Transcripts For CSPAN2 Treasury Secretary Nominee Steven Mnuchin Testifies At Confirmation Hearing 20170120

Now treasury sect nominee Steven Mnuchin testifies before the Senate Finance Committee Help faced questions on hi as ceo of one west, bank that foreclosed on thousands of home owners after the 2008 downturn. This portion of the hearing is three and a half hours. Committee will come to order. Welcome to this more mornings hearing. Well discuss the nomination of mr. Steven mnuchin to serve as secretary of treasury for the Incoming Trump administration. I want to officially welcome mr. Mnuchin for to the finance committee. I certainly appreciate your willingness to appear before us here today and to serve in this important position. The position of treasury secretary is among the most important in the executive branch. The next treasury secretary will be asked a lot of questions that are going to very, very important here today. Well be talking about advancing policies that will improve our inagurations economic and fiscal outlook. This position oversees the collection of taxes and the management of our debt and in addition as Congress Works to reform the nations tack code and fix our broken Healthcare System it is absolutely essential that we have a cooperative partner overseeing treasury. That is quite frankly something that has been missing for the past eight years as the obama treasury has become increasingly ospake knopp responsive to opaque and nonresponsive to changes with numbers of congress. As we consider mr. Mnuchins nomination, ensuring that both congress and Incoming Administration are committed to sharing information and communicating on policy will be among my top priorities. And in that regard i believe the president elect has selected a nominee who will provide a Clear Channel of communication and be willing to work with congress on these allpersonality away allimportant efforts. We will have to work closely with the committee. Another priority for know will be advance of protrade policies. Treasury plays a key role in several important areas including the development of International Investment agreement. I want to make sure that our trade policy does no harm. The tariffs as a key toll of need to be evalled to make sure they do not hurts out home and i want to make clear any newed trade agreements establish the highest standards for u. S. Stakeholders consistent with the played Promotion Authority enacted in 2015. Finally i expect you to engage much better consultations with the Committee Regarding u. S. Trade policy than we have had under president obama. I look forward to a productive conversation about these issues today and in the coming months. Objectively speaking, i dont believe anyone can reasonably argue that mr. Mnuchin is unqualified for this position. So i hope we dont have those type of stupid arguments. He has three decades of experience work neglect Financial Sector in a wide variety of capacities. He has been a leader and manager throughout his career. Demonstrating an ability to make tough decisions and to be accountable. And he has a reputation for being a problemsolver and an excellent communicator. Indeed we have heard from numerous organizations and associations in a wide variety of industries, all expressing admiration of mr. Mnuchin and their support for him nomination. Put simply, if the confirmation process focused on the question of the nominees qualifieses there would be little, if any, opposition to mr. Minute chens nomination. Unfortunately thats not the world were living in. Today we are in midst of on unprecedented effort to stall and prevent confirmation on the cabinet nominations of an incoming president. It is disappointing that we have taken this turn in the senate where the minority openly and in so many words committed to obstructing nominees to positions across the board. In many cases, knowing full well that they cannot prevent the outright confirmation of nominees at all. My colleagues sometimes are content to unfairly and in some cases ma maliciously malign more or less any nominee before i think assume their post. Hope that not true of our Senate Finance Committee Members today. With regard to mmnuchins nomination we have seen quite a bit of consternation over the process and Time Offering hearings. We have heard demand we convene additional panels of witnesses, a step that has no precedent in the modern history of this committee. There was even a, quote, mock hearing, unquote, on this nomination yesterday, held outside of the committee. Focused on issues that are singh shatly unrelated to mr. Mnuchins qualifieses. Let quarterfinals callifications women have followed the same vetting and hearing process in place for decades and in applying to both republicans and democrats alike. With regard to the substantive arguments being made in opposition to mr. Mnuchin, am hesitant to goo into detail before getting the nominee the chance to fright any accusations. Do want to note a few simple facts. First, no one has credibly alleged that any laws, regulations, or industry standards were violated by Companies Run by mr. Mnuchin. On the contrary, speak offering the main set of allegations regarding the foreclosure pro practices of one west bank. All independent evaluations of the company has resulted in high marks, including review biz the fdii Inspector General and the department of treasury. Second, any claims that mr. Mnuchins businesses contributed to the housing and foreclosure crisis that caused the financial collapse in 2008 are similarly lacking in merit. Mr. Mnuchin had no involvement in the Mortgage Market in the leading up to the collapse. It is my understanding that after purchasing all therefore to toxic mortgage assets, mr. Mnuchins Company Offered Loan Modifications to the vast majority of delinquent borrowers and one over the first institutions to make offs to forgive pouring offices the loan to reduce foreclosures. Mr. Mnuchin is joined by a best, miss faith bautista, president and ceo of the National Asia American Coalition and head of the National Diversity coalition. In those capacities she worked with many home own towards work out Loan Modifications with one west bank. She is here today to support mr. Mnuchins nomination. Finally i just note that those making claims that mr. Mnuchins connections to me mortgage and Banking Industry is disqualifying, are conveniently forgetting the current secretary of treasurys tenure at major wall street bank and communities sanctioned by the fcc and others for practices that harmed innocent investor us but deemed forgivable. Ill let mr. Mnuchin defend himself in the attacks should not be too difficult for a man of his talented. For now simply hope we can have a fair and open discussion during the Committee Hearing this morning, and during the course of what will likely be a long hearing. Hope that Going Forward my colleagues will apply they statement standards in permanents of express subsubstance that applied to nominees in previous administrations inclusion theirs. Once again i want to think mr. Mnuchin for being here today. I look forward hearing his testimony and look forward to seeing what my colleagues have in mind with regard to their questions of him. With that ill turn to Ranking Member senator widen for his opening remarks. Thank you very much, measure mr. Chairman and welcome you mr. Touchdown continue this. Is our 115 hearing, congratulations on my colleague senator hatch for his collection to reed the committee on behalf of the majority and want to mcour two new members, senator mccaskill and senator cassidy, were lucky have you both. Aside from the president there may be no individual with a tighter grasp on the levers of our economy than the secretary of treasury. That has been true since the days of Alexander Hamilton. When you read about the nominee for treasury secretary, given all the power that this position holds, you hope not to see phrases like foreclosure machine, redlining, offshore funds, and predatory lending. Im sure todays hearing is going to cover a wide range of matters, whether its mr. Mnuchins background and quarterfinalification qualifications or the incoming administerings policies. Ill cover the truly disgusting inequity and abuse of americas tack tax laws. The tax code today is a tale of two systems. For wageearners like coaches and nurses like cops and nurses there arent any special tax dodges. The rules that apply to them are firm and involuntary. Once or twice a month, their taxes come right out of their paychecks. No cutting corners. The rules are different for the powerful and the wellconnected. They have armies of lawyers and accountant at their disposal. With the right advice, the most fortunate individuals in our country, can decide for themselves how much tax to pay and when to pay it. So, lets look at mr. Mnuchins history. There is no clearer example than mr. Mnuchins hedge fund setting up outposts in an the Cayman Island, an action explained only by the islands zero percent tax rate. It certainly wasnt for ease of commute or the infrastructure. In mr. Mnuchins is a, millions of dollars in profits from hollywood exports like the movie, avatar, were funneled to an shower youre web of entities and investors. When mr. Mnuchins bank was up for a merger that had the potential to deliver a huge financial gain, a foundation he chaired reportedly used tax exempt dollars to turned an astro Turf Campaign push north deals approval. In the Public Comment period of a potential merger, that is the equivalent of stuffing stuffinge ballot box. Mr. Mnuchin operates seven personal trusts, including one known as the Dynasty Trust that will shield tens of millions of dollars from taxes. In my view, if you look at our history, our nation wanted to reward merit, not to perpetuate dynasties. Now as a nominee for cabinet position, mr. Mnuchin could be in line for a special elective federal tax deferral on money made by selling stocks and bonds. This is the very definition of getting to pay what you want, when you want. Now, there is a common answer when these kind of tax tricks come under a spotlight. Its said that people who use them are just following the laws on the books. And that might be true. The outrage in tax law is what is legal and that every member of the senate has allowed it to stay legal. In my view, this outrage going to change only when taxpayers are no along ever divided into two very different sets of tax rules. Now, this provides a segway in the important policy questions. Setting aside mr. Mnuchins finances and background, the tax reform agenda already being advanced by the president elect perpetuate and in fact worsen the unfairness and n at the tax code. On the campaign trail the president elect delivered lots of tough talk about fixing the tax system. He said he alone could fix it. Because he has spent a career using the system to his advantage. As for the details, the few position papers that were put forward didnt get a whole lot of attention outside the business pages. But after mr. Mnuchins nomination was announced, he laid down a clear and specific marker. So ill quote mr. Mnuchin directly. Any reductions we have in upper income taxes would be offset by less deductions so there would be no absolute tax cuts for the upper class. Let me repeat that. And nor the sake of brevity im going to start caughtle it the mnuchin rule. No absolute tax cuts for the upper class. So lets take stock of what is already happening on capitol hill. Thats fir major act of the unified republican government repealing the Affordable Care act, would immediately violate the pledge of in tax cuts for the wealthy. Bottom line, the aca repeal scheme that was connected kicked off last week is a trojan horse of tax break ford the most fortunate. Its paid for by taking tax benefits for Health Insurance away from millions of working people. Then its back for round two. Under an emerging run plan to fasttrack an even bigger tax break for the wealthy. In my view, this is proof that the Campaign Promises about fixing the tax system were pretty much a head fake. For example, the president elect said he would close the carried interest loophole. Its a favorite of Investment Fund managers, but his plan actually gives them 25 tax cut. In fact its slashes tax rates for corporations and the wealthy across the board at a cost of trillions of dollars. So it sounds to me like the mnuchin rule is already on the rope is. Now, what would the new administrations tax plan do for people of more modest income . Millions of working parents, mostly single, would get hit with tax increases because they would lewd lose heads of household status when the five. You wanted to write tax plan that would push even near working class folks ouster the economic Winners Circle thats how you do it. Given how central tax policy is to our jurisdiction, i hope the committee is able to discuss those issues today. But of course, the treasury secretary and this committee handle a lot more than taxes. So there are other issues to raise. On broad level, its my view that senators need to make a judgment call about what sort of person they want to head the Treasury Department. Mr. Mnuchins career began in trading Financial Products that helped to bring on the housing crash in the Great Recession. After nearly two decade at Goldman Sachs he left in 20002002 2002 and joined a hedge fund and then spun off a hedge fun of his own. It was only a few lackluster years before dune began to wind down its investments in 2008. In early 2009, mr. Mnuchin led a group of investors that purchased a bank called indymac and renamed it one west. Colleagues one west was truly unique. While mr. Mnuchin was ceo, the bank proved it could put more Vulnerable People on the streets faster than just about anybody else around. While mr. Mnuchin was ceo, one west Vice President admitted in a Court Proceeding to robo signing upwards of 750 disclosure documents a week. She spent less than 30 seconds on each, and in fact, she shortened her signature to speed the process along. Investigations found that the bank frequently mishandled documents and skipped over reviewing them. All it took to plunge families into the nightmare of potentially losing their home, with 30 second of sloppy paperwork and few haphazard signatures. These tactics were in were in 2000 between 2009 and 24014 a person on which the bank forked on foreclosured on more than 40,000 homes. Widow foreclosures 0, reverse mortgagals. One wet did more offer those than anybody else. The bank defends its record on loan mod modifications but it was found guilty of an illegal practice known as dual tracking. One Bank Department tells home owners to stop making payments so they can pursue modification while another department presses on and hurdles those folks into for are foreclosure. One west made two loans to africanamerican for borers no 24014 and 2015. A fraction of its brans opened storefronts in minority communities. None were in predominantly africanamerican minutes but minorities still represented a disproportionally large share of the people that got booted out of their homes. Under mr. Mnuchin, one west churned out foreclosures like chinese factories churned another trump chutes and tie us. And the bail crowd from the fdii one rest im a aroundmaker for mr. Mnuchin and his fellow investors. At presidencily he same time the foreclosure member was running, one west funds were poured into game game in Rouse Investments in hollywood. In 2012 it struck an agreement to loan hundreds of minute offered do to a move studio could Relativity Media. In 2014 while he was ceo over one west Media Company he took a seat in the boardroom, was appointed cochairman and bought a jet with the relativity cofound founder but the Company Quickly tanked. One pest welled out 50 million emptying several residenttively accounts including one ear marked for guild expensed that expanded wage ford contracts and todays men. Mr. Mnuchin bailed out just before the studio declared bankruptcy. There has been press reports that the fbi has denied a freedom of information act request concerning Relativity Media on the grounds that disclosure is likely to interfere with a pending Law Enforcement proceeding. I have read the fbi background report on mr. Mnuchin and i saw no discussion of any such enforcement action in the report. That may be entirely appropriate, mr. Chairman i want to continue to workive you find out what the enforcement proceeding cited in the free dam of information act denial is and how it relates to the nominee if at all. It was not a set bark considering the one west foreclosure machine was still pulling in. The Purchase Price of the bank was less than 1. 6 billion. After five years of foreclosures and profits, it sold for 3. 4 billion to cit group. Now, outside one west and relativity, mr. Mnuchins spent years as a director or the Holding Company for sears. An iconic american brand. He search o. The committee dad watch dogged the Employee Pension fund. The report shows that plan was routinely mismanaged and underfunded. Retirees saw their pensions cut, losing a Monthly Health care stipends that was enough to offset roughly a third of the premiums the seniors pay for Medicare Part b. Sears also shuttered hundreds of Stores Nationwide over the last few years and recently announced another round of closures. On against, showing a truly impressive capacity to advantage himself while others fell behind. Mr. Mnuchin joined a small group of investors that spun off the companys real estate into a separate trust. It was arguably the most valuable asset sears had left. So as retirees warning their pink shrinks and sears remaining workers worry about an uncertain future, this small number of powerful individuals made out just fine. Im going to wrap up and i just 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 americans paychecks and mortgages, the caliber of Job Opportunities they face, the safety and stability of the Financial System that holes and invests their hard earned money and much more. This is a position that has the power to help reverse decades of yawning inequality that has hollowed out the middle encloses, depend the hopes of so many young people and left millions buried the debt. The treasury secretary ought to be somebody who works on behalf of all americans, including those who still wait for the economic recovery to show up in their communities. When i look at their mnuchins background, it is a real stretch to find hard evidence that he would be that kind of treasury secretary. Now, just finally, mr. Chairman, one other bit of housekeeping. I want to make it very clear that democrats have in know noh way been on instruct michigan mnuchins confirm make. Were doing our jobs to truly velocity this nominee and we are in fact 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, ask the tim geithner about what it was like in 2009. I want to point out that its your request, mr. Chairman, agreed shorten the normal one week notice period to all so that mr. Mnuchins hearing could be held today. Ultimately, nominations hearingses are about hearing what the nominee is for. So mr. Mnuchin, that is what today is all about. We look forward to your testimony. I note also we have a couple members of the house and we want to welcome them as well. Banker, finance and a fellow california, Steve Mnuchin, the nominee for secretary of treasure. From Alexander Hamilton to andrew melon it is an office that requires deep technical skill, Strategic Vision and uncommon instincts all qualities that steven posesses. 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 talent for the benefit of the American People as a whole. Steven is a patriot and an independent thinker and america is in great need of such leaders. I believe our nation is enriched when we have people serving in government who have spent their lives serving outside of government. I know steven shares with us here in congress two fundamental priorities. To enable an economy that creates meaningful and goodpaying american jobs and to improve Economic Security for the American People. He understands that government doesnt create jobs but government can create the structure and incentive to 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 fair and encourages businesses to hire workers here in america. He knows first happed the devastating impact of irresponsible Financial Regulation that stifled national l local lenders alike. He will work with President Trump and congress to provide a trade policy that benefits American Workers and consumers. But if broad Economic Growth for 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 assurance the government is doing everything within its power to make sure the financial crisis that happened in 200 20072008 never happens again. Steven will work to defend the integrity of peoples Social Security accounts and fight for good paying, secure jobs and will work for the economic stability so peoples investments in their homes and elsewhere are secure. So i thank you, chairman hatch, and Ranking Member wyden, and the entire community for this opportunity to introduce you to Steve Mnuchin. I hope the committee and senate as a whole will give thoughtful consideration to this accomplished and qualified nominee for the secretary of treasury. Thanks, leader mccarthy. We appreciate having you here and the hard work you do over in the house. Lets go to congressman pen. Chairman hatch, Ranking Member wyden, and distinguished members of the committee is an honor to stand here before to speak in support of Steve Mnuchin as secretary of the treasu treasury. President trump has outlined a Detailed Program to help hard working families that have seen their savings decline and dreams diminish. The president elect has chosen a roster of very impressive citizens to serve in his cabinet. Each individual has achieved incredible success in their chosen field and among the most respected leaders in business, military and public service. Each one is commit today the president elects vision of an american that is stronger, safer, and more prosperous and an american that is accountable to we the people. I believe president elect trump was right to include Steve Mnuchin in this list. As we confront americas challenging together mr. Mnuchin success in Retail Banking will be vital to the incoming instruction and to those of us serving in congress. He understands the need to increase jobs, income and opportunity and has the critical experience necessary to help and do just that. He knows all too well this economy isnt working for working americans. Nearly eight years after the last recession ended, americans are still stuck in the slowest recovery in generations. 301,000 manufacturing jobs disappeared in the last eight years. To get our economy back on track with sustained growth and higher incomes, mr. Mnuchin knows washington must give all americans more freedom. The freedom to save, the freedom to invest and the freedom to innovate so they can dream big. I have no doubt mr. Mnuchin is ready to hit the ground running and work as a partner in president elects trump progrowth, projob agenda. I had the opportunity to meet and speak to mr. Mnuchin on several occasions about the trump plans on growth and banking reform and other vital items on the president elects agenda. I am deeply impressed by his knowledge, his talent and commitment to work with congress on these priorities. As you know, al fred galtan who was secretary of treasures for Thomas Jefferson and James Madison once said quote the job of the secretary of treasurer is more laborous and important than all. The man who will be our president in less than 24 hours has every confidence mr. Mnuchin is up for the job. The election is over and should not be relitigated now. That both dissever disserves the many peerm. The president elect should be able to surround himself with people of his choice to serve in his cabinet. He has choegs chosen Steve Mnuchin as secretary of treasure. I do not offer advice since as a house member i am not that fond of receiving your advice. But i remain hopeful the questioning is fair and focused on his experience and about to fulfill the duties of secretary of treasurer and fulfill the president s agenda. I ask you to confirm him without delay. Thank you, mr. Chairman. Thank you, mr. Hensarling. We appreciate you coming. We know you are busy in the house of representative but thank you for coming to testify against mr. Mnuchin. Senator robert has to leave and he will take less than two minutes and i will turn to him before asking questions. Thank you, mr. Chairman. Mr. Mnuchin, if you are confirmed will you pledge to work with this committee to implement systems, control and procedures to make sure Tax Collection Agency of the federal government can never again be used ad a weapon against any political opponents of any president ial administration . Yes, senator, i absolutely pledge to do that. I have a few companies in kansas that are interested with regard to your views on tax reform. We could probably talk about that later in the interest of time. And then i just have an observation. I think today what are you done with my here it is. Senator wyden, i have a valium pill here you may want to take before the second rounds. Another suggestion we have a lot of colleagues waiting. If you could be brief it would be helpful. I am going to be very brief. Mr. Mnuchin, from the distinguished Ranking Members remarks i understand you were in charge of the Great Recession mr. Chairman, i hope that comment about valium doesnt set the tone for 2017 in this committee. I like senator roberts but i cant quite believe you would say that to a distinguished senator i said that to the United States once. I would help that doesnt set the tone. Senator corker please. I have to time, please. This is outrageous. I think just a little pinprick of humor might help this committee from time to time. I appreciate the gentlemens contribution but are regard to the Agricultural Committee he is a good member of the committee and we Work Together on the ethics committee. I am sorry if i have incurred your wrath. We will be all right. Mr. Chairman, we have many colleagues waiting. I am done. Thank you. Mr. Mnuchin, we will take your statement at this point. Thank you very much. Chairman hatch, Ranking Member wyden, and members of the committee, it is an honor to appear before you today. I am grateful and humbled by president elect trump nominating me to serve as secretary of the treasury. It is truly an honor and a privilege to be considered for this position. Thank you to all the members i have already had an opportunity to meet with during this process. I enjoyed meeting with you and learning more about the issues that are important to you. For those few members that i didnt 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 mind like to introduce my fiance and my children emma, jp and dillion who are here with me today. And thank them for their unwavering support. I would also like to introduce my brother alan and his wife and my father Robert Mnuchin who has always supported me and caught 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 gra grandparents who were a tremendous influence in my life. My grandfather was a first generation american whose father immigrated from europe. He truly embodied the american dream. He started out blowing gas bottles by hand and build one of the largest glass manufacturing in the United States with five factories employing thousands of workers. My first job every was in his factory when i was in high school. It was there i first learned the importance of humility, hard work and commitment. For those of you who dont know my background i studied economics at yale university. At the age of 22, after gradi graduating from yale i got a job at golden sachs and stayed there for 17 years. Many years later i was put in charge of municipal securities. Then i worked for future secretary of the treasure, hank paulson has the chief information officer. In that role, i oversaw 5,000 people and a 1 billion budget. While at Goldman Sachs i learned the importance of the Financial Market and providing liquidity to government and consumers. I decided to leave a few years later to build an Investment Business. I start by own Investment Business dune capital management. Throughout my career, my commitment was for clients and shareholders who 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 americas 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 and taking advantage of others, hardship and others to earn a buck. Nothing could be further than the truth. During the summer of 2008, i saw the devastation that was caused by the housing crisis. When i watched people line up to get their lifesavings out of indymac bank it was the middle of the financial crisis and despite the global panel 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 31st, just before midnight, we signed a binding agreement with the fdic. They later confirmed our bid was almost a billion dollars 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 our belief in the ability to rebuild a successful Regional Bank and 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 portfolios. When we bought the bank, we assum assumed these bad loans which were originated by previous management. We invested 1. 6 billion into a failing Financial Institution when most investors were running for the hills. We renamed the business one west bank and saved thousands of jobs. We developed a Prosperous 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 bank of santa monica and k la jolla. I met met with hundreds of Business People from all over seeking loans to growth their business and proser. Like many banks, indymac and reverse decision, Financial Freedom was unstable due to distressed credit mortgages. We bought indymac and these legacy loans were included in the purchase. The responsibility landed on me to cleanup the mess others made but we inherited. We worked very hard to help homeowners remain in their homes through modifications wherever possible. Ultimately one west extended over a 100,000 Loan Modifications to borrowers to try to them. I am proud Loan Modifications started at indymac under the leadership of the fdic. However the Loan Modification Program didnt work for everybody. When the fdic took over indymac they estimated half of the foreclosures didnt meet the test and they demanded extending assistance to sympathetic borrowers by establishing affordable payments and stabilize market agreements. My group had to agree to agreements that limited the ability to make Loan Modifications that could have helped more borrows. In the press, it has been said i ran a foreclosure machine. This is not an accurate description of my role at one west bank. On the contrary, i was committed to loan modification intended to stop foreclosures. I ran a loan modification machine. When we could do them, we did. But many times the fdic, fannie mae and others had strong regulations. I am proud to say we did over one thousand Loan Modifications to allow people the opportunity to stay in their homes. Not all the homes were able to be saved and despite my best effort some were subject to foreclosure. So sincere my concern over this was that in 2010 instructed my lawyers to sue sbc to allow loans on mortgage trusts they oversaw. We won on Summary Judgment and were allowed to do more Loan Modifications and keep more americans in their homes. Similarly, in 2015 when hud issued a letter in 201511 i wrote hud and asked them to change the policy so we didnt have to foreclose on Senior Citizens that were behind small amounts of money on taxes and insurance. I was so troubled i discussed it with the office of the controller of the currency. Unfortunately, hud did not agree and we were forced to foreclose on Senior Citizens even if they owed 1. Not complying would have subjected the bank to penalties and losses from hud. Despite your inability to save every home from foreclosure, i am proud of the Affordable Care act one west bank was the only one one west bank of 14 banks that completed the independent foreclosure review conducted by there occ. Every one of the 175,000 borrowers that were in the foreclosure process during 20092010 were able to have an independent review. We had the most affective Loan Modifications of any bank. If we had not bought indymac the bank would have likely been broken up and sold in pieces to private investors where the outcome for consumers could have been much more bleak. Overall, i helped many homeowners stay in their homes and escape financial ruin through my management of one west bank. My experience confirmed that we must identify and eliminate unwise and burdensome policies which contributed to the disasterous outcomes that came in the wake of the financial collapse. Many americans are still suffering from the ripple effects the 2008 crisis had on our nation. Faithfully ensuring this doesnt happen again means careful oversight of a system that prioritizes the needs of Everyday Americans over the wishes of Financial Institutions or the federal government. I felt great empathy for the millions of hardworking American Families who lost their femz homes because the system failed them. If confirmed as treasury secretary, i will work diligently and compassionately for the American People so we never see anything like the meltdown of 2008 every 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 hardworking americans who their concerns for the American Economy. Over the last year, i visited over 50 cities in 26 states. I remember attending my first rally with him in indianapolis. It was an unforgettable experience. I saw the excitement people had for a Trump Presidency as we packed the stadium. But our trip to flint, michigan, i visited the Water Treatment facilities and saw the crumbling pipes and the devastation caused by that lead tainted water. We met with Water Engineers and saw the impact it had on that community and the families that lived there. Across the country of my travels we heard the pain of americans who 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 shared the concerns of your con and workers who are nervous about whether their retirement account will be saved from ruined. One of the greatest reason i was drawn the president elect Trumps Campaign was it was on the promise of stimulating the economy for all americans whether they lived in rural north carolina, detroit, the cold country of ohio or West Virginia or any place in between. I share the president elects goal of economically empowering every citizen. We will not rest in our mission until that is a reality. Among president elect signature issues in the campaign was revising trade policies that put the American Worker first. I will enforce policies that keep our currency strong on the exchanges and create and protect american jobs. We will make america the best place for companies to do business. Sensible regulations is a necessity for healthy markets. However, i saw firsthand how regulatory access can inhibit institutions resulting in lack of capitol for Small Businesses and entrepreneurs. Alexander hamilton remarked wealth of a nation may be promoted by quote multiplying the objects of entrepreneurs. He knew the value of entrepreneurs to a thriving economy. From our nations earliest days, americans business have been the greatest entrepreneurial spirit in the world. We need to unleash that power to create jobs and create abundance for americans of all ba backgrounds. We will look to lower regulations and lower taxes on hard working americans and smaller businesses and get the engine of Economic Growth firing again. We must also be vigilant about cybersecurity in this day and age. If confirmed as secretary of treasury, i will use by expertise in technology to protect americas privacy at the irs and keep our system safe from attacks. I will use the department of terrorism and Financial Intelligence to stop the financing of terrorism. I will partner with other Government Agencies in the goal of allowing the Financial Markets to operate free from digital and physical threats. If i am confirmed his 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. Thank you, mr. Mnuchin. We appreciate your comments. I have some obligatory questions i ask all nominees. Are there anything in your background you are aware of that might present a conflict of interest to the duties of the office you have been nominated . I have not. I worked with the Ethics Department and signed an agreement to expose all. Do you know of any reason personal or otherwise that would prevent you from fully discharging the responsibilities of the office to come you expect to be nominated . I do not. Finally, do you commit to provide a prompt response in writing to any questions addressed to you by any senator of this committee . I provided over 5,000 pages to the staff. I think i have the record of that. If there is any additional questions i will respond promptly. I have to go outside so instead of my starting the questions i will turn to the Ranking Member. My partner in this matter and then i will ask questions when i come back. Thank you very much. Mr. Mnuchin, medicare finance is about taxes. It would be your responsibility if confirmed. With the attempt to repeal the Affordable Care act medicare saul is threatened. How would you strengthen this program that every senior relies on . Thank you, senator ir, first all. Appreciate meeting with you yesterday and talking about tax reform. I agree with you medicare is very important and a very Important Program and the safety of that is an important issue. If confirmed that is something i look forward to working with your staff on to make sure we have the appropriate policies. Now, if you are confirmed, mr. Mnuchin, you would be the managing trustee for medicare. Now, wouldnt you like to offer something byway of discussion about what you would be doing if confirmed . This is an important part of the job. Senator, i acknowledged it is a very important part of the job j there are many parts of this job i consider myself an expert on and certain parts orphthe job, if confirmed i will work diligently with this committee and others, there is a significant staff. This is an important issue and i am committed to be very responsible in my position there and make sure that i properly provide the support from the Treasury Department and i would take my responsibility very seriously. I will just tell you that without any specifics on a matter that is so important that you would have direct responsible over i find it very troubling that you wont discuss medicare. So lets go to terrorism financing. The country finances fighting isis and other terrorist groups and Treasury Department plays a key role in fighting this battle. What would be your ideas on additional action for strengthening how this department fights terror . Let me say i strongly believe all are important tools within the Treasury Department that can combat terrorism and many of the tools like sanctions are effective and keep our 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 the president elect as he sees fit on additional sanctions. There are also other programs within treasury that i believe are very, very effective in fighting terrorism. It is a very important part of the treasury. And i know that has been done very effectively. We all agree it is important. What we are trying to do is assess your qualifications. You havent been willing to talk about medicare. Havent been willing to talk specifics on terror. Lets take one more crack on Foreign Investment because this is Something Else you would have responsibilities on to protect the country when a Foreign Investment makes an investment in the United States in a way that has security implications. If a foreign investor invests in trumps business should we automatically with close scrutiny examine this transaction . Senator, first let me say yes, i think that would be appropriate. But let me go back to your other question because i apologize if i didnt answer questions on terrorism i was searching for specifics in order to be able to assess your qualifications. Well, senator, i believe there are some very important sanctions as it relates to sanctions against iran and other countries, i would enforce those and encourage the president to use additional sanction when appropriate. I understand there are certain classified programs i will be part of like the nsa and also use that and work with the National Security group to the maximum amount available by law. We didnt hear what you would do to fight isis. Didnt get any specifics on medicare. Now lets hear about this most current question with respect to the committee on Foreign Investment. What would you do if you were dealing with President Trumps business . I would deal with President Trumps business no different than i would deal with any business that comes before the committee and i would take my role as chair of that committee very, very significantly. I think it is a very important issue. I think in perhaps previous secretary had not enforced these things not necessarily as much as perhaps they should have in protecting the American Workers and the American People and american technology. I think this is one of the most important jobs that i would have as secretary of treasure the president is not like everybody else. He is the commander and chief and foreign involvement in this business could compromise National Security. So i will reflect on that answer as well. Can i just do one other additional question, mr. Chairman . Go ahead. You ran a hedge fund starting in 2004 and i have been trying to get my arms around the mnuchin web of employees. How many employees in anguila . We didnt have any there. How many customers . We didnt have any. Did you have an office there . We dd not have an office ourselves there. You just had a post office box . Senator let me explain yes or no. I am over my time. Hopefully the other senators will defer time. I think it is an important issue. I think he should answer the question. That is a legitimate question. Go ahead and answers. I like all other hedge funds and many private equity funds setup offshore entities primarily intended to accommodate nonprofits and pensions that want to invest through these offshore entities. As it relates to my own tax situation, these entities were 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 nearly an accommodation to Pension Funds and Nonprofit Institutions and a small number of foreign investors. As treasury secretary, if i am confirmed i would like at these rules and make sure i think 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 paid all my taxes as was required. We will come back to this question of offshore deals or commonly called the blockers. I am troubled about the question of how you will unrig the system if you have a record of taking advantage of tax shelters that have 0 tax rate. Thank you, mr. Chairman. Mr. Mnuchin, as you can see you are going fto get questions like this. What was legal at the time is still being criticized. I am sure you heard the allegations of profiting from predatory lending. You reformed indymac a failed institution responsible for many Mortgage Loans into the a viability institution called one west which offered Loan Modifications above and beyond what other institutions were doing to more than a 100,000 borrowers. During the foreclosure turmoil obama officials setup a program and according to the program many members of congress, both sides of the aisle and others, have repeatedly fell short of the goals. In testimony before congress in 2011, then sick tar, special Inspector General, identified that quote there have been countless published reports of p participants who end up worse off and didnt achieve the release they promised. It often leaves borrowers with more principal outstanding on the loans and less equity and depleted credit scores. I guess you could say that the then treasury secretary was a quote predatory lane modifier using that type of lodging. Mr. Mnuchin, did one west have any interplay with the Obamas Administration hamp program . Was that program always successful in preventing f foreclosures or could more have been done by the administration . Senator, thank you very much for that question. That is a very important issue. When we did the indymac deal with the fdic we committed to the fdic that we would continue the fdic Loan Modification Program. It was after that that the Obama Administration came up with hamp. We had no obligation to do hamp. We could have continued to do fdic Loan Modifications but we felt it was the appropriate thing to voluntarily go into the u. S. Treasury program as were other major banks so we voluntarily went into the program. The hamp Loan Modification Program was a Prescriptive Program including following net present value calculations determined by the treasury models to see which was better either foreclosing on a home or providing a loan modification. To the extend that the net present value was higher on foreclosing we unfortunately had to follow the hamp rules or we would have been severely penalized if we had not proceeded with foreclosures. These were not your rules. No, they were not. These were rules that were driven by the administration under hamp. Which administration . The Obama Administration. I see. Okay. Let me ask one more question. There is a wide agreement that the tax loads are too complicatcomplicat complicated. Reduci reducing cyniciism. There is a major problem and something needs to be done to address the problem. To your credit, mr. Mnuchin, you talk about your desire to simplify the tax code. Thank you. I am glad you are talking about that because i very much agree with you. My question to you, mr. Mnuchin, is how to 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 complicated and would you recommend a moratorium on tax regulations and should the tax laws simply try to raise revenue for the government, stop trying to achieve so many other social and societal goals. I agree with you. It has been an honor to travel with the president elect. I have been a chief architect in this plans. 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 tax simplification and fewer deductions are critical. You mention about the tax gap. That is something i have been reading about and studying and something i am actually quite interested in. I was particularly surprised looking at the irs numbers that irs head count has gone down dramatically. Almost 30 over the last number of years. I dont think there is any other Government Agency that has gone down 30 especially for an agency that collects revenues i am concerned about this. Perhaps the irs started with way too many people. I am concerned about the staffing of the irs. That is an important part of fixing the tax gap. I am very concerned about the lack of firstrate technology at the irs, the issue of making sure that we protect the american publics privacy when they give information to the irs, cybersecurity around that, and also Customer Service for the many hardworking americans that are paying taxes. Senator grassley, you are next. Like i told you when i met in your office i dont have any gotyou questions or i would let you know. Let me go along the lines with the first statement. I dont expect you to answer unless i have a misunderstanding of my position discussed in my office. Progrowth tax reform will be a top priority for you. I agree and look forward to working with you and president elect trump on that point as part affany tax reform proposal it will be important that adequate transition rules are included to provide a smuth transition for businesses that may be unpredictable and negatively impacted. As we discussed in our meeting, congress has already effectively put in place transition rules for some alternative energy including wind, the production tax credit is scheduled to phase out ending in 2020 based upon our conversation i believe we are in agreement that you would support the current phase out as part of any tax reform proposal. Question. I have been a strong proponent of the irs private Debt Collection program as has senator schumer. In 2015, congress made mandatory the private Debt Collection. It is designed to chip away at the tax gap by requiring the irs to contract with private debt collectors to collect inactive debts. These are the tax debts not being worked by the irs. And absent this program this would never be collected adding up to 187 Million Dollars in 2017. Out of that, 187 million the Treasury Department provided debt collectors to collect a net of 8 million. This is certainly not due to the lack of inactive tax debt available for the irs to assign. According to the Government Accountability office report, the irs has over a 130 billion of outstanding debt on its books. So hamstringing this program by refusing to release inactive debt or the program ought to be considered unacceptable by anybody. Can you give me assurance that the department of treasury will work to implement the program to the full extent of authorized law and bring in the tax money that is not being collected . Yes, senator. First of all, thank you for having spent time with me. I appreciate the opportunity to speak to you about a lot of important issues. On these issues, i agree. We need to have phase out rules when we change things and i support the phase out of that as you suggested. On the irs, i think most aspects of taxes should be handled by the irs. As you have described to the extend we have a 100 plus billion of receivables that are sitting there and we can collect tens of millions or hundreds of millions of dollars for the american public, particularly in an environment where we are looking for money for so many programs. This to me, i agree with you, seems like a very obvious thing to do. This will have to be 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 3 and four tenths dollars that would be lost to fraud. An ongoing concern of the program is poor communication with whistle blowers. Another concern is the irs has chosen to interpret the whistle blower wall narrowly to the detriment of whistle blowers in several instances. The irs interpreted the term collected proceeds which is the base for determining the amount of an award to exclude criminal penalties and certain other proceeds such as penalties assessed for undisclosed foreign make accounts. Two questions. Should you be confirmed . Can i count on you to be supportive of the Whistle Blower Program and work to ensure success and would you be willing to review the irss administration Program Including its ve its very narrow nert interrepinter interpretation. Absolutely. Let go let me go on to say the majority of americans pay their taxes diligently. I will work very hard on this with you. Thank you, chairman. Senator stabenow. Thank you and welcome. Congratulations on your nomination and welcome to your beautiful family as well. I want to followup on information we received last night that were additions to your recent financial disclosures. I havent had a lot of time to look at it. We just received it last night. But you failed to include your position as the director of Cayman Islands and additional Shell Companies nearly 100 million in real estate as well as a number of other things including 906, 560,000 in artwork held by your children. As treasury secretary, as we go into the tax reform, would you support closing tax loopholes in the u. S. tax code that extremely wealthy people use, such as yourself, have used to avoid paying taxes . We have heard about the Cayman Islands for years and the buildings that have thousands of Companies Use it as addresses. Would you be willing to close those loopholes . First of all, let me comment, appreciated the community the meet with you and traveled to 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. I appreciate everything you have done there. Let me just comment on i realize last night you got a memo on changes to my senate questionnaire. Thank you for giving me the opportunity to comment on that. I think as you all can appreciate, filling out these government forms is quite complicated. There were many things i expected in the job including selling everything but the amount of paperwork and filling out forms, even for me having experience in business, was quite a job. In an effort to get the Committee Information early, we submitted a preliminary questionnaire prior to us having to 278 form finished and prior to signing the agreement with the ethics office. Let me first say any oversight it was unintentional. You did mention that there was 100 million of real estate. I was advised by my lawyer we didnt need to disclose that on the questionnaire because it didnt need to be disclosed on the 278. There was confusion about the complexity. We worked tirelessly with the Committee Staff and i want to thank the staff. I know they worked very, very long hours. They were extremely thorough. We delivered over 5,000 pages and i can assure you they actually read all 5,000 pages because when i had the opportunity to meet with my staff and lawyers and accountants we answered very specific questions. Excuse me. Just a minute. I dont want to interrupt. I have limited time and appreciate the Additional Information and clarification. But my question goes to what you were disclosing. And particularly the Cayman Islands. Did you use them to avoid paying taxes . Would you support closing tax loopholes that very wealthy people have consistently used in the cay man islands to avoid paying taxes . Let me be clear. I did not use a cayman entity to avoid paying taxes myself. I paid u. S. Taxes on all that income. There was no benefit to me from the cayman entity. It was setup to accommodate nonprofit and Pension Funds that want to invest offshore. So you helped others avoid paying taxes . They didnt devoid. They followed the law. I have experience as a Hedge Fund Manager i am committed to tax simplification. I think it makes no sense we would encourage Hedge Fund Managers to setup entities in the Cayman Islands where you pointed out i didnt have any physical people. There are people who setup offshore businesses and put all their people offshore and you have heard of inversions and those things are legal and hurt the American Workers. In the hedge fund world, these are all setup to make the accou accou accountants rich and i would work with the irs to close these tax issues that make no sense and make sure we are collecting the proper amount of taxes. You would support closing those loopholes . I will support changing the tax laws to make sure they are more simple and effective. Senator . Thank you for being here. Appreciate your willingness to support the American People. We truly need the vision trump a has stated. I am paraphrasing you hear but i believe you said we have a regul regulatory excess in the United States that is inhibiting lending and inhibiting capital formation. Two things that i think are critical to a progrowth economy. Can you elaborate on that . Sure. Let me say i absolutely believe in proper regulation. Before i have the opportunity to put in a bid for indymac bank i had to be issued a charter and i worked very closely with what was the ots at the time. By the way, i was a big fan of you merging with the occ and getting rid of another regulatory agency. I worked with the ots and the feds at the same. The regulators explained and i told them i understood the responsibility of being given a banking charter. I took that seriously. I must say i enjoyed working with smart regulators and i have tremendous respect for them. Matter of fact, one of the few things that the wall street journal wrote nice about me was they made a comment i told everybody we had to treat the regulators like our best client which i believe the regulators and the relationships with them and nothing was more important given the trust they had put in us. Having said that, i witnesses first hand multiple regulators. The fdic, the Consumer Protection bureau, the Federal Reserve, there was overlapping regulations in certain cases. My biggest concern, and i fully support regulation for banks with fdic insurance but my biggest concern is this regulation is killing Community Banks. We are loosing the Community Banking business. We are loosing the ability for small and medium size banks to make good loans, small and medium size businesses in the community where they understand the credit risks better than anybody else. I think that we all appreciate the engine of growth is the small and medium size businesses and in my role and working with the different regulators i would make sure that we did what we could to have proper regulations but eliminate overlap as well as make sure that the banks are lending to small and medium size businesses and we dont end up with a world where we only have four big banks in the country. Thank you. You led me to the next question. As you know, as the secretary of treasury, you will have a very Important Role as the chair person of fsock. In my view they are heavily focused on statutory mandates while ignoring others. One of the statutory mandates the frank dodd act requires is advise congress and make recommendations in areas that enhance the efficiency, competitiveness and stability of u. S. Financial markets. Today i am not aware of fsock fulfilling that role. We dont get a lot of advice from them. We get a lot of directive in the country. Will you pledge as the chairperson of such that you will ensure the Council Considers ways to make the United States Financial Markets more efficient and advise and work with congress to achieve those outcomes . I absolutely will, senator. Let me comment on the voca rule. I think the concept of proprietary trading doesnt belong with the fdic. But the rule was eliminated liquidity of many banks. That is something i would absolutely want to look at. And senator wyden, i wanted to thank you in now great esteem of having the mnuchin rule. With the buffet rule i take it as great compliment. Thank you. Senator nelson . Good morning. I enjoyed our visit yesterday. Were you a director of dune Capitol International limited Cayman Island corporation . I was. That is correct. Did you move a hedge fund dune Capitol Partners llc . To become a foreign entity. But let me just comment no, im running out of time. I have to get to the question. Both of those were for a tax consequence, so the question is you said you support tax reform. Do you support closing that kind of tax avoidance provision in the tax code . Let me comment i did have to apply to the irs and they approved it as an entity as the u. S. Partnership so in my standpoint it made no difference if it was located in delaware. Im giving you a slightly longer answer and i apologize it is a complicated issue. Th the short answer is yes as i said before ive would work with the irs and congress as i said it makes no sense that we have all of these requirements to set up offshore entities that didnt benefit me the day to benefit certain nonprofit attentions and we should address the issues and understand why they need to address the funds. We talked about the bank yesterday. It required the portfolio of the reverse mortgages and you se sad to your credit once it became one west that you didnt sell any more reverse mortgages, and as the ceo i want you to comment on the fact that of the reverse mortgages that you acquired, some of the folks were not treated very well. I mentioned to you yesterday a 90yearold lakeland woman was foreclosed on because of a 27 sends payment error. In fact, she did and she happened to have the foreclosure papers served in the home the bank said she didnt live in. Another couple in their 50s trying to make the best of everything they ask for a loan modification which they were eligible for and instead that they were foreclosed on. Explain to the committee, and i think that you are in earnest and wellintentioned person but you are sitting there as a ceo and this stuff is happening that is very unfair to little people. Thank you for taking the time to meet with me and speak about these important issues. I completely understand the hardships that created. We did go through an independent for closure review. We pay money to those people to make them whole and i feel terrible for any mistakes at the bank. So any complaint that went to the regulators and that the senator and a member of the house, we had a special group of people that reviewed every single one of those complaints and responded to all of your offices and directly the borrower. It was a big concern. The reverse mortgage wasnt some we wanted to buy that we agreed to as a part of the solution. What we were trying to do is create a Regional Bank and they had no part of it. There were about a billion and a half reverse Mortgages Bank owned and there were over 20 billion reverse mortgages that we didnt own that we surfaced for the parties. The majority of all of those parties were guaranteed mortgages. They forced us to foreclose and there is another problem called the non borrowers thousands and you woulyou would have to for cd we discussed these issues. I look forward to discussing this survey would seriously consider looking at these things although it is not undermine responsibility i would share my concerns. These are government guaranteed programs where we are for closing on Senior Citizens. Nothing was more painstaking to me in the whole place and i will tell you i cant talk about specific loans because of privacy that there were certain things in the press and the most troubling we had we worked very hard, there was a terrible situation and we worked very, very hard to move her to another home they could afford. But i can assure you its not to say that we didnt have certain mistakes. There were mistakes. We had hundreds of thousands of doubling blend loans and just as an aside when you talk about Loan Modifications banks are highly intended to do Loan Modifications. Anyone that thinks we need more money than modifying the loan has no understanding of this. We were highly incentive to closing on people as a very capable thing to do but its also costly to the bank. We believe in the Loan Modifications so thank you, senator. I look forward to the second round. Senator menendez. I had a different line of questioning that the information that came this morning makes me concerned. On december 19 you sign a notarized affidavit to the committee certifying that it was true, accurate and complete. Question 11 asks the nominees to list all as a partner and proprietor and consultant of any company, firm, partnership, or educational or other institution that needs to be pretty pervasive so its almost like an open book test. Listing your position as director in as the manager, chairman, director of the corporations and Holding Companies. The question was correct and only after the Committee Staff having done their Due Diligence brought the missing information to your attention. Now, after that, you admitted to being the director to the offshore entity in the Cayman Island corporation. You admitted to moving the hedge fund offshore in 2005 even though all the business was conducted in new york city. They know they will be asked to do difficult things were challenging things that they understand in the system. In essence isnt it true that what you did here is take these companies, put them off shore so you can help the clients that you are making money from to avoid the u. S. Taxation . You just described the purpose of creating these entities were to help pensions and entities and as the only reason to go offshore as senator grassley said when he was the chairman of the committee the difference between investing in the United States and the Cayman Islands is the possibility of avoiding u. S. Taxes. You made it very clear that you pay for taxis and i will accept your word. But the entities that you were helping and making money from, you were helping them avoid u. S. Taxes otherwise they could have invested here. I assure you they were very complicated and i dont have the form in front of me that i believe its said to the best of my knowledge this is true and when i certified then i thought that it was correct. I should have waited until he finished the 278. With all due respect the rea lot of complicated entities. My lawyer that is quite sophisticated in this and stated for many nominees before believe that we filled out the form correctly. Didnt you create these offshore entities that most americans cannot take advantage of in order to help the clients you are making money from to avoid u. S. Taxes . No, not necessarily. First i want to say its important that the committee understand that this wa was timd so thdone sothat different entid invest. Sometimes it had nothing to do with taxes and with what they could invest or couldnt invest in as i said to you, if you want to put me on for the entire hedge fund in the pension fund, we should have a session to go through these issues and i would be more than happy to work with you and your offices to go through these complicated issues. One does not go and appreciate the 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 may be illegal in which case we should definitely close it but you have to question whether that is the essence of the leadership and so. What you did may have been legal but it was to help the people and entities avoid u. S. Taxes. On the tax simplification to make sure that we dont let anybody avoid taxes. In certain cases it isnt a function of avoiding taxes but to create eligible investments for serving nonprofits. I would be happy to work with your office to simplify the tax code. It may have been an eligibility issue and not a tax issue but i agree this doesnt make sense, and i will work with you and your office to make sure that why people need to move entities we are not creating jobs this is just where these entities are. I agree and it will create a lot less work for the tax accounts and youve been otherwise, so i agree completely, senator. Is ironic and a bit hypocritical of my friend from the other side of the aisle who suddenly found religion on the holdings evidently memories are short from the nominees that now serve in the cabinet at the holdings. That includes the secretary that also ran a Business Unit at citigroup from the millions of dollars in bonuses. They harm the investors. With regards to the nominees disclosures, i want to see this as a part of the bipartisan vetting process, in good faith he submitted questions to other materials that were later modified and the file is now complete. The disclosures now include Financial Information that is usually kept confidential such as the value of the personal residences and the community appreciates the efforts to move through the complicated request for information by any measure an exhaustive and vetting process. Just so we are clear, they called out both democrats and republicans to the secretary and others. Thats the reason that people even knew he hadnt filled these formfelt theseforms out properl. We did it because the American People deserve to know about the offshore investments even though they havent been originally disclosed. But we called out both democrats and republicans. Thats the purpose but lets be fair about it. Senator enzi. Thank you for going through the process. Thank you for meeting with me in the office and going through the accounting functions and initiatives that he will be managing. They are very important and i was impressed with your answers. Im impressed with your private sector experience and ive always said it looks simple unless you are the one that has to make the decisions on it. Its been a pretty unique situation. This is the biggest business in the world. Ive been really impressed with the knowledge that youve already shown this committee. Very impressive. I will cover a couple of specific things here because i think the Internal Revenue service has often strayed from its core function of responsible and efficient revenue collections. Its the refund checks. Its an independent organization or any other organization. Thank you for your longstanding interest in the country. I will work with you on that. I dont think it makes sense that the irs is doing that. I would want to understand that the reason is that it seems to make no sense. One of the big issues is technology and i would use my expertise in technology to make sure we bring the irs up to da date. If you can get good service in the retail online business. I look forward to working with you in your office on that. In the International Tax reform act of help fix the tax code and promote the u. S. Economic job growth, and that bill would help to pull the International Tax rules into the 21st century and make them more certain so that the companies are not at a competitive disadvantage with the foreign companies. They would keep their rights to their ideas and in the United States more than shift them offshore. And the counterparts to work with me on the International Tax reform. Theres hundreds of billions of dollars offshore because of the differential in the tax rates and being penalized to bring back the money. One of the things i think we all agree on. The bring them back on shore so that its invested in the American Business and creating jobs and i absolutely look forward to working with you and your office on tax reform. Im interested in but. Thank you, senator carper. The governor from delaware. I think about how to create a nurturing environment for the job creation and preservation and well talk about that and just a moment but before we do, some of my colleagues have raised tax havens and as we mentioned, you mentioned the irs and in the past year several times in the past couple of years they sat right where you said. They selected to serve the term with another year in the 70s he took this job not because it was something he was inspired to do or asked to do for his country he is one of the finest Public Servants i know. As the general Accountability Office and you said it here today we give them less money than they need. They dont have the technology they need. For every dollar we get at least 4 by as much as 10. Its not so much a message for you i think youve got it but its for us. We are interested in raising revenues and that is a good place to start. The cfp b. Coming to your take on how they are doing. Is it worth keeping . First of all, it is a complicated issue but yes, the Biggest Issue that i have is i dont believe they should be funded with the Federal Reserve. I think he should be funded out of an appropriation process. I mentioned earlier for the job creation and preservation in a lot of components to it and among them are funding research. There is a sensible tax code and commonsense regulation, Affordable Health care and finding ways to get a better result for a little bit less money and the people that suggested. The businesses that use the system we would pay for them, we donweve done that for half a century. We figured how many miles of vehicle was traveling with different approaches to that. Theres another time to talk about that. One way to grow the gdp or jobs is to do a better job of exporting getting it into other markets. In the trade partnership they proposed to take down a lot of barriers overseas and enable us to have access to those markets. That seemed like a good deal and they are interested in renegotiating nafta. We did that but your thoughts on the trade policy especially the transpacific trade partnership. First of all, you raised a bunch of very important issues. It is about growing as much as we can be any you commented on the intellectual property. One of the biggest problems is the American Intellectual property not being kept and its being taken in foreign countries. You mentioned the president elect is interested in renegotiating nafta and as you know he picked up the phone and called many ceos but i cant remember the last time a president elect did that and i look forward to working with you in your office youve raised some very important issues in the infrastructure and appropriate times im happy to comment on infrastructure because it is important to the president elect. Some of the other things i mentioned in comprehensive Immigration Reform. Is there any take on that . I think you know emigration and Immigration Reform is important. Its not completely in my lane and looks forward to working in the house and the senate on the important issues. You do have allies on both sides of the aisle. Hes going on a freeze and im not sure how that coincides with the desire to have adequate personnel but i assume you have an opportunity to talk to the president and hopefully get a number of people you need is a conversation with donald trump. I want to follow up on a couple of issues. First, i have another role on the ranking democrat on the Senate Foreign relations committee. We have sanctions in the countries that are violating the International Norms on the democratic principles. Russia is top on the list. Your views on the sanctions, we have Bipartisan Legislation to strengthen, particularly with russias attacking the democratic election institutio institutions. But i want to make sure i understand you are committed. The president elect has made it clear that he would only change the sanctions if he got a better deal and we got something in return about whether it was on the nuclear arms or other areas. In response to the questions asked about using the irs so that its not used for partisan reasons coming well in force sanctions without regards to a persons Party Affiliation or office. Supporting terrorism and illegal activities is the most important issue and that is not a bipartisan issue. I appreciate that answer. If confirmed to investigate the allegations recently named as the white house director of engagement and Governmental Affairs to the president may have violated the sanctions against russia in his dealings and i accept that you would investigate the issue to see if there was a violation on the sanction. Anything that you send to me i will make sure my staff properly investigate. I will do that 100 . It really has me concerned and that is the point that out with treat your International Roles in American Company thats dealing with the foreign markets equally. You are taking a note to defend the constitution of the United States and that ther there is te enrollment claws and you have to make sure that if you are dealing with the entity that it isnt getting a favor in exchange for trying to influence the president of the United States or the trump administration. So how do you go about knowing there is no special breaks being given to the enterprise if you dont have full access to that information. We have a president that has a vast amounts of money we know that but hes not doing what every other president has done, set up a blind trust or digest. What you are doing is divesting and that is what is required. My question to you how do you deal with the complaint institution that makes sure that the enterprise isnt getting a special treatment. This is a very important issue for the public so i can understand why youre asking if that let me first say the president elect is committed to following the law and has set out a series of blind trust, hes put his sons in charge of the business. Excuse me one second. I can assure you whatever responsibilities i have to monitor the issues i can assure you that i will, too. How are you determined to make sure there isnt a break giving that would violate the constitution . It is the supreme law of the land. Employed lots of lawyers but the good news is we have a big group the Treasury Department and i can assure you we will make sure we absolutely follow the law and the constitution and i have every reason to believe the president elect wants to adhere to it and will do so. Thank you for the conversation. Lets clear up one thing. Things are not consented thats why we had a systemic breakdown and why so many families lost their homes and banks were forced to pay billions of dollars in fines and remediation. But that aside. I want to talk about the situation. I understand your defensiveness and the individual meetings, mine and others and in this committee about what happened. In 2006, Businessman Donald Trump responded to a question about the possibility of the real estate crash by saying i hope that happens because people like me would go and buy. You didnt just buy properties coming you bought the ability to help families stay in their homes. Thats not what you did. So my questions i really want yes or no answers because i have a lot of questions coming and what i will say is factual in my view i would like to confirm with yes or no is it True Community groups say specifically to California Reinvestment Coalition is it true that the groups say it for close on 60,000 families nationwide and denied three fourths of the mortgage modification applications . I am not aware of that. I want to hear it from you. Im going to keep interrupting because we dont have a lot of time. Is it true they said you had deficient mortgage practices for close on 10,000 plus borrowers. They were current on their mortgages. What i would say is we follow the same procedures. Is it true that the independent audit firm said that it violated the release act on the 54 activeduty military families, that is what the independent audit firm said. If you have the document in front of you, i dont. Im pretty surprised you dont know these things because youve been rather the defensive i do want to comment for the record. Every Single Person had the opportunity to have the mortgage reviewed. They were less than half. They said they backdated 96 of documents examined and then you aggressively obstructed the investigation. But the comment i saw the leaked memo as muted and i think that its highly inappropriate that somebody at the attorney generals office. What i would say is they were the ones that have the obligation to regulate [inaudible] you couldnt remember when i asked you. One of the employees in charge of the modification is accused of not having any process in place for the mortgage borrowers into the same employee in charge of the modifications has accused not having a process in place to help the wait for closures and submitting false claims. I dont have the ability to respond. You dont follow these are factual things if you want to follow up on the response. You can answer this and take as long as you need. One example of the inside of loan is the media deal the fbi denied the request related to the media where you were the cochair citing the enforcement procedures and if you have a question about the Law Enforcement on this, yes or no. I saw that you wrote that letter yesterday and i assume the fbi did a thorough review of the background report. I have no reason to believe that its an issue associated. I accept your answer you are not being investigated. The letter i sent with all those questions detailing the issues i asked about with bing west bank west, one west, i apologize. My father forgot the name sometimes. The letter that i sent back about thi dispute not even takee time to answer. I think the issue is the purchase went well for the treasury secretary designee but it was a disaster for homeowners and employees we can talk about the taxpayer cost and the amount of money mostly subsidized. First of all, senator, i did enjoy meeting you. I dont believe we have the opportunity beforhad theopportu, and if i am confirmed by, i look forward to spending time with you although we may not agree on everything there for certain things we did agree on when we met, and i have a lot of respect for you as a senator and her issues. I did tell you and acknowledge you send me the letter and i was advised by the staff the appropriate thing was to come here and answer questions or meet with all of you independently to answer questions you have, and if i dont satisfy that, you have the ability to submit questions afterwards. When i came to your office i told you i would spend as much time with you as i wanted answering the questions because i knew they were complicated so i did tell you although i wouldnt respond to them in writing at that point i did understand and wanted to address them. We havent had a single da day where theyve raised 3 and a love of the Current Administration describes that as the do normal. Tell me what do you think is a reasonable expectation in the economy if you go back to world war ii we would average 3. 2 a year. Im just looking at some of my notes. The short answer i said publicly and i believe we should be able to get to three or 4 sustained gdp i think that is absolutely important and as a country the most important issue that we have is Economic Growth and republicans and democrats i think we could agree it is easier to solve these issues and we should focus on growing the economy. In the 1984, we had 17 and in 2005 we had 3 . That was the last time that we had the appropriate growth rat rates. I can assure you i will work tirelessly if confirmed to create growth in the economy and progrowth programs and i connect to work with all of you on that and the tax reform will be the first and most important part of that. The president elect has less than the Regulatory Burden and there are two ways that we can unleash the economy for the rate of growth. To what degree do you think regulations have the volume coming out of the Administration Even up to right now there was as of yesterday 277 pages of regulation that came out of the Obama Administration that affects the businesses and the folks i represent. We sent a letter to secretary lew trying to get him to deal with the valuation discounts that affect the states and it makes it difficult for a Small Business or farmer or rancher to pass it on. When you get over there are you going to hopefully look at withdrawing those types of regulations and im doing a lot of economic harm and frankly what has adversely impacted the growth rate as quickly as possible tax absolutely and i will tell you both i and the president elect believe in the appropriate regulation that many areas of the economy not just financial services, there is excess regulation in hibbing jobs and growth and hurting the American Workers and we are committed specifically what you mentioned on the Family Business as i am committed to working with you on your office and we want to make sure we cover the appropriate loopholes so if people have the businesses set up to avoid taxes thats one thing that any other operating business we need to make sure that people that own the minority interests and operating businesses at the valuation for the tax purposes are reflected appropriately to follow the markets and to know that there is a significant difference between the control and non control and they should follow the fair valuations and ensure that we collect the most money and not have lots of loopholes but on the other hand we need to reflect the fair valuations. One of the issues that came out of that, and i hope we do, how will you treat the businesses to me that is one of the most important questions and 90 of the businesses organize passed through his end of the income is generated and they employ about 55 of the people in the country and so as we think about the tax reform, i guess im asking you if you would connect to work with us to make sure they are treated fairly and that whatever we come up with in terms of policy reflects the Economic Impact to the businesses. Ive actually spent a lot of time on this issue already. Ive worked with the trade group that follows Small Business and not only did they support the trump economic plan that they hoped to design but they were kind enough to write a letter of support to the committee and the important thing on the passthrough is is that we want to make sure there is a business tax and its not just a Corporate Tax but there is a business tax. They keep the money in the company and they dont use passthrough is as a way to get lower taxes than they wouldve to makwould tomake sure hedge fs dont use passthrough is to avoid what would be the higher personal income taxes but we are absolutely committed and weve spoken to many Small Businesses to make sure that they are perfect and get the benefit. I can assure you its something we are committed to working with you and your office on. Thank you for joining us and i appreciate the willingness to serve in this extremely important post. Mr. Chairman, i want to thank you for a observing some nottoodistant history and the fact that current treasury secretary had investments in the Cayman Islands. There seems to be a bit of selectivity on the part of that. I want to go back to the point that you made earlier because i think its important especially for the benefit of those among us but have no experience in banking that you made a point that i think is important. I have never heard of a bank that would nonpreferred modification at the time over for closure not only to avoid the misery that that resulted in for their customer but also because the foreclosure almost guarantees locking in substantial losses for the bank. Would it be fair to say that virtually any time its possible your bank would have preferred a loan modification for the borrower . We ran a test that was established by the u. S. Treasury assumptions and we put in the assumptions any time that we could collect more money by giving the modification, and we werent allowed to do the modification and we were incentive. By the way we would have done the modifications even if we hadnt received the incentives from the government which were rebated back to the fdic. So the banks are incentive to do this from the treasury or not. A couple things i want to touch on quickly if we could on the trade front, the president elect indicated an interest in the trade agreements into some of them were negotiated a long time ago that could be modernized and updated. Would you agree that it could be a mistake to evaluate whether or not a trade agreement is a good one to look at whether we have a trade deficit with the country in question . Also, would you agree that many have a strong Economic Growth have corresponded to a strong dollar and often if our economy is performing well and the world sees as a Bright Future of the inevitable result would be a stronger dollar . I think the u. S. Currency has been the most attractive currency to be for a long period of time. Its important and you see that now more than ever the currency is strong and qc people from all over the world wanting to invest. When the president elect made a comment it wasnt needed to be a longterm comment. perhaps in the short term strengtthestrength gained currea result of people wanting to invest may have had a negative impact on the ability and trade but i agree over a long period of time is important and that is a reflection of the most attractive investment environment in the world and we have to protect the u. S. Companies so that they are not forced abroad. Of the many failures in my view include title which is a mechanism for the bailouts from taxpayers in the event that a large Financial Institution would fail again. It is much more desirable to amend the code. I agree we shouldnt be in the business of bailing out the big bang is and i agree with you i share certain concerns on title. I would comment that the bigger issue is for a long pure power of time the fdic was able to take over and resolve banks when the regulators determined there are issues and one of the big problems we had in a financial crisis was the intermingling of the banks and Holding Companies and complex securities. So i think if we have proper regulation a lot of the need also goes away. We have run out of time. Thank you, mr. Chairman. Thanks for holding this hearing and for your willingness to serve and to meeting yesterday. Do you believe the dollar is too strong . I believe in the short term as the treasury secretary will we ever hear you say that it is too strong . I dont see it as my role commenting on the dollar. I have commented on what i believe over the long term. As a result, the Rating Agency downgraded the nations deficit for the first time in history and the stock market lost 17 of the value. This hurt americans retirement savings, growth and job creation. Mr. Trump suggested he could finance or renegotiate the existing debt. He walked away from the idea initially later in the campaign and suggested the country could pay the creditors list than what they are due and said you go back and say the economy just crashed, im going to give you back half and also suggested they never have to default because you print the money. Do you agree with these statements . Thank you for asking the question i do agree on and i think it is a very important issue for all of us and if i am lucky enough to be confirmed please dont filibuster. The president has made it perfectly clear and i think it is perfectly clear honoring the u. S. That is the most important thing and i hope that if we have to have the debt ceiling we wont go through another one of these issues because there are certain things i would have the power to postpone and i firmly believe the u. S. Has the observation. I will commit to absolutely working with the congress, the house and senate so that we dont get to the last minute and run out of money. Is that a yes . I dont know your definition of the clean debt ceiling but i would like us to raise the debt ceiling sooner rather than later. I dont want to risk defaulting. Which i would not suggest but even if we did not that would only pay for about 8 of the tax plan is acceptable all come to you . I believe that 7. 2 trillion number was the first tax plan and not the second. I die that scored the dynamic it was 11 trillion. The dynamic was closer to the 2 trillion. And then adding mountains of debt. I have discussed the debt with the president elect we are concerned we have one from 10 trillion up at 20 trillion the way to reduce that is by Economic Growth that will create the opportunity to pay that down. But the senator said in our history the average growth is 3. 2 to emigrate to get at 4 . But there is no way that can fill the gap that is projected again i think as you know we had a modest Campaign Staff relative to the other people out there. So what if look forward to having access to all of people at treasury to model these things. We had some internal models reforest it to rely on external models of what is important is that officer cliff ruff has love for zero brophy from life tax plan and we are sensitive to the cost of that plan. Yesterdays i talked robert process of tax reform with senator wyden i will be taking the lead on that and i will look forward working with the house in the senate to move foregone tax legislation. One observation that twice that mr. Mnuchin has praised him that is a change from what we have occurred up until now with these hearings. Sorry i have spent in and out by have been listening. I will talk about what i had not prepared myself until i heard some of the other questions december 2008 was with indymac . Use started a domino effect that collapsed with their securities is that correct . Correct. When you purchase indymac it had those loans quick. Had Mortgage Backed securities that was included correct. Because wall Street Package those quick. Actually with indymac they securitized damn themselves the market backed up they cannot afford to sell them and they were ended up keeping them most of them were a failed sale price. Is a true freddy and fannie insure those loans when it came to Affordable Housing credits is not true that they retracted to have a larger percentage quick. I believe ed unfortunately that led them to buy bad loans. Was in the realestate business 31 years. But what happened was because in the direction of congress what was called Affordable Housing was subprimal on which and of having a high interestrate. Did is true they have all different types of acronyms they should have just been called bad loans because that is what they were. With indymac he tried all you could to recalibrate and restructure as many as possible for . Thats true not only that we all foot that we serviced for free if a and freddie laugh elisa recalls to fannie mae and freddie mac i feel alone modifications for of the did not they were owned by them and other security holders. But allied studies were originated at the expense of the United States. A lot of people bought those loans soleil inherited the problem and did not originate the problem. I can assure you those loans were good it had nothing to do with the terrible legacy lungs. But you own that. That is not your problem for creating it . To make that is true to meg shame i knew they did something wrong but that you inherited something. I understood that. I have been told that the irs for not sending out 524 soph flood negative 522 forms flex would become treasury secretary i hope you Pay Attention to that because the only way we can keep that intrusion is for people to get the report. If you would work on that i would work with that to appreciate that. That sells like an important issue. Mr. Chairman faugh full flow to the hearing for today. Sift the beginning of the Great Recession you are probably well aware we lead off a fifth season of foreclosures to fit the fed jeff treasury secretary for the deaf over the next nine years profile i ask some festive to that of life to ask those today how many nevada homes were in one bank for folio five. Unfortunately i will request that information i know will never have that inflation. But i will work with the bank to give that information. Would about foreclosures flexivan i have the information in the public reports that i am committed to get that information for you and i do appreciate how hard your state was hit in the fourth flush of princess foreclosure francis. I will try to fill that to get that information. This is the seven time my a staff as follows the still cannot get the answers to these questions and now your own comments were there were 5,000 pages. Why were these three questions not fast life. First i will apologize because i do recall view asking those in your office and there is no excuse they have not been answered. I was not aware that my staff of slovak those questions for felt i ensure you personally as soon as i get out i will request that information. We were responding to a lot of other information. We you have my commitment. 2008 what motivated that transaction . Buffet way to save the bay core make money or keep them in their homes quick. All of the above. I saw the opportunity that there would be a banking crisis and i saw the opportunity that i thought we could turn around the bank from what was a lousy Mortgage Bank andy opportunity to have an attractive investment but i saw that as a goal to build the business. Yes, and theyve made money but if we just invested with jpmorgan and bank of america we would have made more money and i would not have to work nearly as hard. Part of that financial return was be invested in the market at a very depressed period of time. Were you motivated or was it the objective of the of bank to foreclose to receive compensation from the fdic shared loss agreement . Quite the contrary. When we bought indymac from the fdic was inherent that we committed to do the loan modification. That was the agreement. We were proud of what was started there and we had a bunch of incentives for that was much better for us. So i can assure you that what prevented us was either the net present value tester the qualifications required to get updated in come to effectively requalify for the of loan. Not only as a social basis but to be economically motivated to do that. How much did that fdic pay as compensation . What do you mean . With the share loss agreement i would comment i think there has been 400 agreements they believe they saved 40 million. The answer is 1. 2 billion dollars spirit that is after be absorbed 2 billion of losses. That is not a motivation because we were restructuring fees when we did Loan Modifications. We wanted the good loans let me be clear we wanted good loans good loans that perform was critical. Did one west bank specifically get targeted . Absolutely not. We appreciate you being here with your family and we want to start with this subject of mortgage foreclosures also modification i have in a document with the channel for that the trumps secretary pick foreclosed on hundreds of homeowners at dated, jr. T16 so i would ask consent for this part of the record. Parts of it because when they refer to individuals the mayor may not last few know this person but here is a couple of excerpts according to a channel for pittsburgh. Losing dresden to cancer and her son stephen overdose and her home to the bank. She said i will not get over my sons death and lives in west dale. She said they should have worked with me to make a payment from that i could make. That she filed bankruptcy that it caused a lot of depression and also a house in 2012 and pittsburgh but but, again the headline says hundreds of the homeowners so one and a region of the state of 67 counties. I highlight that because to focus on the impact of one community and one state but also to ask questions to make sure the record is clear with this line of questioning from modifications and foreclosures. The statements that you made in my office you said there were lots of modifications and with the question of foreclosure its so few said at the time with only 30 or 35,000. Is that correct quick. That was the period of 2009. I believe the 175,000 but it was over a slightly longer period of time. Over that time you were the leader of one west how many foreclosures total quick. I dont have that. There is a lot of talk of the foreclosure business but 93 percent that we serviced was serviced for the third parties. I want to build a Regional Bank so one west is no longer and resold years ago because we did not want to be in the servicing business obviously the alone the utah about this sounds like a horrible situation and i sympathize. Is seems to be some discrepancy but you say given your testimony today that ultimately to extend over 100,000 loan for the modifications extending is the same . No. They were offered to put on a loan modification. But according to a document with the record is a onepage document that i would ask be made part of the record to make home affordable and in fact, in terms of total modifications we will put that into the record. We will now turn to senator cassidy. As you can tell where i am. I will note that my sympathies and second with Economic Growth and editorial with the french negative upholstery journal shows if you have that Economic Growth as we did for between 93 and 2,000 with the surplus despite the entitlement spending as opposed to the deficit by a appreciate your in acknowledgement of the progrowth policies. I represent in world parrishs and typically the Utility Companies and Community Banks. The number of Community Banks plummeted. So your thoughts as how we revise those Community Banks with the prospect from world america . I enjoyed the opportunity to talk about these issues and i am very concerned that we have and continue to be in the business to put Community Banks and small Regional Banks ought of business. 80 million he tells me 64 regulatory ms. Its in a 52 week period so why in my not selling . Continue. That sounds about right. Pdf i agree completely. If we want to have Economic Growth for us to end up with four or five big banks to deal with too big to fail or to bid to succeed we need to have Community Banks that understand the people in the community. It doesnt seem like we have an absence of capital. We did cannot get that down to take back capital you dont know where that is day do agree but there are two possible goals of tax reform under the reagan tax cuts with the high marginal rates deprive the capital plan seems we had enough of floating around as a choke hold. And another is to align the symptoms. And to keep the money within the business quick. To create jobs. And do you agree . You were the economist. With us third reason it seems the creation of capital that could create certainty. I peggy but the only other thing i would say is to have a business tax system to keep that capital abroad. So was part of behavior that money comes back to the United States and a candy displayed to create jobs in restocked and versions because it makes economic sense. The incentive is to use their money more wisely and on behalf of all of those people thanks for your offer to serve afford to supporting nomination. Is up pleasure to see mr. Mnuchin congratulations on your nomination. United states enjoys enormous advantages of a state Research Currency to allow still longs and mortgages fan and a student loans. The comments about initiating the debt were unprecedented. Can you affirmative is your policy we would never question the willingness. I entry 100 percent as incredibly peace successful i appreciate. I have been very troubled who have said we could ignore the debt ceiling without consequences. And if we could prioritize those debt obligations to ignore the obligations to pay the states and honor the commitments to pay the salaries it is it your policy they need to honor all obligations . Absolutely i hope they will work with me to get that done. We spent the money there should be no uncertainty that we paid the bills. I think that is important but clearly the words that you say will have consequences. But the actions of commenting on the strength of the dollar are unprecedented. Now you will simply be a Senior Adviser in the cabinet. Words have consequences how can you be scheerer of Economic Policy to speak with a single voice . If confirmed i think that once we get into offense office, you will see that. There may be times where the dollar is too strong but i do believe we will speak with a unified voice. And the president could weigh in on these matters . President is willing to do a lot of things. One area to have a huge amount of concern there are some people that interpreted the comments that would say even though the american taxpayer was paid back of those failing institutions in a moment of crisis some could say that was high risk capital but those that say lets ignore the underlying challenges, i do you support that . I did make some comments but the comments is we have been around the of mortgage industry is the area i believe we have expertise. Fannie and freddie could be run without creating risk to the government prepare your running out of time but bear with me. Extra 30 seconds greg. Theyre very important entities to Housing Finance. So what i believe is we need housing reform so to leave at as it is under government control. With the of fix and limiting finance. I have two quick questions. So and light of those comments you commit not to support that effort to bypass the congress . That dont want to make any commitments legislative for naught but it is my responsibility of treasury as it relates to certain issues but i will commit to to my objective to have a bipartisan solution. With at bipartisan consensus is that solution should end up with the Housing Finance system but the current status that plantings are going well then when they hit the fan. I can 100 percent sure you i understand this well enough you will find i will not support any policy. I found a tweet of your future boss that i a agree with. Fast and short and direct would never is. To oppose lifting the current sanctions on russia . Right now i do im sorry i oppose right now lifting the sanctions. Use aboard new sanctions. The answer is i dont have the information to receive classified briefings that would put to understand the information so i dont have that opinion if we should have more but i do have the opinion we should not be existing. What about firing people . To make key has a Television Show about it laugh laugh were not sure where that stops or reality begins will he hesitate to fire if he believes they do a bad job greg. If he disagrees with them , no. Sometimes i could convince him sometimes i could not and i have not backfired. Could he higher the ethics officer . Key would if it was not him . We are not talking about trust but the ethics officer to oversee him in the government who will hire or fire the ethics officer . It is a good question i am more than happy to talk to him about it understand i dont have the answer. I believe he sold his public stock stomach is it fair to characterize him as an international businessman. I believe so. Keep enjoys the benefits of the Business Success while president . Correct . I believe he will do everything legally. My question is he has said he will go back to his business and fire his son if they had not done a good job so whenever success his business and joyce he will get the benefit . I miss the part of firing his son but yes. By definition i would assume that. Do you agree . Is it true that debt is held by foreign interest . Do you think you should know that as someone who runs the committee of Foreign Investment if we are talking about the commander in chief . Should you know what percentage . I am told it is a huge percentage of his debt held by foreign interest for. If confirmed i assure you i will make sure the requirements of the constitution are upheld and you have a valid point and if confirmed i will research that to get back to you. So if you report to this committee the percentage of the debt against the Trump Enterprises that is your job as secretary of treasury and died give that information. I am not making that commitment today to report on anything but what i am willing to do to the extent i am confirmed i am willing to speak to the chairman that whenever the committee thinks it needs the will discuss with the president. The American People need to know based on Foreign Investment people want to know how much debt is owed to the foreign entities that could happen with National Security. I will followup. Ive above for the staff to look at the responsibility of the treasury to ask of president i dont think that is part of your job mr. Mnuchin. But your employment history is complex more than any nominee that i have seen bayou are a road map of the things we need to do to have a more transparent tax policy some do you combat to work towards a simple more understandable tax code for quick. Absolutely cough. Do you pledge to divest herself that is a conflict greg. [inaudible conversations] negative final many of these questions have suggested they did not hear that. In april 2014 the treasury ig came out with a steady to have to . 8 million in bonuses as well as tens of thousands of hours of the increase to the employees that were tax delinquent or committed serious misconduct. Inspector general found those employees with noncompliance cases closed between october 2008 and october 2013 to see those voluntary separation payments within one year after being disciplined. Will you commit to change this policy greg. Absolutely it is very concerning. And another report the Inspector General of the irs for said they repeatedly hired employees after a lengthy examination process. In fact, the treasury found in the sample of 7100 employees who were rehired by the irs, those at had bad performance as to why they were fired in the first place and in some instances in the records it does say do not rehire but the irs does to you commit to change that policy could. That sounds like the most common sense thing i have never heard i am committed to that. I fink with all the acquistion is to have been asked i tried to look at it from the value of the American People. We deserve better because you would policy and for this. You would not have a company to pay people for nonperformance or pour performance or reward individuals to rehire them if they did a poured job last time. The American People look at these policies so i go back to where i started with that employment background with more areas than we ever imagined. Day you pledge to have all the branches but the American People need to be changed. Would be a great honor and that is why i am here. I yield back. Senator scott. Thanks for coming by the office with this conversation about Economic Growth. Folks but to follow up on a simple tax code i think many comments i have heard from the up president elect for those working paycheck to paycheck think about uh tax code those since health care line that were strongly supportive of of president elect or those where they are working every single day long hours barely making it. Think of the tax code to focus on income or capital. Ridley to hear your comments on the approach to reforming the tax code. Or is it more of the capital process . I think it is both have an opportunity to reform the tax code we should focus on the personal and the business faugh side. Off there are creating more jobs and in combat as we had to discuss and to deliver a tax cut in make u. S. Business taxes competitive with the rest of the world to compete effectively and aggressively to create more jobs. It is about better economics and i am very concerned of the number of jobs with a decrease of manufacturing those that have left the work force if you will get the Unemployment Rate to tell the story would is going on. In order for us to get to a lower rate we have to have a challenging conversation of the expenditures. I hope the illustration will treat very carefully the deductions going for word. I noted it is 1. 1 million but i thought as a political document deals with the interest that you pay and not the actual value of the home but i hope you would take seriously the importance of those to deductions from my perspective. If we lower the corporate rate . I think it absolutely has a huge impact. Brcs somethings we can do but the of Biggest Issue is the incentive for much lower taxes abroad than what we have here. 35 higher in the world that is wonderful. But on that 12. 5 or whenever we can do to be competitive but to look for other remedies perhaps the haven of america. But we have spoken before about legislation i have sponsored that defers Capital Gains tax at seven years if you reinvest those resources. More than 1 million south carolinian with singing is in distressed communities i hope we have a goal of to create incentives for of four private capital to come back. As a matter of fact i have that in my notes prime1 to followup with you to learn more about that if we use that for other tax incentives it is critical the areas that are the most fun struggling so i will definitely. I thought that was an endorsement. With trade policy as a haven for manufacturing 100 years ago with a manufacturing perspective trade agreements were an important part i know that you try to move away from the multilateral agreements i hope that includes those growing markets around the world. And president elect bill leaves and traded just once to grow exports and he wants a better deal. We have to more. Less keeps going then be will take a short break. Eightyfour being here view our kids deserve the award for stamina. [laughter] like kids would have been long gone. I said they could leave after one hour. Oppose is the opportunity to give a shot in the arm. Looking back at those pre recession levels and then in terms of unemployment going back to the Labor Force Participation rate at 56 compared to today unemployment would be ninepoint 5 were not serving those middleclass families and that it is one way and diane appreciate what you said in response because we should be focusing on wages. How to ensure we create opportunities for families we represent. Puff for fpu camel were the rate but isnt there an opportunity to repatriate those that are locked in . What could be brought back spirit the president elect things we will get 3 trillion. We year getting a lot of money back. I have spoken to several ceos to want to bring money back. To the extent to have the one time repatriation but i absolutely believe some of the biggest holders of cash abroad. You are committed to working with us . We need to invest but with regard to trade i believe been expanding exports but i also believe it available Playing Field and with currency manipulation we tried to introduce an amendment that came close with a trade objective. But it does a treasury has authority to take action. Some conditions have to be met but at the end of the day the treasury secretary can recommend to perform a consultation at the imf unbilled and if confirmed will you take full and vantage . Absolutely. I know you have taken the opportunity and priest spoke about these issues and i am committed this sounds like the importuned issue. With the bipartisan agreement and i appreciate your commitment. Another topic to touch upon was the i. R. A. Said understand there was some discussion of i heard about those examples including promotion policy that there was politics for involved based on those matters though to create huge problems but has not performed as anybody would expect but by understaffing and underfunding but are you committed to try to fix these problems but work with us to have adequate funding. Absolutely. This is what i feel strongly about i hope we do have bipartisan support it is one of the areas to have resources one of the things that i have occurred while we have Technology Problems based upon uh guidelines to have these internal expertise. In this day and age we need to have good Customer Service if people pay taxes have the right to to get the information and we should interact electronically and securely i could look up of realestate tax bill in california to see my information i dont know why that those that could see then Information Online and also we should monitor Customer Satisfaction and understand was the taxpayers think of the service we provide them. Additional focus on the irs is an opportunity and in 19 years ago as a house member every 20 years it should be looked at ayer appreciate your comments today. Look forward to working with you. I apologize for being with governor perry for the of morning. I want to ask if you support returning to class stiegel . I do not support going back as it is but perhaps we nikkei 824 centuries class stiegel but to take a very old block to say we should adhere to it but added again that republican platform with of president elect we need a 21st century version. When did that change greg. That is part of the campaign. October . At the convention it was a glass eagle. Disposition never was . Oh or all along he meant a difference version . This is an issued to discuss. So leaving does that have anything to do with the change . This is an important issue that the republican platform had a stronger position than the democratic platform. But now ive understand he does not really support that but a modern version that i do not understand. Brought on by toxic financial as she miss that did not have the backing that they needed and a 14 trilliondollar hole in our economy so i think you alluded to the damage. So now also i think you answered at least some of the notes i have hear about some of my other colleagues that you believe in the concept of proprietary trading with the bank. That is correct. Okay, so where does that go . So you are saying you dont think today there is clear prohibition and you want to see clear prohibition . What i said today we have a prohibition of proprietary trading in banks. With loopholes. A problem we have is with the definition with that was left to the regulators to decide so the first issue and again im a believer in proper regulation but im also a strong believer in people need to understand the regulation so we need to be able to explain to banks what is proprietary trading and what is not proprietary trading. Think we would all agree if we were all sitting in this room and just betting on things other trading the Federal Reserve had their own independent report on a lack of liquidity in many of the important markets so what i am in favor of is that we have clear definition around the volcker rule and the regulators come out with that and do it in a way so that doesnt eliminate liquidity in many of the important markets. So you would basically just type what you think are the rules that are out there. You would lessen the rules that are arctic tests under doddfrank . Thats not what i said that i want to be very clear. What i said is that i support the volcker rule but there needs to be proffered definition around the volcker rule so that banks can understand exact way what they can do and what they cant do and that they can provide the necessary function of liquidity and customer markets and again i am referencing a problem that the Federal Reserve has independently raised. I think to me, i think this election was a lot about the frustration of the American People on the implosion of our economy and the fact that they havent recovered and i think the president elect whether he directly mantu, i was pleased that his party adopted coming up with a varied bright line of separating commercial from Investment Banking so now i think where we are today, hopefully well get a chance to vote on this and our colleagues have to answer to platforms and committees will hopefully get an answer where our colleagues are on that but i will tell you not only is this an issue of people wanting to see a bright line and be protected from this ever happening again and when it comes to the tax policy, the American People have not recovered. Lowering the Corporate Tax rate without a plan for the average american who lost pension, couldnt send their kids to school or maybe lost their home what is the tax probably policy that the president elect and youre going to pursue this going to help restore them from that major implosion and protect them from this ever happening again . Let me just tell you from having traveled with the president elect in 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 is and the president elect is committed as in my in an economic adviser to work for the American People and grow the American Economy so the average American Worker does better and thats why ive been willing to sell all my investments, ive been willing to give up my businesses. My desire is to work for the American People to create a better economy and i understand that. I have traveled for the last year. Ive seen this in the president elect understands that very rarely. Is one question on that and id know my time is limited so did you mention what tax break policy you would give to the American Worker . Absolutely. We specifically said the objective is to create a real income tax cut and to create business taxes that puts incense businesses to grow and make businesses more competitive and hire more people. Not specific to education or pensions or anything. As we have had it chance to talk i think pensions are very important issue and id be happy to work with your Office Another time. I think the people that have earned pensions deserve to have those pensions maintained and be safe and im very concerned about the retiree issue in this country and its something i look forward to working with you and others on. We need to protect the pension holders. Thank you mr. Chairman. We are going to take a tenminute break here. My friends on the other side have requested a second round and we are going to grant that and so lets just recessed for about 10 minutes, maybe a bit longer. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] on friday the Senate Returns after the inauguration. We found that public official , people who really guided this country, its not congress, to the president come its aircraft. They run thousands of rules and regulations that have the force of law and we found out that they dont think much of ordinary americans. We learned that we elect to congress and the president reviews the laws but that aint exactly how the system works. What we think of as the law consists of rules and regulations written by bureaucratic agencies by bureaucrats who are not elected by anyone and who often serve for decades. Testimony by betsy devos president elect trumps nominee to lead the Education Department she testified be