Transcripts For CSPAN Treasury Secretary Nominee Steven Mnuc

Senator hatch committee will come to order. Welcome to everyone to this mornings hearing. We will discuss the nomination of mr. Steve mnuchin to serve as secretary of treasury for the Incoming Trump administration. I want to officially welcome mr. Munchin to the finance committee. I appreciate your willingness to appear before us here today and serve in this important position. The position of treasury secretary is among the most important in the executive ranch. The next treasury secretary will be asked will be asked a lot of questions that are going to be very, very important here today. They will be we are going to be talking about advancing policies to improve our nations economic and fiscal outlook. This position oversees both the collection of taxes and the management of our debt and in addition, as Congress Works to reform our nations tax code and fix our broken health care system, it is absolutely essential that we have a cooperative partner overseeing reasury. That is, quite frankly, something thats been missing for the past eight years as the obama treasury has become increasingly opaque and nonresponsive to inquiries from congress. So as we consider mr. Munchin mnuchin, communicating on policy ill be among my type my top priorities. I believe the president elect has selected a nominee who will provide a Clear Channel of communication and be willing to work with congress on these allimportant efforts. We discussed coming over here that he is going to need to work very closely with members of this committee and he has committed to do so. Another priority for me will be the advancement of progrowth trade policies. While ustr is the Principal Agency for trade policy, treasury plays a key role in several important areas, including the development of International Investment agreementings and oversight of customs revenue functions. As the new administration comes in, i want to make sure first and foremost that our trade policies do no harm. Proposals to, for example, impose unilateral import tariffs as the key tool of International Policy need to be carefully evaluated to ensure they do not hurt us at home. In addition, i want to make clear that any new trade agreements establish the high standards for u. S. Stakeholders. Consistent with the trade Promotion Authority statute enacted in 2015. Finally, i expect you to engage in much better consultations with the Committee Regarding u. S. Trade policies than we have had under president obama. I look forward to a productive conversation about these issues today and in the coming months. Objectively speaking, i dont believe anyone can reasonably argue that mr. Mnuchin is unqualified for this position. So i hope we dont have those type of stupid arguments. He has three decades of experience working in the Financial Sector in a wide variety of capacities. He has been a leader and manager throughout his career, demonstrating an ability to make tough decisions and to be accountable. And he has a reputation for being a Problem Solver and an excellent communicator. Indeed, we have heard from numerous organizations and associations and a wide variety of industries all expressing their admiration for mr. Mnuchin and their support for his nomination. Put simply, if the confirmation process focused mainly on the question of the nominees qualifications, there would be little if any opposition to mr. Nuchins nomination. Unfortunately, that is not the world we are living in. Today we are in the midst of an unprecedented effort to stall and prevent confirmation on the cabinet nominations of the incoming president. It is disappointing that we have taken this turn in the senate where the minority openly and in so many words is committed to obstructing nominees to positions across the board. In many cases, knowing full well that they cannot prevent the outright confirmation of nominees at all. My colleagues sometimes our content to unfairly and in some cases maliciously maligned, more or less, every other nominee before they can assume their post. I hope that is not true of our Senate Finance Committee Members ere today. With regard to mr. Mnuchins nomination, we have seen quite a bit of consternation over the process and the timing of hearings. We have heard demands that we convene and Additional Panel of witnesses come a step that has no precedent in the modern history of this committee. There was even a mark hearing on this nomination yesterday held outside the committee, focused on issues essentially unrelated to mr. Mnuchins qualifications. Let me be clear. While my colleagues may believe that nominees in the Incoming Administration should be treated differently than those of any Previous Administration on this committee, we have followed the same vetting and hearing process that has been in place for decades and applied to both republicans and democrats alike. With regard to the substantive arguments being made in opposition to mr. Mnuchin, im hesitant to go into too much detail before giving the nominate a chance to review any accusations that have been made. That said, i do want to note a ew simple facts. First, no one has credibly alleged that any laws, regulations, or industry standards were violated by government is run by mr. Mnuchin. On the contrary, speaking of the main set of allegations regarding foreclosure practices of onewest thanked them all independent valuations of the companys actions resulted in high marks. This includes reviews by the fdic Inspector General and the department of treasury. Second, any claims that mr. Mnuchins businesses contribute d to the housing and foreclosure crisis that precipitated the financial collapse of 2008 are similarly lacking in merit. Mr. Mnuchin had no involvement in the Mortgage Market in the years leading up to the collapse. In fact, it is my understanding that after purchasing indymac and all of its toxic mortgage assets, mr. Mnuchins Company Offered Loan Modifications to the vast majority of its delinquent borrowers and was one of the first institutions to make offers to forgive portions of the loan principal balances in order to reduce foreclosures. To that point, mr. Mnuchin is joined by a guest today, ms. Fai th bautista, president and ceo of the National Asian American Coalition and head of the National Diversity coalition. In those capacities, she worked with many homeowners to work out Loan Modifications with onewest bank. She is here today to support mr. Mnuchins nomination. Finally, i will know that those making claims that mr. Mnuchins connections to the mortgage and Banking Industry is on its own disqualifying car conveniently forgetting that the current treasury secretarys tenure at a major wall street bank included overseeing Business Units that were sanctioned by the s. E. C. And others for prack uses that harmed innocent investors. Yet when his nomination came up for the senate, this connection to wall street and the financial crisis was deemed orgivable. Like i said, i will let mr. Mnuchin defend himself from this baseless line of attack, which come a given the lack of credibility and the accusations, should not be too difficult for a man of his talents. For now, i simply hope we can have a fair and open discussion during the Committee Hearing this morning. And during the course of what will likely be a long hearing. I hope that going forward, my colleagues will apply the same standards both in terms of process and policy substance, that have applied to nominees in Previous Administrations, including theirs. Once again, i want to thank mr. Mnuchin for being here today and i look forward to hearing his testimony and to look forward to seeing what my colleagues have in mind with regard to their questions of him. With that, i will turn to my Ranking Member, senator wyden, for his opening remarks. Senator wyden thank you very much, as determined, and welcome to you, mr. Mnuchin. This is our first hearing of the 115th congress, and theres a bit of housekeeping. First, congratulations to my friend, senator hatch, for his election to continue leading the committee on behalf of the majority. I want to welcome our two new members, senator mccaskill and senator cassidy. We are lucky to have you both. Now to the business at hand. Aside from the president , there may be no individual with a tighter grasp on the levers of our economy than the secretary of treasury. That has been true since the days of Alexander Hamilton. When you read about the nominee for treasury secretary, given all the power that this position holds, you hope not to see phrases like foreclosure machine, redlining, offshore funds, and predatory lending. Im sure todays hearing is going to cover a wide range of matters, whether it is mr. Mnuchins background and qualifications, or the Incoming Administrations policy agenda. I am going to begin with a topic that cuts across all of these matters, the truly disgusting in inequity and abuse of americas tax laws. The tax code today is a tale of two systems. For wage earners like cops and nurses, there arent any special tax dodges. The rules that apply to them are firm and involuntary. Once or twice a month, the taxes come right out of their paychecks. No cutting corners. The rules are different for the powerful and the wellconnected. They have armies of lawyers and accountants at their disposal. With the right advice, the most fortunate individuals in our country can decide for themselves how much tax to pay nd went to pay it. So lets look at mr. Mnuchins history. There is no clearer example that mr. Mnuchins hedge fund setting up outposts in anguilla and the Cayman Islands, an action that can be explained only by the islands 0 tax rate. It certainly wasnt for ease of commute or the infrastructure. In mr. Mnuchins case, millions of dollars of profits from hollywood exports like the movie avatar were funneled to an offshore web of entities and investors. When mr. Mnuchins tank was up for a merger that had the potential to deliver a huge financial gain, a foundation he chaired reportedly used taxexempt dollars to fund an astroturf campaign pushing for the deals approval. In the Public Comment period of a potential merger, that is the equivalent of stuffing the allot box. Mr. Mnuchin operates seven personal trusts, including one known as a Dynasty Trust that will shield tens of millions of ollars in taxes. In my view, if you look at our history, our nation wanted to reward merit, not to perpetuate dynasties. Now as the nominee for a cabinet position, mr. Mnuchin could be in line for a special elective federal tax deferral on money made by selling stocks and bonds. This is the very definition of getting to pay what you want, when you want. Now, there is a common answer when these kinds of tax tricks, under a spotlight come under a spotlight. It is said that people who use them are just following the laws on the books, and that might be true. The outrage in tax law is what is legal, and that every member of the senate has allowed it to stay legal. In my view, this outrage is going to change only when taxpayers are no longer divided into 2 very different sets of tax rules. This provides a seqgue in the imported policy question. Setting aside mr. Mnuchins finances and background, the tax reform agenda already being advanced by the president elect would perpetuate and in fact worsen the unfairness in the tax code. On the campaign trail, the president elect deliver lots of tough talk about fixing the taxes. He said he alone could fix it, because hes spent a career using the system to his advantage. As for the details, the few position papers that were put forward didnt get a whole lot of attention outside the business pages. But after mr. Mnuchins nomination was announced, he laid down a clear and specific marker. I will quote mr. Mnuchin directly any reductions we have in upper income taxes would be offset by less deductions, so there would be no absolute tax cut for the upper class. Let me repeat that, and for the sake of brevity, im going to start calling it the mnuchin rule. No absolute tax cut for the upper class. So lets take stock of what is already happening on capitol hill. The first major act of the unified republican government, repealing the Affordable Care act, would immediately violate the pledge of no tax cuts for the wealthy. Bottom line, the aca repeal scheme that was kicked off last week is a trojan horse of tax breaks for the most fortunate. It is paid for by taking tax benefits for Health Insurance away from millions of working people. Then it is back for round two. Under an emerging republican plan to fasttrack an even bigger tax break for the wealthy. In my view, this is proof that the Campaign Promises of fixing the tax system were pretty much a head fake. The president elect said he would close the carried interest loophole. It is a favorite of Investment Fund managers. But his plan actually gives them a 25 tax cut. N fact, it slashes tax rates for corporations and the wealthy across the board at a cost of trillions of dollars. Sounds to me like the mnuchin rule is already on the ropes. Now, what with the new administrations tax plan do for people of more modest income. Millions of working parents, mostly single, would get hit with tax increases because they lose head of household status hen they file. In my view, senators need to if you want to push folks out of the economic winners circle, thats how you do it. Given how Central Economic policy is to our jurisdiction, i hope the committee is able to discuss those today. Of course the treasury secretary handles more than taxes so theres other issues to raise. In my view, at a broad level, senators need to make a judgment call on what sort of person they want to head the Treasury Department. Mr. Mnuchins career began in trading Financial Products that helped to bring on the housing crash and the Great Recession. After nearly two decades of Goldman Sachs, he left in 2002 and joined hedge fund. In 2004, he spun off a hedge fund of his own. It was only a few lackluster years before dune began to wind down its investments in 2008. In early 2009, mr. Mnuchin led a group of investors that purchased the bank called indymac, and they renamed it onewest. Colleagues, onewest was truly unique. While mr. Mnuchin was ceo, the bank proved it could put more Vulnerable People on the streets faster than just about anybody else around. While mr. Mnuchin was ceo, a onewest Vice President admitted in a Court Proceeding to robosigning upwards of 700s 50 Disclosure Document so we a week. She spent less than 30 seconds on each and in fact she shortened her signature to speed the process along. Investigations found that the bank frequently mishandled documents and skipped over reviewing them. All it took to plunge families into the nightmare of potentially losing their homes was 30 seconds of sloppy paperwork and a few haphazard signatures. These tactics were in use etween 2009 and 2014, a period during which the bank foreclosed on more than 35,000 homes. Widow foreclosures on reverse mortgages, onewest did more of those than anybody else. Now, the bank defends its record on Loan Modifications, but it was found guilty of an illegal practice known as dual tracking. One Bank Department tells homeowners to stop making payments so they can pursue modification, while another department presses on and hurdles those folks into foreclosure. Onewest made only 2 loans to fricanamerican borrowers in 2014 and 2015, according to an analysis by the california reinvestment coalition, just a fraction of its branches occupied storefronts in minority communities. None were in predominantly africanamerican communities. But minorities still represented a disproportionately large share of the people that got booted out of their homes. Under mr. Mnuchin, onewest churned out foreclosures like chinese factories churn out trump suits and ties. With the combination of extreme foreclosure tactics and the bailout from the fdic, onewest became a rainmaker for mr. Mnuchin and his fellow investors. At precisely the same time, the foreclosure machine was running, onewest funds were poured into glamorous investments in hollywood. In 2012, onewest struck an agreement to loan hundreds of millions of dollars to a movie studio called Relativity Media. In 2014, while he was ceo of onewest Holding Company, mr. Mnuchin bought his own stake in relativity. He took his seat in the boardroom and was appointed cochairman could he even bought a private jet with relativitys cofounder. The Company Quickly tanked. Onewest pulled out 50 million, emptying several relativity accounts, including one earmarked for guild expenses that expanded wages for contractors. Mr. Mnuchin bailed out just before the studio declared bankruptcy. There have been press reports that the fbi has denied a freedom of information act request concerning R