Transcripts For CSPAN2 Treasury Secretary Nominee Steven Mnu

Now treasury sect nominee Steven Mnuchin testifies before the Senate Finance Committee Help faced questions on hi as ceo of one west, bank that foreclosed on thousands of home owners after the 2008 downturn. This portion of the hearing is three and a half hours. Committee will come to order. Welcome to this more mornings hearing. Well discuss the nomination of mr. Steven mnuchin to serve as secretary of treasury for the Incoming Trump administration. I want to officially welcome mr. Mnuchin for to the finance committee. I certainly appreciate your willingness to appear before us here today and to serve in this important position. The position of treasury secretary is among the most important in the executive branch. The next treasury secretary will be asked a lot of questions that are going to very, very important here today. Well be talking about advancing policies that will improve our inagurations economic and fiscal outlook. This position oversees the collection of taxes and the management of our debt and in addition as Congress Works to reform the nations tack code and fix our broken Healthcare System it is absolutely essential that we have a cooperative partner overseeing treasury. That is quite frankly something that has been missing for the past eight years as the obama treasury has become increasingly ospake knopp responsive to opaque and nonresponsive to changes with numbers of congress. As we consider mr. Mnuchins nomination, ensuring that both congress and Incoming Administration are committed to sharing information and communicating on policy will be among my top priorities. And in that regard 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 allpersonality away allimportant efforts. We will have to work closely with the committee. Another priority for know will be advance of protrade policies. Treasury plays a key role in several important areas including the development of International Investment agreement. I want to make sure that our trade policy does no harm. The tariffs as a key toll of need to be evalled to make sure they do not hurts out home and i want to make clear any newed trade agreements establish the highest standards for u. S. Stakeholders consistent with the played Promotion Authority enacted in 2015. Finally i expect you to engage much better consultations with the Committee Regarding u. S. Trade policy 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 work neglect 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 problemsolver and an excellent communicator. Indeed we have heard from numerous organizations and associations in a wide variety of industries, all expressing admiration of mr. Mnuchin and their support for him nomination. Put simply, if the confirmation process focused on the question of the nominees qualifieses there would be little, if any, opposition to mr. Minute chens nomination. Unfortunately thats not the world were living in. Today we are in midst of on unprecedented effort to stall and prevent confirmation on the cabinet nominations of an incoming president. It is disappointing that we have taken this turn in the senate where the minority openly and in so many words 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 are content to unfairly and in some cases ma maliciously malign more or less any nominee before i think assume their post. Hope that not true of our Senate Finance Committee Members today. With regard to mmnuchins nomination we have seen quite a bit of consternation over the process and Time Offering hearings. We have heard demand we convene additional panels of witnesses, a step that has no precedent in the modern history of this committee. There was even a, quote, mock hearing, unquote, on this nomination yesterday, held outside of the committee. Focused on issues that are singh shatly unrelated to mr. Mnuchins qualifieses. Let quarterfinals callifications women have followed the same vetting and hearing process in place for decades and in applying to both republicans and democrats alike. With regard to the substantive arguments being made in opposition to mr. Mnuchin, am hesitant to goo into detail before getting the nominee the chance to fright any accusations. Do want to note a few simple facts. First, no one has credibly alleged that any laws, regulations, or industry standards were violated by Companies Run by mr. Mnuchin. On the contrary, speak offering the main set of allegations regarding the foreclosure pro practices of one west bank. All independent evaluations of the company has resulted in high marks, including review biz the fdii Inspector General and the department of treasury. Second, any claims that mr. Mnuchins businesses contributed to the housing and foreclosure crisis that caused the financial collapse in 2008 are similarly lacking in merit. Mr. Mnuchin had no involvement in the Mortgage Market in the leading up to the collapse. It is my understanding that after purchasing all therefore to toxic mortgage assets, mr. Mnuchins Company Offered Loan Modifications to the vast majority of delinquent borrowers and one over the first institutions to make offs to forgive pouring offices the loan to reduce foreclosures. Mr. Mnuchin is joined by a best, miss faith bautista, president and ceo of the National Asia American Coalition and head of the National Diversity coalition. In those capacities she worked with many home own towards work out Loan Modifications with one west bank. She is here today to support mr. Mnuchins nomination. Finally i just note that those making claims that mr. Mnuchins connections to me mortgage and Banking Industry is disqualifying, are conveniently forgetting the current secretary of treasurys tenure at major wall street bank and communities sanctioned by the fcc and others for practices that harmed innocent investor us but deemed forgivable. Ill let mr. Mnuchin defend himself in the attacks should not be too difficult for a man of his talented. For now 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. Hope that Going Forward my colleagues will apply they statement standards in permanents of express subsubstance that applied to nominees in previous administrations inclusion theirs. Once again i want to think mr. Mnuchin for being here today. I look forward hearing his testimony and look forward to seeing what my colleagues have in mind with regard to their questions of him. With that ill turn to Ranking Member senator widen for his opening remarks. Thank you very much, measure mr. Chairman and welcome you mr. Touchdown continue this. Is our 115 hearing, congratulations on my colleague senator hatch for his collection to reed the committee on behalf of the majority and want to mcour two new members, senator mccaskill and senator cassidy, were lucky have you both. 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 its mr. Mnuchins background and quarterfinalification qualifications or the incoming administerings policies. Ill cover the truly disgusting inequity and abuse of americas tack tax laws. The tax code today is a tale of two systems. For wageearners like coaches and nurses 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, their 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 accountant at their disposal. With the right advice, the most fortunate individuals in our country, can decide for themselves how much tax to pay and when to pay it. So, lets look at mr. Mnuchins history. There is no clearer example than mr. Mnuchins hedge fund setting up outposts in an the Cayman Island, an action explained only by the islands zero percent tax rate. It certainly wasnt for ease of commute or the infrastructure. In mr. Mnuchins is a, millions of dollars in profits from hollywood exports like the movie, avatar, were funneled to an shower youre web of entities and investors. When mr. Mnuchins bank was up for a merger that had the potential to deliver a huge financial gain, a foundation he chaired reportedly used tax exempt dollars to turned an astro Turf Campaign push north deals approval. In the Public Comment period of a potential merger, that is the equivalent of stuffing stuffinge ballot box. Mr. Mnuchin operates seven personal trusts, including one known as the Dynasty Trust that will shield tens of millions of dollars from taxes. In my view, if you look at our history, our nation wanted to reward merit, not to perpetuate dynasties. Now as a nominee for 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 kind of tax tricks come under a spotlight. Its 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 going to change only when taxpayers are no along ever divided into two very different sets of tax rules. Now, this provides a segway in the important policy questions. Setting aside mr. Mnuchins finances and background, the tax reform agenda already being advanced by the president elect perpetuate and in fact worsen the unfairness and n at the tax code. On the campaign trail the president elect delivered lots of tough talk about fixing the tax system. He said he alone could fix it. Because he has 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. So ill 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 cuts for the upper class. Let me repeat that. And nor the sake of brevity im going to start caughtle it the mnuchin rule. No absolute tax cuts for the upper class. So lets take stock of what is already happening on capitol hill. Thats fir major act of the unified republican government repealing the Affordable Care act, would immediately violate the pledge of in tax cuts for the wealthy. Bottom line, the aca repeal scheme that was connected kicked off last week is a trojan horse of tax break ford the most fortunate. Its paid for by taking tax benefits for Health Insurance away from millions of working people. Then its back for round two. Under an emerging run plan to fasttrack an even bigger tax break for the wealthy. In my view, this is proof that the Campaign Promises about fixing the tax system were pretty much a head fake. For example, the president elect said he would close the carried interest loophole. Its a favorite of Investment Fund managers, but his plan actually gives them 25 tax cut. In fact its slashes tax rates for corporations and the wealthy across the board at a cost of trillions of dollars. So it sounds to me like the mnuchin rule is already on the rope is. Now, what would 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 would lewd lose heads of household status when the five. You wanted to write tax plan that would push even near working class folks ouster the economic Winners Circle thats how you do it. Given how central tax policy is to our jurisdiction, i hope the committee is able to discuss those issues today. But of course, the treasury secretary and this committee handle a lot more than taxes. So there are other issues to raise. On broad level, its my view that senators need to make a judgment call about 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 in the Great Recession. After nearly two decade at Goldman Sachs he left in 20002002 2002 and joined a hedge fund and then spun off a hedge fun 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 a bank called indymac and renamed it one west. Colleagues one west 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, one west Vice President admitted in a Court Proceeding to robo signing upwards of 750 disclosure documents 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 home, with 30 second of sloppy paperwork and few haphazard signatures. These tactics were in were in 2000 between 2009 and 24014 a person on which the bank forked on foreclosured on more than 40,000 homes. Widow foreclosures 0, reverse mortgagals. One wet did more offer those than anybody else. The bank defends its record on loan mod modifications but it was found guilty of an illegal practice known as dual tracking. One Bank Department tells home owners to stop making payments so they can pursue modification while another department presses on and hurdles those folks into for are foreclosure. One west made two loans to africanamerican for borers no 24014 and 2015. A fraction of its brans opened storefronts in minority communities. None were in predominantly africanamerican minutes but minorities still represented a disproportionally large share of the people that got booted out of their homes. Under mr. Mnuchin, one west churned out foreclosures like chinese factories churned another trump chutes and tie us. And the bail crowd from the fdii one rest im a aroundmaker for mr. Mnuchin and his fellow investors. At presidencily he same time the foreclosure member was running, one west funds were poured into game game in Rouse Investments in hollywood. In 2012 it struck an agreement to loan hundreds of minute offered do to a move studio could Relativity Media. In 2014 while he was ceo over one west Media Company he took a seat in the boardroom, was appointed cochairman and bought a jet with the relativity cofound founder but the Company Quickly tanked. One pest welled out 50 million emptying several residenttively accounts including one ear marked for guild expensed that expanded wage ford contracts and todays men. Mr. Mnuchin bailed out just before the studio declared bankruptcy. There has been press reports that the fbi has denied a freedom of information act request concerning Relativity Media on the grounds that disclosure is likely to interfere with a pending Law Enforcement proceeding. I have read the fbi background report on mr. Mnuchin and i saw no discussion of any such enforcement action in the report. That may be entirely appropriate, mr. Chairman i want to continue to workive you find out what the enforcement proceeding cited in the free dam of information act denial is and how it relates to the nominee if at all. It was not a set bark considering the one west foreclosure machine was still pulling in. The Purchase Price of the bank was less than 1. 6 billion. After five years of foreclosures and profits, it sold for 3. 4 billion to cit group. Now, outside one west and relativity, mr. Mnuchins spent years as a director