Treasury Secretary Nominee Steven Mnuchin Testifies at Confirmation Hearing CSPAN January 19, 2017 10:01am-3:31pm EST
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 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 nation's economic and fiscal outlook. this position oversees both the collection of taxes and the and inent of our debt
addition, as congress works to reform our nation's tax code and fix our broken health care system, it is absolutely essential that we have a cooperative partner overseeing treasury. that is, quite frank with something that has been missing for the past eight years as the obama treasury has become paque andgly o nonresponsive to inquiries and nicaitonscommu with congress. so as we consider mr. munchin -- communicating on policy will be among my type 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 all-important metrics. 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 lays a key role in certain areas, including the development of international investment agreements 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 the highs establish 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. i don'tely speaking, believe anyone can reasonably argue that mr. mnuchin is unqualified for this position. so i hope we don't 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 nominee's qualifications, there would be little if any opposition to mr.
mnuchin's 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 here today. with regard to mr. mnuchin's 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. hearing"s even a "mark on this nomination yesterday held outside the committee, focused on issues essentially unrelated to mr. mnuchin's qualifications to 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, i'm 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 few 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 company's actions resulted in high marks. this includes reviews by the fdic inspector general and the department of treasury. second, any claims that mr. mnuchin's 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 companymr. mnuchin's offered loan modifications to the vast majority of its to link when borrowers -- stilling quint 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 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. mnuchin's nomination. finally, i will know that those mnuchin'sims that mr. connections to the mortgage and banking industry is on its own disqualifying car conveniently forgetting that the current tenure at aretary's major wall street bank included overseeing business units that were sectioned by the sec and other practices harming innocent investors. yet when his nomination came up for the senate, this connection
to wall street and the financial .risis was deemed forgivable 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 civilly hope that we can have of -- i simply hope that 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 ,rocess 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. much,yden: thank you very
as determined, and welcome to you, mr. mnuchin. this is our first hearing of the 115th congress and divisive 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 sen. cassidy. we are lucky to have you both. hand. the business at 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 that this position holds, you hope not to see phrases like "foreclosure machine," "redlining," "offshore
funds," and "predatory lending." i'm sure today's hearing is going to cover a wide range of matters, whether it is mr. mnuchin's background and qualifications, or the incoming administration's policy agenda. i am going to begin with a topic that cuts across all of these matters, the truly disgusting in equity and abuse of america's tax laws. the tax code today is a tale of two systems. for wage earners like cops and nurses, there aren't any special tax dodges. them are that apply to 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 well-connected. they have armies of lawyers and accountants at their disposal. with the right advice, the most fortunate individuals in our country can decide for payselves how much tax to and went to pay it. so let's look at mr. mnuchin's history. there is no clearer example that settinghin's hedge fund up outposts in anguilla and the cayman islands, an action that can be explained only by the islands' 0% tax rate. it certainly wasn't for ease of commute or the infrastructure. in mr. mnuchin's 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. mnuchin's tank 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 fund an astroturf campaign pushing for the deal's approval. od ofe public comment peri a potential merger, that is the equivalent of stuffing the ballot box. mr. mnuchin operates seven personal trusts, including one known as a dynasty trust that will shield tens of millions of dollars 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, undera spotlight -- come 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 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. gue inrovides a se the imported policy question. setting aside mr. mnuchin's
finances and background, the tax reform agenda already being advanced by the president-elect would perpetuate and in fact worsened the unfairness in the tax code. on the campaign trail, the president-elect deliver lots of tough talk about fixing the taxes to. he said he alone -- fixing the tax system. he said he alone could fix it because he spent a career using the system to his advantage. as for the details, the few position papers that were put forward didn't get a whole lot of attention outside the business pages. but after mr. mnuchin's 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 sooffset by less deductions,
there would be no absolute tax cut for the upper class." let me repeat that, and for the sake of brevity, i'm going to start calling it the mnuchin rule. no absolute tax cut for the upper class. so let's 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. ca repealne, the a 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. two.it is back for round
under an emerging republican plan to fast-track an even bigger tax break for the wealthy . proofview, this is that the campaign promises of fixing the taxes some 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. tax ratest slashes 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 administration's 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 when they file. view, senators need to make a judgment call on what sort of person they want to hit the treasury department. mr. mnuchin's 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 ne began to wind down its investments in 2008. in early 2009, mr. mnuchin led a group of investors that purchased the bank called itymac, and they renamed 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 -- 750 disclosure document so we could she spend less than 30 seconds on each and effect, 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 between 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. the bank defends its record on loan modifications, but it was found guilty of an illegal tracking.nown as dual 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. loans toade only 2 african-american 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 african-american 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, funds were poured into glamorous investments in hollywood. an2012, onewest struck agreement to loan hundreds of millions of dollars to a movie studio called eligibility media -- relativity media. in 2014, while he was ceo of onewest holding cavity, 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 relativity's cofounder. the company quickly tanked. pulled out $50 million, and deed several relativity accounts, including one earmark for guild expenses that extended wages for contractors
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 relativity media on the grounds that disclosure is likely to pending lawth a 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 work with you to find out what the enforcement proceeding cited in the freedom of information act denial and how it relates to the nominee if he does at all. , relativity media's failure was not much of
a setback. the purchase price of the bank was left at $1.6 million. after five years of foreclosures and profits, it sold for $3.4 billion to cit group. outside onewest and relativity, mr. mnuchin spent years as a director of the holding company for sears. obviously, an iconic american brand. he served on the committee that watchdog the employee pension fund. the record shows that plan was routinely mismanaged and underfunded. retirees saw the pensions cut, losing a monthly health care stipend. it was enough to offset roughly one third of the premiums that seniors pay for medicare part b. hundreds ofhuttered stores nationwide over the last few years. and recently announced another round of closures. once again showing a truly impressive capacity to advantage
himself while others fell behind, mr. mnuchin joined a small group of investors that spun off the company's real estate into a separate trust. it was arguably the most valuable assets years had left. so as retirees watched their pensions shrink and sears' remaining workers worry about an uncertain future, this small number of powerful individuals made out just fine. now i am going to wrap up, and i want to step back for a moment to talk about the role of the secretary of treasury. this is the person who is going to have enormous influence over hx and mortgages, the caliber of job opportunities they face, the safety and stability of the financial system that holds and invests their hard-earned money, and much more. this is a position that has the power to help her first decades
of yawning inequality that has hollowed out the middle class, dimmed the hopes of so many young people, and left millions buried in debt. the treasury secretary taught to be somebody who works on behalf , includingicans those who still wait for the economic recovery to show up in their communities. when i look at mr. mnuchin's background, it is a real stretch to find hard evidence that he would be that kind of treasury secretary. just finally, mr. chairman, one other bit of housekeeping. i want to make it very clear that democrats have in no way been obstructing mr. mnuchin's confirmation. we are doing our jobs to truly vet this nominee. we are come in fact, collins
doing it as we have been doing it for almost 20 years on a bipartisan basis, and if you have any questions about the fairness of it, ask tim geithner about what it was like in 2009. i want to point out that at your request, mr. chairman, i agreed to shorten the normal one-we can period-- one-week notice so that mr. mnuchin's hearing could be held today. ultimately, nomination hearings are what hearing what the nominee is for. mr. mnuchin, we look forward to your testimony. i noted we have a couple members of the house and i want to welcome them as well. sen. hatch: thank you, senator. ofare pleased to welcome 2 our listing which colleagues from the house of representatives. first, we will hear from representative kevin mccarthy, house majority leader. then we will hear from representative jeb hensarling, chairman of the house financial services committee. leader maccarthy, please feel
free to proceed with your introduction to we will go to ensarling, and then to the nominee. mccarthy: chairman hatch, ranking member wyden, leaders of the committee, i'm proud to be here to introduce annexing the capable investor, banker, financier, and fellow californian, steve mnuchin. the nominee to be the next secretary of the treasury for the united states. the secretary of treasury is a distinct office. once held by luminaries of our history. from alexander hamilton to andrew mellon. it is an office that requires deep technical skill, strategic vision, and uncommon instincts, all qualities that stephen possesses and has demonstrated in the private sector. inh decades of experience banks, financial firms, and even movie production, he has a
history of growing returns and achieving financial stability for his clients and shareholders . i think it says a lot about this man that he would leave such a successful career to apply his talents for the benefit of the american people as a whole. teven is a patriot and an independent thinker. and america is in great need of such a capable leader -- such capable leaders. i believe our nation is enriched when we have people serving in government who have spent their lives serving outside of government. shares with us here in congress 2 fundamental priorities, to enable an economy that creates meaningful and good paying american jobs, and to improve the economic security for the american people. he understands that government doesn't create jobs, but government can create the structure and incentives for
broad economic growth that benefits all at the expense of none. to do this, we have to rethink the way our country taxes, regulates, and trades. he shares with congress the goal of progrowth tax plan that makes tax rates fairer and encourages businesses to hire workers here in america. he knows firsthand the devastating impact of irresponsible financial regulations that stifled national and local lenders alike. es small business creation and drags down job creation. and he will work with president trump and congress on a trade policy that benefits american workers and consumers. growth for economic the american people is our top goal, it is not our only goal. prosperity means little if it can all be lost in another financial crisis.
the american people must have a complete assurance that their government is doing everything within its power to make sure financial crisis that happened in 2007 and 2008 never happen again. as a secretary of treasury, steven will work to defend the integrity of the american people's retirement accounts, will fight for the creation of not just good paying jobs, but secure jobs, and will work for the economic stability so that people's investments in their homes and elsewhere are secure. so i thank you, chairman hatch and ranking member wyden, and the entire committee for this opportunity to introduce you to steven mnuchin. i hope the committee and the senate as a whole will give thoughtful consideration to this accomplished and qualified nominee for secretary of treasury. sen. hatch: well, thanks, leader mccarthy.
we appreciate having you here and the hard work you do over in the house. hensgo to congressman arling. hensarling: chairman hatch, ranking member wyden, distinguished members of the committee, it is an honor to appear before you today to speak in support of steven mnuchin's confirmation as secretary of the treasury. president-elect trump has outlined a bold agenda to tackle the serious problems that face hard working american families, families who have seen their paycheck sustain it, their savings shrink, and the dreams diminished. to implement his agenda, the president-elect has chosen a roster of a very impressive citizens to serve in his cabinet. each of these individuals has achieved incredible success in their chosen field and are among the nation's most respected leaders in business, military, and public service. each one of them is clearly committed to the president-elect's vision of an america that is stronger, safer, more prosperous commanded teaming with opportunity-- and
teeming with opportunity, and america were washington is truly accountable to we the people. i believe president-elect trump was right to include steven mnuchin in this select list. as we confront america's economic challenges together, mr. mnuchin's very successful background in investment banking, retail banking, and business will not only be vital to the incoming administration, but to those of us who serve in congress as well. he understands the urgent need to increase jobs, incomes, an opportunity, and has the critical experience necessary to help and do just that. it is all too well that this economy simply isn't working for working americans. nearly eight years after the last recession ended, americans are still stuck in the slowest recovery in generations. 300 and 1000 manufacturing jobs disappeared in the last eight years. to get our economy back on track with sustained growth and higher incomes, mr. mnuchin knows that washington must give all americans more freedom, the
freedom to save some of the freedom to invest, the freedom to innovate so they can dream big and pursue those dreams. i have no doubt mr. mnuchin is ready and capable to hit the ground running and work as a partner with congress on president-elect trump's progrowth, pro-jobs agenda. i've had the opportunity to meet and speak with mr. mnuchin on several occasions about the trump administration's plans for fundamental progrowth tax reform, for banking and capital markets perform that work for all, and other vital items on the president-elect's agenda. i'm deeply impressed by his knowledge, his talent, and commitment to work with congress on these priorities. the secretary of treasury's response abilities are formidable, as we all know. as you may know, albert gallatin has served as treasury secretary for presidents thomas jefferson and james madison once said "the place of secretary of treasury an is more laborious and responsible than any other."
i have every confidence that steven mnuchin is up to the job, and more importantly, the man who will be our president in a little more than 24 hours has every confidence that steve mnuchin is up to the job. the american people have entrusted president-elect trump with the oval office. the election is over and should not be relitigate an output that this relitigate it now. --relitigate it now. that deserves and disrespects the american people. the president-elect should be allowed to surround himself with honorable men and women to serving his cabinet. he has wisely selected steven mnuchin as treasury secretary senate fulfills the constitutional duty to advise and consent, i do not offer advice. as a house member, i'm not all that fond of receiving your advice [laughter] . ensarling: but i do remain hopeful that the questioning of mr. mnuchin will be fair and
focused on his experience and ability to fulfill the duties of treasury secretary and carry out the president-elect's agenda. i asked you to realize the oppressive qualifications he brings to office and confirm him without delay. thank you, mr. chairman. sen. hatch: well, thank you. we appreciate both of you coming. you are busy in the house of representatives, but for you to come and testify for mr. mnuchin, i appreciate it, as do all of us. sen. roberts has to leave. i will turn to him before i start asking any questions. thank you, i will try to wrap this up quickly. mr. munchin -- mr. mnuchin, pardon me. probably happened to you elected will you make sure that tax collection agency of the federal government can never again be used as a weapon against any political opponents of any presidential and administration? i. mnuchin: yes, senator,
absolutely pledge to do that. roberts: i have quite a few companies in kansas who are interested in your views on tax reform. we can talk about that later in the interest of time. just have the observation -- i think that to date -- mike, what have you done with my -- here it is. got a valium have pill here you might want to take before the second round. just a suggestion, circuit sen. wyden: just another suggestion, we have a lot of colleagues waiting period if you could be brief, that would be helpful. sen. roberts: i will be very brief. mr. mnuchin, from the distinguished ranking member's
remarks, i understand you are in charge of the great recession -- sen. brown: i hope that comment about valium does not set the tone for 2017 industry. i like sen. roberts, but i cannot believe he would say that to the distinguished senator from oregon -- sen. roberts: i said that to the president of the united states. sen. brown: perhaps you did, but i hope that is not set the tone -- sen. roberts: i have the time, please. sen. brown: just outrageous. i don't know about outrageous, but maybe a pinprick of humor might help this committee from time to time, which i engage in. i appreciate the gentleman's contribution. he is a good member of the committee. we work together on the ethics committee. so i am sorry if i have, you sir. incurred your wrath,
we will be all right. mr. chairman, we have many colleagues waiting sen. roberts sen. roberts: fine, ron, i'm done. sen. hatch: mr. mnuchin, we will take your statement. chairman hatch, ranking member widen, members of the committee, it is an honor to appear before you today. i'm rifle and humbled by president-elect trump selecting me to be secretary of the treasury. it is an honor to be considered for this position. thank you to all of the members i've had the opportunity to meet with during this process. i've enjoyed meeting with you and learning more about the issues that are important to you . for those few members that i did not get a chance to meet with if confirmed, i look forward to meeting with you as well. i would like to thank chairman
hatch and his staff for taking so much time to work with me and support me through this process. in addition, i would like to cee, louisey fian linton, and my children, who are with me today. and thank them for their unwavering support. i would like to introduce my brother, alan mnuchin, and his wife, and my father, robert mnuchin, who has always supported me and taught me that hard work, determination, and the ability to bring people together can make anything possible. i would like to acknowledge my late mother, elaine turner cooper, who was an inspiration to me. i would like to acknowledge my grandparents, who were also a tremendous influence in my life. my grandfather was a first-generation american whose father emigrated from europe.
he truly embodied the american dream. he started out blowing glass builts by hand and later one of the largest glass manufacturing companies in the united states, with five factories employing thousands of workers. my first job ever was in his factory when i was in high school. it was there that i first learned the importance of humanity, hard work, and commitment. for those of you who don't know my background, i studied economics at yale university. at the age of 22, after i got ang from yale, job at goldman sachs, where i spent the next 17 years. i started on a folding chair in the mortgage department. nine years later, after many sleepless nights, i was put in charge of mortgages, u.s. government bonds, municipal securities. several years after that, i worked directly for future
secretary of the treasury hank paulson as the firm's chief information officer. in that role i oversaw 5000 people in a $1 billion budget. -- and a $1 billion budget. while at goldman sachs, i learned the importance of the financial markets in providing liquidity and capital to business, governments, and consumers. a few years later i decided to leave goldman sachs to build an investment business. after working briefly at esl investments, i started my own investment business, dune capital management. throughout my career, my commitment was to my client's and shareholders, for whom i worked tirelessly to get the best results. 30 years later, my commitment is now to the american people, for whom i will work tirelessly by helping to grow our economy and create jobs. i am eager to share with you why
i believe i will serve well as america's next secretary of the treasury. but first, i want to correct the record about my involvement with indymac bank. since i was first nominated to serve as treasury secretary, i have been maligned as taking advantage of others, hardship in order to earn a buck. nothing could be further than the truth. i saw the summer of 2008, the devastation caused by the housing crisis when i watched people line up to get their life savings out of indymac bank. it was the middle of the financial crisis, and despite the global panic, i saw a way to save the bank. i applied for a banking charter and submitted a bid to the fdic for indymac. on december 31, just before midnight, we signed a binding
agreement with the fdic. they later confirmed that our bid was almost $1 billion higher than the next best bid. we were willing to invest $1.6 billion into the most costly bank failure ever to the fdic deposit fund. we did this because we believed in our ability to rebuild and create a successful regional bank. we believed in the recovery for the american economy. let me be clear, my group had nothing to do with the creation of the risky loans in the indymac loan portfolios. when we bought the bank can we assume to these bad loans, which had been originated by previous management. the individuals had to answer to federal authorities for their bad lending decisions. we invested $1.6 billion into a failing financial institution when most investors were running
for the hills. we renamed the business onewest bank and save thousands of jobs. we developed a prospering community banking franchise in southern california, as most banks were pulling back. over the next two years, we bought two more struggling banks from the fdic. first set of santa monica and la jolla bank. both through competitive bidding. combined we have almost 70 branches and a robust lending business especially for small and medium-sized businesses. bank, i metof the with hundreds of business people from all walks of life who were seeking loans to grow their business and prosper. time,any banks of the indymac and its rivers mortgage reverse mortgage division was unstable due to the large amount of distressed mortgages in its portfolios. we bought indymac.
these legacy loans were included in the purchase. the responsibility landed on me to clean up the mess others make that we inherited. we worked very hard to help homeowners remain in their homes through modifications wherever possible. extendedy, onewest over 100,000 loan modifications to delinquent borrowers to try to help them out of a bad situation. i am proud of the fact that loan modifications started at indymac under the leadership of the fdic. however, the fdic loan modification program did not work for everyone. when the fdic took over indymac, they estimated that over half the foreclosures would not meet their test for the loan modification, and they demanded many policy conditions -- extent assistance to some pathetic borrowers by establishing affordable and sustainable increaseby borrowers,
the net present value of cash flows to the owner of the loan, and to stabilize housing markets. my group had to adhere to servicing agreements that limited our ability to make loan modifications that could have helped more borrowers. it has been said that iran a foreclosure machine. this -- that i ran a foreclosure machine. this is not an accurate description of my role at onewest thank. on the contrary, i was committed to loan modifications intended to stop foreclosures. loan modification machine. many times the fdic, fannie mae, freddie mac, and bank trustees imposed strict rules governing the process of these loans. i am proud to be able to say our bank was able to do 100,000 loan modifications that allowed
people the opportunity to stay in their homes. unfortunately, not all the homes were able to be saved through these programs, and despite my best efforts, some were sadly subject to foreclosure. so since he was my concern over sinceret in 2010 -- was my concern over this that in 2010 i instructed my lawyers hsbc to allow us to do loan modifications on loans and mortgage trusts that they oversaw. we won on summary judgment and were consequently allowed to do more loan modifications and keep more americans in their homes. hen hudly, in 2015, w issued a mortgagee letter 201 and asked themud to change the policy so we did not have to foreclose and senior citizens who were behind on
small amounts of money on taxes and insurance. i was so troubled by this that i discussed it with our primary regulator, the office of the comptroller of the currency. did notately, hud agree, and we were forced to foreclose and senior citizens even if they only owed one dollar. not complying with these hud policies would have subjected the bank to panel -- penalties and losses from hud. despite our inability to save every home from foreclosure, i'm proud of the fact that onewest the only one of 14 banks that was able to complete the independent foreclosure review that was conducted by the occ. 175,000e of the borrowers that were in the foreclosure process during 2009 and 2010 were able to have an independent review of their loan. we had a very low error rate.
independent government reviews routinely showed that we had the most effective loan modifications of any bank. if we had not bought indymac thanks, the bank would likely have been broken up and sold in pieces to private investors, where the outcome for consumers .ould have been much more bleak overall, i have to many their homestay in -- helped many homeowners stay in their homes and escape financial ruin through my management of onewest bank. my experience confirmed that we must identify and eliminate unwise and burdensome policies which contributed to the disastrous outcomes that came in the wake of the financial collapse. many americans are still suffering from the disastrou ripple effects the 2008 crisis had on our nation. faithfully entering this does not happen again meets supporting careful oversight of
financial system which prioritizes the needs of everyday americans over the wishes of the financial institutions or the federal government. i felt great empathy for the millions of hard-working american families who lost their homes because the system failed them. if confirmed as treasury secretary, i will work diligently and compassionately for the american people so that we never see anything like the meltdown of 2008 ever again. i was deeply honored when donald trump asked me to join his campaign as finance chairman. i had the opportunity to travel with him and hear firsthand from hard-working americans about their concerns for the american economy. over the last year, i visited states.cities and 26 i remember attending my first rally with him in indianapolis.
it was an unforgettable experience. as we arrived into the stadium packed with 20,000 people, i saw the excitement that people had for a trump presidency. on our trip to flint, michigan, i went with the president-elect to visit the water treatment facilities and saw firsthand the crumbling pipes and the devastation caused by that -taintedted -- lead water. we met with water engineers and saw the impact it had on the communities and the families. the paint and heartbreaking stories of americans who had lost their jobs to workers in foreign countries. we heard the concerns of people in small business burdened by high taxes, just trying to make ends meet. in my meetings with you over the last month, you share the concerns of your constituents,
like farmers who worry about the death tax wiping out the family farms, or workers who are nervous about whether their retirement accounts will be safe from ruin. one of the greatest reasons i was drawn to president-elect trump's campaign was it was predicated on a commitment to stimulating prosperity for americans of all backgrounds, if the lived in the inner city of detroit, rural north carolina, coal country of ohio, or west virginia, or any place in between. i share the president-elect's goal of economically empowering every citizen. we will not rest in our mission until that is a reality. among the president-elect's signature issues in this campaign was reviving trade policies that put the american worker first. i will enforce trade policies that keep our currency strong on the world exchanges and create and protect american jobs.
we will also make america the best place for companies to do business. sensible regulation is a necessity for healthy markets. however, i saw firsthand how regulatory excess can inhibit lending by financial institutions, resulting in a lack of access to capital for small businesses and entrepreneurs. alexander hamilton remarked that wealth of the nation may be promoted by "multiplying the objects of enterprise." hamilton knew the unique value of entrepreneurial activity to a thriving economy. from our nation's earliest days, american business has been the greatest repository of ingenuity and entrepreneurial spirit in the world. we need to unleash that power to generate jobs and create abundance for americans of all backgrounds. we will work diligently to limit regulations, lower taxes on
hard-working americans and small business, and get the engine of economic growth firing on all cylinders again. in this age of unprecedented online attacks, we must also be vigilant about cybersecurity. if confirmed as secretary of the treasury, i will use my expertise in technology to informationricans' at the irs and keep our financial architecture safe from malicious attacks. i will use the treasury department's office of terrorism and financial intelligence to stop the financing of terrorism. i will partner with other government agencies in our shared goal of allowing our financial markets to operate free from digital and physical threats. if i am confirmed as treasury secretary, i promise i will work hard with this committee, all members of congress, and the administration to put forth policies that will help american
families reach and maintain prosperity. we will make america great again. thank you, and i look forward to answering your questions. sen. hatch: well, thank you, mr. mnuchin. we appreciate your comments. i have some obligatory questions i asked all nominees we do on this committee. first, is there anything you are aware of in your background that might present a conflict of interest in the duties of the office to which you have been nominated? mr. mnuchin: i am not -- i worked with the ethics office and disposed of investments that could create conflicts. sen. hatch: do you know of any reason personal or otherwise that would prevent you from fully and honorably discharging the responsibilities of the office to which you expect to be nominated? mr. mnuchin: i do not. sen. hatch: do you agree without reservation to respond to any reasonable summons to appear and testify before any duly
constituted committee of the congress if you are confirmed? mr. mnuchin: absolutely, i look forward to it. sen. hatch: finally, do you commit to provide a prompt response in writing to any questions asked you buy any senator of this committee? well, i provided over 5000 pages to the staff, i think i have the record of that. if there is any additional questions, i will respond to them properly. sen. hatch: all right, i have to go outside for a minute. instead of my starting to period, i will turn to the ranking member, my partner in this matter, and then i will ask questions when i come back. much,yden thank you very mr. chairman. mr. mnuchin, medicare finances about taxing. it would be your responsibility have confirmed with the attempt to repeal the affordable care solvency ise's threatened. what steps are needed in your view to strengthen this program
that every senior in america relies on? mr. mnuchin: well, first of all, senator, thank you very much. i very much appreciated the opportunity for us to meet yesterday and especially the opportunity to talk about tax reform with you, which i think is very important. i completely agree with you that medicare is very important and a very important program, and the safety of that is an important issue, and if confirmed, that is something that i look forward to working with your staff on and make sure we have the appropriate policies. now, if you are confirmed, mr. mnuchin, you would be the managing trustee for medicare. now, wouldn't you like to offer something by way of discussion about what you would be doing if confirmed? this is an important part of the job. mr. mnuchin: senator, i acknowledge it is a very important part of the job, and
there is many parts of this job i consider myself an expert on and understand, and there are certain parts of this job that, if confirmed, i will work diligently with this committee and others and, and there is honestly a significant staff, this is a very important issue and i am committed to be very responsible in my position at make sure that i properly divide the support from the treasury department and take my responsibility very seriously. sen. wyden: without any specifics on a matter that is so important that you would have direct responsibility over, i find it troubling that you will not discuss medicare. ,et's go to terrorism financing the country is financed fighting isis and other terrorist groups and the treasury department lasik you will in this battle. what would be your idea on additional axis for strengthening how the department fights terror?
mr. mnuchin: i strongly believe and understand that there are very important tools within the treasury department to combat terrorism. that many of these tools such as sanctions are extremely effective and keep the armed services out of harm. i am fully committed to the maximum amount of law to both enforce the existing sanctions in a very strict way and i will work with the president-elect as he sees fit on additional sanctions and there are also other programs within treasury i believe are very effective in fighting terrorism. it is a very important part of the treasury and i know that that has been done very effectively under previous administrations sen. wyden:. we all agree it is important but we are trying to assess your qualifications, you will not talk about medicare or specifics on terror, let me take one more
crack on qualifications on foreign investments because this as treasury else secretary you without responsibility on to protect the country in a foreign investor makes an investment in the united states in a way that has national security implications. if a foreign investor with a tightly foreign government invest in president fronts businesses, should the committee on foreign investment automatically and with close scrutiny examine the transaction? mr. mnuchin: first let me say, yes, i think that would be appropriate that let me go back to your other question because i apologize if i did not answer the specifics on your terrorism --sen. wyden: i was searching for any specifics in order to assess your qualifications. mr. mnuchin: there are very important sanctions with relating to the sanctions on iran and other countries, i would happily enforce those and encourage the president to use
additional sanctions when appropriate. i understand there are certain classified programs that i will be part of at the nsa and use that and work with the national security group to the maximum amount that is available by law. sen. wyden: we did not hear what you would do to fight isis, no specifics on medicare, let's hear about this most current question -- with respect to the committee on foreign investment. what would you do if you were dealing with president trump businesses. mr. mnuchin: no different then i would deal with any business that comes before the committee at take my role as chair of the committee very, very significantly. it is a very important issue and i think perhaps in previous secretaries have not enforced some of these things. necessarily as much as perhaps -- inhould have an
protecting the american workers and american people and american technologies, this is one of the most important jobs i would have as secretary of the treasury. sen. wyden: the president is not like anybody else, he is the commander in chief and it could national gas compromise national security and i will reflect on that answer as well. can i pursue an additional question? you read a hedge fund for a few years starting in 2000 and four -- 2004 and i am trying to get my arms around the bank accounts and shell companies in the cayman islands, how many employees did you have in england -- in anguilla? mr. mnuchin: no employees or customers that resided there. sen. wyden: did you have an office there? mr. mnuchin: not an office ourselves there. sen. wyden: just a po box?
mr. mnuchin: let me explain to you -- sen. wyden: yes or no.. mr. mnuchin: hopefully other senators will differ times because it is important. sen. hatch: go ahead and answer it. it is a legitimate question. go ahead and answer it. mr. mnuchin: like all other hedge funds and many other private equity funds, set up offshore entities that are primarily intended to accommodate nonprofits and pensions that want to invest through these offshore entities. as it relates to my own taxes to a, these entities were either taxed as u.s. corporations or u.s. partnerships and in no way did i use them whatsoever to avoid any u.s. taxes. they were merely as an accommodation, the pension funds and nonprofits institutions in a
small number of foreign investors, as treasury secretary, if i am confirmed, i would look at these rules and make sure -- you did a good job in stopping one of the abuses of offshore deferred fees but i would diligently look at these things and i can assure you i pay all my taxes as was required. sen. wyden: we will come back to this question about offshore deals or commonly called bloggers. -- blockers. i am very disturbed about how the system if you took advantage of tax shelters. see, youh: as you can are going to get questions like this at what was legal at the time is still being criticized. i am sure you have heard of allegations that he profited from quote predatory lending
during the housing crisis, and investor group you headed formed by a reformed indymac, a failed institution responsible for low loans into artgage viable institution called one offer loan modifications often above and got what other institutions did two more than 100,000 borrowers. ,hat is the way it looks to me and during all of the , the obama turmoil administration set up a last -- national loan modification program. -- many members of congress from both sides of the aisle and others have failed -- fell far short of its goals and has significant design flaws and in testimony before congress, the special instructor general neil borofsky identified that there have been countless
published reports of participants who end up worse off for having engaged in a civil effort to obtain be sustained relief that the program promised. excuse me. modifications often made borrowers -- left with more outstanding principal and less equity, depleted savings and worse credit scores. using provocative language that we have heard supporting your actions in the foreclosure and crisis, you could say that they didn't secretary of the treasury can geithner -- was a predatory loan modifier using that type of logic. mr. mnuchin, dead onewest bank -- was that program always successful in preventing foreclosures on struggling american homeowners or could more have been done by the
administration? mr. mnuchin: thank you for that question, that is an important issue. when we did the indymac did -- deal with the fdic we committed to them that we would continue with the fdic loan modification program. it was after that it the obama administration came up with hemp and we had no obligation to do hamp. we could continue to do fdic loan modifications but we felt it was the appropriate thing to voluntarily go into the u.s. treasury program as for other major banks and we voluntarily went into that program. hamp loan modification program was a very prescriptive program including us having to value net present calculations that were determined by the treasury model to see which was better, either for closing on a home or providing a loan modification.
to the extent the net present. he was higher on foreclosing, we unfortunately have to follow the hamp rules or we would have been severely penalized if we had not proceeded with foreclosures. sen. hatch: these were not your rules? mr. mnuchin: they were not our rules, they were rules driven by the administration under hamp. sen. hatch: which am -- administration? mr. mnuchin: the obama administration. sen. hatch: there is a white agreement the tax laws become much too complicated, stories of people getting their tax liability not catalytic correctly, reducing cynicism about the tax laws and creating an ever greater tax gap or difference between what is owed versus what is paid, it is clear that there is a major problem and something needs to be done to address the problem and your credit you have talked about your desire to simplify the tax code. thank you.
i am glad you are talking about that because i agree with you. -- how do you address this problem? do you have any suggestions for how to make the internal revenue code less complex or at least keep it from getting more recommendd would you a moratorium for tax legislation or regulation and should the tax law simply try to raise revenue for the government and stop try to achieve so many other social goals or societal goals? senator, i: yes, agree with you completely and one of the things that has been a great honor to travel with the president-elect, and i have been a chief architect of his economic plan. we believe the most critical issue is creating economic growth and passing tax reform is a major component of that. our tax reform plan, we believe the taxable occasion and fewer deductions are critical. you mentioned the tax gap and that is something i have been
reading about and studying and something i am interested in. i was particularly surprised that in looking at the irs numbers, the irs headcount has gone down dramatically, almost 30% over the last number of years. i do not think there is any other government agency that has gone down 30% and especially for an agency that collects revenues , this is something i am concerned about. perhaps the irs just started with way too many people but i am concerned about the staffing of the irs, it is an important part of fixing the tax gap and i am very concerned about the lack of first-rate technology at the irs, the issue of making sure that we protect the american public's privacy when they give information to the irs, cyber security around that and also customer service for the many
hard-working americans that are paying taxes. sen. hatch: senator grassley, you are next. grassley: let me go along the line of the first statement i want to make, i do not expect you to answer unless i have some misunderstanding of our position discussed in my office. tax reform will be a top priority for you and i agree and look forward to working with you and president-elect donald trump on that point as part of any tax reform proposal, it will be important that adequate transition rules are included to provide a smooth transition for businesses that may be --redictably negative negatively impacted. as we discussed, congress has
effectively put in place transition rules for some alternative energy, clean wind, the production tax credit is currently scheduled to phase out over the next few years, ending in 2020. i believe that we are in agreement based on our conversation that you would support the current phase out as part as any tax reform proposal. aestion two -- i have been strong proponent of the irs private net -- debt collection program as has senator schumer congressn 2015, updated and made it mandatory the irs private debt collection program. this program is designed to chip away at the tax gap by requiring the irs to contract with private debt collectors, collecting in active tax debt owed. these are the tax debts not being worked by the irs. absent this program would likely
never be collected. ining up to $187 million 2017. million the$187 treasury department has provided debt collectors to collect a net of $8 million. this is not because of a lack of in active staff available for the irs to assign. according to the government accountability office report, billion of over $130 outstanding debt on its books here in cannes screening this program -- hamstringing this program by refusing to release in active debt or the programming should be considered unacceptable by anybody. thatou give me assurances the department of the treasury under your leadership will work to implement the program to the full extent of authorized law
and bring in this tax money that is not being collected? mr. mnuchin: yes, senator, thank you for having spent time with me, i appreciate the opportunity to speak with you about important issues. i agree with you on these issues that we do need to have phase out rules when we change things and i support the phaseout of that as you suggested. aspectsrs, i think most of taxes should be handled by the irs but as you have haveibed, to the extent we 100 plus billion dollars of receivables that are just sitting there and we can collect tens of millions or hundreds of millions of dollars for the particularly in an environment where we are looking for money for so many programs, this i agree with you seems like a very obvious thing to do. sen. grassley: my last question, in 2006 i was successful in
enacting legislation to enhance the irs whistleblower program, the program has been one of the most effective programs in addressing tax evasion, leading to the recovery of more than three and 4/10 of billion dollars in taxes that would have otherwise have been lost to fraud. there has been resistance within the irs of the was of lower program and -- of the whistleblower program and a concert is poor communication with whistleblowers who often wait in the dark years with no feedback run the bureaucracy. irs has chosen to interpret the whistleblower law narrowly to the detriment of whistleblowers and several instances, the irs has interpreted the terms collected proceeds which is the base for determining the amount of award to exclude criminal penalties and certain other proceeds suggest penalties assessed for
undisclosed foreign bank accounts. two questions and i will say that both -- should you be confirmed, can i count on you to be supportive of the whistleblower program and work to ensure its success, and would you be willing to review the irs's administration program including it's very narrow interpretation of the words collected proceeds? mr. mnuchin: absolutely, you have my assurance and i will further say that the majority of americans voluntarily file their tax returns honestly. we are aware there is tax fraud. there is tax evasion as you said and we need to be diligent and i believe that the whistleblower laws are very important part of that. i will work very hard with you on that, thank you, senator. sen. grassley: thank you and taking mr. chairman.
>> congratulations on your nominations and welcome to your beautiful family as well. i do want to follow up on information we just received last night that were additions to your recent financial disclosures, i have not had a lot of time to look at that as we just received it last night but you failed to include your position as a director of the cayman islands corporation and manager-german or director of additional shell corporations and holding companies, the only $100 million in real estate and a number of other things including 900 and 6500 $56,000 worth of artwork held by your children. --965,000 5600 as we go into tax reform, would you support closing tax loopholes in the united states that extremely wealthy people use such as yourself to avoid
paying taxes? we have heard about the cayman four years and the buildings that have had thousands of companies that have used them as addresses and would you be willing to close those loopholes? mr. mnuchin: i very much appreciated the opportunity to i traveled toand your state many times and have great admiration for your state, the president-elect had a very significant economic speech in detroit and we have been very focused on time in your state and i appreciate everything you have done. -- ie just comment on realized last night you got a memo on some changes to my senate questionnaire, so thank you for giving me the opportunity to comment on that. appreciate,an filling out these government forms is quite complicated. there were many things i
expected in this job including having to sell everything but the amount of paperwork and filling out the forms even for me having experienced in business was quite a job. in an effort to get the committee information early, we submitted a preliminary questionnaire prior to us having finished and prior to signing the agreement with the ethics office. let me first say that any oversight was unintentional. you did mention that there was $100 million of real estate. i was advised by my lawyer that we did not need to disclose that on the questionnaire because it did not need to be disclosed on the 278. there was some confusion about the complexity. we work tirelessly with the committee staff and i want to thank all of the staff, i know they worked very long hours.
they were extremely thorough and i appreciate their work, we delivered over 5000 pages and i can assure you that they actually read every 5000 pages because when i met with the staff with my lawyers and accountants, we answered some very specific questions. sen. stabenow: i do not want to interrupt but i have limited time and i appreciate that information and the clarification. my question goes to what you were disclosing, particularly the cayman islands? did you use the cayman island corporation to avoid paying taxes to support closing tax loopholes that very wealthy people have consistently used in the cayman islands to avoid paying taxes? mr. mnuchin: let me be clear, i did not use a cayman islands entity in any way to avoid taxes for myself. i hate u.s. taxes on all that income. ok -- i've paid u.s. taxes on
all that income, ok? no benefit for the 10 entity for me, it was set up to accommodate nonprofits and pension funds that want to invest through offshore and a certain number -- sen. stabenow: you help others avoid taxes? mr. mnuchin: they follow the law, because i have experience as a hedge fund manager, i am committed to tax obligation, i think it makes no sense to encourage fed fund managers to set up -- hedge fund managers to set up entities in the cayman islands or anywhere else where i did not have any physical people, this is -- there are people who set up offshore businesses and put all of their people offshore and you have heard of inversions and those types of things. they are perfectly legal and hurt the american workers here in the hedge fund world, these are set up to make the accountant's rich and i would like to work with the irs to tax issues that make
no sense to make sure we are collecting the proper amount of taxes. sen. stabenow: you would support closing the loopholes? mr. mnuchin: i would support changing the tax laws to make sure they are simpler and more effective, yes. thank youu very -- >> very much, i appreciate your being here and willingness to go through this and to serve the american people. we truly need the kind of vision that president trump has enunciated for the country and you have committed to work with him to achieve for the country. as a part of that, one of the things you have mentioned today -- and i am paraphrasing you but i believe you said that we have a regulatory excess in the united states in many circumstances that can at his inhibiting lending and inhibiting capital formation, two very important things that are critical to a progrowth
economy. could you elaborate on that? mr. mnuchin: sure, i believe in proper regulations. before i had the opportunity to put in a bid for indymac bank, i had to be issued a charger, and -- charger and i worked -- charter, and i was a big fan of you merging the ots and the occ and getting rid of another regular free agency but at the time i worked with the ots and the fed and the regulators explained to me at the time and i told him i understood the responsibility of being given a banking charter, i took it very seriously. i enjoyed that working with a very, very smart regulators. i have tremendous respect for them. in one of the few things that the wall street journal actually wrote nice about me, they made a
comment that i told everybody we had to treat the regulators like our best clients which i believe , the regulators and the relationships within and following the regulations, nothing was more important, given the trust they had put in us. i witnessed firsthand, having said that, multiple regulators. the occ and fdic and consumer protection bureau, the federal reserve, and in certain cases there was overlapping regulation. my biggest concern and i fully support regulation for banks with fdic insurance but my biggest concern is that this regulation is killing immunity banks, we are losing big community banking business at losing the ability for small and medium-sized banks to make good loans to small and medium-sized businesses in the community where they understand the credit risks better than anybody else. i think we all appreciate the engine of growth, with small and
medium-sized businesses and in my role in working with the different regulatory's -- regulators, i would make sure that we did what we could to have proper regulation but eliminate overlap and make sure tot the banks are lending small and medium-sized businesses and we do not end up with a world where we only have four big banks. my nextpo: you let into question because in a closely , asted matter, as you know the secretary of the treasury, you have a important role as the in myerson of and sock -- view, they have focused on very heavily focused on statutory mandates -- some of them while ignoring others. one of the statutory mandates that the dodd frank act requires them to do is -- this is the statutory language -- advised
congress and make recommendation in such areas that will enhance the integrity and efficiency and competitiveness and stability of u.s. financial markets. i am not aware of them fulfilling that role, we do not get a lot of advice from them. we get the directives in the country, will you pledge as the oc that the of fs council considers ways to make u.s. financial markets more efficient and advise and work with congress to achieve those outcomes? mr. mnuchin: i will, senator, and let me comment on the focal rule -- thel concept of proprietary trading does not belong with banks with -- the federal reserve put out its own report that that rule has completely limited liquidity
in many markets and the federal reserve is concerned that the interpretation of the volcker rule does not allow banks to create enough liquidity for customers. that is something i would absolutely want to look at. i wanted to thank you senator wyden for having the mnuchin rule with the buffet role andy volcker rule -- and the volcker rule, that is a great accomplishment and thank you for putting meet with these great people. nelson: good morning and i enjoyed our visit yesterday. were you a director of doom capital international limited, a cayman islands corporation? mr. mnuchin: i was, that is correct. move alson: did you hedge fund llc to and we let --
and we let --? when we talk about about as if inot had different people sitting in offices as we have talked about and moving. dunet to comment -- capital, llc, which was our master fund, and not to get into the nuances of this but when one runs an offshore fund and entre fund there are efficiencies and keeping the assets in a master fund. because we set up the master fund in anguilla, i was required to change dune capital partners to become a foreign entity. that was the reason. let a comment
i am running out of time and had to get to the question. mr. mnuchin: sorry. sen. nelson: both of those work for a tax consequence located in the cayman islands and anguilla. -- you said you support tax reform, do you support closing those kind of tax avoidance provisions? the anguilla and cayman islands type tax avoidance in the tax code? mr. mnuchin: let a comment that when i did move it, i had to apply to the irs and the irs approved it as a foreign eligible entity to be taxed as a u.s. partnership. from my standpoint, it made no difference whether it was located in delaware -- i am giving you a slightly longer answer and i apologize, it is a complicated issue.
yes, as ianswer is, said before, i think i would work with the irs and with congress, as i have said, it makes no sense that we have all these requirements to set up these offshore entities which did not benefit me but did benefit certain nonprofits and pensions. we should address the issues for nonprofits and pensions and understand why they need to invest through these offer funds. -- offshore funds and i would not want to do anything detrimental to the pension holders or nonprofits but i commit to work with your office, senator, to make sure we fix the system. nelson: we talked about intevac -- indybank yesterday becoming onewest, and you said you bought, when you required i
a portfolioindybank of reverse mortgages and to your credit you said that once it became onewest, you did not sell anymore reverse mortgages. you as the ceo -- comments on the fact that, of the reverse mortgages you acquired from indybank, some of the folks were not treated very well. to you yesterday, a 90-year-old lakeland woman was foreclosed on because of a 27 sent payment error. others,t mention two foreclosing on an 80-year-old orange park florida woman that your bank claimed did not live
in the home when in fact she did and she happened to have the foreclosure papers served on her in the home that the bank said she did not live in. a married couple in their 50's trying to make the best of everything, they asked for a loan modification of west bank and -- which they were eligible for but instead they were foreclosed on. explained to the committee, if you would, and i think you are an honest and well-intentioned person but you're sitting there as a ceo and this stuff is happening that is very unfair to little people. why? mr. mnuchin: first of all, thank you for taking the opportunity to meet with me, i appreciated that and the time to speak about these important issues. let me first say to the extent that we made any errors or we
ever foreclose on anybody, i completely understand that the hardship that created. we did go through an independent foreclosure review and unfortunately there were some issues, very low rate relative to everybody else but there were some issues and we paid money to those people to make them whole. i earnestly feel terrible for any mistakes at the bank. oncee comment on also that a week i have shared an internal committee that dealt with customer complaints. any complaint that went to our regulators, that went to a senator, that went to a member to what wee, or went called the -- came through those , we had a special group of people that reviewed every single complaint and responded to all of your offices and responded directly to the
borrower. we also routinely had the occ, and monitor and test us and go through all of those complaints. it was a very big concern because as you can imagine for the fdic and the occ, when we bank, the indy number of complaints spiked dramatically. the reverse mortgage business was not something we wanted to buy, we agreed to buy that as part of an overall solution, what we were trying to do was and thatregional bank business had no part of it. there were about 1.5 billion reverse mortgages the bank owned. over $20 billion of reverse -- over 20 billion reverse mortgages we do not own that we service through third parties. the majority of all of the third parties or had guaranteed guaranteed- were hud
mortgages and there were significant issues with the hud program, what is a problem with taxes and insurance, that if there is a shortage of taxes and insurance because if someone outlives their expectancy, hud force us to foreclose. another problem call the non-borrower spouse were if the spouse was not on the mortgage at the time, you would have to foreclose on the spouse. we discussed these issues with hud and i try and confirm i would look forward to discussing these with dr. carson and hope hud would look at these things although that is not under my responsibilities, i would share my concerns, these are government guarantee programs where we are foreclosing on senior citizens. i can assure you nothing was more painstaking to me in the entire place and i will tell you that i cannot talk about specific loans because of privacy but there are certain things that were in the press.
the most troubling loan was to the octomom and we worked very hard, that was a terrible situation, we worked very hard to move her to another home that they could afford. i can do sure you that as chairman of the bank -- i can assure you that as chairman of the bank i took these issues seriously, not that we did not have certain mistakes, we regret the mistakes, we had hundreds of thousands of delinquent loans. as an aside, when you talk about banks areications, highly incentivized to do loan modifications, people think that we have more money foreclosing than modifying a loan has no understanding of this, we were highly incentive to closing -- and closing on people was a terrible thing to do but also very costly to the bank. we believed in loan modifications and financial
incentivized to offer them when we could. en. nelson: i look forward to a second round. >> congratulations on your nomination, the information that came to us this morning makes me concerned, you have addressed some but not all of it. on december, 19 of leicester you cited notarized affidavit on your questionnaire of the finance committee certifying it was true, accurate, and complete. question 11 of this questioner asked nominees to list all positions held as an officer ,irector proprietor representative or consultant of any corporation, company, firm, ,artnership, business education, or other institution, pretty pervasive. an open book test. yet you did not answer in that questionnaire listing your
position as director of a cayman islands corporation as manager chairman and director of eight additional shell corporations. and holding companies and editor -- nearly $100 billion in real estate and that questionnaire was corrected only after the committee staff having done their due diligence brought the missing information to your and after that who admitted to being the director of the offshore entity doing -- of a cayman islands corporation added that it to moving your hedge fund offshore to anguilla even though all the business was conducted in new york city. i have a lot of other questions on policy but first and foremost, truth, that is what americans need in their treasury secretary, they will ask to be -- to do difficult and
challenging things. isn't it true that what you did here is take these companies and put them offshore so you can help your clients who you are making money from, avoid u.s. taxation? mr. mnuchin: that is not true. that is not true, senator. you just describe the purpose of these offshore entities were to help pensions and other entities and the only reason to go offshore as senator grassley said when he was the chairman of the committee is the difference between investing in the united states or the cayman islands is the possibility of avoiding u.s. taxes. your clients, you paid your taxes and i accept your word, but the people -- the entities you were helping and making money from, you were helping them avoid u.s. taxes? otherwise they could have invested here. mr. mnuchin: let me answer the first part of your question, i
have said this before and i repeated, i assure you that these forms were very complicated, i do not have the form in front of me but i believe it said to the best of my knowledge this is true and when i certify those forms i thought it was correct. perhaps it was a mistake in giving the committing -- committee information early and i should have waited until i finish the 278 and the ethics office, it was not a function of your office, we were in the process of correcting things. menendez: it does not take a rocket scientist to list all positions. mr. mnuchin: i had a lot of complicated entities, i did not list the director but i delisted the entity, the fact that i was a director was not intended to hide anything and i is i oftioned in my 100 millions dollars in real estate, my lawyer who is quite sophisticated in this stuff and has done this for many nominees
before, believe that we filled out the form correctly and that -- sen. menendez: did you create these offshore entities that most americans cannot create or take advantage of in order to help your clients who you were making money from avoid u.s. taxes? mr. mnuchin: no, not necessarily. i want to say that is important that the committee and american public understand that this was done so that different entities could invest here sometimes it had nothing to do with taxes and had to do with what they could invest in and what they could not invest in. if you want to put me on for the entire hedge fund and pension we should have an irs session to go through these issues and i would be more than happy to work with you and your offices to go through, these are very complicated issues.
menendez: one does not go and create offshore entities at the end of the day other than to avoid in some form or fashion the tax laws of the united states, that is presentable -- that is pretty simple. it may be legal and we should close it but you have to question whether that is the essence of what we want as leadership. i would like you to be more determinative of saying yes, we would close all of those down if i can convince the president-elect to do that, because what you did may have been illegal but it was to help people and entities avoid u.s. taxes. mr. mnuchin: i am committed to working with you and your offices on tax of publication and make sure that we do not let anybody avoid taxes. in certain cases, not a function of avoiding taxes, it was to create eligible investments for
certain nonprofits. i agree with you completely and am on board with what you set and will work with your office to simplify the tax code. i agree with you that it does not make sense and i will work with you and your office and am committed to do that, to make sure -- why people need to move entities to anguilla to everywhere else, we are not creating jobs, this is just where these entities are housed. create with you, it will a lot less work for the tax accountants and lawyers and make the american public more money and move our irs resources otherwise. i agree with you completely, senator, thank you. sen. hatch: it is ironic and hypocritical a bit that my friends on the other side of the aisle have suddenly found religion on offshore account holdings.
evidently, memories are short. at least two of president obama's nominees who now serve in his cabinet had cayman islands holdings. that includes the current treasury secretary who also ran a business unit at citigroup, bailed out megabanks room where he received close to $1 million in bonuses. that unit has been sanctioned by the sec for selling toxic assets investors." with regard to the nominee's disclosures to the committee, i want to say this -- as part of the committee bipartisan setting goodss, mr. mnuchin and faith submitted answer to committee questionnaires and other materials that were later modified. this file is not -- now complete and meets the demands of some of my democratic colleagues, the disclosures now included financial information that is
usually kept confidential. such as the value of personal residences. the committee appreciates mr. mnuchin's efforts to work through the multiple and complicated request for information of what is by any reasonable measure an exhaustive vetting process. let's be fair. the bipartisan: staff called out the offer investments of both democrats and republicans to secretary liu and others, i wanted understood and that is the reason that people even knew that mr. mnuchin had not filled out these forms properly. the american mnuchin people deserve to know about mr.'s talk to him and --mnuchin's offshore investments but the track record has been bipartisan and we have called out republicans and democrats. sen. hatch: that is the purpose
that let's be fair -- but let's be fair. >> thank you for being willing to serve and go through the process. thank you for meeting with me in my office and going through many of the accounting functions, initiatives that you will be inaging, i do not ask those these meetings because i notice it puts the audience to sleep. they are very important and i was really impressed with your answers. i am impressed with your private sector experience. every business looks really simple unless you are the one who makes the decisions and how far ahead you have to make the decisions and how you find employees and train them and how you meet all of the federal regulations. you have actually worked with those rules. learnve been forced to
some things that will be essential to your job. it is a unique situation. this is the biggest business in the world. we do not even make decisions timely, we are still working on last october 1 spending bills. there are a lot of things around here that have to change and some of them you will be in a position to do and i have been impressed with the knowledge you have already shown with this committee on different things that most of us have never had any experience with. very impressive. now, cover a couple of specific things because i think the internal revenue service has often strayed from its core function of responsible and efficient revenue collection. i hope the new donald trump administration will make sure the irs stays on track with this purpose while also improving the recent record on how to to mitigate with taxpayers and
practitioners -- how to communicate with taxpayers and practitioners, people have not been able to get answers and what is more disturbing to me to illustrate the recent years, the irs has inserted fliers with the tax refund check, and those flyers, one of the produced by the consumer financial protection bureau which is outside of our oversight, and solicited cases from the taxpayers about their money. for anropriate independent organization or any other organization to solicit information from taxpayers nor is it appropriate for the irs to help facilitate this. at the treasury secretary, would you stop this activity? do you believe that is the role of the irs? mr. mnuchin: thank you and thank you for taking the time to meet with me and thank you for your long-standing service to our country. yes, i absolutely would work with you on that.
i do not think it makes sense that the irs is doing that. i would want to understand what the reason is but it seems to make no sense to me. think one of the big issues is around the irs is technology and i would use my expertise in technology to make sure that we bring the irs up to date which is a function of -- i understand old email systems, old privacy systems, we absolutely need to make sure -- in this world of cyber security and it being such a big issue, we need to protect american taxpayer information and there should be simple ways that the irs can interact with the american taxpayer. if you can get good service in the retail online business, no reason why we cannot use the same type of technology for taxpayers to communicate and get their information securely with
the irs. i look forward to working with you and your office on that. sen. hatch: giving you will help us modernize the irs? mr. mnuchin: it will be one of my great priorities, absolutely. sen. hatch: that would be a wonderful thing. >> i hope that is a bipartisan issue we can agree on. i introduced 2012, the job creation and international tax reform act that would help fix our tax code and promote u.s. economic and job growth. that would help right the ship my point our international tax rules into the 21st century and make them more certain so that not at aanies are competitive disadvantage with foreign companies and give american companies incentives to create jobs in the united states and undertake activities here at home so that they can win globally. i would encourage u.s.
companies to develop in the united states rather than overseas. do you agree that our current international taxes that is u.s.ted and places companies at competitive disadvantage with our foreign counterparts and would work with me on international tax reform? mr. mnuchin: i could not agree with you more, the fact that we have companies like apple that have hundreds of billions of dollars offshore because of the differential in tax rates and they are being penalized to bring back money, one of the things i think -- we all agree on and i have talked to the president-elect and he believes we can bring trillions of dollars back on shore so that that money is invested in american businesses and creating jobs. i look forward to working with you and your office on tax reform and bringing down business rates for big businesses and small businesses and making america business the most competitive in the world so
that we are not shipping jobs overseas and money overseas. sen. enzi: thank you and i have questions about the debt and how we will handle that, i am interested in that but it gets into the number one asia so i will submit that -- number my new shop, so i will cement that. fromrecovering governor delaware, a lot of my time as governor, how to create a nurturing environment for job creation and job preservation which i will talk about in a moment but first, some of my colleagues have raised tax havens in the cayman islands. you have mentioned irs, in the past years, several times in the past couple of years, the commissioner of the irs has set where you sit, has been elected to serve a five-year term, has maybe another year, he is in his 70's and took this job not
because he was inspired but he was asked to do this and he is one of the finest public servants i know, he is often paraded in the house of representatives, he has said to that we give the irs less money than they need and they do not have the people and technology they need, for every dollar we invest in the irs we get four dollars back and sometimes as much as $10, not a message for you, i think you have it but the message is for us, interested in raising revenues and not having to raise taxes, that is a good place to start and i was encouraged about what you said. 30 seconds, your take on the cfp be, how they are doing? real quick. mr. mnuchin: a complicated issue but yes, ok? the biggest issue with the dfpb
is i do not think they funded by the federal reserve but by appropriation process. sen. carper: that is good, thank you. when i think of the nurturing environment for job creation and research, making sure they are doing a good job protecting election -- property, sensible tax code, commonsense regulation, affordable health care, find ways to get better results for less money. we have had people suggest that one of the components could go is substantial investments in infrastructure -- theuggested we use businesses that use our transportation system would pay for them, we have done that for half a century and i think it makes sense. vehicle miles traveled, sort of like -- they dropped how many
miles a vehicle has traveled and assess a fee. incomingistration, the administration infrastructure investment, no time to talk about that. one of the ways to go, gdp or grow jobs is to export, a better job of exporting our products and getting into other markets. the transpacific trade partnership, they propose to take down barriers overseas and enable us to have better access to the markets and at the same time renegotiated nafta. that seemed like a pretty good deal and i understand they -- the new administration is interested in renegotiating nafta and we did that. your take on the traits percent -- transpacific trade partnership? mr. mnuchin: you have raised very important issues. sen. carper: go to that one
issue if you would. it is not a trick question. mr. mnuchin: i wrote five i want to come in on. sen. carper: on trade agreements. mr. mnuchin: the president-elect is interested in free and fair trade. this is not about limiting imports it is about growing exports as much as we can. you commented on intellectual inperty, one of the problems trade agreements is american intellectual property is not being kept, being taken in foreign countries. nafta, the president-elect interested in renegotiating nafta so we can keep more jobs here. he picked up the phone and called many ceos, i cannot remember the last time a president or president-elect did that and work for the american workers. i look forward to working with you and your office, you have brought important issues and infrastructure, at the
appropriate time, i am happy to comment on infrastructure as that is important to the president-elect. sen. carper: comprehensive immigration reform, we learned that not only will it grow gdp by infrastructure investment. also comprehensive and -- immigration reform, any take on that? andmnuchin: immigration immigration reform is very important to the president-elect. not completely in my lane but i have been with him so i know his views on that. -- lookse works forward to working with the house and senate about a very important issue. sen. carper: if you do not share his views on comprehensive immigration reform, mentor him a bit. >> thank you for being willing to serve the country. i want to follow up quickly on this point on the irs, you have
allies on both sides of the aisle that will help you. there is good professional people that work there. under very difficult circumstances, not enoughi hopee with president-elect trump as i understand he is calling on a freeze. i am not sure how that coincides with your desire to make sure we have adequate personnel in irs. hopefully you will get the number of people you need because they cannot do it with the current workforce. mr. mnuchin: i can assure you the president-elect understands we need people to make money and he will get that completely. that is a very quick conversation. up with ato follow couple issues. another role in the senate, i am the ranking democrat on the senate foreign relations committee and i want to deal with sanctions. i heard you with regard to enforcing sanctions, particularly those aimed at
those dealing with those who sponsor terrorism and against countries that are violating our international norms on democratic principles. russia is top on that list and i will ask you questions for the record as to your views on the current sanctions and strengthening sanctions. particularly with russia's attack against america's democratic election institutions. i want to make sure you understand -- i understand you are committed to enforcing sanctions against russia. mr. mnuchin: 100% so and the president-elect has made it clear they would only change sanctions if he got "a better deal" and we got something in return whether on nuclear arms or other areas. president-elect has made it clear they wouldyes, senator -- >> in response to the questions about using the irs and making sure it is not partisan reasons, you will enforce sanctions
without regard to a person's party affiliation or office? of course,: terrorism and supporting terrorism and illegal activities is the most important issue and i hope that is not a -- i hope that is -- that is a bipartisan issue and whether our 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 you are confirmed to investigate the allegations that mr. scarry moshe -- recently named as senior advisor to the president may well have violated sanctions against russia in his dealings at i accept that you would investigate this issue to see whether it was a violation of the sanction law. mr. mnuchin: of course. everything that you sent to me i will make sure myself or my staff investigates and have your
respect that i would do that 100%. >> i think you for that. you for that.hank you pointed out that you would treat in your international roles, an american company dealing with the foreign markets equally, even if it is a trump enterprise entity. you are taking note to defend the constitution of the united states and there is the emo luments clause and you have to make sure if you are dealing with the trump entity it is not getting a favor in exchange for trying to influence the president of the united states or the trump administration. how do you go about knowing there are no special breaks being given if you do not have full access to that type of information question mark -- information? mr. mnuchin: let me first say and i think we all acknowledge
that we are in a unique situation that we have a president who has the vast amount of money -- : he is not doing what every other president has done, set up a blind trust to divest. what you are doing come if you are confirmed, divesting. that is what is required. he is not doing that. my question to you is how do you , if confirmed, deal with compliance to the resolution -- constitution to make sure a trump enterprise is not getting a special agreement which will violate our constitution? mr. mnuchin: i think this is a very important issue for the american public. let me first say that 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 not a blind trust -- he has removed himself from his business, he put his sons in charge of his business and he is
, onetted -- excuse me second coming is going to hire an ethics officer and i can assure you that in my job of treasury secretary, whatever responsibilities i have to monitor these issues which are very important, i can sure you i will do. sen. cardin: you did not answer and i will follow up with you make sure do there is not a break given to a trump enterprise which would follow a -- violate our constitution. sen. cardin: --mr. mnuchin: i have employed a lot of lawyers, but i am not a lawyer. the good news is we have a big group of lawyers and a big ethics group and i can assure you we will make sure we absolutely follow the law and the constitution and i have every reason to believe that the wantsent-elect absolutely to adhere to it and will do so. >> centered around. -- senator brown.
senator brown: thank you for the conversation in my office on china and banking issues. let's clear up one thing. "not are in your words highly unscented to do -- for their borrowers. systemichy we had a breakdown. but that aside and i want to talk about your situation. i understand your offensiveness in individual meetings and in this committee about what happened at one west. in 2006, donald trump responded to a question about the possibility of a real estate crash by saying "i sort of hope that happens because then people like me would go in and buy." bank, the ability to help families stay in their homes -- that is not what you did.
you have been saying that one west -- i really want yes or no answers because i have a lot of questions and what i say is factual in my view and i would like you to confirm with yes or no. is it true that community groups theone west, specifically california reinvestment coalition, is it true community groups say one west foreclosed on 60,000 families nationwide and denied three fourths of mortgage modification applications? mr. mnuchin: i am not aware of that. sen. brown: they did. mr. mnuchin: if you know they did why are you asking? sen. brown: because i want to hear it from you. i will keep interrupting because i do not have a lot of time. is it true one west regulators said you had deficient mortgage practices foreclosed on 10,000
plus borrowers without proper procedure on at least 23 who were current on their mortgages. mr. mnuchin: what i would say is we follow the same procedures that the fdic followed. we inherited the procedures. sen. brown: is it true that one west independent auto firm said it violated the servicemembers civil relief act by initiating foreclosures on 54 active duty military families? yes or no? mr. mnuchin: you have the document in front of you and i do not. sen. brown: well they did. i am sorry, i am surprised you do not know these things because you have been rather defensive, for good reason about what happened at one west. is it true the california attorney -- mr. mnuchin: i want to comment for the record. we unfortunately did disclose on certain people in the military and it was unfortunate and inappropriate and we responded and made them whole.
every single person had the opportunity to have their mortgage reviewed and we corrected errors. i am beinghat defensive, i am proud -- sen. brown: i would not be proud of these findings. is it true the california attorney general office found that one west backdated their documents and you obstructed the investigation. did they say that? mr. mnuchin: first, let me comment i saw the leaked memo as you did and i think it is highly inappropriate that somebody at the attorney general's office -- sen. brown: is their new -- no truth about backdating? mr. mnuchin: again, what i would say is the primary regulator was the occ. they had the obligation to regulate. sen. brown: i am sorry, the occ said you had these deficient mortgage practices that you could not remember when i asked you about occ and now you are citing occ.
is it true that one of the employees that was in charge of the modification -- one of the one west employees accused one west of not having any process in place to help the 3000 fha and va mortgage borrowers avoid foreclosure and this same employee accused one west of not having a process in place to help those va mortgage borrowers avoid foreclosures and submitting false claims. mr. mnuchin: in all due respect, it seems you want to shoot questions at me and not let me explain -- sen. brown: i will you explain after you go through -- i go through the questions because one answer will take my whole time. mr. mnuchin: at least understand these are complicated questions. let me at least explain them, otherwise there is no point at shooting them at me and i do not have the ability to respond. sen. brown: you don't, but all of these are factual things if
you want to follow up with a response later in more detail. you can answer this and take as long as you need. one example of an insider loan was the media deal that the fbi denied a for your request related to relativity media where you were cochair citing enforcement procedures. have you been? law enforcement on this? yes or no? mr. mnuchin: i have not and i assumed you wrote that letter -- i saw you wrote that letter yesterday. i assume the fbi did a thorough report or it i am not sure why they did not approve the issue. we have had no reason to believe it is an issue associated with me. sen. brown: fair enough. mr. mnuchin: -- sen. brown: i accept your answer and you are not being investigated, but i find it interesting you know about the letter i sent yesterday detailing all of the questions i one west, about with
but the letter i sent you back in early mid december about this , you of not even taken the time to answer. i think the answer is the one west purchase went well for the , butury secretary designee was a disaster for homeowners, employees, investors, and taxpayers. we can talk more about taxpayer cost on this when the whole process and the amount of money that he bought it for -- sold it for, mostly subsidized by taxpayers. up.enator, your time is take as much time as you want to answer. mr. mnuchin: thank you very much. youtor, i did enjoy meeting and if i am confirmed i look forward to spending more time with you. 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 you and it -- as a senator to hear your issues. i did acknowledge that you sent me the letter. i was advised by the staff that 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 do not satisfy that you have the ability to submit questions afterwards with -- which i will respond to. when i came to your office i told you that and said i would spend as much time as you wanted answering those questions and that they work white significant because i knew -- were quite significant because i knew they were complicated. i told you i would not respond in writing, but i did understand your questions and wanted to respond to them. >> welcome. we have had -- we have not had a
single year with a growth rate has exceeded 8% and the current administration describes that is the new normal. is ame, what do you think reasonable expectation in terms of the growth rate in our economy? 3.2% a year.out what do you think is a reasonable growth rate? mr. mnuchin: i am looking at some of my notes. answer is ishort have said publicly and believe that we should be able to get 3%-4% sustained gdp. i think that is important and i think that 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, it is a lot easier to solve these issues and we should all be focused on things that help grow the economy. and in 1998had 7%
we had 5% and in 2005 we had 3%. that was the last time we had appropriate growth rates. i share the president-elect's concern of low growth. our number one priority from my standpoint is economic growth and i can assure you i will work tirelessly if i am confirmed to create growth in the economy and and i pro growth programs commit to work with all of you on that. i believe the tax reform will be our first and most important part of that. sen. thune: i think we can achieve a higher level of growth. to -- to what degree to you believe that regulations -- a lot of regulations of volume out of the administration, as of yesterday there was a 277 page regulation out of the obama
administration that affects farmers, small businesses, the folks that i represent and there was also in september we sent a letter to secretary lou basically trying to get him to withdraw regulations that dealt with valuation discounts that impact the estates and makes it difficult for a small business or a 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 on doing a lot andhe harm -- economic harm frankly what has adversely affected the growth rate in the economy as quickly as possible? mr. mnuchin: absolutely and i will tell you that both myself and the president-elect believe in appropriate regulation. not just in financial services, there is excess regulation inhibiting jobs, in growth, hurting the american workers and we are committed, specifically
on what you mentioned on the irs regulations on family businesses , i am committed to work with you and your office. we want to make sure that we cover the appropriate loopholes so that people have businesses set up to avoid taxes, it is one thing and they are not a real operating business. we need to make sure that people who own minority interest and operating businesses -- that the valuation for tax purposes are affected appropriately and anybody who follows the markets knows that there is a significant difference between and theand non-control irs should follow their valuations. we should make sure we collect the most money and not have lots of loopholes. on the other hand, we need to reflect their valuations. sen. thune: senator cardin and i share -- one of the issues that
came out of comprehensive tax reform. how will you treat pastor businesses? businesses operate as pass-throughs and they employ about 55% of the people in this country. as we think about tax reform, i guess i am asking you if you would commit to work with us to ensure that passed through businesses are treated fairly and that whatever we comes up with in terms of policy reflects the economic impact that llc's and partnerships and chapter ask -- chapter corporations have on our economy. mr. mnuchin: absolutely. i have committed to it and spend a lot of time on this issue already. i have worked with the trade group that follows small businesses and not only do they support the trump economic plan that 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 there is a business tax, not just a corporate tax. that there is 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, ok? as an incentive and do not use pass-throughs as a way to get lower taxes than they would pay as personal income tax and we want to make sure that hedge fund managers do not use pass-throughs to avoid what higher personal income taxes. we are absolutely committed and we have spoken to many small businesses and entrepreneurs to make sure that they are
protected and get the benefit of the business tax. i appreciate your concern we have heard this loud and clear on the campaign trail and i can assure you it is something we are committed to work with you in your office on. sen. thune: keep that focus on growth so we can get that back up. >> senator toomey's next. senator toomey: thank you for joining us and i appreciate our chat the other day. mr. chairman, i want to thank not tooobserving some distant history, the fact that the cayman island and maybe my memory fails, but i do not remember the outrage from my colleagues on the other side when it comes to his circumstances. there seems to be a bit of selectivity on the part of that. i want to go back to a point you made earlier briefly because i think it is important for the benefit of those among us who have no experience in banking at
all. you made a point that i think is really important. i have never heard of a bank that would not prefer loan modification every time over foreclosure. not only to avoid the misery that results for their customer, but also because foreclosure almost guarantees locking in substantial losses for the bank. would it be share to say that virtually anytime it is possible that -- valueuchin: we ran a net established by the 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 in scented ived to do aent modification. were --dic loans we
back to the fdic. sen. toomey: a couple of things i want to touch on quickly if we could. on the trade front, the president-elect indicated an interest in revising trade agreements and some were negotiated a long time ago and i am sure there are things that could be modernized and updated. 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? mr. mnuchin: i would agree with that. sen. toomey: good. also, would you agree that many of the periods of strong economic growth we have had in decades -- recent decades correspond to a period of a strong dollar and if the economy
behaving well,- the result will be a strong dollar. mr. mnuchin: let me comment on that because i think the u.s. currency has been the most attractive currency to be in for long periods of time. i think it is important and i think you see that now more than ever the currency is 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 was not meant to be a long-term comment. it was meant to be that perhaps in the short term, the strength in the currency as a result of free markets and people wanting to invest here may have had negative impacts on our ability in trade, but i agree with you, the long-term strength over long
periods of time is important and that is a reflection of -- i believe we have the most attractive investment environment in the world and we just have to protect our u.s. companies so they are not forced abroad. sen. toomey: last point i want to make. running low on time, the many failures of dodd frank in my 2, which ie title 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 that it is much more desirable to amend the bankruptcy code so that we could handle the resolution of up complex financial institution through bankruptcy and not ever have to go to taxpayers to bail out these banks? mr. mnuchin: i 100% agree with you that we should not be in the --iness of ailing out
bailing out big banks and i 100% agree with you that i share concerns on title 2. i think we need to look at the bankruptcy code and what we can do as an alternative. i would just comment that the bigger issue is, for long periods of time, the fdic was able to take over and resolve when the regulators determined there were issues in one of the big problems we had during the financial crisis was the intermingling of banks and holding companies and complex securities, so i do not necessarily -- i think if we have proper regulation of -- a lot of the need for title 2 also goes away. sen. toomey: i have run out of time. thank you, mr. chairman. >> senator bennett. senator bennett: thank you for holding this hearing and thank you for your willingness to
serve in the meeting yesterday for clarity. "the washington -- the wall street journal "yesterday "the dollar shrinks as trump talks it down." as treasury secretary are we ever going to hear that the dollar is too strong? mr. mnuchin: as treasury secretary i do not see it as my role commenting on the dollar on short-term. i have commented on what i believe are the long-term -- senator bennett: in 2011, due to the this function in congress, we almost failed to raise the result, ang and as a rating agency downgraded our nation's deficit for the first time in history and the stock market lost 17% of its value and did not recover for almost a year and consumer confidence fell 22% in a few months. it completely self-inflicted wound on the american economy.
retirement savings and dealt a blow to job growth and job creation. mr. trump suggested he could refinance or renegotiate our existing debt and he walked away from the idea initially. later in the campaign he suggested the company could pay creditors less than what they are due, specifically he said "you go back and say hey, guess what, the economy just crashed and i am going to give you back. half" he also suggested the united states never has to default " because you print the money. " the you agree with these statements? mr. mnuchin: first of all, thank you for asking the question about the debt ceiling. sen. bennett: good because i have another question. mr. mnuchin: i think it is an important issue for all of us. sen. bennett: please do not filibuster, i appreciate. mr. mnuchin: the president-elect
has made it perfectly clear that honoring the u.s. debt is the most important thing. i hope that when we get to the point if i am confirmed that we have to have the debt ceiling -- that we will not go through another one of these issues because there are certain things that i would have the power to postpone this. i firmly believe the u.s. has the obligation to honor -- sen. bennett: can you then commit to working with congress to pass a clean debt ceiling? mr. mnuchin: i will commit to absolutely work with the , and the the house senate so we do not get to the last minute and run out of money. sen. bennett: is that a yes? we will pass a clean debt ceiling? mr. mnuchin: i do not know your technical issue of what a clean debt ceiling. sen. bennett: the debt ceiling. mr. mnuchin: let me be clear, i would like us to raise the debt ceiling sooner rather than later. sen. bennett: that is good enough for me.
i grateful for that answer. the nonpartisan tax policy center found that the president-elect trump's tax plan would increase the debt by $7.2 trillion over the next 10 years. he also proposed increasing defense spending of that he would not touch entitlements like little care -- medicare and social security. nondefense discretionary spending comprised about 16% of the budget and about $583 billion which includes funding for veterans benefits, transportation, national parks, and research. even if we did not spend a single money -- penny on these priorities for a year, which i would not suggest, that would only pay for about 8% of mr. trump's tax plan. the tax plan increases the debt by $7.2 trillion in acceptable outcome for you? mr. mnuchin: i believe the $7.2
trillion number was the first tax plan and not the second tax plan. i believe it scored dynamic closer to -- sen. bennett: the first tax plan was $11 trillion. mr. mnuchin: you must be referring to static and not dynamic. the dynamic number was closer to $2 trillion. sen. bennett: the dynamic is three point tricks -- $3.6 trillion. what we are doing is adding mountains of debt. mr. mnuchin: let me comment that i have discussed the debt and we are concerned that we have gone from $10 trillion to $20 trillion a me think the way to reduce the debt is by economic growth and that will create the opportunity for us to pay down the debt. sen. bennett: just to be clear on that, senator thune said that in our history, the average growth rate we have seen is about 3.2%. it would be great to get to 4%.
you said between 3% and 4%. there is no way that will fill -- get projected in the tax plan. i can accept the fact the president-elect may have changed his mind or you differ. i am trying to find if you would find it acceptable to bury the american people and this kind of debt? mr. mnuchin: i think as you know, we had a rather modest campaign staff relative to the other people out there. one of the things i look forward to if i am confirmed his having access to all of the people at treasury who are able to model these things. we were forced and we had some internal models, but we were forced to rely upon external models and certain assumptions we agreed with and certain we did not. i think it is important that president trump has a progrowth economic tax plan and we are sensitive to the cost of the 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 look forward would to working with the house and the senate, both republicans and democrats to move forward on tax legislation. timebennett: i am out of mr. chairman, i just want to make one observation is that mr. mnuchin, in fairness to him, has twice praised the employees of the treasury department today and i would like to say that is a refreshing and welcome change from what we have heard up until now in a lot of these hearings. isakson:sakson: sen. thank you very much mr. chairman. i am sorry i have been in and out of the room. i have been listening, so i am up to date. i am going to talk to you about something i have not prepared myself to talk about.
i want to talk about intgage-backed securities 2008. your port -- your purchase of indymac was in 2008? that was correct, december of 2008. it started a domino effect around the world that collapsed mortgage-backed securities and their value. is not that -- is that not correct? mr. mnuchin: that is correct. sen. isakson: when you purchased indymac it had a number of those loans in its portfolio. mr. mnuchin: yes, that is correct. sen. isakson: wall street packaged loans and put it into a security based on a high yield. is that not correct? mr. mnuchin: indymac securitized the loans themselves and created their own security the market backed up and cannot afford to sell them and got stuck keeping
them. most of the mortgage backed securities we had they did not buy. most of them were failed sales. sen. isakson: is it not true that the freddie may add fannie mae guaranteed insured loans 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 that to have a larger percentage of affordable housing loans in the portfolio? mr. mnuchin: absolutely and i believe that unfortunately what led them to buy a lot of bad loans. sen. isakson: i want everybody to understand when they are talking about mortgage issues, i was in the real estate business for 31 years and in congress at the time this went on. what happened in a lot of these loans is they were made because of the inducement or direction of congress to take more of them. what was called and affordable housing loan ended up a subprime loan which ended up being a high
risk loan which had a high interest rate and was packaged together into securities and sold around the world. is that not true? mr. mnuchin: these loans had all types of acronyms. they should have been called bad loans, that is what they were. sen. isakson: indymac, as i recall, tried everything it loansto recalibrate those and restructure the loans and renegotiate the loans to keep as many as possible from going into foreclosure. is that not right? mr. mnuchin: that's right and even not just the loans that we owned, but the loans that we serviced for fannie mae and freddie mac. the one person that protested at a fannie maeas loan and i was not able to do anything about that. but through my multiple phone calls i was able to get a loan modification. a lot of times people thought we owned the loans and we did not. sen. isakson: the main part i want to that point i want to
make for the sake of the argument and a lot of the questions you will get is a lot were calledns affordable housing loans and a lot of people bought those loans that had been made by some of the else and they inherited the problem and did not originate the problem. there is a world of difference between originating a loan and buying alone. mr. mnuchin: that is correct. i can assure you the loans that we originated were good loans and had nothing to do with the terrible legacy loans. thank you for pointing that out. sen. isakson: that is the important point because if you or originate something, you own it, but if you acquire some bad debt or aa bad piece of paper, shame on you for buying it, but it is not your problem for creating it. is that not correct? mr. mnuchin: that is correct, thank you. sen. isakson: and i do not mean shame on you that you are wrong.
one last point, i have been told by my state director of revenue that the irs is not sending out -- the federal government is not sending out the w-2 forms to the state revenue departments in the united dates. is that not correct? >> correct. sen. isakson: when you become treasury secretary, i hope you would pay attention to that and try to direct them to going back to do that because the only way we can keep bogus loans and intrusion out of the portfolios is for people to get back their income tied to their social security in the federal government to get the report on that and the irs to get it at the same time. if you would work to seeing that those practices are ended i would appreciate it. mr. mnuchin: i will be committed to work with you and your staff on that. sen. isakson: thank you for your willingness to serve and congratulation on your nomination. andhank you mr. chairman mr. mnuchin, to you and your
family welcome to the hearing. since the beginning of the great recession, no state was hit harder than the state of nevada. we let the -- we led the country in closures and unemployment. we are sensitive as to who becomes the next treasury secretary having gone through that over the next -- last eight or nine years. you came in my office on january 4 and i appreciate the visit. i asked you questions and i would like to ask the same questions today. the question was how many nevada homes were in one west's bank portfolio? mr. mnuchin: unfortunately, i will go back and request that information from the bank. i no longer have that information. i will work with the bank to try to get that for you. did oneany nevadans west foreclose on while you owned the bank? mr. mnuchin: again, i have the
information on public reports, but i am committed to go back and get that information for you from the bank. i apologize i do not have that with me today and i appreciate how hard your state was hit in the foreclosure crisis. senator heller: do you know how many nevadans one west provided assistance to with modifications? the reason i ask these questions the again is that this is seventh time i have asked you. i asked when you are in my office and my had mice follow-up, three times by text and weee times by phone still cannot get the answers and i am not quite sure with two weeks -- your own comments were they you had responded to 5000 pages of questions asked. why were these three questions not asked if you had 5000 pages of questions that you answered question mark mr. mnuchin: first of all, let me apologize to you because i recall you asking them
in your office and there is no excuse they have not been answered. i am not aware that my staff also don't -- got those questions. i apologize to you and assure you that as soon as i get out of this hearing i will request that information from the bank. we are responding to a lot of other information. i apologize, this is important to you and your have my -- you have my commitment you will get that. sen. heller: in 2008 when you purchased indie west can you tell me what motivated the transaction? ,as it a way to save the bank which make money, or a way to keep people in their homes? mr. mnuchin: i think it was all three of the above. i saw the opportunity that i thought there is going to be a banking crisis and i saw the opportunity that we saw we could turn around the regional bank and turn it from what was a lousy mortgage bank into what --
an attractive regional bank and it was the opportunity both to have an attractive investment. i had to convince my investors they would make money, but i saw it as a great goal of building a business. i just made comments and my investors made a lot of money on one west, but i comment if we had just invested in jpmorgan and bank of america and a handful of other stocks we would have made a lot more money and i would not have had to have worked nearly as hard. a big part of the financial return ultimately was reinvested in the market at a very depressed period of time. sen. heller: sen. heller: were you motivated sen. heller: -- let me ask you this way, was it an objective of one west bank to foreclose on nevadans to receive confirmation from the fdic on the shared loss agreement question mark mr. mnuchin: no, quite a contrasty -- quite the opposite. loanmmitted to
modification. when we bought the bank, that was the agreement. we were proud of loan modification starting there and we actually had a bunch of incentives, whether it was hamp incentives or other things in the washer agreement where it was much better for us to do loan modification. as i have said before, i can assure you that what prevented us from doing more loan modifications was either the net what wasalue test or the qualifications. we were required to get updated income and people had to have -- had to be able to effectively requalify for the loan. as i have said before, not only from a social basis that i want to keep people in their homes, but we were economically motivated to do that. sen. heller: how much did the fc -- fdic pay one west for the losses? mr. mnuchin: what he mean by how
much did they pay us for the losses> sen. heller: what was the compensation from the fdic for the shared lost homes? mr. mnuchin: i think there has been like 400 shared loss agreement according to the fdic public data, they believe they saved $40 billion by using the -- sen. heller: the answer is $1.2 billion. mr. mnuchin: that is after we absorbed $2 billion of losses. sen. heller: you are not saying that is not a motivation to foreclose on a home is $2 billion? -- $1.2 billion? mr. mnuchin: no because they were restructuring loans and we wanted good loans. let me just be clear. we wanted good loans, having good loans that performed under the loss-share agreement. sen. heller: did one west bank specifically target my normal --
minority communities in nevada for foreclosure? mr. mnuchin: absolutely not. >> senator casey. senator casey: thank you very much. to start with a subject you have already answered questions about, the issue of mortgage foreclosures and also modifications. i am holding in my hand -- i 4-page document -- and investigative report announced "trump picked for secretary secretary foreclosed on -- treasury secretary foreclosed on hundred and pennsylvania." i would ask to have this part of the record. mr. chairman: without objection. sen. casey: let me read part of
it because i know some of these reports refer to individuals. you may know them and you may not and i will not ask if you know this person, but here is a couple of excerpts according to channel 4 in pittsburgh. cancerost her husband to , lost her son to an overdose, and then she lost her home to one west bank. one says, i am quoting " thing i will never get over is my son's death." she lives in west moreland county. here is what nelly hoped would of happened, she said "they -- meaning one west -- they should've worked with me to -- for a payment that i could make." she filed bankruptcy and even
then cannot save her house. she said it caused her "a lot of depression." and it lists a couple of examples. a house in white oak was foreclosed in 2014. another house in 2013 and at a house in2 pittsburgh in 2011. the headline says "hundreds of homeowners in western pennsylvania." depending on where you draw the line, that is roughly 10 counties. 6 -- 57on of a state of counties. one reason i highlight that is to focus on the impact that those foreclosures had on one community and one state. also to ask questions so i can toe sure the record is clear the extent that we can get to modifications in foreclosures.
one of the statements you made in my office when we met and i appreciated the time we had -- you said that one west "did lots of modifications." on the question of foreclosure itself, you said "at the time we -- $35,0000,000-35 in foreclosures." mr. mnuchin: i was confused about the time period. that was 2009-2010 versus 175,000 -- the 100,000 loan modifications was over a longer. of time -- longer period of time. sen. casey: over the time that west,re the leader of one how many foreclosures total nationwide? mr. mnuchin: i don't have that, but i can find the number.
let me comment because there is talk about foreclosure business. 93% of the loans that we service, we service toward third parties. we sold this business. i never wanted to be in the mortgage servicing business. i did not want to be in the reverse mortgage business. i wanted to build a regional bank. one west is no longer, we sold years ago the servicing business because we did not want to be in that. we sold the business to another company. the loan you are talking about sounds like a horrible situation and i sympathize for that person. ,en. casey: i 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 your testimony today and i am quoting you hear at the bottom of page 2 "ultimately one west extended over 100,000 loan modifications to delinquent
borrowers." extended is not the same as a modification. you agree with me? mr. mnuchin: extended means they were put on modifications. sen. casey: that is not a completed modification. mr. mnuchin: again, they were offered and put on a loan modification. sen. casey: in fact, according to a document that makes -- i will make part of the record, this is a one page document from hamp, the home affordability modification program that mr. chairman, i would ask to be made part of the record "making home ," thatble summary result is the name of the document. in terms of total modifications, it was really only 22,908 so we will put that into the record and have more questions later. mr. chairman: without objection we now turn to senator cassidy. senator cassidy: nice to see you
. as you can tell from where i am, i am fairly junior on the panel. i will note that you have been somewhat insulted by innuendo and my sympathies for being insulted by innuendo. secondly, as regards economic growth, i wrote an editorial with a friend in the "wall street journal that showed if we had economic growth from 2001-2014 as we had from 1993- 2000, in 2014 we would've had a surpluse would've had a as opposed to the $500 billion deficit we had. i appreciate your acknowledgment that progrowth policies cover a multitude of sins. good for you. mr. mnuchin: thank you. sen. cassidy: that said, i represent a lot of rural parishes and there are two things driving economic growth,
typically utility companies and community banks. since. frank has passed, you and i discussed the number of justnity banks -- it is plummeted. m-g" as my daughter would say. how do we revive economic prospects of rural america? mr. mnuchin: thank you and first of all, i enjoyed the opportunity to meet with you and talk about these issues. as i mentioned before, i am very concerned that we had and continue to be in the business of putting community banks and small regional banks out of business, that the regulatory cost -- sen. cassidy: one guy told me that 64 regulatory visits in a 52-week period. the marginal cost for this small bank is like why am i not selling? mr. mnuchin: that sounds right from my -- for my experience,
that is the right ratio. i agree with you completely and if we want to have economic growth, for us the -- to end up with four or five big banks in this country and dealing with the two -- too big to fail or too big to succeed, we need to have banks. we need to have regional banks and community banks. those banks understand the people in the community and can make good loans. sen. cassidy: related to that and something you were speaking with thune, it doesn't seem like we haven't excess of capital. capital, butlot of we cannot get it down to someone who is an entrepreneur and to bring prosperity to eventually perish -- parish -- a very
small parish. i do not know the answer to this, but it strikes me that there are those co-possible goals of tax reform. one is to create more capital -- i think under the reagan tax cuts high mortgage rates deprived capital to those who -- high marginal rates the private capital to those who needed it. the other point of tax reform would be to align incentives. you spoke earlier that the pastors -- pass throughs, you folks. incent would you agree with what i am saying? of the two -- is there a third reason to be tax reform? if you throw those in, it seems the creation of capital is the one that is not the priority so
much as to align incentives and create certainty. you go. mr. mnuchin: i agree. the only other thing i would say because i think we have a lot of capital in the united states now , but we have a business tax system that is incenting u.s. companies keeping the capital of broad. the other thing we want to incent is that money comes back to the united states now as well as going forward and that money to create newd business here and create jobs and that we stop things like inversion because it makes economic sense for u.s. companies to do business here. sen. cassidy: the incentive is both for the company to use their money more wisely, to invested to create jobs, and to keep companies from moving abroad? mr. mnuchin: correct. sen. cassidy: on behalf of all the folks in that small parish,
i look forward to your nomination. >> senator warren -- senator warner. appreciate our i visit and congratulations on your nomination. i will try to move quickly. the united states obviously enjoys enormous advantages with thee state reserve currency. that allows a slower interest rate and everything from student loans to mortgages. the president-elect's comments about negotiating the debt during the campaign were unprecedented. i want you to affirm to this body going forward it will be your policy as much as you can influence the president-elect that we would never again question america's willingness to stand by their debt obligations. mr. mnuchin: i agree with that
100% and let me thank you for meeting with me and acknowledged as an incredibly successful business person, i appreciate your service. sen. warner: don't let that eat into my time. i have been very troubled by even some folks in elective office who have somehow said we can ignore the debt ceiling without consequences or even some that are going out and saying somehow we could prioritize those debt obligations and potentially pay off bondholders, many of them foreign and many of them chinese, and ignore obligations to pay states which then affects and honor ratings commitments to salaries of fbi employees, etc. it is your policy that the united dates come in terms of debt obligations, needs to honor all debt obligations and should not have the ability to prioritize those obligations. mr. mnuchin: absolutely and i
hope you will work with me so that we get that done. we have already spent the money and we have the obligations. there should be no uncertainty that we are paying the bills. sen. warner: i think that is extraordinarily important and those who argue prioritization would recap again in the financial market. i will raise what entered a bennett race. raised, enator bennett if you get this role -- the actions of the president-elect in terms of commenting on the strength of the dollar work on president has ever done this before. it has affects now. you will be a senior adviser in the cabinet of the president, but how do we and sure since words have consequences that there will be an ability for the trumpet ministration on -- trump administration on economic policy to speak with a single voice. mr. mnuchin: if i am confirmed,
i think that once we all get in access,nd have regular both myself and the administration, i think you will see that and there may be times where there is a view that the dollar is slightly too strong, but i believe we will speak with a unified voice. sen. warner: you then expect to the president-elect and then president would break precedent and be able to way into these matters unlike any prior president? mr. mnuchin: as you know, this president is willing to do many things other presidents have not done and many of them are great. sen. warner: one area i have concern and interest in is on fannie and freddie. i know there were some people that potentially interpreted some of your comments about recap and release, which in a say even though the
american taxpayer was paid back $188 billion in the failing institutions in a moment of crisis, i think from a business standpoint we would both say that was high risk capital and we got a better return, but somehow those that say let's refloat these entities and ignore the underlying challenges -- do you support that position of recap and release that some have advocated? mr. mnuchin: let me be clear that i did make comments about this. my comments were never that there should be recap and release. mortgageen around the industry for 30 years and i have seen this for a long period of time. this is an area i believe i have expertise in. for very long periods of time i think fannie and freddie have been well run without creating risk to the government and they played an important role -- i know you are running out of time.
sen. warner: mr. chairman can i get another 30 seconds? mr. chairman: go ahead. mr. mnuchin: i believe these are very important entities for liquidity for thewhat i have cot i will work with both the democrats and republicans. what i have said and believe, we need housing reform. we should unjustly fannie and freddie as is or the next four or eight years under government control without a fix. i believe we can find a bipartisan fix for these. on the one hand, we don't end up with a giant bailout. on the other hand, we don't run the risk of completely limiting housing finance. sen. warner: i appreciate the comments, i look forward to working with you. of the 30ok most seconds on your statement, i have two quick questions. i hope that you can answer with yes or no. in light of those comments about recap and release, you commit not to support any kind of
administrative effort that would bypass the congress in terms of efforts to recap and release? mr. mnuchin: i don't want to make any commitments to legislative or not. what i will commit, because it is my responsibility at treasury , as it relates to certain issues with fannie and freddie. what i will commit to is it is my objective to find a bipartisan solution to it. i would welcome the opportunity to sit down with you. sen. warner: my hope would be that the bipartisan consensus that the banking committee arrived at was that that solution, and we can discuss about how we get there, should end up with the housing finance system that preserves things like a 30-your mortgage it also makes sure there is not the current status, when things are going well, private sector gain, but when things hit the fan, taxpayer holding the bag. mr. mnuchin: i can assure you i
have no interest in that and i will not support any policy that has that case. mr. chairman: senator mccaskill. mccaskill: mr. mnuchin, i found a tweet of your future boss that i agree with. keep it fast, short, and direct, whatever it is. that is what i'll try to do. you oppose lifting the current sanctions on russia. mr. mnuchin: right now i do. i'm sorry, i oppose right now lifting the current sanctions. sen. mccaskill: do you support new sanctions against russia? yes or no? mr. mnuchin: the answer is i don't have the information. i have not been able to receive classified briefings. i would want to understand the classified information. i would want to work with others to understand it. i don't have an opinion right now as to whether we should have more. i do have an opinion that we
should not be lifting the existing ones. sen. mccaskill: would you agree that your new boss is famous for firing people? mr. mnuchin: well, he has a show about it. sometimes it is a blur at this point, we are not sure where the show stops and the reality begins. do you think he will hesitate to fire people if he disagrees with them or believes they are doing a bad job? mr. mnuchin: if he disagrees with them, no. i can tell you, the president-elect and i have disagreed on things. sometimes i have been able to convince him and sometimes i have not, and i have not been fired. if people do a bad job, absolutely, he should be able to fire them. sen. mccaskill: will he be able to hire and fire the ethics officer? mr. mnuchin: i have no idea. sen. mccaskill: who would hire and fire the ethics officer is not him? mr. mnuchin: i don't have access to the documents. we are notill: talking about trust. he says he will have an ethics
officer to oversee him in the government. who is going to hire and fire his ethics officer? him? mr. mnuchin: it's a good question. i would be more than happy to ask him and talk to him about it and come back. you raise an important issue. i think he will understand that i don't have the answer. sen. mccaskill: he is not digesting any business interests, correct? mr. mnuchin: correct. i believe he sold his public stocks. sen. mccaskill: i am talking about his business. is it fair to characterize him as an international businessman? mr. mnuchin: i believe so. sen. mccaskill: he will enjoy the benefits of his businesses success while he is president, correct? again, i believe he will do everything legally -- sen. mccaskill: this is not my question. my question is, he has said very loudly, he will go back to his business after he is president,
even said he would fire his sons and they had not done a good job . so whatever success his business enjoys during his presidency, he will get the benefit of, correct? mr. mnuchin: i missed the part about firing his sons, but that sounds like something he may have said. yes, he is the economic owner, so by definition, i would assume that he would have that. businessesill: his in other countries and this country intersect with foreign countries, agree? mr. mnuchin: yes. sen. mccaskill: isn't it true that a lot of his debt is held by foreign interests? mr. mnuchin: i don't know, i have read it in the papers. sen. mccaskill: do you think you should know that as someone who runs the committee on foreign investments, if we are talking about the commander-in-chief? as secretary of the treasury, should you know what percentage of his debt -- i'm told by people familiar with his business that it is a huge percentage of his debt -- that
is held by foreign interest. mr. mnuchin: as i said, if i am confirmed, i assure you, i will make sure the requirements of the constitution are upheld. i think you have a valid point about foreign debt and understanding foreign things. if i'm confirmed, i will research that and get back to you. sen. mccaskill: 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 trunk enterprises is held by foreign interests. that is your job as the treasury treasury. i won your commitment that you will report to this committee as soon as you are able to get that information from the new president. mr. mnuchin: i am not making the commitment today to report to the committee on anything. 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. sen. mccaskill: i can assure you the american people need to know. you in your job as treasury secretary that is supposed be determining national security interests based on foreign investment, the american people need to know how much debt is business istrump owned to foreign entities, and if that could have a direct impact on our national security. thank you, mr. chairman. havenuchin: i think you asked some interesting questions on which i will follow-up. mr. chairman: thank you. senator burr. burr: i would love for the staff to look it up and see if that is the responsibility of ,he secretary of the treasury to actually ask the president what percentage of foreign debt. i don't know if that is part of your job, mr. mnuchin. let me say, your employment
history is quite complex. probably the most complex i have seen of any nominee that is here. what i read into that is that you are sort of a roadmap for things that we need to do, if the goal is a simpler, more transparent understandable tax policy in this country. pledgeme ask you, do you , do you commit to the committee to work toward a simpler, more understandable tax code in this country? mr. mnuchin: i do, absolutely. sen. burr: 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 you are being considered for? mr. mnuchin: i have already agreed to that and sign the form with the ethics office. sen. burr: i know that. many of the questions i have heard on this committee suggest that they did not hear it. i just wanted you to have the opportunity to repeat it.
in april of 2014, the treasury ig came up with a study. he found 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 taxed the link went -- delinquent or had conducted serious misconduct including drug abuse. the inspector general found a 108 of 364 employees with willful tax noncompliance cases closed between october 1, 2008 & number 2013 -- september 2013 received one or more awards, steps, incentive payments within a year of after being disciplined for non-tax compliance. when you commit to me to change this policy, this insane policy?
mr. mnuchin: absolutely, it's very concerning. i commit to working with you and your staff on it. thank you. in another report, december 2014, the inspector general of the irs discovered that there they 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 763 employees who were rehired by had bad 11% of them performance in their record as to why they were fired in the first place. , it said inances their records, do not rehire. yet, the irs rehired them.
do you pledge to this committee to change that insane policy? mr. mnuchin: that sounds like the most common sense thing i have ever heard. so yes, i'm absolutely committed to that. sen. burr: i appreciate it. with all the questions you have been asked today, all the pledges you have been asked to , i try to look at it from the value of the american people. the american people deserve better than this because in the private sector you would not stand for this. you would not have a company that would pay people for nonperformance or poor performance. you would not reward individuals by rehiring them, if in fact, they did a poor job last time. i think the american people look at insane policies like this and they really do question those who had agencies, and frankly, 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. 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 sense need to be changed? mr. mnuchin: absolutely, it would be a great honor to lead the treasury department and work or the american people. sen. burr: thank you for being here, i yield back. mr. chairman: senator scott. senator scott: thank you for coming by the office and having a good conversation about economic growth, which should be our focus as part of the finance committee. follow up on some of the senator's comments about a simpler tax code. i think about the comments i have heard from the president-elect as it relates to making sure the folks working paycheck to paycheck experience a better quality of life.
i think about the tax code. i specifically think about folks in south carolina who are strongly in support of resident trump as well as places like pennsylvania, wisconsin, michigan, where these folks are working every day long hours, 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 resident trump's approach to reforming the tax code. will the emphasis be on the personal code or more on the capital process? mr. mnuchin: i think it is both. we have an opportunity to reform alltax code, and we should be focused on this, on both the personal side and the business side. 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 have the opportunity to
discuss -- and thank you for meeting with me -- is to simplify personal taxes, deliver a middle income tax-cut, make u.s. taxes competitive with the rest of the world so that we can compete effectively and aggressively and create more jobs. creatingll about better economics and more jobs for the american public. i am 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. when you just look at the unemployment rate, that absolutely does not tell the story of what is going on in this country. that same: following thread, you think about simple application of the tax code. in order for us to get to a lower rate, we need to have a serious conversation and 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 eduction going forward. i know the house plan cap the mortgage deduction at a home value of around $1.1 million. in your political document, the approach that you are taking had more to do with the interest that you pay, not the actual value of the home. i do not need a comet now, but i hope you would take seriously the importance of those two deductions. also, if we lower the corporate rate, certainly we would be more competitive. i'm not sure just lowering the rate actually stops in versions. your thoughts? mr. mnuchin: i think it absolutely has a huge impact on stopping in versions. there are some other things that we may be able to do, but the biggest issue that creates in versions is the incentive for
much lower taxes abroad than we have here. sen. scott: if we can get our 35% down to something competitive, that would be wonderful. [indiscernible] whatever we can do to become competitive will be helpful. i do believe we will have to look at other remedies outside of the tax code in order to sell that perhaps the haven of america is a great take to do business beyond the tax code itself. speaking about that simpler tax code, we have spoken before about legislation that i have sponsored around investing in opportunities. it essentially defers the capital gains tax for up to seven years, if you reinvest those resources into distressed communities. we have 50 million americans, more than one million south carolinians living in distressed communities.
one of the goals that i hope we have is to look for ways to create incentives for private capital to come back into distressed communities. i would love to hear your comments on that. mr. mnuchin: i have in my notes the investment opportunities act that we talked about. i want to follow-up with you and learn more about it, and whether we use that or other tax incentives. i think it is absolutely that the areas that are most struggling, that we use the appropriate incentives to get business to go there. i definitely look forward to following up on that. one last question. 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 a high-tech manufacturing perspective. trade agreements are an important part of what makes it ,ttractive for brands caterpillar, b&w. trade is important to the state. i know you are moving away from multilateral agreements and toward bilateral agreements. i hope that bilateral approach will include some of the countries growing markets around the world, specifically within the tpp footprint. mr. mnuchin: absolutely. as i said, president-elect trump absolutely believes in trade, he just once better deals. he wants us to grow exports. he wants better deals. we have two more to go here. can we finish up? then we will take a short break and give you a little bit of time and then come back.
senator portman and then the senator from washington. fortor portman: thank you being here, but i think it is your kid to deserve the award for stamina. my kids at that age would have been long gone. i told him they could leave after an hour but they opted to stay. i think you are right that a tax-cut is an opportunity to give the economy a shot in the arm. ,edian income has not gone up when you look back at the prerecession levels. that is the middle-class squeeze , that an higher expenses in health care. in terms of unemployment, you are right. if you go back to the labor force participation rate in , sixt before the recession and 6%, compared to today, on a plum it would be about 9.5%. so this economy is not humming, we are not doing great. we are 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 a difference. i appreciate what you said in response to senator scott on that. i think we should be focusing on overalld not just economic growth, but how to ensure we are creating opportunities for the families we represent. one thing you didn't talk about, on the business side, repatriations. you can lower the rate, and that is important. don't you think there is an opportunity to we patriots of those profits that are now locked in overseas? the number i'm hearing is over $2 trillion. what can be done to bring that money to invest back in jobs and plant and equipment? mr. mnuchin: the president-elect's things we will get over 3 trillion. his number is three drying dollars to $4 trillion. who wanto several ceos to bring money back. to the extent that we create a one-time repatriation in the trump plan, we had put it at 10%
here it in the house gop plan, that was slightly lower. but i absolutely believe, and i have heard ceos say this -- and without naming names, some are the biggest holders of cash abroad -- absolutely want to do it and we are committed to that. sen. portman: you are committed to making sure that we can do that. we need to invest those funds back here, including for things like infrastructure. with regard to trade, we heard some discussion on that. i believe in expanding exports. i feel like we are not doing enough there but i also believe in a level playing field. one area we have had contention is currency manipulation. we tried in the legislation to get that done. we introduced an amendment which came close but we did not get it done to make it a trade objective in our trade negotiations. we did pass something in the customs bill that directs -- relates directly to your job.
there are some conditions that have to be met that trait manipulators will beat. at the end of the day, in the country feel to change its policies, the treasury secretary can recommend the president take action such as prohibiting the president from getting goods from that country. if confirmed, would you confirm to take full advantage of that enhanced authority that would give the environment -- mr. mnuchin: absolutely i want to point out and thank you to it i know you have taken the opportunity to meet with me several times. i enjoyed our working lunch yesterday in your office. we talk a lot about these issues. i'm absolutely committed to working with you on this. it sounds like a very important issue. sen. portman: again, one where there is bipartisan agreement to address currency manipulation. i appreciate your commitment to work with us. another topic i wanted to touch on was the irs. i understand there was some
discussion -- i had to step up for another hearing -- regarding the irs. i heard what senator burr said about the examples of irs poor management, including promotion policies. obviously, we know there was politics involved in the irs, making decisions based on political matters, which is totally inappropriate. the irs has created a huge problem either way it has not performed in the way that anyone would expect. on the other hand, by understaffing and underfunding the irs, taxpayers service has been eroded. that affects my constituents. 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 a simple fight tax code? mr. mnuchin: absolutely. this is something i feel very strongly about. it is something that i hope we do have bipartisan support on.
this is one of the areas where i think we will all agree, to the extent we had resources, we can collect more money. one of the things i have heard is, one of the reasons we have technology problems is because, based upon the guidelines, we cannot afford to hire technology people internally. while i think there is some external technology, we need to have internal expertise in the irs to manage our own technology systems. , like anyy and age other entity, we need to have good customer service. 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 people's information safe. i can go on and look up my real estate tax bills in california
and see my information there. i don't see why we don't 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. sen. portman: i know my time is up. the ranking member and i would agree on this but additional focus on the irs, i think, is an opportunity for us. 19 years ago there was this reform effort, i cochaired it. every 20 years, it ought to be looked at. including the technology. this is an opportunity. i appreciate your comments today. i appreciate you being here today. mr. mnuchin: i look for to working with you on it. mr. chairman: senator cantwell.
i can't someell: of your testimony but i apologize i had to be at the hearing with governor perry for most of the morning. a busy day: it is and you are, getting a lot of buzz, so thank you. senator cantwell,: do you support returning to glass-steagall. ? mr. mnuchin: i do not support going back to it as is. perhaps we need a 20 century glass-steagall, but no, i do not support going back as to taking a very old law and saying we should adhere to it as is. so, is thatl: and the position of what the republican platform was? i thought it was glass-steagall. mr. mnuchin: the republican did pass at the
convention, glass-steagall. the president-elect, and went we talked about policy with the president-elect, our view is we need a 21st century glass-steagall. sen. cantwell: when did that change? hasmnuchin: again, that been a part of the campaign, has been in some of his speeches. sen. cantwell: so october? at the convention it was glass-steagall. mr. mnuchin: at the convention, the republican position was glass-steagall. sen. cantwell: so his position was never glass-steagall or all along he meant a different version? mr. mnuchin: again, i can only tell you, postconvention this is an issue that he and i have discussed, ok? something that we will be looking at. sen. cantwell: do you think that mr. metaphor to leaving had anything to do with the change m --anafort had anything to do -- manafort leaving had anything to do with the change? mr. mnuchin: no. now i understand
that the president-elect is not really support glass-steagall. he supports some modern version, which i don't understand. perhaps you could tell me what that modern version is. thinkuchin: again, i separating out banks and investment banks right now under glass-steagall would have very big implications to the liquidity and capital markets and the banks being able to perform necessary lending. in terms of looking at a lot of regulatory issues, the administration will look at glass-steagall, and what i revert to as the 21st century glass-steagall, as part of regulatory reform, have a view as to what is appropriate. to beantwell: i just want clear, because i think in your testimony i heard, you did allude to the damage that was caused by the implosion of our
toxicy, brought on by financial instruments that did not have the backing that they needed. according to the dallas fed, $14 trillion hole in our economy. i think you alluded to the damage. so now, what i also think you answered -- in some a note from believe ines, you the concept of par trading not belonging to the bank. mr. mnuchin: correct. sen. cantwell: so where does that go? , you don't think today there is a clear prohibition, and you want to see a clear prohibition? mr. mnuchin: today, we have a prohibition of proprietary trading in banks sen. cantwell:. with loopholes --sen. cantwell: with loopholes. mr. mnuchin: the problem is it
was left to the regulators to decide. so the first issue -- and again, i'm a believer in proper regulation. but i'm also a strong believer in people need to understand the regulation. we need to be able to explain to banks what is proprietary trading and what is not proprietary trading. i think if we're betting on things that's proprietary trading. the federal reserve had their own independent report on a lack of liquidity in many of the important markets. so what i'm 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 it doesn't eliminate liquidity in many of the important markets. senator cantwell: so you would basically just tighten what you think are the rules that are out there? so you would lessen the rules
that have already passed in dodd-frank? mr. mnuchin: no, that's 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 can't do and that they can provide the necessary function of liquidity in customer markets. again, i'm referencing a problem that federal reserve has independently raised. senator cantwell: well, i think to me, i think this election was a lot about the frustration of the american people on the implosion on our economy and the fact they have not recovered. and i think the president-elect, whether he directly or meant to or -- i was pleased that his party adopted coming up with a very bright line of separating commercial from investment banking. so now i think where we are
today, we're not sure. hopefully we'll get a chance to vote on this, all our colleagues, now our colleagues have to answer to platforms and committees. hopefully we'll get an answer where our colleagues are on this, but i will tell you that not only is this an issue of people wanting to 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 not recovered. so lowering the corporate tax rate without getting a plan for the average american who lost pension, couldn't send their kids to school, maybe lost their home, what is the tax policy that 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? mr. mnuchin: 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 advisor, to work for the american people and groy the american economy so -- grow the american economy so the average american worker does better and that's why i've been willing to sell all my investments, ok. i've 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. i've traveled for the last year. i've seen this and the president-elect understands that very clearly. senator cantwell: so just one question on that. i know my time has expired. so did you mention what tax break policy you would give to that american worker? mr. mnuchin: 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. senator cantwell: not specific to education or pension or a broad tax break? mr. mnuchin: well, as we talked -- as we had a chance to talk about, i think pensions are a very important issue, and i'd be happy to work with your office another time, ok. i think the people who have earned pensions absolutely deserve to have those pensions maintained and be safe. and i'm very concerned about the retiree issue in this country, and that's something i look forward to working with you and others on. senator cantwell: thank you. mr. mnuchin: we need to protect the pension-holders in this country. senator cantwell: thank you. thank you, mr. chairman. hatch hatch we're going to take -- senator hatch: we're going to take a 10-minute break here. my friends on the other side have requested a second round and we are going to grant that.
>> treasury secretary steve muchein served as donald trump's campaign finance chairman. orrin hatch calling for about a 10-minute recess, and we expect the second round of questions shortly. donald trump is in washington, but earlier today announcing that he's filled out his cabinet entirely by nominating
former georgia governor son knee perdue to be his -- sonny perdue to be his agriculture secretary. saying he will accomplish great things as secretary of agriculture, from growing up on a farm to being governor of a big agriculture state. he spent his whole life understanding and solving the challenges farmers face. and son ear perdue saying -- and sonny perdue saying, i'm proud to be joining president-elect trump's administration to be agriculture secretary. sonny perdue, the announcement coming from the trump campaign earlier today. donald trump and his family officially arrived in the nation's capital today. arriving a bitterlyier at joint base -- arriving a bitterlyier at joint base andrews. along with mike pence later, they will be laying a wreath at arlington national cemetery at 3:00 p.m. and then head over to the grounds of the lincoln memorial put on by the presidential inaugural
>> just about 24 hours from now barack and michelle obama will depart this location as private citizens. donald trump and his family, meanwhile, staying at the blair house tonight. just across the street from the white house, a tradition started by jimmy carter the day before he was sworn in as president in 1977. an update on donald trump's cabinet picks. more news from "the hill" here reporting about comments from senator shuck shumer and his briefing earlier today saying the senate will take up at least two of donald trump's -- donald trump's nominees. democrats allowing for a day one vote on retired general james mattis and john kelly. trump picks to head the pentagon and department of homeland security respectively. perhaps others. we'll show you as much as we can of senator schumer's comments as we wait for the hearing to resume.
senator schumer: hello, everybody. i want to be right next to my potential cabinet people. [laughter] reporter: well, that implies hey are going to be confirmed. senator schumer:. no. keep your friends close and all that stuff. sorry we're a bit late. now, early on during the transition, senate republicans said that they hope they could confirm as many as seven cabinet nominations on inauguration day. they said that's what president obama got so we should get the same treatment, they said. but over the last several weeks
republicans have made a mockery of the cabinet hearing process. trying to jam through nominees in truncated hearings, nominees with serious conflicts of issues and ethical issues unresolved and without giving senators and more importantly the american people a fair chance to question and hear from these nominees. if there was ever a group of cabinet nominees that cry out for rigorous scrutiny, it's this one. the president-elect's cabinet is a swamp cabinet, full of billionaires and bankers that have conflicts of interest and ethical lapses as far as the eye can see. congressman mulvaney failed to pay taxes on a household worker. the exact same issue that caused past nominees to withdraw. congressman price is facing serious scrutiny, for trading
stock with one hand and pushing legislation to boost the stock with the other. betsy devos has refused to pay an old election fine. and by the way, the fact that her hearing was so appalling to so many americans, 15 million people, we sent out just a video of a couple of the questions. 15 million people have seen it and if you go look on the social media, trump supporters are saying, why the heck did he nominate her? rex tillerson has refused to recuse himself from matters relating to exxonmobil for the length of his term. amazing. head of the biggest oil company, and after one year he can do things to help it again. his work there decades. and just this morning, we've learned that steve mnuchin tried to hide his holdings in the cayman islands from the
finance committee. the list goes on and on and every day there is a report of a major ethical lapse by this cabinet, the swamp cabinet. the president-elect isn't draining the swamp with his cabinet picks. he's filling it up, contrary to everything he promised during his campaign. these issues and others deserve to be thoroughly and rigorously reviewed by the senate. senate democrats asked for multiple rounds of questions, multiple days of hearings, outside witnesses and to have ample time to review a nominee's completed paperwork before a hearing is held, particularly in light of the fact that so many of these fox -- folks have such complicated paperwork you can't just review it in a day. i would remind my republican friends that the only real billionaire in president obama's cabinet, penny, took
ix months to clear her ethical conflicts and file papers. so we have made some progress on a few fronts. but the more we learned about the nominees, the more important a thorough, fair process became. and the more it became clear republicans were simply trying to jam through these nominees out of sight of the american people. they're not really proud of this cabinet, and so they want the hearings to be as quick, as short and as bufrpbled up as they can be. -- bunched up as they can be. even though back in 2009, republicans asked democrats not to have any hearings before the office of government ethics had signed off on a given nominee. senate republicans did exactly that with betsy devos.
senator alexander stymied members from asking critical questions of both mrs. devos and mr. price. some members of the public were kept out of hearings. one report was there were only seven public seats in the hearing for mr. pruitt. from top to bottom, it's clear republicans were attempting to orchestrate a cover-up of the president-elect's swamp cabinet. senate democrats and the american people won't stand for it. so the inauguration is tomorrow , and here is what we are prepared to do. senators on both sides of the aisle have expressed support for the president-elect's key national security nominees. we expect to be able to vote on general kelly and general mattis tomorrow and look forward to beginning the debate on congressman pompeo in hopes
that he can also receive a quick vote. it's possible that some other noncontroversial nominees could be considered relatively quickly, but from there, we intend to have a full and rigorous debate on the president-elect's remaining nominees. senate republicans did not want to have a full debate on the merits of these nominees in committee, but they should be prepared to do so on the floor of the united states senate. i understand republicans are saying they wouldn't have chosen any of obama's nominees but allowed them to be conpirmed. let me be clear. -- them to be confirmed. let me be clear. the republicans would allow confirmations and votes for nominees who would not have been chosen by our party, but what we will not support are nominees who are so extreme in their viewpoints or their noncompliance with ethics laws and practice that they have
demonstrated themselves to be unfit. we will not be dilatory for the sake of it, and we're hopeful nominees will answer the remaining questions their hearings have raised and some believe will come back for another round of questioning. that type of cooperation could speed things up on the floor. we'd much prefer to have full questions with these nominees in hearings because they're there. but if we can't, the floor will be the place we have to bring to light the key issues that i've mentioned. if republicans continue to stonewall and cover up the serious issues that many of these nominees are trying to avoid, they should be prepared to have those debates on the floor of the full senate. and i would make just one final point. if republicans continue down this path, they're going to dramatically lower the ethical
standards in government that we've always had, standards that were upheld by previous administrations, obama and bush and clinton and h.w. bush and eagan. a dramatic lowering of the standard in a country where we try to hold ourselves up to higher standards. if the cabinet nominees are confirmed with republican support, when republicans opposed previous nominees for lesser ethical lapses, our ethical standards will wither and that will be one of donald trump's first legacies as president. it will make clear that conflicts of interests and ethical lapses are totally acceptable from the president to his cabinet and on down. the political price, the new administration pays for that, will come down the road for sure. the conflicts of interest and conflicts between the cabinet
members and the president-elect large ssues will cause future problems for this administration, even if all these nominees are confirmed. one of the reasons the president-elect enters office with the lowest approval ratings in history is his failure to drain the swamp and his decision to fill it up with these cabinet picks. so there are good reasons our republican colleagues should oppose some of these nominees, and we will be certainly trying to persuade them. senator hatch: we will begin our second round. i hope people will help us to move this along. so i'll reserve any comments that i have to make. senator wyden. mr. wyden: let's go back to the
mnuchin rule if we could, mr. mnuchin. let's say they cut payroll and investment taxes for the top 1% or 2% of americans while eliminating tax credits for those with low or middle incomes. that sure looks to me like what we agree is going to be called the mnuchin rule. no tax break, absolute tax break for wealthy, do you agree with that? mr. mnuchin: so, again, i think we want to work on -- senator wyden: that's very specific and i'm asking it for a reason. i don't want to have to repeat it. if you have a policy that cuts payroll investment for the top 1% or 2% while eliminating the credits for those who are low and middle income, doesn't that violate the mnuchin rule? mr. mnuchin: again, i think we need to look at the overall tax plan. as i said, the primary objective is to deliver a
middle-income tax cut and tax simplification on the high end. senator wyden: you are already fudging on this commitment that you made to the american people, that you wouldn't give absolute tax break to well-to-do people? the reason i'm asking this, this is exactly what a.c.a. repeal was about in the last congress, and every single republican up here voted for it. so i hope you'll think this over, but this is exactly what troubles me. we've got two tax systems in america. you are nudging our way saying maybe you wouldn't give a break to the well-to-do. i'm asking about a specific situation. you said, gee, i don't know. we'll have to go and see. now, let me turn to a second area that working-class people care a lot about and it involves their purchasing power. there are a lot of questions about the 35% to 45% border tax
that the president-elect is doing a fair amount of tweeting about. could you tell the american people what products would be subject to this tax? i'm not interested now in all the complicated theories about the dollar. i think it's a question worth talking about and the like, but americans want to know what products would be subject to it. working class people want to know if gas is going to be part of this. give me your response. are there any products that are going to be exempt? mr. mnuchin: first of all, thank you. i think that's an important issue. i think this week the president-elect came out and suggested that he had concerns about the house g.o.p. ordered adjusted tax and part of it is the complexities around it and art of it is -- senator wyden: i am not talking
about the border adjustment. i am talking about the border tax that the president-elect has been talking about. mr. mnuchin: he's not suggesting a border tax. what he's suggested is that for certain companies that move jobs, ok, that there may be repercussions to that. he's not suggested in any way an across-the-board 35% border tax. and if anything, quite the contrary, as you said, he has concerns about things that impact the price of gasoline and others. senator wyden: so what products would be off the table for purposes of what i call a border tax and you want to say is kind of something else? what products that working class people buy would be exempt? mr. mnuchin: again, i think when he's referred to a border tax, ok, he's referred to a small number of companies that have moved their jobs or are moving their jobs, putting products back into the united states and taxing them.
so he's in no way contemplated a broad 35% border tax that couldn't be further from anything that he'd possibly consider. senator wyden: let me turn to another topic of tax policy, because we're trying to gather at least a bit of information about how you would deal with some of these kind of common tools that would be in your jurisdiction if confirmed as treasury secretary. now, inequality has grown substantially over the last 30 years. there has been bipartisan upport in the past for the earned income tax credit. there are a number of proposals pending now in the congress. do you have any thoughts on that? mr. mnuchin: again, first of all, as i suggested to you when we met, i hope we can sit down and talk about taxes with democrats and republicans and
see where we can agree on bipartisan solutions. i think as it relates to any specific component of this, i think we need to look at the overall tax reform that we're going to put through and where things fit in it, but i'd welcome the opportunity to follow up with you and work on that. senator wyden: mr. mnuchin, again, and i want to be respectful on this point. because you have not been involved in these policy fields in the past -- and i respect that because there's lots of leadership that a person still can provide. when i asked about medicare, you'd be the managing trustee. you really didn't have any thoughts on that. i just asked but the earned income tax credit. tremendous interest among democrats and republicans. i gather you're not aware that the speaker has long been advocating some improvements that democrats are interested in, and i will tell you, we're
going to have the chance, i guess, to go into some other questions. i'm very troubled on the fact that on these basic tools that you would have, if confirmed, you seem almost unscathed by the subject. so thank you, mr. chairman. mr. mnuchin: i'm sure that you're troubled by that. i hope i earn your support and respect that you aren't troubled going forward if i'm confirmed. it's not that, again, on the earned income tax credit, i don't want to comment on specific legislation on tax. i think that tax reform needs to be looked at as an overall policy, and i've laid out certain framework for what i believe the president-elect believes in for tax reform without commenting on specifics. senator wyden: i'm over my time for this round. i hope because i'm interested in those discussions with you about tax reform, you're not
talking about putting the earned income tax credit on the table as something you might throw in the trash can because if you do, you're going to have opposition from me and you're going to have opposition from the speaker of the house. mr. mnuchin: i'm not suggesting that. i was just saying i wasn't going into the specifics of every single tax item. >> i want to try to cover three quick questions. the first one is to return back to the discussion you were having with senator warner about fannie mae and freddie mac and gse reform, housing policy reform. senator warner and i and a number of other senators on the banking committee have worked for some time on legislation to deal with this circumstance. we currently have a situation in which fannie mae and the mac are run bydie mac are being
the government. we are trying to find out -- the administration may believe it is ok to keep them in receivership and let them run as is or simply recapitalize them and put them back out into the market without .ny housing reforms i realize you cannot comment on a specific land yet heard if you told comment on the fact as whether you believe we need to have reform in our housing finance policies that would go further than simply recapitalizing fannie and freddie or keeping them in receivership. steve mnuchin: thank you for that. funds, i think i am an expert in fannie mae and
freddie mac. it would be one of my priorities to work with you. we need housing reform and a solution. the status quo is not acceptable of just leaving them there. this are two extremes on and it is something i look tting down and talking with you. don't put the taxpayers at risk and two, we don't eliminate capital for the housing market. i'm very concerned that middle income people who need mortgage loans have access to the capital. sen. crapo: i agree with you on both of those objectives. that is exactly what we need to work together to identify. steve mnuchin: i'm optimistic we
can work together and hopefully find a bipartisan solution. question,: my second we have seen the unfortunate circumstance in the last few years of the irs actually targeting individuals because of and how theyieve advocate in our society. i would just encourage you to make a high priority that not only the irs but all of the federal functions under your jurisdiction as secretary of are stopped from that of americaneting citizens who are conducting perfectly fleree and legal speech. steve mnuchin: you have my 100% assurance that i will do that. there's no place in the treasury or other agencies for us to be
having people act that way. question,: my last back to the tax issue, one of the big issues i think we must a huge with is that percentage commit a significant majority of business entities in the u.s. pay tax through the individual income side of the code rather than the corporate side of the code. as we reform our corporate code and engage in individual tax code reforms, i'm concerned that we don't end up with a significant bifurcation between different business entities as to the tax burden and the tax rates they pay. i think that is an important issue. again, for large companies that ,re in pass-through form today
the reason a lot of these countries are in pass-through form is because they look at the personal income tax trade and it to the corporate rate and the dividend rate. for many large companies structured as pass-throughs, they will opt to take the business tax and we will find a , youe non-bureaucratic grow your company, you get the lower tax committee distribute out and you pay dividends. that is something that is critical. we will work with congress to make sure we close the loopholes so rich people don't use this as a way to get lower business tax. on the other end, we will make sure that small businesses are protected as well. legitimate small businesses. so the small businesses don't pay and incrementally higher tax because they choose to not engage
in the corporate form. steve mnuchin: correct. sen. crapo: thank you very much. mr. chairman: senator nelson? en. nelson: mr. mnuchin, you are no doubt aware that one of the things as treasury secretary you will have to face is the multi employer pension funds that are in dire straits. these are ones that have become unstableunstable and onces for e like carpenters and truck drivers and miners and the treasury secretary has the authority to temporarily or permanently reduce the pension benefits if the plan is projected to run out of money.
are two bad outcomes. one is running out of money. you will be faced with the problem of what to do about it. that are living on the edge. in the reduction of the pension is going to mean something that they have to go without. what do you think about this and how would you approach this heart wrenching issue? steve mnuchin: i appreciate your concern. officeve your followed up and sent me some information on this. it is something i look forward to working with you on. i think the people who have worked long periods of time and have built up a pension deserve to get their pension.
that is very important. on the other hand, we have to be careful that on the other extreme we don't have a bailout of the entire pension industry and bankrupt the guaranty fund. yourmit to work with office. i understand these issues and the sensitivity of these issues. i share your concerns that ionsing truck drivers' pens ad other people's is significant outcome and we should go to great lengths to find other solutions before doing that. sen. nelson: since folks like you and me have been blessed, we don't often have to walk in the shoes of people like that who are living on the edge. steve mnuchin: i completely understand. in yourson: i ask that position with this awesome authority as treasury secretary that you put your self in those shoes.
another financial disaster is what is happening in puerto rico , not only because of what they in at fault about, but also the unequaled way that they have , quirksated by the law in the law that i do not understand how they ever got that way. they are not treated the same on bankruptcy laws, they are not treated the same on medicare and medicaid laws. they have a particularly tragic situation where they were given a block grant of medicaid money, that is running out this year. , one at the same time third of the island's residents are infected with zika.
those know that 15% of , if they are zika pregnant, there is a 15% chance that they are going to have a deformed child. i would like very much for you to keep that in mind. we have to come up with a plan. i know a lot of responsibility is on us in the congress. the chairman led an effort and we tried to get some things pa t sed in december. but the big things like medicaid are coming up in the future. steve mnuchin: thank you for coming through that. when i did have the opportunity to meet with secretary lou and talk about certain issues that he wanted to advise me on and bring to my attention that he thought i would have to deal with in the near future, puerto rico was high on that list.
i was not an expert on puerto rico before the last 30 days. i have started studying this issue and i share your concerns. i'm glad the commission was established. i understand that the treasury has been staffing the commission. i have someone that i've already on ando start working get debriefed by the treasury staff on this. we need to figure out a bipartisan solution. i'm hoping it can be done in the context of the commission. i look forward to working with you on it. sen. menendez: i have listened to your responses to my west'sues defending one foreclosures and i understand you bought a bad book of loans.
we are saying that you had to save every single homeowner, but by taking the fdic back stock, you had an obligation to at least try. do you believe you made every effort to prevent foreclosures? steve mnuchin: i do. thetually brought with me asked the oig to come in and look at the loan modification process. the independent the review that and that was verified by the oig. sen. menendez: what about one of admittingpresidents 450 foreclosure documents a week without even reading them? can you honestly say that your bank made every effort to keep
families and seniors in their homes when they were robo signing one foreclosure document every three minutes? steve mnuchin: yes, i can absolutely say that we made .very effort being a private equity person who bought a bank, we lived in a glass house and we were constantly viewed by the regulators. there was an industry issue which had nothing to do with loan modifications which had to do with the processing around foreclosures. that was a procedure that was mac and wasndy under ourcontinued ownership. it was salt. -- it was solved. sen. menendez: you keep
--erring to entities that you were putting homeowners on a fast track to foreclosure. that was part of that 750 foreclosures a month. you also had an independent onewestent audit of one foreclosures -- there were 54 incidents over the course of just two years where the bank violated the rights of active duty military servicemen and those defending our country across the globe under the servicemembers civil relief act. if you did all of that, how is it that you feel that you can in swornsay here testimony that your company did everything? steve mnuchin: i appreciate the
issue. we highly regret the extent that we make even one error, especially to the servicemen. we had all those loans reviewed and we paid $8 million. many firms paid billions and billions of dollars. what you are referring to with the ots and the independent foreclosure review are one and the same. we were one of 14 banks that signed a consent order. at the time, we were under the ots, it was later taken over by the occ. we were the only bank that actually completed that independent foreclosure review and we are proud of that. sen. menendez: and the fact that it was completed at the end of the day ultimately showed that your company took people out of their homes and created consequences for them they
should not have had. do you know a woman named sylvia oliver? steve mnuchin: i do not. sen. menendez: i didn't think so. she is from new jersey. she received a loan from indy mac in 2008 and after her employer cut her hours, she wanted to be a good borrower. she tried eight times for loan modifications. every time, your bank denied each and every one. she has been fighting to save her home for seven years. she nearly lost her home yesterday. she has a 30 day reprieve, but that is no guarantee that she will not lose her home next week. i will like to have the testimony of several individuals who faced these realities be included in the record at this time.
they certainly pertain to the record. they pertain to having been foreclosed on and ultimately being loan modifications denied. i see this as an example of privatizing profits but socializing losses. in the darkest days of the financial crisis, you and your friends were looking for stores to ratid. you engineered a highly lucrative equation that make billions on the backs of homeowners, seniors, minorities, military men and women. i have a problem understanding how that creates confidence in the secretary of the treasury nominee when you have to be looking out for every american. it did not seem that when you thathe chance to do that
that was your drive. steve mnuchin: i hope i have the opportunity to convince you. i did not recognize the name. it that you have mentioned to me, it has been postponed. cit did inform you that your office had requested an extension and they did honor that and gave an extension to revisit that. i'm not involved in cit anymore. i would encourage you to make sure that you have -- there is a department within the bank that response to this. any complaints that came through any government or regulatory agencies were responded to very carefully.
i would just apologize to the extent there were any errors whatsoever. that is something i'm very sorry for. having said that, we took over a mortgage servicing business that was not part of what we were trying to build. it was a mess when we got there. we fixed it and cleaned it up. to the extent that we made errors or issues, we compensated people for that as part of the agreement that we entered into with regulators which we think is the right thing to do. carper: you introduced your dad earlier. how old is your father? steve mnuchin: 83. sen. carper: you are blessed to have them with you.
him with you. my parents are both deceased. they would say to me and my again,over and over figure out the right thing to do, not the easy thing. treat other people the way we want to be treated, the golden rule. my dad was always big on doing things -- if it isn't perfect, make it better. just use some common sense. can you think of a word of advice that your dad or maybe your mom would give you over the years that you should have used foreclosuress of you are facing and what you did? steve mnuchin: first of all, thank you. i agree with those many things you were told.
understanding the importance of hard work. as you have suggested, treat people the weight you want to be treated, be sympathetic and empathetic to those people. that's the way you want to be treated. sen. carper: i think you've acknowledged that. we can always do better. i want to go back to the issue of how to create an environment for job creation with respect to growing exports, making sure we get our products to markets across the world. has talkednt-elect about support for a duty on items imported from china.
, 35% duty one 45% items imported from mexico. ordersidered an executive of imposing a 5% tariff on all imports. i have a question with three parts. chooses tonistration pursue such policies, how would similar dutiesse on american exports? our second largest export market for goods. machinery, electrical machinery and biofuels. it mexico were to impose a 35% duty on american exports, any idea what would be the impact on manufacturing? and third, what role would our government have been assisting those small businesses that were harmed by the closing of international markets to our
domestic manufacturers? steve mnuchin: those are all good issues. let me assure you, from my conversations with the -- i'vet-elect on trade had the opportunity to work closely with wilbur ross over the campaign. he's also very involved in trade as well as peter navarro. certain enforcement issues of trade cut across the treasury. be working with the other people on a unified position on trade. president heard the elect to talk about 35% tariffs across the board. i have heard him specifically say if certain companies want to move their jobs, we will put it tariff on them. that's put a tariff on them.
that is something that needs to be looked at. i don't think it is a plan that is going into action. this is as much about growing exports as it is about growing imports. specifically with mexico, most people acknowledge nafta was negotiated a long time ago. we should reopen this agreement. steve mnuchin: we did it in the context of -- sen. carper: we did it in the context of tpp. makee you will go back and sure we understand what was on it or done. steve mnuchin: i am optimistic that we can renegotiate that deal that is both advantageous to us and advantageous to mexico. sen. carper: when you are giving advice to the president-elect, another word of advice from my me,nts to my sister and
what goes around comes around. you might want to keep that in mind. steve mnuchin: i'm not mentoring him. he is mentoring me. but i do give him advice. cardin: i want to go to the tax issues for a moment. i think we all would acknowledge ont our income tax rates global competition puts the u.s. at a disadvantage. it is something we need to deal with. we also recognize that from a business tax point of view, it is not just a corporate rate, it ate.lso the individual righ i want to talk about two
will judgehat i hope the review of tax reform so we can have a simplified tax structure, one that is fairer to the american people. i would hope that you would agree that we do not want tax reform to increase the size of the federal deficit. i'm taking notes. sen. cardin: the second is that tax reform should be at least progressive as our current tax code. is, middle income families should not be asked to pay more in regards to our tax code. i share your: the first the first one, again, we do believe in dynamic scoring with the appropriate
growth. we want to make your that tax reform doesn't increase the size of the deficit. in regards to the second issue come as i have said in my discussions with the president-elect, he is very interested in as providing a middle income tax cut that is his party. -- his priority. sen. cardin: recognize that we have to be disciplined as we deal with the federal budget. i would hope that we would have consistent rules in regards to cuts as tong and tax the dynamic nature of those types of activity. it's a lot easier for us to use the current rules. subjectivity, it endd be abused and at the of the day we could have much larger deficits. you do not want to add to the deficit. steve mnuchin: that is correct. sen. cardin: you want to make sure middle income families are not damaged by the tax code. so, here is the challenge.
you also believe we should be competitive globally. it is difficult to see how you can get that done within the context of using just income tax revenues. among the states industrial nations of the world has a relatively low part of its economy tied up in government. have marginal tax rates that are among the highest in the industrial world. tax.n't use a consumption every other industrial nation uses a consumption tax. without bringing in other sorts of revenue, we will have a very difficult time to get those competitive tax rates. i would urge you to take a look at a progressive conception tax. it is porter adjusted and does reward savings and does make our competitive and gives us a competitive advantage over the industrial nations of the world. i appreciated
meeting with you and talking about these issues and will follow up. under the appropriate growth , weers with dynamic scoring are not looking to grow the deficit. one of the concerns is the size of the debt and how it has gone up. in regards to your other issue, one of the issues that impacts trade policy, we don't have a that's we have an income tax system. the rest of the world uses consumption taxes. we use income taxes. income taxes are not porter adjusted. that makes it difficult for us to grow exports. that's -- income taxes are not border adjusted. we use more incentives for savings, which is the other area we talked about at my office.
to increase the opportunities for americans to save, particularly in retirement savings. i don't believe that would be a partisan issue. as we are working for major tax reform to make our tax code fairer, i would urge you to work with us on retirement savings and other savings initiatives that we could make progress in a relatively short amount of time. steve mnuchin: i look forward to working with you. thank you. thank you very much, mr. chairman. i want to thank you for allowing us to have an opportunity to ask questions in multiple rounds. thank you for allowing that. marathon.physical .
we appreciate your hanging in there as well. following up on colleagues speaking about jobs going overseas, obviously a critical issue for michigan. we make things and pride ourselves in making things. had been working for a number of years on a bill we call ring homehome -- bring jobs t.curat it seems in line with our incoming president that's what our incoming president has said. steve mnuchin: i look forward to working with you on that. it sounds like something the president-elect would like. i think it's important that we take step one and admit all
the loopholes that are there. first of all, we should not pay for the move. i hope that is something that will be embraced. i know colleagues have talked about pensions, which are critically important. people throughout their lives often giving up a pay raise to put money into a pension, it is very serious what is happening to pensions around the country. certainly whether it be a multi employer pension or single-employer pension, deeply concerned about what is happening to people. gaoave heard that from the in 2013 that if there was a multi employer pension fund to seeme insolvent, we could an estimated benefit paid by the pbgc to be reduced less than 10%
it seems tonteed -- me that is a pretty basic promise that we need to keep. other to go on to the piece of keeping our promises. is the pension and the other is social security. as treasury secretary, you will be a trustee in a very important position. i think it is important to know if you are committed to upholding the new president's promise in may of 2015 that you would not support cuts to social security. steve mnuchin: i absolutely support the president's promise. that is why i'm here. sen. cardin: what is a cut -- >> what is a cut? we've heard increases in the retirement age.
steve mnuchin: i have heard the president's promise. i would sit down and discuss it with him. i'm happy to work with you on the specifics. i have not discussed the specifics with him. i know how he feels. i acknowledge it is a very significant issue. it is something i look forward to working with you and your office on. just as the financial crisis created a serious situation for people at home, we all know pension funds were involved in that as well. somehow did not make it to the top in terms of being able to be made whole. promisean unfulfilled and obligation that our country still needs to keep. on social security, there are a lot of ways to look at this. whether it is raising the environment age, progressive
price annexing, privatization -- all of these things would reduce a worker's benefits as they become a retiree. the you know the average social security benefit per month? steve mnuchin: i do not. i apologize. .12. cardin: $1228 and not a lot to live on. much.you very steve mnuchin: it is a very significant issue and i look forward to working with the president-elect on this. brown: thank you.
i've been pleased the president-elect is committed to helping manufacturers. he wants to buy american and higher american. hirey american and american. i'm extending it to all infrastructure construction if taxpayers pay for it. our companies and our workers should build it. i want to let you know of that. i want to talk to you about china. i've never met a goldman sachs anchor who wanted to get tough on china. based on your wall street background in financial dealings come i'm concerned about what i've seen in the past with bankers being soft on china.
relativity media, when you were during 2014 and 2015, the company received investment from chinese investors in the company's films and partnered with the people's republic of china to distribute chinese films. china readily admits it wants to be more powerful by increasing its cultural influence. member of a board company that increased chinese influence in hollywood. were you helping china expand its global power? steve mnuchin: let me first i left goldman sachs 15 years ago. i think of myself as a regional bank or. theegional banker chinese never invested in and i don't recall
them ever having invested in relativity films. they had a small joint venture in china that was not particularly successful come up for what it's worth. president'srt the view that we need to look at china overall from a trade standpoint and economic standpoint and security standpoint. i look forward to working with him on that. sen. brown: we will follow up by mail to talk about that. china has great capacity in the production of steel. you make a plan to address overcapacity in the steel
industry within the first month on the job?? i'm happy to work with your office -- i will make a commitment to sit down with your office and work on this issue and then figure out the timeframe and whether we should be making public. i understand the issue. the president-elect is concerned about these issues and we will work with you on this. sen. brown: you left goldman 15 years ago? steve mnuchin: i did. 2002. sen. brown: during part of the time you were at goldman, one of had managed the portfolio of the teamsters pension fund -- while goldman was a manager when the plan lost 40% of its value.
losses and to those smanagement of mi that plan, the fund is in distress and at risk of becoming insolvent. there is a certain irony that if confirmed you will be a member of the board responsible for protecting the pensions of 400,000 working families. i assume you don't know who butch and rita lewis are. their constituents of mine and senator portman. he passed away on new year's eve due to a stroke which contributed inen treat part to the stress he endured over pension cuts.
she will lose almost her entire pension. i know you said you are not for finding a way to make these pensions hole, but understand this congress bailed out wall street banks, including goldman. i hope you will change your mind. steve mnuchin: i can assure you i had nothing to do with that issue when i was at goldman sachs. i completely understand that and appreciate that. sen. brown: i know there is an ideological antipathy to help the wall street banks but not help workers like rita lewis' husband. last year -- i work with
manufacturers at a metals warehouse that was driving up costs. will you make it a priority to help the fed finish its merchant banking rules and to use treasuries authority to address these unfair practices? steve mnuchin: absolutely. sen. brown: thank you. i understand the treasury has joint rulemaking authority and merchant banking. you have a role and role. i hope you exercise it. >> mr. chairman, thank you. to talk -- i don't question the president-elect's desire to repeal and replace obamacare. he said it and i don't doubt it.
what his question is positions are on all the taxes. there are a dozen or more taxes in obamacare, $1 trillion new taxes on middle-class america. can you clarify the president-elect's position on the taxes that go along with it? i just want to apologize that we did not get back to you on that information. i have read my staff the right act that this will be our top priority. in regards to obamacare, i have not been as involved in the specifics of the repeal and replace as it relates to the taxes. is to get ridng
of the surcharge on that. sen. heller: there's a number of controversial taxes. i want to hone in on the cadillac tax. it is a 40% excise tax on what they consider cadillac taxes. this would affect 1.3 million nevadans, 120 million americans. we are talking seniors, unions, public employees getting hit by this 40% excise tax. give me your feelings on this and your desire to repeal the tax of this nature. steve mnuchin: i agree with you. i'm not as close to the whole obamacare discussion right now, but i will definitely follow up with you on that. sen. heller: it was postponed two years to 2020 from the work
of senator heinrich from new mexico and myself. what i just want is a commitment to work with you as we go forward on this and hopefully we can reveal what i consider to be an onerous tax. steve mnuchin: it sounds like what you are saying makes absolute sense. you have my commitment to work with you on that. sen. heller: 17% of the houses in nevada are currently still underwater. i want to talk about the mortgage debt tax. the i rescued it a gift today that if you bought your house and$220,000 today sell it for $250,000, they consider that a gift -- it expired as of january 1. we have reached is that legislation to try to eliminate this burden.
i would like to get your understanding of this, your feelings on it, where your support would be on this particular piece of legislation. steve mnuchin: you have my commitment to work with you. i agree with you on that. sen. heller: i appreciate your support. i want the record differect that i would from my colleague with a characterization of the funding i know this has not been your focus yet. the ability to say we are going to maintain the prohibition ,gainst pre-existing conditions
make sure there is, make sure there is insurance for everybody and pay for it all will be a curious act. i appreciate your earlier comments to me about gse reform. i want to clear up one thing. as you are aware, there have been a number of hedge funds that at the absolute demise of those fannie and freddie in the public markets, they went in and bought them cheap. that is what hedge funds do. they have launched a more remarkable campaign of lobbying that is unprecedented. the president-elect and you invested in one of those funds. i imagine you will divest yourself.
in light of your firm commitment earlier not to go with some that and release scheme would greatly enhance those hedge fund profits and leave the taxpayers holding the bag if another housing crisis took place, i thought you would want to comment on that and reaffirm that commitment that you will be looking up for the interest of the taxpayers. steve mnuchin: i have divested my interest in that fund as well. already. out said, my job is to look for the best interests for the taxpayers. balancing on this issue the need for housing reform and making sure we maintain housing liquidity with making sure the taxpayers are not on the hook for that. whatever the legal issues are associated with -- as it relates to the entities, i have to medicine expertise on the entities that i have to mend his expertise on the entities.
expertisetremendous on into these. -- on the entities. sen. warner: you are come from entry of my business background. you've had a great deal of success in business as well. -- you were couple met three of complementary of my business background. people take absolutist pledges on things like revenues. look at the data of the 34 industrial nations in the surprise ofto the many come on america actually ranks 34 nations in terms of total revenues as a percentage of gdp. it affects our tax rates compared to everyone else. my hope would be that you would
take one of those absolutist pledges in an effort to drive deficit $19 trillion , growing much higher with these tax reform plans put forward, that you will not arbitrarily take one half of the balance sheet off being considered. steve mnuchin: i am working for the american people. i will be open-minded in looking at different things. not only do i have a new view, but we have a president who is looking -- sen. warner: i will hold you to that. the absolutist approach is the weakest place where we are spending the lowest level on education, infrastructure and r&d. i was a little surprised at your
response having gone through the fdic process with a relatively lehman, institution -- much smaller than many of the institutions, took five years in the bankruptcy proceeding. in title two of. frank, a bipartisan part of the bill --. dodd-frank, a bipartisan , if thethe bill could not take place, you had as a fallback provision title two. reserve you would be in favor of repealing.
steve mnuchin: it is a complicated issue. sen. warner: absolutely. that is why i'm concerned. steve mnuchin: i'm not suggesting that we remove title two tomorrow without having the proper bankruptcy solution. it depends on what is in bankruptcy. it depends on whether we are talking about a holding company that just had a bunch of sub debt and equity or the bank. we have had a process to resolve banks. and theto look at it holding company issues. sen. warner: the national bankruptcy conference, which is composed of bankruptcy judges it shoulds -- continue to be available even if the bankruptcy code is amended. >> i want to gently take issue
with my colleague -- it is clear that the foreign investment have the does responsibility of looking at foreign investment and whether it impacts national security and clearly, you will have a role in that. it would be hard to argue that debt owed to foreign entities could not have any impact on national security. i recall that when a foreign company was looking at buying starwood, it was going to go there for a decision. if you decide someone wants to come in and buy one of president trump's properties and you decide it will risk national security by the location or who the foreign entity is, the ultimate decision is whose? steve mnuchin: again, let me assure you, i will take my role
as chair very seriously. sen. warner: but whose decision is it? steve mnuchin: i will consult with the internal counsel at treasury and the ethics area of what theand determine general counsel at the resolution. mccaskill: whose is it? it is the president of the unite states'. you make a decision and it goes to the president and the president gets to decide. the same guy hiring his own ethics team. you make the decision that it should go to the president, i want to point out for the record that ultimately, it is his call, it is not your call. we are in a bit
of a unique situation that we have not had a president like this. willing to come into government and serve the country as president -- i assure you, we will come back and talk about these issues. we will work with the chairman on this as to the purview of the committee and the appropriate lawyers. steve mnuchin: it is different -- sen. mccaskill: it is different. we got the annulments clause because a foreign government gave a snuffbox to the president of the united states. that seems the minimus in light of how complicated the international aspect of holdings that the president is going to stay with through his presidency. i do think you are inviting a lot more questions down this line. besides being a former prosecutor, i'm also a former auditor.
when i heard the president-elect's pledged about profits from foreign governments going to the treasury, my ears perked up. as you well know, you benefit from income to your business, even if it is not profitable, correct? steve mnuchin: how do you benefit of income if it is not profitable? you mccaskill: let's say are the trump hotel by the white house and you are losing $1 million a year and a foreign government comes in and buys a suite of rooms for a year which brings your balance sheet much closer to a loss of $200,000 a year. haven't you benefited from that income of $800,000 year? steve mnuchin: i am following your reasoning. sen. mccaskill: first of all, i think he has to in order to make good on a pledge to do this, he has to pledged to give all of his income from foreign interests unless there will be an auditor. when mr.decide if and
trumps businesses that he has not divested from our profitable from foreign involvement? who will make that call? his family? is that going to be his ethics officer? are there going to be -- is there anybody who works for you whether or not he is profiting off foreign involvement in his wide variety of interests across the globe? steve mnuchin: you've raised some very interesting comments. i would be happy to follow up with you. i'm sure the president-elect will put out more information on this and i'm happy to inquire with him. mr. mnuchin, is there anyone with income under $200,000 who will receive a dime from repealing obamacare and the tax cut that goes with it? steve mnuchin: we are looking at overall tax reform.
sen. mccaskill: in repealing obamacare, you will repeal the taxes in obamacare that strengthen medicare and do all those things. if you repeal obamacare, it will be a tax cut. will anyone who makes less than $200,000 a year receive even a dime from the tax-cut? steve mnuchin: i think we will look at tax reform as overall and what it does. obamacarent from when was put in, it was a tax hike on the people. sen. mccaskill: people who made over $200,000 a year. most of it was on people who made over $1 million a year. thatne dime of the tax cut the republican congress is about one american to who makes less than $20,000 year. -- $200,000 a year. you supported the bank bailout.
you support the stimulus. so did i. we both agreed it was necessary in light of what our country was facing. pensions, you have an incredibly important role in the stability of guaranteed pensions. state 32,000 people in my network card for decades, most of them driving trucks. they planned their lives around their pensions. bailout for the ands and provide stimulus do an awful lot of things around here to benefit people who have a lot of money. will you commit to meet with some of the truck drivers from my state so they can look you in the eye and explain to you that the guarantee of their pension -- your new boss did an amazing
job connecting with people like these missourians all over the country. he looked them in the eye and said to them, i will not leave you behind. i want to hear from you. steve mnuchin: i will commit to meet with them and i will commit to work with your office on us figuring out what is the appropriate bipartisan solution to this issue that i appreciate. mr. mccaskill: thank you, mnuchin. >> i wanted to start with a question you have no doubt come -- ss
been an all too common occurrence. maybe not at this moment, but workers in countries across the state. let me get some basics down. violating international trade laws and a country that engages with that activity and behavior should be held accountable. mr. mnuchin: yes, i do. second, while china's currency policy -- would
you commit to me that if china began to manipulate its currency again, you would recommend to the president that the government formally named them as a currency manipulator. i am happy to hear you answer to both of those because this cuts both parties, it cuts across all different points of view. i want to move to tax issues. for you came to my office, a little while about tax reform, and your perspective, in particular, i want to focus on the middle-class. many in the incoming administration have talked about trying to help the middle-class, and correct me if i am wrong, but he repeatedly said you want to provide middle-class tax cuts? mr. mnuchin: that is correct.
sen. casey: what specific provisions would you support as treasury secretary that would get to as you define a set of trade policies that would provide that kind of middle-class tax cut? mr. mnuchin: there are two different issues. trade policies and tax policies. i see the trade policies as that are beneficial for the american worker and american companies, and i see things thatcies as incentivize businesses to be competitive here as well as simplify personal taxes and reduce middle income taxes. i hope we can be more specific. i think the american people need to know that when any deal is reached in this town when it relates to taxes, whether tax reform or subject more limited,
that the middle-class does not get left behind. you the peace from .he new york times august 12, i remember the day because of how stunning it was. did the analysis of candidate trump's cabinet proposal, the republican house program, the middle-class got to -- .2%. a big bonanza there. got five full percentage points. you made -- you may debate that it is wrong or the other analysis is wrong. i hope when this incoming administration is work with a republican congress, that had an agreement taxes, i would hope we would not see that kind of bonanza, a giveaway. a giveaway to the very wealthy.
the concern a lot of us have is you are seeking to be not just or government but arguably one of the top two or three positions in the government at any time. it has an true since the founders. you have is concern, not been through scrutiny of public officials or even public officials -- i know you are in the mists of that now. of your liferms experience or work experience, what qualifies you for prepares you, not just to fill the duties of the office, that is one
worth a significant review. youtell me what prepares and what part of your life is relevant to the question of preparing to do public service in one of the most complicated of the most complicated government on the planet earth, the federal government of the united states. textpeople would point to -- .2 experiences they had outside their normal day to day job. public service in addition -- mr. mnuchin: i do think i have privateugh scrutiny, my rut -- private life as part of doing this. it is part of the deal and i
fully disclosed everything, as you know. i consider it a great honor to be able to serve the country. through the beginning of time, to serve the people. no different than president elect trump. he decided to step way from his business and serve the country and he spent the last two years campaigning and being on the road because he wants to serve the american people. i share that desire. in regard to what has prepared me, i have had several different careers. at goldman sachs, i had tremendous experience in the financial markets and in technology. both of those are important things and expertise for a treasury secretary to have.
that, i have been in the investment business and more portly a regional banker. a regional banker who has lent unique combination, unlike hank who just ran a big investment bank. iran a big part of goldman sachs. i have similar training experienced what bob did, was that gold and sex serve and on top of that, i have the added a regionalbeing banker and lending companies. it is something i have been doing. closely with very the president. one of the important parts of the child is the treasury secretary has to have a close relationship. i view my job as serving the president and being a conduit between the president's and between the senate and the
house. i think i have a unique set of skills and that is why he has chosen me for the job. i would add to my earlier comment, this is public service. it is not just being able to fulfill a duty or a job. you are a servant with the people. inscription on the state capitol in my home state of harrisburg, the golden i worked in for 10 years. service, thepublic best way i've ever seen. it says public service is a trust given in faith and accepted in honor. the accepted in honor part is challenging for all of us. i just hope you bear that in mind, if you were to be successful in the confirmation process. has one morenendez question he would like to ask and hopefully he will be the
last one to ask. sen. menendez: i care about pensions. you served for the parent company of sears and kmart for our 12 -- 412 years and you served on the finance committee passed with reviewing investment policies of retirement plans for the company and its subsidiaries. the chairman and ceo is a gentleman who i understand is your former colleague. you are also an investor in the you arend, which choosing not to divest yourself of if i understand with your disclosure. to $26 million from the hedge fund last year according to disclosures. that same hedge fund post 29% of portfolio in sears stock and
itself owns 49% of sears stock according to public filings. are those all fair statements? make 26 million. >> ok. sears has been performing poorly and is covering operating costs to contribute to its pension fund. several of the most valuable assets sold in part to mr. lambert's hedge fund, including most of sears real estate, the real estate was sold off to a different entity. that seems to have resulted in a shareholder lawsuit according to filings. the pension benefit here and tee anporation initiated agreement with sears to protect the pension benefits more than 200,000 participants at the real estate deal and significant cuts
to health subsidies that occurred during your watch. unfortunately, this puts the pensioners behind the ability to get assets from sears in any bankruptcy proceedings. because sears has received it hundred million dollars in security loans from these hedge funds, some of them secured by the sears properties, the a 2.1n fund currently has billion dollar operating cap. i take these all from filings and public reports. i assume that that is basically a fair statement. question and my then i will be happy to hear your answer. are you aware you would become one of three board members of guaranteen benefit
corporation that has the power or deny a plant termination application such as what could occur with sears bankruptcy, making the federal government sears pension review recognize you will be part of that. and is where my concern is maybe you could elucidate it for me. you were the director for 12 years where you had oversight over the invest for the pension fund. that has been underfunded. benefits were cut during the time you were there. it now faces a $2.1 billion funding observation gap. sears has sold off some of the most viable assets while you have been on the board. your college roommate's's hedge fund has a large interest in properties sold. sharess secure funds own to your stock shares. another 26 million last year in your shares hedge fund and you are refusing today investor self
of the hedge fund. and youears go bankrupt confirm as treasury secretary are a director who would have a role in the pension of benefit aarantee corporation's as creditor to recover $2 billion for the unfunded liabilities in the sears pension fund, while trying not to lose money in your hedge fund investments in sears that you hold with your college roommate, who is the ceo of sears, how is it you are going to do that? >> you said i may 20 $6 million, which i did not die invested 26 million. i want to make sure the invest -- the record states that. was --inal involvement with mr. lampert was in kmart running a bankruptcy. we thought it should be saved tens of we
hundreds of thousands of jobs. sears thought it was already a failing issue and the company has contributed multibillion dollars to that fund and issues before hand. aware of pension issues, something that when i was on the board, we were very cognizant of, very significant contributions. virtually justll recuse myself in any way as it relates to being on the board if indeed there ever were an issue with sears, whether i had an investment in esl. i would be concerned about any conflict. menendez: if you recuse yourself over that that of not sureances, i am the remaining two can ultimately
make a decision in such a case which involves 200,000 people's pensions. it is a serious issue and i urge your attention to it in terms of thinking about how this well may happen. because those were underfunded because -- now we will have circumstances where we have to do with it. i think it is a serious challenge. i will work with the ethics office and the general counsel. sears has contributed billions of dollars to this along the way. >> all right here the sender will give his closing remarks and then i will give mine. >> thank you. i want to review for the colleagues where we are from the standpoint of
process and substance. signed documents omittedffidavit that the cayman island fund a $100 million of real estate. six shell companies, and a hedge fund. corrected.t self the only reason it came to light was my staff found it and told you it had to be corrected. i hope you make another based on what i heard today. when we talk about the fund, and i asked whether you pursued this , you said it was really all about helping churches and
pensions. your words, not mine. i have a document that indicates you are helping a lot of private investors as well. thepe you will take comments you have made today, people whomed most you are hoping, churches and pensions, that they will get the fcc lockman -- document lays that out. from the standpoint of substance, the mnuchin rule promising to me, when you said time, no absolute tax cuts for the wealthy. thought the senator was very good, probably considerably more eloquent than i, asked when you aca because,
look at the aca, it is really a trojan horse for tax cuts for the well-to-do. she and i pointed out that well-to-do people would get payroll tax cuts and it would be paid for by the working-class, losing benefits. throughout the afternoon, when anyone would ask the question about task -- tax policy, we said well, it has all got to be bigidered as part of this architecture. your words, not mine. whether you knew anything about the end and come, for example, and if you did, you could include that for the record as well. but your point there was it has taxto fit with the overall
architecture. the tax policy center, the center that does the objective analyses, indicates that the trump plant, which you have been a part of, would add billions skews me, chileans, the debt, and would disproportionately provide a tax cut to everyone but would disproportionately favor the well-to-do. me to myreally gets last point, the point where i am really walking out of fear with it. strongly about the tax system in america just being a broken, dysfunctional, rotting economic carcass. says to stop there because you are going to frighten the children. in fixingerested this. i can tell you are interested in fixing it as well.
i think i mentioned to you in the office, republican senators, including one who the president-elect wants to help run the intelligence field, wrote a bipartisan bill. the hallmark of that bipartisan it would give everybody in america the chance to get ahead. it would not just be stacked all in favor of the most well-to-do. as far as i can tell with respect to your views, your views indicate that you do not commitment the approach that mitch mcconnell's's economic lieutenant and i all put together. i am walking out of here thinking about it.
i am open to being persuaded. oftainly, it would not be certain -- the first time if i've missed something. , wheresure looks like there is one set of rules with cops and nurses -- and nurses and another set of rules for people who are well-connected can pretty much pay what they want when they want, to maybe nothing at all, that system is still going to be pretty much alive and well with your purchase to taxes. i appreciate having had this chance to discuss this today and thank you for your time. >> i have numerous letters and hundreds of signatories in support of mr. mnuchin's nomination. the support includes representative in the banking industry and the american banking association, letters
from small business owners to national banking coalition to the national diversity coalition to families for -- churches and nonprofits and businesses, businesses serving predominantly minorities, included in the support for the position of treasury secretary. fullal of the letters are who are not personally affiliated who applaud his efforts when he had ownership in one length -- one. the letters of some or should be included in the record, without objection. i want to thank my colleagues for participation today and
especially you for going through this long ordeal. if nothing else, i think you should be commended for your endurance, as is typically the case, the timeline for written abbreviated sobe i hope everyone pays attention. theirthat members submit questions by saturday, the first. you and others in support of you, frankly, i think you have handled yourself very well with byvery difficult questions some of my colleagues, some of which were very thought out and very interesting questions. you handled yourself as well as any nominee for this that i have seen.
really goodsome people who have been well known and are still well known and who brought a lot to the table. i don't know that anyone is bringing as much to the table as you are. i hope you can help this country with the ordeals it is going through right now, especially economic ordeals. usope you will be a chairman influence with our president-elect. i know that he wants to change things and i hope that he can. i hope we get things going in the right direction. feeling youi have a will be one of the reasons. i'm grateful to you for being willing to give your time. i said, you are going to lose a .ot of money taking this job your response was, i don't care. i want to serve my country and
you are going to lose a lot of money when you sell off all your assets and so forth. you have made a tremendous sacrifice and i hope our colleagues on both sides of the aisle will fully realize that, having people like you to give your life's work to something like this, because you love the country. you're hoping we can pull the the messes that literally system that we really have to change. that, i will thank you for your patience and i want to tell you you have certainly impressed a lot of hair and especially me. we are going to help you get through this ordeal and also help you when you are there. have friends here on this committee on both sides
of the aisle and for good reason. this job is one of the most important jobs in this country's history. i think you are the man for and i want to personally commend you. with that, we will recess until further notice. >> thank you very much. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2017]
2000 3-2011. the issue of cabinet nominations will come before the senate on operation day. 7:00row, noon eastern at a.m. eastern, later the senate will return tomorrow for votes on president-elect trump's nominations, including james mattis for defense secretary and retired center john kelly for homeland security secretary. the debate will begin, republican, smith mike pompeo and his nomination for cia director and his nomination for mr. ponte over congressman pompeo on monday. senate coverage at 4:00 p.m. eastern over on c-span2. we will take you live momentarily to arlington national cemetery where president-elect donald trump and vice president-elect mike pence have arrived at the cemetery. they are going to lay a wreath at the tomb of the unknown soldier