Treasury secretary nominee Steven Mnuchin defended himself Thursday from attacks by Senate Democrats who blasted him for alleged predatory home foreclosures in the aftermath of the Great Recession.
Democrats and Republicans clashed in the confirmation hearing even before Donald Trump’s Cabinet pick defended his work history in an opening statement.
During the Senate Finance Committee hearing, Mnuchin parried Democratic attacks on his history with foreclosures at a lender he co-owned and tax practices at his hedge fund. He hit the Trump administration talking points of lowering taxes on businesses to encourage them to keep operations in the U.S., saying he thinks 3 to 4 percent sustained GDP growth is reasonable and playing down analyses that Trump’s tax plan would expand the national debt by trillions.
Mnuchin, 54, is a financier and former finance director for Trump’s presidential campaign. He previously worked as a partner at Goldman Sachs and co-owned OneWest Bank, the former IndyMac that was failing after the mortgage crisis.
Before Mnuchin’s opening statement, Sen. Pat Roberts, R-Kan., joked that he could give ranking member Ron Wyden, D-Ore., a Valium so he could deal with the questions.
Sen. Sherrod Brown, D-Ohio, fired back at Roberts, saying “I hope that comment about Valium doesn’t set the tone for 2017 in this committee.” He added that “this is just outrageous.”
As the pair bickered, Wyden said that “we have many colleagues waiting.” Roberts responded, “Fine Ron, I’m done,” then left for an unspecified reason.
After the incident, though, the hearing was largely more cordial. Mnuchin could have a relatively easy time clearing a Senate vote, as at least two Republicans would need to defect for him not to get confirmed. He also made some concessions to Democrats, including saying he does not want to fully repeal the Dodd-Frank financial reform act and that he would support existing sanctions on Russia.
Just hours before the hearing, The New York Times reported that Mnuchin did not disclose nearly $100 million of his assets on Finance Committee disclosures, offering more fodder against Mnuchin.
In his prepared remarks, Mnuchin attempted to get ahead of Democratic attacks on his record at OneWest and in a mortgage role at Goldman. OneWest has been accused of aggressively foreclosing on homeowners.
“Since I was first nominated to serve as Treasury Secretary, I have been maligned as taking advantage of others’ hardships in order to earn a buck. Nothing could be further from the truth,” he said.
He also argued that he was not responsible for the risky loan portfolio at the company but simply inherited it. “The responsibility landed on me to clean up the mess that we inherited,” Mnuchin said.
“In the press it has been said that I ran a ‘foreclosure machine.’ This is not true. On the contrary, I was committed to loan modifications intended to stop foreclosures.”
In his opening statement, committee chairman Sen. Orrin Hatch, R-Utah, pre-empted Democratic jabs, saying Mnuchin had not broken any laws and that other Treasury secretaries have had links to Wall Street and the financial crisis.
In his opening remarks, Wyden argued that it is a “real stretch to find hard evidence” that Mnuchin would be the kind of Treasury secretary “who works for all Americans.” He cited reports about OneWest’s foreclosure behavior.
When Mnuchin was asked about reports that the bank foreclosed on senior citizens, the nominee said “there were some issues” but they happened at “very, very low rates.” He added that homeowners were compensated when errors were made, saying he “earnestly” feels terrible for “any mistakes at the bank.”
Mnuchin was also slammed about his hedge fund, Dune Capital Management, setting up offshore entities. He stressed that he did not use offshore entities to avoid taxes personally but used them for “certain nonprofits and pensions.”
He also said that he would enforce Trump campaign pledges to close some tax loopholes for the rich, a plan Wyden suggested could just be a “head fake.”
Sen. Claire McCaskill, D-Mo., also challenged Mnuchin on how exactly Trump would give profits from foreign governments made at his hotels to the Treasury Department. Mnuchin said he expects Trump to give more information on how the process will work.
Here are some of the other topics Mnuchin was asked about:
- CONFLICTS: Mnuchin said that he has worked with the independent government ethics office to address possible conflicts of interest from his holdings. He said he would treat the Trump Organization, which Trump’s two eldest sons will run, the same as any other company.
- RUSSIA: He said that he is “100 percent” committed to Obama administration sanctions against Russia. The Treasury has a role in enforcing sanctions. The White House put sanctions on Moscow after its 2014 annexation of Crimea and most recently after suspected Russian hacking efforts to influence the 2016 U.S. election. But Mnuchin said that “the president-elect has made it very clear that he would only change those sanctions if he got, quote, a better deal and we would get something in return.” Trump has promised better relations with Russia and recently said he would consider dropping sanctions in exchange for a move like a nuclear drawdown.
- U.S. DEBT: Mnuchin said: “I fully believe that the U.S. has the obligation to honor its debt.” Trump during the campaign made suggestions that troubled some senators, including saying that the U.S. could renegotiate debt.
- TAX CUTS: He played down analyses that said Trump’s corporate and income tax cuts could send the debt higher by trillions. “We think the way to reduce the debt is by economic growth,” Mnuchin said.
- DEBT CEILING: Mnuchin added that he wants to “raise the debt ceiling sooner rather than later” to avoid possible default.
- TRADE: He said that negotiations on the North American Free Trade Agreement should be reopened, arguing that it can be renegotiated in a way that benefits both the U.S. and Mexico.