. Omg as my daughter would say. So your thoughts as regards how do we revive the fortune of Community Banks which in my mind is how do we revive the economic prospects of Rural America . Well, thank you, and first of all, i enjoyed the opportunity to meet with you and talk about a bunch of the issues. I think as i mentioned before, i am very concerned that we have and continue to be in the business of putting Community Banks and small Regional Banks out of business. That the regulatory costs can i interrupt for a second . Of course. One guy, i dont know what his bank is worth, he told me 64 regulatory visits in a 52 week period. The marginal cost for this small bank is, like, why am i not selling . Im sorry, continue. That sounds about right from my experience. Thats about the right ratio. Mmhmm. So i agree with you completely. And as i said, if we want to have Economic Growth, you know, for us to end up with four or five big banks in the country, you know, and dealing with the too big to fail or anything else or the too big to succeed, we need to have banks. We need to have Regional Banks. We need to have Community Banks. Those banks understand the people in the community and can make good loans. Now, it is also related to that and something you were speaking, i think, with that doesnt seem like we have an absence of capital in our society right now. A lot of capital. Thats correct. It is just that we cant get capital down to Evangeline Parrish for someone who is a entrepreneur and bringing prosperity to Evangeline Parrish. The fact you dont know where it is shows it is a smaller parrish in terms of population. I presume you agree with that. I do completely. Related to that, and, again, this is something for my edification. I dont know the answer to this. But strikes me that there is two possible goals of tax reform. One is to create more capital, i think under the reagan tax cuts my gestalt of that period is that high marginal rates deprived capital to those who needed but seems like we have enough capital floating around but choke hold at certain points. And then the other point of tax reform would be to align incentives. You spoke earlier i think about the pass throughs you want to incent folks to keep the money within the business. Thats correct. Reinvest it and create jobs. Would you agree with my one, would you agree with what im saying . Im a gastroenterologist, youre the economist, of the two is there a third reason, with fairness . If you throw those all in, it seems like capital, though, creation of capital is the one which isnt the priority so much as to align incentives, perhaps create certainty. Continue, you go. I agree with you. The only other thing i would say because i do think we have a lot of capital in the United States now, but we have a business tax system that is incenting companies, u. S. Companies keeping that capital abroad. So the other thing we want to incent as part of behavior is that money comes back to the United States, both now, as well as Going Forward, and that money can be deployed to create new business here and create jobs and that we stop things like inversions because it makes economic sense for u. S. Companies to do business here. So the incentives is both for the company to use their money more wisely, to invest it within to create jobs and also to Keep Companies from moving abroad . Correct. On behalf of all of those folks in Evangeline Parrish and elsewhere who want prosperity, i look forward to your offer to serve. Thank you. I appreciate that. Your time is up. Senator warner. Nice to see you, mr. Mnuchin, appreciated our visit and congratulations on your nomination. I have a series of topics is ill try to move quickly as well. United states obviously enjoys enormous advantages particularly around the status of us being the reserve currency. That allows us lower Interest Rates and everything from Student Loans to mortgages. Senator bennet raised this but ill reraise it again. The president elects comments about potentially renegotiating the debt during the campaign were unprecedented. I want you to again affirm to this body on a Going Forward basis it will be your policy as much as you can influence the president elect that we would never again question americas willingness to stand by its debt obligations. Senator, i agree with that 100 . And also let me just thank you for meeting with me and also acknowledge as an incredibly successful business person i appreciate your service here. I want that to eat into my time. Sorry. There are ive been very troubled by even some folks in Elective Office who have somehow said we can ignore the debt ceiling without consequences. Even some that are going out and saying, somehow we could prioritize those debt obligations and pay off bond holders, many foreign, many chinese, and ignore obligations to pay states, which would then affect their bond ratings to pay Social Security trust funds to honor the commitments the United States government made to pay salaries of fbi employees, et cetera. It is your policy that the United States in terms of its debt obligations needs to honor all its debt obligations and should not have any ability to prioritize those obligations. Absolutely. And i hope youll work with me so that we get that done. We have already spent the money. We have the obligations. There should be no uncertainty that we are paying the bills. I think that is extraordinarily important and those who somehow argue for prioritization would wreak havoc in the financial markets. I want it reraise what senator bennet raised. Clearly if you get this role, words you say and the president elect will say will have consequences. We already have seen this the actions of the president elect in terms of commenting on the strength of the dollar, unprecedented, no president , democrat or republican, has ever done this before. It has effects. Now, you will simply be a Senior Adviser in the cabinet of the president , but how do we ensure since words have such consequences that there will be an ability for a Trump Administration on Economic Policy to try to speak with a single voice . Well, if i am confirmed, i think that once we all get in office, and have regular access, both myself and the administration, i think you will see that. And, again, there may be times where, you know, there is a view that the dollar is slightly too strong, but i do believe we will speak with a unified voice. But then expect the president elect but then president would continue to break all precedent and be willing to weigh in these matters unlike any prior president. As you know, this president is willing to do a lot of things that other president s havent done and i think many of them are great. Lets move to another area. One area that ive had a huge amount of concern, interest in, i know senator crapo and a number of us on the panel on fannie and freddie. I know there were some people that potentially interpreted some of your comments about recap and release, which would in a sense say even though the american taxpayer was paid back the 188 billion that we invested in those failing institutions at a moment of crisis, i think both of us would perhaps from a business standpoint say that was high risk capital and we got a better return, but somehow those who simply say lets refloat these two entities and basically ignore all some of the underlying challenges, do you support that position of recap and release that some have advocated. Let me be clear. I did make some comments about this. My comments were never that there should be recap and release. What my comments were, and, first of all, ive been around the mortgage industry for 30 years, ive seen this for a long period of time, so this is an area i do believe i have expertise in. For very long periods of time, i think that fannie and freddie have been well run, without creating risk to the government. As well as they have played an Important Role i know youre running out of time. But just bear with me. Can i get an extra 30 seconds, sir . Can i just answer this so you get more time . I believe these are very important entities to provide the necessary liquidity for Housing Finance and what ive committed to is that i will work with both the democrats and republicans. What ive said and i believe, we need housing reforms. So we shouldnt just leave fannie and freddie as is for the next four or eight years under government control without effects that i believe we can find a bipartisan fix for these. So on the one hand, we dont end up with a giant bailout. On the other hand, we dont run the risk of completely limiting Housing Finance. I appreciate those comments. I look forward to working with you. Since i took up most of the 30 seconds on your statement, two quick questions, hopefully you can answer them with yes or no answers. One is, in light of those comments about recap and release, you commit not to support any kind of administr e administrative effort that would bypass the congress in terms of efforts to recap and release . Again, i dont want to make any commitments to legislative or not. What i will commit, because it is my responsibility in treasury, you know, as it relates to certain issues with fannie and freddie, what i will commit to is that it is my objective to find a bipartisan solution to it and i would welcome the opportunity to sit down with you. Hope would be the bipartisan consensus that the Banking Committee arrived at was that that solution, we can argue or discuss about how we get there, should end up with the Housing Finance system that preserves things like the 30 year mortgage, but also makes sure that there is not the current status which has when things are going well, private sector gain, but when things hit stuff hits the fan, taxpayer holding the bag. I can 100 assure you that i have no interest in that and i think i understand this well enough that you will find that i wont support any policy that has that case. Thank you, mr. Mnuchin. Senator mccaskill. Thank you, mr. Chairman. Mr. Mnuchin, i found a tweet of your future boss that i agree with. Keep it fast, short and direct, whatever it is. So thats what im going to try to do. First, do you oppose lifting the current sanctions on russia . Right now i do. You think we should lift the current sanctions . Im sorry, i oppose right now lifting the current sanctions without do you support new sanctions against russia . Well, d yes or no . The answer is i dont have the information. I havent been able to receive classified briefings. I would want to understand the classified information and i would want to work with others to understand it. So i dont have an opinion right now as to whether we should have more. I do have an opinion that we shouldnt be lifting the existing ones. Would you agree that your new boss is famous for firing people . Well, he has a show about it, but other than the show do you think sometimes it is a blurred line at this point. Were not sure where the show stops and where the reality begins. Do you think he will hesitate to fire people if he disagrees with them or believes theyre doing a bad job . Well, if he disagrees with them, no. I can tell you the president elect and i have disagreed on things. Sometimes ive been able to convince him and sometimes i havent and i havent been fired. If people do a bad job, absolutely, he should fire them. Will he be able to fire and hire the ethics officer . The ethics officer as it relates to his trust, i have no idea, im not who would hire and fire the ethics officer if it wasnt him . Again, i dont have access to the trust documents and i dont know thenot talking about trust. He said hes going to have an ethics officer to oversee him in the government. Who is going to hire and fire his ethics officer . Him . It is a good question. I would be more than happy to ask him and talk to him about it and come back. I think you raise an important issue and i think hell understand that. I dont have the answer. Hes not divesting any of his business interests, correct . Correct. I believe he i believe he sold his public stocks in his other im talking about his business. Would you is it fair to characterize him as an International Businessman . I believe so. Okay. And he will enjoy the benefits of his businesses success while he is president , correct . Again, i believe hell do everything legally and no, no, no, no. This is not my question. My question is he has said very loudly he will go back to his business after hes president , in fact, he said he would fire his sons if they had hadnt done a good job. So whatever success his business enjoys during his presidency, he will get the benefit of, correct . Well, i missed the part about firing his sons, but that sounds like something he may have said. But, yes, hes the economic owner, so by definition i would assume he would have that. His businesses and other countries and this country intersect with foreign countries. Do you agree . So ive read, yes. And isnt it true that a lot of his debt is held by foreign interests . I dont know. Ive just read it in the papers. Do you think you should know that as someone who runs the committee on Foreign Investments if were talking about the commander in chief. Should you as secretary of the treasury know what percentage of his debt, i am told by people familiar with his business, that it is a huge percentage of his debt that is held by foreign interests. Well, as i said, if i am confirmed, i assure you that i will make sure that the requirements of the constitution are upheld, and i think you have a valid point about foreign debt and understanding foreign things. And if im confirmed i will research that and get back to you. Okay, so what i want to get a commitment from you today is that you will report to this committee what percentage of the debt against the Trump Enterprises is held by foreign interests. That is your job as a secretary of treasury and i want your commitment that youll report to this committee as soon as you are able to get that information from the new president. Im not making the commitment today to report to the committee on anything. But what i am willing to do is to the extent i am confirmed, i am willing to speak to the chairman and make sure that whatever the committee thinks it needs i will discuss with the president. I can assure you the American People need to know and you and your job as secretary of the treasury that is supposed to be determining National Security interests based on foreign investment, the American People want to know how much debt that is owed by the trump businesses is owed to foreign entities and because that could have a direct impact on our National Security. Thank you, mr. Chairman. Senator, thank you. I think youve asked some interesting questions which i will follow up. Thank you, senator. Senator burr. Mr. Chairman, i would i would love for our staff to look and see if that is the responsibility of the secretary of the treasury to actually ask the president what percentage of foreign debt. I dont think thats part of your job, mr. Mnuchin. And let me say that your employment history is quite complex. Probably the most complex ive seen of any nominee that is here. What i read into that is that youre sort of a road map for things that we need to do if the goal is a simpler, more transparent, understandable tax policy in this country. So let me ask you, do you pledge do you commit to the committee to work towards a simpler, more understandable tax ked code in this country in. I do, absolutely. Do you commit and pledge to this committee to divest yourself of any assets that may be perceived as a conflict with the job that youre being considered for . I already agreed to that and signed the agreement with the ethics office. Well, i know that. Many of the questions ive heard on this committee thank you. Have suggested that they didnt hear it. And i wanted you to have an Opportunity One more time to repeat it. Mr. Mnuchin, in april of 2014, the treasury ig came out with a study. He found that the Internal Revenue service had paid out 2. 8 million in bonuses, as well as tens of thousands of hours of leave and hundreds of pay step increases to employees who were tax delinquent or had committed serious misconduct including fraud and drug abuse. More recently in their april 2015 report, Inspector General found that 108 of 364 employees with willful tax noncompliance cases closed between october 1, 2008, and december 2013 received one or more awards, promotions, quality steps, incentive payments within a year after being disciplined for tax noncompliance. Will you commit to me today to change this policy, this insane policy . Sounds very concerning. I commit to work with you and your staff on it, absolutely. Thank you. In another report, december 2014, Inspector General of the irs discovered that there had repeatedly hired employees who were fired for poor conduct and performance after lengthy examination processes on their employment. In fact, the treasury watchdog found in a sample of 7163 employees, who were rehired by the irs, 824, 11 of them, had bad performance in their record as to why they were fired in the first place. And in some instances, it said in the records do not rehire. Yet the irs rehired them. Do you pledge to this committee to change that insane policy at the irs . That sounds like the most common sense thing ive ever heard, so, yes, i absolutely am committed to that. I appreciate it because i think that with all the questions youve been asked today, and all the pledges you have been asked to make, i try to look at it from a value of the American People. The American People deserve better than this because in the private sector you wouldnt stand for this, would you . Absolutely not. You wouldnt have a company that would pay people for nonperformance or poor performance. You wouldnt reward individuals by rehiring them if, in fact, they did a poor job last time. And i think the American People look at insane policies like this and they really do question those that head agencies and committees like this that have oversight over the agencies. So i go back to where i started, you have a very complicated and fascinating employment background, it spreads probably more areas than any of us can ever imagine. Do you pledge to use that experience to make the changes at the Treasury Department and within all the branches of the Treasury Department that the American People since need to be changed. Absolutely. Great honor to lead the Treasury Department and work for the American People and thats why im here. Thank you for being here today. I yield back. Thank you, senator. Senator scott. Thank you, mr. Chairman. Mr. Mnuchin. Good afternoon. Good to see you again. Thanks for coming by the office and having a good conversation about Economic Growth, which should be our focus for the finance committee, at administrations focus as well. To follow up on what senator burrs comments about a simpler tax code, i think about many of the comments i heard from the president elect as it relates to making sure the folks working paycheck to paycheck experience a better quality of life, raises i think about the tax code, i specifically think about folks in South Carolina who are strongly in support of President Trump elect as well as places like pennsylvania, wisconsin, michigan, where these folks who are working every single day long hours are barely making it. As we think about the tax code and reforming it, we can focus either on income or on capital. I would love to hear your comments on President Trumps approach to reforming the tax code, will the emphasis be on the personal code or will it be more on the capital process . I think it is both. I think we have an opportunity to reform the tax code, and we should all be focused on this on both the personal side and the business side. So and in many cases i see them linked. There will be changes to the business tax code that will create more jobs and more income, but i think the overall goal as we had an opportunity to discuss and thank you for meeting with me is to simplify personal taxes, deliver a middle income tax cut, make u. S. Business taxes competitive with the rest of the world so that we can compete effectively and aggressively and create more jobs. This is all about creating better economics and more jobs for the american public. Im very concerned about the number of jobs that have been lost, the decrease in manufacturing, the number of people that have left the workforce, these are all very concerning issues and when you just look at the Unemployment Rate, that absolutely doesnt tell the story of what is going on in this country. Following that same thread, think about simplification of the tax code, and in order for us to get to a lower rate, were going to have to have a serious conversation, perhaps a challenging conversation about the expenditures in the tax code. I hope the administration plans to treat very carefully the mortgage deduction and the charitable deduction Going Forward. I know that the house plan, i believe, capped the mortgage deduction at a home value of around 1. 1 million. I saw it in your political document that the approach you guys were taking had more to do with the interest that you pay and not the actual value of the home. I would not dont need a comment now, but i would hope you would take seriously the importance of those two deducks from my perspective. Also, i think if we lower the corporate rate, certainly become more competitive, im in the sure that just lower, the corporate rate stops inversions. Your thoughts . I think it absolutely has a huge impact on stopping inversions. So i think there is some other things that we may be able to do, but i think the Biggest Issue that creates inversions is the incentive for much, much lower taxes abroad than we have here. No question that if we can get our 35 highest in the world Corporate Tax down to something that is competitive, that would be wonderful. Absolutely. Inversions, probably going to a place we cant get to be competitive with 12. 5 or the innovation boxes at 10 , whatever we can do to become competitive will be helpful. I do believe were going to have to look for other remedies outside of the tax code in order for us to sell perhaps at the haven of america is a great place to do business beyond the tax code itself. But speaking of that simpler tax code, i have we have spoken before about legislation that i sponsored around investing and opportunities. Essentially defers the Capital Gains tax for up to 7 years if you reinvest the resources into distressed communities. We have 50 million americans, more than a million south carolinians living in distressed communities. I think one of the goals i hope that we have is a look for ways to create incentives for private capital to come back into distressed communities. I would love to hear your comments on that. Absolutely. I have in my notes here the Investment Opportunities act that we talked about and i have im glad youre supporting it, thank you very much. I want to follow up with you and learn more about it. And whether we use that or whether we use other tax incentives i think it is absolutely critical that, you know, the areas that are most struggling that we use the appropriate incentives to get business to go there. So i will definitely look forward to following up with you on that. One more question, mr. Chairman. Thank you, sir. I thought that was the ringing endorsement for the investing opportunity act. Ill take it as that from my ears, not necessarily what you said. On the trade policy, South Carolina has been a place of provocative position on trade. We were a haven for manufacturing 100 years ago. We are today a haven from the high tech manufacturing perspective. Trade agreements are very important part of what makes us successful, attracting brands like boeing, michelin, bridgestone, caterpillar, bmw. Trade is very important to the state. I know that you guys are moving away from multilateral agreements, but towards bilateral agreements. I hope that that bilateral approach will include some of the countries and the growing markets around the world, specifically within the tpp footprint. Absolutely. As i said, president elect trump absolutely believes in trade. He just wants better deals. So he wants us to grow exports, and he wants better deals. Thank you, mr. Chairman. We have two more to go here. Can we finish up with absolutely. Lets keep going. Okay. Well take a short break and then give you a little bit of time and well come right back. Senator portman and senator from washington. Thank you, mr. Chairman. Mr. Mnuchin, thank you for being here. Your kids deserve the award for stamina. My kids at that age would have been long gone. So whatever youve done, you did a good job. I told them they could leave after an hour but they opted to stay. Good for you guys. Listen, i think youre right about the fact that the tax code is an opportunity for us to help get the economy a shot in the arm and just to put a finer point on it, Median Income has not gone up when you look at the prerecession levels. Thats the squeeze. That and higher expenses including health care. In terms of unemployment, youre right, if you go back to the Labor Force Participation rate that was in effect at 66 before the recession, and you compare it to today, unemployment would be about 9. 5 . So this economy is not humming. Were not doing great and were not serving middle class families who are struggling to make ends meet. I think tax reform is one way within your purview that you can make up a difference there and i appreciate what you said in response to senator scott on that. I do think we should be focusing on wages. And not just overall Economic Growth, but how to ensure were creating opportunities for the families we represent. One thing you didnt talk about, when i was here, is on the business side, repatriation. You can lower the rate and thats important having the highest rate in the world, but dont you think there is an opportunity to re pat rate sopa profits locked in overseas and the number i shehear is 2 trillion. I can tell you the president elect thinks were going to get over 3 trillion. His number thinks hes 3 trillion to 4 trillion. Were getting a lot of money back. I spoke to several ceos who want to bring money back. So to the extent that we create a onetime repatriation in the trump plan, we had put that at 10 , i think in the house gop plan they had that slightly lower. But i absolutely believe and i heard ceos say this and some of them are without naming names some of the biggest holders of cash abroad, absolutely want to do it and were committed to that. Youre committed to working with us to be sure we can do that. Shut absolutely. This has bipartisan support here. We need to invest the funds back here, including for infrastructure. With regard to trade, some discussion on trade, i believe in expanding exports and forming trade rep and i think were not doing enough there. I also believe a level playing field. One area we had a lot of contention is on currency manipulation. We tried in the legislation called trade Promotion Authority to get that done. Senator stabenow and i introduced an amendment which came close but didnt get it done to make it a trade objective in our trade negotiations. We did pass something in the customs bill that directly relates to your job. It says that treasury has enhanced authority to take action on this. There is some conditions that are that are to be met that frankly trade manipulators will meet. And at the end of the day, if a country feels it changes policies, the treasury secretary can recommend the president take action like prohibiting the federal government from procuring goods or services from the country, calling for consultations at imf, International Monetary fund. If confirmed, would you commit today to take full advantage of that enhanced Authority Given the department of the treasury . Absolutely. I think thats important. I want to point out and thank you. I know you have taken the opportunity to meet with me several times and i enjoyed our working lunch yesterday in your office. And we talked a lot about these issues. And im absolutely committed to working with you on this and this sounds like a very important issue. Again, i think it is one where there is some bipartisan agreement about the need to address currency manipulation and i appreciate your commitment to use the authority we have given you and work with us on other authorities. Another topic i want to touch on was the irs. I understand there was some discussion when i had to step out to another hearing regarding funding for the irs. I heard what senator burr said about some of the examples of irs poor management including promotion policies. Obviously we know there were politics involved in the irs and making decisions based on political matters which is totally inappropriate for tax collection agency. So the irs is has created huge problems by the way it has not forumed in a way that anybody would expect as a taxpayer. On the other hand, by understaff and underfunding the irs, Taxpayer Service has been eroded. And that affects my constituents in very direct ways. Are you committed to trying to fix these problems at the irs, but also working with us to ensure there is Adequate Funding and support so that the tax system can work better. Hopefully under very simplified tax code. Absolutely. And this is something i feel very strongly about. And it is something that i hope we do have bipartisan support on because this is one of the areas where i think well all agree to the extent we add resources, we can collect more money, one of the things i heard is one of the reasons why we have Technology Problems is because based upon the guidelines we cant afford to Hire Technology people internally. While i think there is some external technology, i think we need to have internal expertise in the irs to manage our own technology systems. And i think in this day and age, like any other entity, we need to have Good Customer Service that if people are paying taxes, they have the right to get the information. They have the right to understand their information. I think that we should be able to interact electronically, securely, keep peoples information safe. I can go on and look up my Real Estate Tax bills. And in california, and see my information there. I dont see why we dont have good systems that people who pay taxes can see their information securely online. So i look forward to working with you and i also think that we should be monitoring Customer Satisfaction like anything else, we should understand what the taxpayers think of the service we provide them. I just i know my time is up, mr. Chairman. The chair and Ranking Member they would agree with me on this, additional focus on the irs is an opportunity for us and 19 years go there was this reform effort i cochaired with bob carey, senator at the time, i was a house member, every 20 years ought to be looked at including the technology. I think this is an opportunity, i appreciate your comments on that today and i appreciate your being here today, mr. Mnuchin. Thank you. I look forward to working with you on it. Senator cantwell. Thank you, mr. Chairman. Mr. Mnuchin, i caught some of your testimony, but i apologize for being at the hearing with Energy Secretary governor perry for most of the morning. So missed most of your appreciate it is a busy day and youre accommodating lots of us, so thank you. Thank you. I wanted to ask you, do you do you support returning to glass steagall . I dont. I dont support going back to glass steagall as is. What we talked about with the president elect is perhaps we need a 21st Century Glass steagall. But, no, i dont support going back as is of taking a very old law and say we should adhere to it as is. And so is that the position of what the republican platform was . Because i thought it was glass steagall. Again, the republican platform did pass at the convention glass steagall and the president elect and what we talked about policy with the president elect, our view is we need a 21st Century Glass steagall. So when did that change . That thats been part of the campaign. It has been in some of his speeches. So, what, like october . I dont after the convention. At the convention it was glass steagall. At the convention, the republican position was glass steagall. So his position was never glass steagall . Is that what youre saying or all along he meant a different version . Again, i can only tell you that post convention this is an issue that he and i have discussed. Okay. And something that we will be looking at. But not do you think that mr. Manaforts leaving had anything to do with the which. Change . No. To me this is an important issue. I would have said at some point in august that the republican platform had a stronger position on glass steagall than the democratic platform. But now i understand that president elect didnt really support glass steagall. He supports some modern version, which i dont understand. So maybe you could help me, tell me that that modern version is. Again, i think that i think that separating out banks and investment banks right now under glass steagall would have very big implications to the liquidity and the Capital Markets and banks being able to perform necessary lending. I think in terms of looking at a lot of regulatory issues, the administration will look at glass steagall and what i refer to as the 21st Century Glass steagall and part of Regulatory Reform have a view as to what is appropriate. So i just want to be clear because i think in your testimony that i heard you did allude to the damage that was caused by the implosion of our economy, brought on by toxic Financial Instruments that did not have the backing that they needed. According to the dallas fed, it is 14 trillion hole in our economy. So i think you alluded to the damage that that caused in your so now, what i also i think you answered or some of the notes i have here about some of my other colleagues that you believe in the concept of proprietary trading did not belong with the bank. Thats correct. Okay. So where does that where does that go then . So youre saying you dont think that today there is a clear prohibition and want to see a clear prohibition . No, no. What i said is that in the volcker rule, today we have a prohibition of proprietary trading in banks. With loopholes. The problem we have is that the definition of that was left to the regulators to decide. And so the first issue is, and, again, i am a believer in proper regulation. Im also a strong believer in people need to understand the regulation. So we need to be able to explain to banks what is proprietary trading and what is not proprietary trading. I think we with all agree if we were all sitting in this room and just betting on things that that is proprietary trading. What i referenced is the Federal Reserve had their own independent report on a lack of liquidity in many of the important markets. So what im in favor of is that we have clear definition around the volcker rule, and that the regulators come out with that and do it in a way so that it doesnt eliminate liquidity in many of the important markets. So you would basically just tighten what you think are the rules that are out there, so you would lessen the rules that are already passed in dodd frank. No, thats not what i said. I want to be very clear. What i said is that i support the volcker rule, but there needs to be proper definition around the volcker rule so that banks can understand exactly what they can do and what they cant do and that they can provide the necessary function of liquidity and customer markets. And, again, im referencing a problem that the Federal Reserve has independently raised. I think to me i think this election was a lot about the frustration of the American People on the implosion of our economy and the fact that they havent recovered. I think that the president elect, whether he directly or meant to or why was i was pleased his party adopted coming up with a very bright line of separating commercial from investment banking. So now i think where we are today were not sure, hopefully get a chance to vote on this, all our colleagues, now this our colleagues have to answer it platforms and committees, hopefully get an answer where our colleagues are on this. But i will tell you that not only is this an issue of people wanting it see a bright line and be protected from this ever happening again when it comes to the tax code and the tax policy, the American People have in the recovered. So lowering the Corporate Tax rate without getting a plan for the average american who lost pension, couldnt send their kids to school, maybe lost their home, what is the tax policy that the president elect and you are going to pursue that is going to help restore them from that major implosion and protect them from this ever happening again. Well, let me just tell you, from having traveled with the president elect for the last year, i absolutely understand why he got elected. And that is because as you point out, the average American Worker has gone nowhere. The Unemployment Rate is not real. The average American Worker has gone nowhere and president elect is committed as am i, as his economic adviser, to work for the American People and grow the American Economy so that the average American Worker does better. And thats why ive been willing to sell all my investments, ive been willing to give up my businesses, my desire is to work for the American People to create a better economy and i understand that. Ive traveled for the last year. Ive seen this. And the president elect understands that very clearly. So just one question on that. I know my time has expired. Did you mention in your what tax break policy you would give to that American Worker . Absolutely. We specifically said the objective is to create a middle income tax cut and to create business taxes that incent businesses to grow and make businesses more competitive and hire more people and create more jobs. No specific to ed kigs ucati anything . As we talked as we had a chance to talk about, i think pensions are very important issue and we id be happy to work with your Office Another time, okay. I think the people who have earned pensions absolutely deserve to have those pensions maintained and be safe. And im very concerned about the retiree issue in this country and thats something that i look forward to working with you and others on. We need to protect the pension holders in this country. Thank you. Thank you, mr. Chairman. Were going take a tenminute break here. The my friends on the other side have requested a second round. And were going to grant that. And so lets just recess for about ten minutes maybe or a little longer. Well continue to have coverage of all cabinet level confirmation hearings live on the cspan television networks, cspan radio app and online at cspan. Org. And well show you the hearings each night in our primetime schedule. The president this morning was sending out tweets from the white house in his first tweet of the day, donald trump said, quote, i will be asking for a Major Investigation into voter fraud including those registered to vote in two states, those who are illegal, and even those registered to vote who are dead and many for a long time. Depending on results, we will strengthen up voting procedures. Also this morning, President Trump tweeting ill be making my Supreme Court pick on thursday of next week. Thank you. Cspan, where history unfolds daily. In 1979, cspan was created as a Public Service by americas Cable Television companies and is brought you to today by your cable or satellite provider. Coming up later this week on cspan, the annual march for life rally on the National Mall in washington, d. C. President ial adviser Kellyanne Conway will adjust the gathering, along with senator joni ernst, representative mia love and congressman chris smith. You can listen live on the cspan radio app. President trump has nominated World Wrestling entertainment ceo Linda Mcmahon to lead the Small Business administration. And yesterday the senates Small Business Committee Held a confirmation hearing for the nominee