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tv   Bloomberg Markets Americas  Bloomberg  January 19, 2017 12:00pm-3:31pm EST

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you do have allies on both sides. there are good, professional people who work there, under very difficult circumstances. i understand trump is calling on a freeze. i'm not sure how that coincides with you or desire to make sure we have adequate personnel at the irs but i assume you will have an opportunity to talk to the president and steven mnuchin: i can ensure you that the president-elect understands the concept of making money. that is a very quick conversation for donald trump. sen. cardin: i want to follow up on senator wyden's point on a couple of issues. i'm the ranking democrat on the senate foreign relations committee. i want to deal with the sanctions for one moment. i heard you in regards to enforcing the sanctions
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particularly aimed at those who sponsor terrorism that we also have sanctions against countries that are violating our international norms on democratic principles. russia is top on that list. about yoursk you views on the sanctions and strengthening the sanctions -- we have bipartisan legislation to strengthen the sanctions with russia's attack against america's democratic election institutions. you are committed to enforcing the sanctions against russia. steven mnuchin: 100% so. the president-elect has made it very clear that he would only change the sanctions if you got "a better deal" and we get something in returnthe presiden. sen. cardin: in response to the question asked about using the irs to make sure it is not used for partisan reasons, you will enforce the sanctions without regard to a person's party
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affiliation or office? steven mnuchin: of course. terrorism and supporting terrorism and supporting illegal activities is the most important issue. i hope that is not a bipartisan -- i hope that is a bipartisan issue. where there are sanctions, i assure you i will use them to the maximum amount allowable by law. sen. cardin: i appreciate that answer. ,e will be sending you a letter if you are confirmed, to investigate the allegations that aramucci may have violated the sanctions against russia in his dealings. except that you would investigate this issue to see whether there was a violation. steven mnuchin: of course. anything you send to make him i will make sure i or my staff properly investigate.
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me bighing you sent to d to sen. cardin. sen. cardin: you pointed out that you would treat an american company dealing with foreign markets equally, even if it is a trump enterprise entity. you are taking an oath to defend the constitution of the united states. there is the all moments clause -- you have to make sure if you are dealing with a trump entity that it is not 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 a trump enterprise if you don't have full access to that type of information? steven mnuchin: i think we all acknowledge this -- we are in a
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unique situation, we have a president who has a vast amount of money best -- sen. cardin: but he is not doing what every other president has done. setting up a blind trust. that is what is required. he is not doing that. how do you come if confirmed, to theth compliance constitution to make sure a trump enterprise is not getting special treatment which would violate our constitution? steven mnuchin: this is a very important issue for the american public. i can understand what you are asking it. i know that the president-elect is absolutely following the law and is committed to following the law and has set out a series of -- he has removed himself from his business. he has put his sons in charge of his business.
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has -- he will hire an ethics officer. jobn assure you that in my of treasury secretary, whatever responsibilities i have to monitor these issues, which are very important, i cannot sure you that i will do. sen. cardin: how do you determine to make sure there is not a break given to a trump enterprise which would violate our constitution -- lawyer,nuchin: im not a but the good news is, we have a big group of lawyers in the treasury department and a big ethics group. we will make sure we absolutely follow the law and the constitution. i have every reason to believe the president-elect absolutely wants to adhere to it and will do so.
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sen. brown: thank you for the conversation. let's clear up one thing. scentede not highly in -- i wantvized to do to talk about your situation. i understand your defensiveness in individual meanings -- meetings and this committee about what happened at one west. in 2006, donald trump responded to a question about the possibility of a real estate i sort of hopeg " that happens because then people like me would go in and buy." , you boughthe bank the ability to help families stay in their homes.
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you have been saying that one -- i have a lot of questions. i want you to confirm with yes or no. is it true that community groups , specificallyest the california reinvestment , foreclosed on 60,000 families nationwide and denied three fourths of mortgage modification applications? steven mnuchin: i am not aware of that. sen. brown: well, they did. i want to hear it from you. time.'t have a lot of is it true that one west regulators said you had deficient mortgage practices, foreclosed on 10,000 plus borrowers without proper
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procedure? steven mnuchin: we followed the same procedure -- fdic followed. sen. brown: is it true that one the servicemembers civil relief act by initiating foreclosures on 54 active-duty military families? that is what the independent audit firm said. steven mnuchin: you have the document in front of you, i don't. prettyown: i'm surprised you don't know these things because you've been rather defensive about what happened at one west. steven mnuchin: i do want to comment for the record -- we unfortunately did foreclose on certain people in the military. it was inappropriate. we responded to those people and made them all.
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the opportunity to have their mortgage reviewed and we corrected our errors. i'm proud of -- sen. brown: is it true that the california attorney general's backdated one west 96% of the documents they examined and you aggressively obstructed their investigation? that is what the attorney general's office said. steven mnuchin: i saw the leaked memo, as you did. i think it is highly inappropriate that somebody at the attorney general's office -- sen. brown: was there no truth in that? steven mnuchin: the primary regulator was the occ. they had the obligation to regulate. sen. brown: and occ said those things. they said you had these deficient mortgage practices. but you cannot remember when i ask you about occ.
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is it true that one of the employees in charge of the modification is accused that has accused one west of not having any process in place to help its 3000 fha nba mortgage borrowers avoid foreclosure -- fha and v.a. mortgage borrowers avoid foreclosure? it seems to me you just want to shoot questions at me and not let me explain what that's -- sen. brown: i will let you explain when i'm done. they are complicated. steven mnuchin: let me explain them. otherwise, there is no point in shooting them all at me and i don't have the ability to respond. sen. brown: but all of these are factual things if you want to
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follow up with a response later in more detail. -- ann answer this denied aoan, the fbi four-year request where you were cochair -- have you been questioned by law enforcement on this? steven mnuchin: i have not. you wrote that letter yesterday. i assume the fbi did a thorough review of my background. i have no idea why they didn't approve the issue. i've been told we have no reason to believe it's any issue associated with me. sen. brown: fair enough. steven mnuchin: why don't you direct that to the fbi? i find it: interesting that you know about the letter i sent yesterday with all those questions detailing all the issues that i just asked west -- one west
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. i sent in early to mid december about this you have not even taken the time to answer. the one west purchase went well for the treasury secretary designate but it was a disaster for homeowners, or employees, for investors and taxpayers. we can talk more about taxpayer in this whole process and the amount of money he bought it for and sold it for but mostly subsidized by taxpayers. all,n mnuchin: first of senator, i did enjoy meeting you. i don't believe we had the opportunity to meet before that time. i look forward to spending more time with you. although we may not agree on everything, there were certain things we did agree on when we respect for lot of
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you as a senator. i did tell you, i did acknowledge that you sent me the letter. advised by the staff at the appropriate thing was for me to come here and answer questions or meet with all of you independently and answer questions that you have. if i don't satisfy that, you have the ability to submit questions afterwards when i came to your office, i told you that. i said i would spend as much time with you as you wanted answering those questions because they were quite significant. i knew they were complicated. although i would not respond in writing at that point, i did understand your questions and i wanted to address them. sen. thune: in the last
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eight years, we have not had a single year the growth rate has exceeded 3%. what do you think is a reasonable expectation in terms of the growth rate in our ? onomy steven mnuchin: i'm just looking at some of my notes. i have said publicly and i believe that we should be able present-four -- 3%-4% gdp. the most important issue we have is economic growth. astever issues we have republicans or democrats, i think we can agree that with more growth, it is a lot easier to solve these issues and we should all be focused on things that help wrote the economy. quite4, we had
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represented in 1998, we had 5%. had 4%.84, we in 1998, we had 5%. i share the president-elect's concern for low growth. if i amork tirelessly confirmed to create growth in the economy and create program programs. -- pro growth programs. tax reform will be our first and most important part of that. the president-elect has identified tax reform and regulatory reform as to areas where we can unleash the economy and achieve a high level of growth. to what degree do you think -- as of yesterday, there was a 277 page regulation
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-- david: members of donald trump's family arriving at joint base andrews. the president-elect and the vice president-elect expected to participate in a wreathlaying ceremony at arlington national ceremony later this afternoon. arer that, the two of them expected to attend a welcome celebration on the steps of the lincoln memorial in washington, d.c. being billed as the make america great welcome celebration. that is scheduled for 4:00 p.m. eastern time. the president-elect will deliver brief remarks at that event. remarks expected to begin at 5:30 p.m. eastern time. among those participating in that event, toby keith, three and there, jon voight will be fireworks after the event.
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images ofking at live at joint757 landing base andrews. back to the hearing with mnuchin . -- with steven mnuchin. steven mnuchin: any operating business, we need to make sure -- david: there he is, the president-elect and his wife emerging from the government plane at joint base andrews. the president-elect flying down from new york just moments ago. he will now head to washington, d.c. and arlington national survey for a wreathlaying ceremony this afternoon. should makein: we sure we collect the most money and not have lots of loopholes. on the other hand, we need to reflect fair valuations. sen. thune: senator cardin and i
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if wed a working group -- get into comprehensive tax reform, how will you treat pass through businesses? they employ 55% of the people in this country. reform,ink about tax i'm asking you if you would commit to work with us to ensure that pass through businesses are treated fairly and whatever we come up with in terms of policy reflects the economic impact that llc's and partnerships and organizations have on our economy. steven mnuchin: i spend a lot of time on this issue already. i worked with a trade group that follows small businesses. not only did they support the trump economic plan which i
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helped design, but they were kind enough to write a letter of support for me to the committee. the important issue on pass-throughs that we are committed is we want to make sure that there is a business tax. this is not just a corporate tax. if there are large pass-throughs that earn tens of millions or hundreds of millions of dollars, we want to make sure that they keep the money in the company. as an incentive and that they don't use pass-throughs as a way to get lower taxes than they would pay as personal income tax. we want to make for that hedge fund managers don't use higherroughs to avoid personal income taxes. we are committed and we have spoken to many small businesses and entrepreneurs to make sure
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they are protected and they get the benefit of the business tax. i appreciate your concern. we have heard this loud and clear on the campaign trail. it is something we are committed to work with you and your office on. sen. thune: keep the focus on growth. thank you. >> thank you, mr. chairman and mr. mnuchin, thank you for joining us. i appreciate your willingness to serve in this extremely important post. i want to thank you, mr. chairman, for observing the not-too-distant history, the fact that our current treasury secretary had i investments in the cayman islands. i don't remember the outrage from the other side when it came to his circumstances. this seems to be selectivity on the part of that. i want to go to a point you made that is really
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important. i have never heard of a bank that would not prefer loan modification every time over foreclosure. not only to avoid the misery that results for their customer, but also because foreclosure almost guarantees locking in substantial losses for the bank. that it be fair to say virtually anytime it is possible , your bank would have preferred a loan modification? steven mnuchin: absolutely. we ran a net present value test established by the u.s. treasury assumptions -- anytime we could collect more money by doing a modification, we were allowed to do a modification and by definition we were incented to do a modification. we would have done those modifications even if we had not received the incentives from the
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u.s. government. incentivized to do this, whether they get the subsidy from the treasury or not. sen. thune: on the trade front -- >> on the trade front, the president-elect has indicated an interest in revisiting trade agreements. would you agree that it would be a mistake to evaluate whether or not a trade agreement is a good one to solely look at whether or not we have a trade deficit with the country in question? steven mnuchin: i would agree with that. , would you agree that many of the periods of strong economic growth we have had in recent decades have corresponded to periods of a strong dollar? often, if our economy is with theg well
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inevitable result will be a stronger dollar. steven mnuchin: i think that the u.s. currency has been the most attractive currency to be in for a long time. it is important. you see that now more than ever. the currency is very, very strong. you see people from all over the world wanting to invest in the u.s. currency. when the president-elect made a comment on the u.s. currency, it was not meant to be a long-term comment. it was meant to be that perhaps in the short term, the strength in the currency as a result of free markets and people wanting to invest here may have had some negative impacts on our ability in trade. i agree with you. the long-term strength over long
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periods of time is important. again, that is a reflection of i believe we have the most attractive investment environment in the world. we just have to protect our u.s. companies so that they are not worst abroad that forced -- they are not forced abroad. dodd-franklures of which ititle two believe is a codification of a mechanism to require future bailouts from taxpayers in the large financial institution to fail again. desirable to amend the bankruptcy code so we can large the resolution of a cup >> financial institutions through bankruptcy and not ever have to go to taxpayers to bail out big banks? steven mnuchin: i 100% agree with you that we should not be in the business of bailing out
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big banks. i share certain concerns on title two. we need to look at the bankruptcy code and what we can -- asnot in a different an alternative. for long periods of time, the fdic was able to take over and resolved banks when the regulators determined there were issues. the intermingling of banks and holding companies in complex securities. , awe have proper regulation lot of the need for title two also goes away. sen. bennett: thank you, mr. mnuchin, for your willingness to serve.
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the you believe the dollar is too strong? steven mnuchin: i believe in the short term -- sen. bennett: are we ever going to hear you say as treasury secretary that the dollar is too strong? steven mnuchin: i don't see it is my role commenting on the dollar on short-term movement. i have comments on the long-term. 2011, due to in the dysfunction in congress, we almost failed to raise the debt ceiling here. as a result, the rating agency downgraded our debt for the first time in history, the stock market lost 17% of its value. 22% inr confidence fell just a few months. a completely self-inflicted wound on the american economy.
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retirementericans' savings. during the campaign to mr. trump suggested he could somehow refinance or reading a sheet our existing debt. -- renegotiate our existing debt. we could pay our creditors less -- you go back and say, hey, guess what, the economy just crashed, i'm going to give you back c half. he suggested the u.s. never needs to default because you print the money. steven mnuchin: thank you for asking the question about the debt ceiling, which i do want to comment on. i think it is a very important issue for all of us. if i'm lucky enough to be confirmed, it will be something -- sen. bennett: please don't filibuster. steven mnuchin: the president thatade it perfectly clear
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honoring the west that is the most important thing. is thering the u.s. debt most important thing. we will not go through another one of these issues because there are certain things that i would have the power to postpone this. i firmly believe the u.s. has the obligation to honor its debt. sen. bennett: can you commit to working with the congress to pass a clean debt ceiling? steven mnuchin: i will commit to absolutely work with the congress so that we don't get to the last minute and run out of money. sen. bennett: is that a yes? don't knowhin: i your technical issue of what a clean debt ceiling -- i would like us to raise the debt ceiling sooner rather than later. we don't want to risk defaulting. sen. bennett: i am grateful for
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that answer. thank you. the nonpartisan tax policy center found the president-elect tax plan would increase the debt by $7.2 trillion over 10 years. the president-elect has proposed increasing defense spending and said he will not touch entitlements like medicare or social security. only suggested reducing spending on nondefense discretionary spending. in 2015, nondefense discretionary spending comprised 16% of the budget. this includes funding for veterans benefits, transportation, national parks and investments in research. even if we did not spend a single penny on any of these ,riorities for an entire year that would only pay for about 8% of mr. trump's tax plan. that increasesn the debt by $7.2 trillion an acceptable outcome to you? steven mnuchin: i believe the
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$7.2 trillion number was the first tax plan, not the second tax plan. i believe it scored dynamic closer to death sen. bennett: the first was $11 trillion. steven mnuchin: the dynamic number was closer to $2 trillion. sen. bennett: the dynamic was $3.6 trillion. in either case, we are adding mountains of debt. steven mnuchin: i have discussed the debt with the president-elect. we have gone from $10 trillion to $20 trillion of debt. we think the way to reduce the debt is by economic growth and that will create the opportunity for us to pay down the debt. saidbennett: senator thune average growth rate we've seen is about 3.2%.
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there is no way that will fill the gap that is projected in these tax points. i can accept the fact that the president-elect may have changed his mind or you differ with him. i'm just try to understand whether you would find it acceptable to bury the american people under this kind of proposed debt. , ween mnuchin: as you know had a rather modest campaign staff relative to the other people out there. forwardhe things i look to if i'm confirmed is having access to all the people at treasury who were able to model these things. butad some internal models we were forced to rely upon next are no models. -- external models. what is important is that president trump has a progrowth economic tax plan. we are sensitive to the costs of that plan.
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yesterday, i did have the opportunity to meet with senator wyden. we talked about the process for tax reform. i will be the person from the administration taking the lead on that. i look forward to working with the house and the senate, both republicans and democrats to move forward on tax legislation. sen. bennett: i want to make one observation. praisedhin has twice employees at the treasury department today. that is a refreshing and welcome change from what we have heard up until now in a lot of these hearings. isakson: mr. mnuchin, welcome. you aboutto talk to something i had not prepared
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myself to talk about until i heard the other testimony. i want to talk about mortgage backed securities in 2008. your purchase -- steven mnuchin: it was in december of 2008. sen. isakson: the beginning of the crisis was in july of 2008 when merrill lynch drove down their portfolio by $.71 on the dollar. steven mnuchin: that is correct. started aon: this domino effect around the world that collapsed the mortgage backed securities. steven mnuchin: that is correct. sen. isakson: it had a number of those in its portfolio. steven mnuchin: it had mortgage-backed securities. that is correct. sen. isakson: wall street packaged loans and put them into securities and marketed them based on a high-yield. they haduchin: securitized the loans themselves and created their own securities. the market backed up and they could not afford to sell them and they got stuck keeping them.
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most of the mortgage backed securities we had they did not buy. most of them were failed sales. sen. isakson: is it not true that the freddie and fannie -- thated insured loans congress directed them to have a larger percentage of affordable housing laws in their portfolio? steven mnuchin: absolutely. that is unfortunately what led them to buy a lot of bad loans. everybodyon: i want to understand when they are talking about these mortgage issues -- i was in the real estate business for 31 years. happened in a lot of these loans, they were made because of the direction of congress to take more of them. what was called and affordable housing loan ended up being a subprime loan which ended up being a high risk loan.
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they were sold around the world insecurities. steven mnuchin: it is true. these loans had all different types of acronyms. they should have been called bad loans. that's what they were. you triedon: everything you could to recalibrate those loans and restructure those loans and renegotiate those loans. steven mnuchin: that is true. not only for the loans we owned, but loans we serviced for fannie mae and freddie mac. the one person who came to my home and protested at my home, it was a fannie mae loan and i was not able to do anything about that and it was through my multiple calls to fannie mae that i was able to get a loan modification for that person. many times, people thought we owned the loans and we did not. main -- sen.n: the isakson: the main point i want
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to make, a lot of these loans were originated at the encouragement of the u.s. government. they were called affordable housing loans. a lot of people bought those loans and inherited the problem. there is a world of difference between originating a loan and buying a loan. steven mnuchin: that is correct. the loans that we originated on the mortgage side were good loans, had nothing to do with those terrible legacy loans. sen. isakson: that is the important point. if you originate something, you own it. if you acquire something that is bad debt, shame on you for buying it, but it's not your problem for creating it. steven mnuchin: thank you. sen. isakson: i don't mean shame on you in that you did something wrong t. steven mnuchin: i understood that.
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thank you. sen. isakson: i've been told by my state director for revenue that the irs is not sending out -- the federal government is not sending out w-2 forms. is that correct? >> correct. sen. isakson: i hope you would pay attention to that and try to direct them to start going back to do that. the only way we can keep bogus intrusion -- if you would work on seeing to it that those practices are ended, i would appreciate it greatly. steven mnuchin: that sounds like a very important issue. sen. isakson: thank you for your willingness to serve. heller: welcome to the hearing today.
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since the beginning of the great recession, no state was hurt harder than the state of nevada. we lead the country in baker please, foreclosures and unemployment. havinga little sensitive gone through that over the last eight or nine years. -- we let the country in ad the country in bankruptcies. i want to ask you some questions -- how many nevada homes were in 's banks portfolio? steven mnuchin: i no longer have that information. i will work with the bank to try to get that for you. sen. heller: how many nevadans did one west for close on? steven mnuchin: i have the information in public reports.
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i'm absolutely committed to go back and get that information for you from the bank. i do appreciate how hard your state was hit in the foreclosure crisis. sen. heller: do you know how many nevadans one west provided assistance to? steven mnuchin: i will go back and try to get all that information. is the seventhis time i have asked. i asked you in my office and i had my staff follow up on it we still cannot get the answers to these questions. this your ownith comments were that you responded to 5000 pages. why were these three questions not asked? steven mnuchin: let me apologize youou because i do recall
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asking for them in your office. staffnot aware of that my also got those questions. i apologize to you. i assure you personally that as soon as i get out of this hearing, i will request that .nformation from the bank we are responding to a lot of other information. i apologize. you have my commitment that we will get that. sen. heller: in 2008 when one purchase, was it a way to save the bank or make money or key people in their homes? steven mnuchin: it was all three of the above. that ihe opportunity thought there was going to be a banking crisis. i saw the opportunity that we thought we could turn around the regional bank and turn it from what was a lousy mortgage bank into an attractive regional
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bank. tore was the opportunity have an attractive investment -- i had to convince my investors that they would make money, but i saw it as a great goal of building the business. ures made a lot of money -- if we had just invested in jpmorgan and bank of america, we would have made a lot more money. i would not have had to have worked nearly as hard. a big part of the financial return ultimately was we invested in the market at a very depressed period of time. was it an objective of one west bank to foreclose on nevadans to receive compensation from the ftse? steven mnuchin: no. quite the contrary. , it we bought in the mac
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was inherent in these agreements, we committed to do loan modifications. when we bought the bank, that was the agreement. we were proud of loan modification started their. there.fications started we had incentives where it was better for us to do loan modification. that whatre you prevented us from doing more loan modifications was either the test or the qualifications. we were required to get updated income and people had to have that had to be able to effectively requalify for the loan. not only from a social basis did i want to keep people in their homes but we were economically motivated to do that. steven mnuchin: sen. heller: how fdic pay one west for the losses?
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what was the compensation from the fdic? in the shared loss agreement? steven mnuchin: i think there d waseen 400 share agreements. they saved $40 billion. sen. heller: the answer is $1.2 billion. steven mnuchin: let us after we absorb $2 billion of losses. absorbed $2after we billion of losses. there were restructuring fees that were put through and we did loan modifications. we wanted good loans. having good loans that performed under the loss shared agreement was critical. sen. heller: did one west bank
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specifically target minority communities in nevada for foreclosures? steven mnuchin: absolutely not. much.nk you very mr. mnuchin, we appreciate you being here with your family. i wanted to start with a subject you've already answered some questions about. the issue of mortgage foreclosures and modifications. hand alding in my --r-page document entitled this is from channel 4's investigative report. trump pick for treasury secretary foreclose on hundreds of homeowners in pennsylvania. let me read you part of it, mr.
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mnuchin. sometimes when these reports referred to individuals, you may know them and you may not. here's a couple of excerpts from channel 4 in pittsburgh. lost her husband to cancer, lost her son to an overdose and then lost her home to one west bank. "one thing i will never get over is my son's death." she lives in west moreland county, just east of pittsburgh. hoped would nelly happen. "they should have worked with me to meet the payment i could make." the report goes on to say she filed bankruptcy but even then
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could not save her house. it caused her a lot of depression. it lists a couple of examples from other communities. a house in white oak was foreclosed in 2014. ailles, an north vers house in pittsburg in 2011. the headline says "hundreds of homeowners in western pennsylvania." that is probably 10 counties, roughly. one region of a state of 67 counties. ,ne reason i highlight that number one, focus on the impact that those foreclosures had on one community in one state. but also to ask you some questions so i can make sure the record is clear.
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one of the statements you made in my office when we met, one west "did lots of modifications." on the question of foreclosure itself, you said we only get 35,000 foreclosures. steven mnuchin: that was for the 2009-2010.ime from there were 175,000 over a slightly longer period of time. sen. heller: over the whole period that you were the leader of one west, how many foreclosures total nationwide? steven mnuchin: i don't have that, but i can find the number.
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loans that we serviced we serviced for third parties. we sold his business. i never wanted to be in the mortgage servicing business or the reverse mortgage business. i wanted to build a regional bank. one west is no longer. we sold years ago the servicing business because we do not want to be in that. to -- ithe business sympathize with the horrible situation. there seems to be some discrepancy here about the numbers on modifications. today, in your testimony ultimately, one west extended over 100,000 loan modifications to the link when borrowers.
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-- the link went borrowers. delinquent borrowers.e steven mnuchin: they were offered and were put on a loan modification. >> in fact, according to a document i want to make part of the record, this is a one-page document from the home affordability modification program. in terms of total modifications, it was only 22,908. we will have more questions later. >> we will now turn to senator cassidy. cassidy: as you can tell by
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where i am, i'm fairly junior on this panel. you have been assaulted by innuendo. growth, ito economic wrote an editorial with a friend in the wall street journal a few years ago that showed if we had economic growth from 2001 to 2014 as we had from 1993 to 2000, we would have had a $500 billion surplus despite entitlement spending and despite whatever as opposed to the $500 .illion deficit we have i appreciate your knowledge meant that progrowth policies cover a multitude of sins. so, good for you. that said, i represent a lot of rural parishes. there's two things driving economic growth in such parishes. utility companies and camino the
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banks. this community banks. haveber of community banks plummeted. so, your thoughts in regards to how we revive the economic prospects of role america. that's rural america. steven mnuchin: i appreciate the opportunity to talk about a bunch of these issues. we have concerned that and continue to be in the business of putting community banks and small regional banks out of business. that the regulatory cost -- me 64assidy: one guy told regulatory visits in a 52-week period, the marginal cost for this small bank, he is like, why am i not selling? steven mnuchin: that sounds
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about right. i agree with you completely. if we want to have economic growth come up for us to end up with four or five big banks in this country and dealing with the too big to fail and everything else, we need to have banks, regional banks, community bank's. those banks understand the people in the community and can make good loans. sen. cassidy: related to that and something you were speaking with thune -- it doesn't seem we have an absence of capital. we cannot get capital down to entrepreneur to bring prosperity. i presume you agree with that. steven mnuchin: i do completely.
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--. cassidy: related to that i don't know the answer to this -- it strikes me that there's too possible goals of tax reform. -- two possible goals of tax reform. one is to provide more capital. height marginal rates the private capital to those who need it. if we have enough capital -- another point of tax reform would be to align incentives. theseoke earlier that pass-throughs should be incentivized to keep the business. steven mnuchin: to reinvest and keep jobs. is there a third reason? if you throw those all in, it seems creation of capital is the one which is not the priority so
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much as to align incentives to create certainty. steven mnuchin: the only other thing i would say -- i do think we have a lot of capital in the u.s. now. we have a business taxes to him incenting u.s. companies to keep that money abroad. the other thing we want to incentiv is that money comes bak to the u.s. now and going forward and that money can be deployed to create new business and that weate jobs stop things like inversions because it makes economic sense for u.s. companies to do business here. sen. cassidy: the incentive is for the company to use their money more wisely and invest it to create jobs and keep companies from moving abroad. steven mnuchin: correct. want to have we prosperity.
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i thank you for your offer to serve and i look forward to supporting her nomination. that's your nomination. warner: i appreciated our visit and congratulations on your nomination. the united states enjoys enormous advantages around the status of us being a reserve currency. that allows us lower interest rates. senator bennett raised this. president-elect's comments about renegotiating the debt during the campaign were unprecedented. i want you to affirm to this body that it will be your policy that we would never question america's willingness to stand by its debt obligations. steven mnuchin: i agree with
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that 100%. let me just thank you for meeting with me and also acknowledge as an incredibly successful business person that -- sen. warner: i've been very troubled by even some folks in elected office who have somehow said we can ignore the debt ceiling without consequences. there are some going out and saying somehow we could prioritize those debt obligations and potentially pay off bondholders and ignore obligations to pay states to pay social security trust funds and honor the commitments of the u.s. government to pay the salaries of at the eye employees, etc. is it your policy that the u.s. needs to honor all of its debt obligations and should not have any ability to prioritize those obligations? steven mnuchin: absolutely.
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i hope you will work with me so we get that done. we have already spent the money. we have the obligations. there should be no uncertainty that we are paying the bills. sen. warner: i think that is foraordinarily important prioritization would wreak havoc in the markets. , words thathis role you say and that the president-elect will say will have consequences. we have already seen this, reactions to the president-elect in terms of commenting on the strength of the dollar. unprecedented. the president has ever done this before. you will simply be a senior adviser. ensure that there will be an ability for a trump administration on economic policy to try to speak with a single voice? steven mnuchin: if i am
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confirmed, i think that once we all get in office and have regular access, both myself and the administration, i think you will see that. where there times is a view that the dollar is slightly too strong. we will speak with a unified voice. this president is willing to do a lot of things that other presidents haven't done. one area i've had a huge amount of concern and interest in his on fannie and freddie -- is on fannie and freddie. some people interpreted some of your comments about recap and release which would say even
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though the american taxpayer was paid back the 100 88 billion dollars we invested in those failing cetaceans at a moment of -- $188 billion we invested in those failing institutions at a moment of crisis, let's ignore the underlying challenges. do you support that position of recap and release? steven mnuchin: i did make some comments about this. my comments were never that there should be recap and release. -- i'vecomments were been around for 30 years. this is an area i do believe i have expertise and. -- expertise in. fannie and freddie have been will run without creating risk to the government. --y played an important role
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i believe these are very important entities to provide the necessary liquidity for housing finance. what i committed to is that i will work and what i have committed to is i will work with both the democrats and republicans. i have said and i believe that we need housing reform. we shouldn't justly fannie or freddie as is under government control without effect. i believe we can find a bipartisan fix. don't end upnd, we with a giant bailout. on the other hand, we don't run the risk of completely eliminating housing finance. took mostr: since i of 30 seconds understatement i have two quick questions hopefully you can answer them. in light of those comments about issue, you claim not
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to support and administrative effort that would bypass the congress in terms of efforts to recap and release. mr. mnuchin: i don't want to make any commitments to legislative or not. it is my responsibility in treasury as it relates to certain issues with fannie and freddie. what i will commit to is my objective to find a bipartisan solution to it. i would welcome it. the hope would be bipartisan consensus that the banking committee arrived at. should end uption with a housing finance system. when things are going well, the private sector gain -- the taxpayer is holding the bag. i can assure you i
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have no interest in that. i think i understand this well enough that you find i will not support any policy that has that case. mccaskill: i found a tweet of your future boss that i agree with. , short, and direct. whatever it is. do you oppose lifting the current sanctions on russia? mr. mnuchin: right now i do. i oppose lifting the sanctions. sen. mccaskill: do you support new sanctions against pressure? yes or no? mr. mnuchin: the answer is, i don't have the information and i the ability to receive classified briefings. i would want to understand. i don't have an opinion right now as to whether we should have more.
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i have an opinion we shouldn't be lifting the existing ones. sen. mccaskill: would you agree with your new bosses statements for firing people? mr. mnuchin: he has a show about it, but other than the show -- sen. mccaskill: it is a blurred line at this point. we're not sure where the show reality begins. the you believe he will fire people if he thinks they are doing a bad job? mr. mnuchin: if he disagrees with them, no. sometimes i've been able to convince him and sometimes i haven't and i haven't been fired. if people do a bad job, absolutely he should fire them. sen. mccaskill: will he be able to fire and higher the ethics officer? mr. mnuchin: as it relates to his trust? i have no idea. sen. mccaskill: who would hire and fire the ethics officer of it wasn't him? mr. mnuchin: i don't have access to the trust documents. sen. mccaskill: he has said he will have an ethics officer to
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oversee him in the government. who is going to hire and fire his ethics officer? goodnuchin: it is a question. i would be more than happy to ask him and talk to him about it and come back. i think you raise an important issue. i don't have the answer. sen. mccaskill: he is not divesting any of his business interests, correct? mr. mnuchin: correct. i believe he sold his public stocks. sen. mccaskill: i'm talking about his business. is it fair to characterize him as an international businessman? mr. mnuchin: i believe so. sen. mccaskill: he will enjoy the benefits of his business's success while he is president. correct? again, i believe you will do everything legally. sen. mccaskill: this is not my question. is, he has said very loudly that he will go back to his business after he is
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president. he said he would fire his sons if they had not done a good job. his businessess enjoys during his presidency, he will get the benefit of, correct? mr. mnuchin: i miss the part about firing his sons but it sounds like something he may have said. the economic owner, so by definition, i would assume that he would have that. sen. mccaskill: his businesses in other countries in this country intersect with foreign countries? mr. mnuchin: so i read. sen. mccaskill: a lot of his debt is held by foreign interests? mr. mnuchin: i don't know. i just read it in the papers. sen. mccaskill: do you think you should know that a someone who runs the committee on foreign investments if we are talking about the commander-in-chief? should you know what percentage , i am told by people
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familiar with his business, that is a huge percentage held by foreign interest? mr. mnuchin: if i am confirmed, i assure you that i will make sure that the requirements of the constitution are upheld. and i think you have a valid point about foreign debt and understanding foreign things. if i'm confirmed, i will research that and get back to you. sen. mccaskill: i want to get a commitment from you today that you will report to this committee what percentage of the against the trump enterprises is held by foreign interest. that is your job as the secretary of treasury. that is your job as the secretary of treasury. i want your commitment that you will report to this committee as soon as you get that information from the new president. mr. mnuchin: i'm not making the commitment today to report to the committee on anything. , towhat i am willing to do the extent i am confirmed, i am willing to speak to the chairman whatever the that
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committee thinks it needs, i will discuss with the president. sen. mccaskill: i can assure you the american people need to know. you and your job as secretary of the treasury is supposed to be determining national security interests on foreign investment. the american people want to know how much debt is owned by the trump businesses. they can have a direct impact on national security. chairman: you have asked interesting questions that i will follow up. burr?r vitter -- love theurr: i would staff to see if that is the responsibility of the secretary of the treasury to actually ask the president what percentage of foreign debt -- i don't think that's part of your job mr. mnuchin. employmentthat your
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history is quite complex. probably the most complex i've seen of any nominee that is here. what i read into that is that you are sort of a roadmap for things that we need to do if the goal is a simpler, more transparent, understandable tax policy in this country. do you pledge, do you commit to the committee, to work towards a simpler and more understandable tax code in this country? mr. mnuchin: i do, absolutely. sen. burr: do you commit and pledge to do vest yourself of any assets that may be perceived as a conflict with the job that you are being considered for? mr. mnuchin: i have already agreed to that and signed the agreement with the ethics office. sen. burr: i know that. many questions have suggested that they didn't hear it and i wanted you to have an
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opportunity to repeat it. mr. mnuchin, in april of 2014, the treasury ig came out with a study. he found the irs paid out $2.8 , as well asonuses tens of thousands of hours of leave and hundreds of pay step increases to employees who were tax delinquent. or had committed serious fraud or drug abuse. 108inspector general found of 364 employees with willful tax noncompliance cases closed between october of 2008 and september of 2013. they received one or more awards. within a year after being disciplined for that -- tax noncompliance. would you commit to me to change this policy, this insane policy?
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mr. mnuchin: absolutely. it is very concerning. i commit to working with your staff, absolutely. in september of 2014, the inspector general of the irs discovered that they had repeatedly hired employees that were fired for poor conduct and performance after lengthy examination processes on their employment. the treasury watched with a sample of 763 employees who were rehired by the irs. 824 had bad performance in their record as to why they were fired in the first place. it saidome instances, in their record, do not rehire. yet the irs rehired them. he pledged to this committee to
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change that insane policy? it sounds like the most common since then have ever heard. i am absolutely committed to that. the questions i have asked today and the pledges you have been asked to make. the american people deserve better than this because in the private sector, you would not stand for this. thatouldn't have a company paid people for poor performance or reward individuals by rehiring them. the american people look at insane policies like this. they really do question those that had agencies. committees that have oversight over the agencies.
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i go back to where i started. you have a complicated and fascinating employment background. publicly more areas than any of us can ever imagine. do you pledge to use that experience to make changes at the treasury department and within all the branches of the treasury department? that the american people need to be changed? mr. mnuchin: it would be a great honor to work for the american people and that is why i am here. sen. burr: i yield back. good afternoon, thank you for coming by the office and having a good conversation about economic growth. it should be our focus in front of the finance committee and the administration as well. following up on comments about a simpler tax code. theink about many of comments i have heard from the president-elect as it relates to making sure folks working paycheck to paycheck experience a better quality of life.
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strongly int folks support of president-elect trump as well as pennsylvania, wisconsin, and michigan. working everye single day, long hours, and barely making it. as we think about the tax code, orcan focus either on income on capital. i will love to hear your thoughts on president trump's approach to reforming the tax code. will the emphasis be on the personal code or will it be more on the capital process? i think it's both. i think we have an opportunity to reform the tax code and we should be focused on this on the personal side and the business side. in many cases, i see them linked. there will be changes to the business tax code that will create more jobs and more income. as we had anoal
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opportunity to discuss, and thank you for meeting with me, to simplify personal taxes. deliver a middle income tax cut. make u.s. business taxes competitive with the rest of the world. so that we can compete effectively and aggressively to create more jobs. about creating better economics and more jobs for the american public. i am very concerned about the number of jobs that have been lost. the decrease in manufacturing. the number of people that have left the workforce. these are all very concerning issues. and you look at the unemployment rate, it absolutely doesn't tell the story of what is going on in this country. following that same thread, we think about signifying the tax code. we will have the have a serious
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conversation, and perhaps a challenging conversation about the expenditures in the tax code. i hope the administration plans to treat very carefully the mortgage deduction and the charitable the duction going forward. cap to thelan mortgage deduction at a home value of $1.1 million. saw in your political document that the approach you guys were taking had more to do with the interest and not the actual value of the homes. i don't need a comment right now, but i hope you would take seriously the importance of those two deductions. also, if we lower the corporate rate, it will become more competitive. i'm not sure it stops and versions. your thoughts? think itin: i absolutely has a huge impact on stopping inversions. there may be other things we are able to do. but the biggest issue that
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creates inversions is the incentive for much lower taxes abroad than we have here. sen. scott: there's no doubt that something competitive would be wonderful. but inversions, you may have to go to someplace we have to get competitive -- we can't get competitive with. wellpoint 5%. whatever we do can be helpful but we will have to look for other remedies outside of the tax code in order for us to sell the haven of america is a great place to do business beyond the tax code itself. we have spoken before about legislations that i've sponsored around investing opportunities. it defers the capital gains tax for up to seven years. those resources and distressed communities. more than one million south carolinians.
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one of the biggest goals i hope that we have is a look for ways to create incentives. for private capital to come back to distressed communities. i have in my notes the investment opportunities act. you ando follow up with learn more about it. it is absolutely critical that the areas that are most that we use the appropriate incentives to get business to go there. i definitely look forward to following up with you on that. sen. scott: one more question, mr. chairman? that we use the appropriate incentives to get business to go there. i thought it was a ringing endorsement for the investment opportunity act. on the trade policy. south carolina has been a place of provocative position on
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trade. ago, we are a haven from the high-tech manufacturing perspective. trade agreements aren't important part of what makes it successful, attracting brands like boeing, bmw. i know that you guys are moving away from multilateral agreements toward bilateral agreements. i hope that bilateral approach will include some of the countries in the growing markets around the world. mr. mnuchin: absolutely. president-elect trump absolutely believes in trade. he just wants better deals. he wants us to grow exports and he wants better deals. chairman: we have two more to go. can we finish up? then we will take a short break and we will give you a little bit of time. portman: thank you for
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being here. it is your kids who deserve the award for stamina. my kids at that age would been long gone. mr. mnuchin: i told them they could leave after an hour but they opted to stay. sen. portman: good for you guys. i think you're right about the fact that a tax code is an opportunity to give the economy a shot in the arm. median income has not gone up when you look back at the levels. .hat and the higher expenses in terms of unemployment, you are right. if you go back to the labor ande participation rate, you compare it to today, unemployment would be about 9.i've percent. .- 9.5% we are not serving middle-class family struggling to make ends meet and i think tax reform is one way within your review that
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you can make a big difference there. i appreciated your response to senator scott and i think we should be focusing on wages. not just overall economic growth but how to ensure we are creating opportunities for the families we represent. one thing you did not talk about is on the business side, repatriation. you can lower the rate. and i think that is important. the number i hear is over $2 trillion. what is the number you believe and what can be done to bring that money back to invest in jobs and equipment? mr. mnuchin: i can tell you the president-elect thinks we can get $3 trillion. his number is between $3 trillion and $4 trillion. i have spoken to several ceos who want to bring money back. to the extent that we create a one time repatriation in the trump plan, we put that at 10%.
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in the house gop plan, they had that slightly lower. i absolutely believe -- and i've heard ceos say this. without naming names, they are some of the biggest holders of cash abroad. you absolutely want to do it and we are committed to that. sen. portman: you are committed to making sure we can do that. this is bipartisan support here and we need to invest funds back here like infrastructure. , i believe ine expanding exports. i also believe in a level playing field. had a lot ofave contention is currency manipulation. we tried to get that done. they introduced an amendment that came close but we did not get it done to make it a trade objective in our trade negotiations. we did pass something in the customs bill that directly relates to your job. the treasury has enhanced
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authority to take action on this. there are conditions that have to be met. trade manipulators will meet. if theynd of the day, feel the need to change policies, the treasury secretary can recommend the president take action such as calling for formal consultations on finding currency -- international monetary fund. if confirmed, would you take full advantage of that enhanced authority? mr. mnuchin: absolutely. i think it is very important. i know you have taken the opportunity to meet with me several times. i enjoy the working lunch in the office. we talked about these issues and i am committed to working with you on this. it sounds like a very important issue. i am wondering if there is bipartisan agreement and i appreciate your commitment. another topic i wanted to touch on was the irs.
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i understand there was some discussion when we step out to another hearing regarding funding for the irs. what the senator said about some of the examples, poor management including promotion policies. we know there was politics involved and they are making decisions based on political matters which is totally inappropriate. the irs has created huge problems by the way it has not performed in a way that anybody would expect as a taxpayer. by understaffing and -- but also the irs working with us to ensure that there is adequate funding and support so that the tax system can work better under a simplified tax code. absolutely. this is something i feel very strongly about and something i
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hope we do have bipartisan support on. this is one of the areas that i think we will all agree to the extent we add resources, we can collect more money. is of the things i've heard that one of the reasons we have technology problems is because we can't afford to hire technology people internally. i think there is some external technology. we need to have internal expertise in the irs to manage our own technology systems. , weink in this day and age need to have good customer service. --people are playing tax paying taxes, they have a right to understand their information. i can go on and look up my real estate tax bills.
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and see my information there. why we don't have good systems that people who pay taxes can see their information securely online. working withd to you and i think that we should be monitoring customer satisfaction. we should understand what the .axpayers think sen. portman: additional focus on the irs is an opportunity for us. ago, they said every 20 years it should be looked at. this is an opportunity and i appreciate your comments today. mr. mnuchin: i look forward to working with you on it. : i caught somel
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of your testimony but i apologize for being at the with governor perry for most of the morning. i miss most of it. you arehin: accommodating lots of us. thank you. sen. campbell: thank you. i wanted to ask, do you support returning to glass-steagall? don't -- i don't support going back to glass eagle as is. -- glass-steagall as is. or have sweetie 21st century glass-steagall. i does support going back as is taking a very old law and saying that we should hear to it as is. sen. campbell: is that the position of the republican platform? it did pass
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glass-steagall at the convention. and the president-elect, we talked about policy. our view is that we need a 21st-century glass eagle. sen. campbell: when did that change? mr. mnuchin: it has been part of the campaign and it has been some of his speeches. ?en. campbell: october he at the convention, the republican position was glass-steagall. sen. campbell: so his position was never glass-steagall or did he mean a different version? postconvention, it is an issue that we have discussed. and something we will be looking at. mr. campbell: do you think manna for leaving had anything to do with the change? mr. mnuchin: no. sen. campbell: this is an important issue for me. i would've said that the republican platform had a stronger position on
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glass-steagall in the democratic platform. the president-elect doesn't really support glass-steagall. he supports in modern version. tell me what that modern version is. i think separating out banks and investment banks would have very big implications to the liquidity in the capital markets. and banks being able to perform necessary lending. regulatoryterms of issues, the administration will look at that. i referred to as the 21st century glass-steagall and part of regulatory reform. having the u.s. do what is appropriate. i want to be: clear because i think you did allude to the damage that was caused by the implosion of our
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toxicy, brought on by financial instruments and did not have the backing that they needed. hole in theon economy. i think you alluded to the damage. i think you answered some of the notes i have, that you believe in the concept of proprietary trading that did not belong with the bank. go?here does that you're saying you don't think that today, there is a clear ? mr. mnuchin: today we have a prohibition of proprietary trading and banks. the problem that we have is that the definition of that was left
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to the regulators to decide. and i am a believer in proper regulation. i am also a strong believer in people need to understand the regulation. we need to explain what is proprietary trading and what is not proprietary trading. were betting on things that it is proprietary trading. the federal reserve had their own independent report about a lack of liquidity in many of the important markets. what i am in favor of his we have clear definition around the volcker rule and the regulators come out with that and do it in a way so that it doesn't eliminate liquidity and many of the important markets. so you would: tighten what you think are the rules out there?
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lesson the rules that are already past? mr. mnuchin: that is not what i said. i want to be very clear. the volcker rule but there needs to be proper definition around the volcker rule so that banks can understand exactly what they can do and what they can't do and they can provide the necessary function of liquidity and customer markets. referencing a problem that the federal reserve has independently raised. to me, thisl: election was a lot about the frustration of the american people on the implosion of our economy and the fact that they haven't recovered and i think the president-elect, whether he i wasly meant to -- pleased that his party adopted coming up with a very bright line of separating commercial from investment banking.
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are today, wee are not sure. hopefully we get a chance to vote on this now that our colleagues have to answer to platforms and committees. hopefully we'll get an answer where our colleagues are on this. not only is this an issue of people wanting to see a bright line and be protected. when it comes to the tax code and the tax policy, the american people have not recovered. lowering the corporate tax rate without getting a plan for the average american that lost pension, couldn't send their kids to school, maybe lost their home. what is the tax policy the president-elect and you will pursue that will help restore them from that major implosion and protect them from this ever happening again? mr. mnuchin: let me tell you having traveled with the president-elect for the last year, i understand why he got elected. , the averageecause
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american worker has gone nowhere. the unemployment rate is not real. the average american worker has gone nowhere in the president-elect is committed. as am i, to work for the american people and grow the american economy so that the average american worker does better and that's why i've been willing to sell all my investments. i've been willing to give up my businesses. my desire is to work for the american people to create a better economy. i understand that. i've traveled the last year and i have seen this. sen. campbell: just one question on that. what tax break policy you would give to that american worker? mr. mnuchin: absolutely. the objective is to create a middle income tax cut and create
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business taxes that gives incentives to grow. sen. campbell: a broad tax break? mr. mnuchin: as we have had a chance to talk about it, pensions are a very important issue. i think the people that have earned pensions absolutely deserve to have those pensions maintained and be safe. i am very concerned about the retiree issue in this country. it is something i look forward to working with you and others on. we need to protect the pension holders in this country. sen. campbell: thank you, mr. chairman: we will take a 10 minute break. my friends on the other side have requested a second round
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and we will grant that. let's recess for 10 minutes, maybe a little longer. body: you have been watching the confirmation hearing for steven mnuchin for treasury secretary and have been talking for three and a half hours at this point, giving the prepared statement and it was a pretty heated hearing, for all intents and purposes. joining us to discuss what we've heard so far, the bloomberg pulitzer prize-winning journalist that will be along in a moment. one of the more feisty hearings. what do we learn about the economic policy? >> feisty to say the least. in terms of what we're hearing from his economic policy, he articulated he would be the
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point person helping to craft president-elect trump's tax policy. we heard he would seek to roll back key portions of dodd-frank, particularly areas that he says caught a fight too big to fail. he interesting things to say about the volcker rule. mr. mnuchin: i support the volcker rule and i think the concept of proprietary trading does not go with banks with fdic insurance. but the vogue rule has completely limited liquidity in many markets. concernedl reserve is that the interpretation of the volcker rule doesn't allow banks to create enough liquidity for customers. >> obviously what we're hearing is a more center-right traditional approach to economic policy that is quite familiar to k street and the business community.
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he criticized the consumer financial protection bureau and said he would hope to work with congress to the u.s. does not default on its debt and not have any last-minute debt ceiling fights. >> the irs was an acute focus for a number of senators. what did they say about the role the irs should play and how it should be staffed? >> he said he would be the point person for trump's economic policy to have a new tax plan. he said he would help reshape the irs to upgrade the infrastructure to make sure it utilizes proper technology and helping folks fill out their taxes, to better protect against cyber security. he also faced heated questions coming from democrats about his own tax policies, particularly for his dealings with the cayman islands.
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he faced a bunch of questions about that like senator brown who grilled him about his previous financial dealings. let's take a listen to one heated exchange. did foreclose on some people in the military. it was unfortunate and inappropriate. we responded to those people and made them all. every single person had their mortgage reviewed and we corrected any errors. >> facing the tough questions and trying to push back, holding himself accountable in the sense that he was able to move beyond that. no hiccups in the first three hours. bonnie: he said he would be looking to raise, sooner rather than later. he said that pretty clearly. asked about the attacks from democrats, primarily, on
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the mortgages and foreclosures -- [indiscernible] kevin: yes. outside the hearing room, there were witnesses that progressive senators like elizabeth warren who is live tweeting throughout the hearing, she's not a member of the senate finance committee, but she is had a lot to say about his nomination. they brought up key people during that merger and take over and argued that it had negatively impacted the middle class. but his political orbit has pushed back against the allegations, arguing that this was a deal that helped grow the economy and provided new financial lending opportunities to a diverse group of people. either way, when you take a broader step back, you have to look at if democrats will be able to convince any republicans
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on the senate finance committee and with the entire upper chamber to flip their votes. i put that question to bob frankly, was quite not optimistic that he and his colleagues would be able to do so. zach, we were speaking a few weeks ago about what steven mnuchin could expect. i on the list he said would be his work with one west bank after the foreclosure crisis. give us your assessment of how he's handled that. >> he's gotten a lot of questions. aboutso a lot of stuff his hedge fund entity in the cayman islands. day, they didthe not seem like anything came up that really seemed like it was likely to cause a lot of republicans to defect.
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republican ask some tough questions. it is clearly his effort to show his constituents that went for hillary clinton that he is not going to be a rubberstamp. >> annoyed he did not produce answers to those questions. >> we could say it was entertaining, right? did we learn anything that we did not know? -- the market definitely learned about fannie and freddie, right? he wanted togo, get them out of government control and their shares shot up. what he didn't mean was recap and release. the markets interpreted that more negatively. >> let me ask you about russia.
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he did field some questions about russia and sanctions. what did he say about how he would enforce them? >> a thought it was quite interesting that he echoed a lot of what the other nominees in the hot heat this week and last week had to say, that he believes sanctions should stay he is echoing what president-elect trump had said. russia being a top issue right now in the halls of congress for lawmakers to have to answer to. again, he reiterated that right now, the sentience will stand, but there are a lot of folks in the business community and the oil industry in the manufacturing industry who are quite bullish that maybe not within the first hundred days but sometime in the first term of president trump, some
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sanctions will be scaled back. mnuchin not giving them any help with his response earlier today. bonnie: on the cusp of either or, but so far, there hasn't been. no new allegations or disclosures that seem to be powerful enough to threaten him. some tough talk from dean heller but unclear if that's not just posturing showing that he's going to be tough. said he is been traveling with the president-elect for the better part of a year. he understands what american voter saw attractive. what did we learn about the relationship? >> we know they are old friends, but what we see in issue after issue is he is often taking something a traditional republican would freak out at
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when he says, interpreting it in a more establishment way. dollar may strong not be a bad thing, and he was talking about there might be certain aspects that are bad but in the long term, we still agree a strong dollar is important. we see the same pattern prop up again and again. -- vonnie: did you get any sense that there was any hope at all on the democratic side that they might be able to block this confirmation? that they would want to? >> little to no hope at all because you talk about folks like senator heller that has ads running against him in his state of nevada, urging him to oppose this nomination. he took a pointed question at that moment but it was more of a process question and not
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necessarily on policy. endgnal that even he could up voting for mnuchin. is good about how they are able to translate for the business prone crowd and in termsld trump means of economic and fiscal policy. experience covering trump on the campaign trail, that is something that we saw time and time again. this is someone in steven mnuchin who is not, perhaps, in the traditional goldman sachs circle. but he is in the goldman political orbit. line ofble to walk that presenting himself as an outsider, still maintaining those traditional business friendly programs economic principles. that, i think, the larger tech away -- takeaway is what we saw this morning.
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nie: they are supposedly in a 10 minute recess and will go another round. anything they left out? which a day concentrate on now? >> i think they are just about through with today's hearing. we have hit a lot of the high points. one thing that was a surprise is that he talked about increasing staff which got applause from democrats on the panel. trump said he's going to do a hiring freeze across the government. he treasury secretary is saying that we will have to make an exception. blog. to the top live i know you have to get back here see when that recess ends. >> we are halfway into the trading day and equities have not been moving. at 21aid that the peso
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.90. with the latest movers. >> i'm looking at the aftermath of the hearing thus far. they did nott delve into was the comments on the u.s. dollar. donald trump recently commented on that as well saying that if we continue to see strength, it could be an economic issue. mnuchin said it's important to have a strong u.s. dollar over the long-term. we do see the bloomberg dollar index a little higher today up .2% and also reacting to moves today in the wake of the ecb press conference. we have been watching the treasury market as well in the wake of this hearing. it seems to be reacting more to the economic news this morning, the fed index. the outlook portion at a two-year high. we got a selloff in the treasury market.
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a relatively large move up six basis points. it is what he said about fannie and freddie, zack alluding to this a few moments ago. backing away from recap and release that perhaps fannie and freddie would come out and be recapitalized, not necessarily own money on government debt. is backing away from that sent shares of both of these companies lower. coming around to some other groups we have been watching, you have the investment banks that he's been talking about, the new financial regulations saying that we need a new glass-steagall and impressed upon that, did not give any details, a new package of regulations we would introduce. all little bit lower. bank of america not seeing much change here.
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interesting that we're seeing higher yields today. there has been a positive correlation between the two. more typical is the relationship between real estate investment trusts. lower and that is the ensemble of what we have been watching today. hasone notable reaction been fannie and freddie. >> what we have seen in terms of market reaction. >> we will take you back when it gets back and gavels back in. please note to those listening to mark halperin and john heilemann, they take a look at the key issues. the stance on climate change. and we have special coverage of president-elect trump's and operation. it all begins it 10:00 a.m. eastern.
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we take you back to the world economic forum. an extensive interview with billionaire george soros. this is bloomberg.
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david: this is bloomberg markets. let's check out bloomberg first word news this afternoon. >> it is the story we have been talking about all morning. steven mnuchin in his bid to become the next u.s. treasury secretary. they told senators at his confirmation hearing that he will be -- mr. mnuchin: i am committed to be very responsible in my
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position there and make sure i properly provide support from the treasury department. i would take my responsibility very seriously. will enforce sanctions against ironic and a night he had offshore entities to avoid is. said that having donald trump won't be such a great deal after all according to officials in moscow. their skepticism that any -- the backlash over russian hacking has forced the cabinet picks to take tougher lines on russia and -- than the kremlin anticipated. global news powered by more than 2600 journalists and analysts in 120 countries. this is bloomberg. david: we will go back to the office building. the minority leader starting a second round of questions here for steven mnuchin who is up for
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treasury secretary in the new administration. the middle income tax cut and supplication on the high-end. >> you're already fudging on this commitment you made to the american people, that you wouldn't give an absolute tax break to well-to-do people. the reason i'm asking this is this is exactly what aca repeal was all about in the last congress. and every single republican a p or voted for it. i hope you'll think this over. but this is exactly what troubles me. we have two tax systems in america. judging our way maybe saying that you would not give a break and i'm asking about a specific situation and you said i don't know. we'll have to go and see. let me turn to a second area networking class people care a lot about. of questionst
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about the 35% to 45% border tax that the president elect is doing a fair amount of tweeting about. can you tell the american people what products would be subject to this tax? i'm not interested now in all the complicated theories about the dollar. i think is a question worth talking about, but americans want to know what products would -- is gas going to be part of this? give me your response. any products exempt? >> i think it's an important issue. this week, the president-elect came out and suggested that he gopconcerns about the house order adjusted tax. part of it is the complexities around it. >> i'm not talking about what the house is doing.
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i want to hear about the border tax the president has been talking about. mr. mnuchin: he has not suggested a border tax. he has suggested that for certain companies that move jobs , that there may be repercussions to that. suggested, in any way, an across-the-board 35% border tax. if anything, quite the contrary. he has concerns about things that impact the price of gasoline and others. >> what products will be off the table for the purposes of what i call a border tax and you want to say is something else. what products can working class people by that would be exempt? mr. mnuchin: again, when he is referred to a border tax, he is referred to a small number of companies that have moved their jobs or are moving their jobs,
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putting products back into the united states and taxing them. in no way contemplated a broad 35% border tax. it couldn't be further from anything he would possibly consider. me turn to another topic of tax policy. we are trying together a bit of information about how you would deal with some of these common tools that would be in your jurisdiction if confirmed as treasury secretary. inequality has grown substantially over the last 30 years. there has been bipartisan support in the past for the earned income tax credit. there are a number of proposals pending now. again, as i suggested when we met, i hope we can sit down and talk about
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taxes with democrats and republicans and see were we can agree on bipartisan solutions. as it relates to any specific component of this, i think we need to look at the overall tax reform put through and where things fit in. i would welcome the opportunity to follow-up up with you and work on that. >> i want to be respectful on this point. but because you have not been involved in these policy fields in the past, and i respect that. there is a lot of leadership a person can still provide. when i asked about medicare, you'd be the managing trustee. you really didn't have any thoughts on that. i asked you about the earned income tax credit. tremendous interest among democrats and republicans.
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if you are not aware of speaker has advocated ideas democrats are interested in. i'm very troubled about the fact that on these basic tools that you would have if confirmed, you seem almost unscathed by the subject. thank you, mr. chairman. mr. mnuchin: well, i'm sorry that you are troubled by the i hope i are your support and respect. respectyour support and . going forward, if i'm confirmed, on the earned income tax credit, i don't want to comment on specific legislation on tax. tax reform needs to be looked at as an overall policy, and i have laid out certain framework for what i believe the president-elect believes in for tax reform without commenting on specifics. sen. wyden: i am over my time for this round. because i'm interested in those discussions about tax
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reform, you are not talking about putting the earned income tax credit on the table as something you might throw in the trashcan, because if you do, you are going to have opposition from me and opposition from the speaker of the house. mr. mnuchin: i am not suggesting and just say i wasn't going to the specifics of every single tax item. thank you. sen. hatch: sender c -- senator crapo. crapo: i want to cover three quick -- that's a quick questions. reform, housing policy reform. i'm sure you are aware that senator warner and i and other senators on the thinking committee have -- banking committee have worked for some time on legislation to deal with this circumstance. we have a situation in which -- fannie mae and freddie mac receivership and the federal government basically is running them. the concern i believe senator
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warner was referencing was a concern that the administration -- not because we are afraid of anything, just because we are asking, we are trying to find , that the administration may believe it is ok to keep them in receivership and continue to run as is with the status quo, or perhaps distantly recapitalize them and put them back out into the market without any housing reforms. i just wanted to ask you if -- i realize you can't comment on a specific plan yet, but if you would comment on the fact as to whether you believe we need to have reform in our housing finance policies that would go further than simply recapitalizing fannie and freddie, or keeping them in receivership. mr. mnuchin: ok, well, again, thank you for that. unlike the medicare front, where i acknowledge i'm not an expert, i think on fannie mae and freddie mac i am an expert. i've been around these four 30
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years, i understand these well. that is why you would be one of my priorities to work with you. as i said, when i am focused on is we need housing reform and a solution. i start with the standpoint of the status quo is not acceptable , of just leaving them there. i think as you know, when we extremes, there are 2 on this and it is something i look forward to sitting down and talking to witt. we need housing reform and we need to make sure that whatever the outcome is on the 2 extremes, that, one, we don't put taxpayers at risk, and two, we don't eliminate capital for the housing markets. i'm very concerned that middle-income people and moderate income people who need mortgage loans have access to that capital. sen. crapo: well, i appreciate -- i agree with you on both of those objectives and i think that is exactly what we need to work together to identify. well, i'mn: good,
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optimistic we can work together and figure out a bipartisan solution. sen. crapo: thank you. my second question -- you have already answered it, but i wanted to raise it again because it is so important. we have seen the unfortunate circumstance, in my opinion, in the last few years of the irs actually targeting individuals because of what they believe, and how they advocate in our society. you have already talked about this, but i would just encourage you to make a high priority that not only the irs that all of the federal functions under your jurisdiction as secretary of treasury, which i'm sure you are be confirmed to be, stopped from that kind of targeting of american citizens who are conducting perfectly legal business and engaging in perfectly free and legal speech. mr. mnuchin: you have my 100% assurance that i will do that. i think there is no place in not only the treasury but in other agencies for us to be having
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people act that way. sen. crapo: all right, thank you. my last question in this round would be back to the tax issue. one of the big issues that i think we must grapple with him and i would just like your ideas , is, as i'm sure you know, a huge percentage, significant majority of the business entities in the united states pay tax to the individual income side of the code rather than the corporate side of the code. as we reform, as we should, our corporate code, and engage in individual tax code reforms, i am concerned that we don't end up with a significant bifurcation between different business entities in the united states as to the tax burden and tax rates that they pay. could you comment? mr. mnuchin: sure, and i, too, think that is an important issue. again, for a large companies that are in path through form today, the reason large
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companies are in pass-through form as they look at the personal income tax rate and a comparing to the corporate rate and dividend rate. i think for many large companies that are structured as pass- throughs, they opt to take the business tax and we figure out a youle, non-bureaucratic -- check the box and you get a business tax and you leave the money in the company and you grow your company and you get a lower business tax. if you distribute it out, you pay dividends. i think that is something that is critical. as i said, we will make sure we work with and gas to make sure we get work with congress to make sure we close loopholes so rich people don't use this as a way to get lower business tax. on the other funnend, we will make sure that small businesses are protected as well. sen. crapo: so small businesses don't pay any criminally higher tax because they choose not to engage in the corporate form? mr. mnuchin: correct, and it is
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something we look forward to working with you on the details in how we can make sure that is preserved. sen. crapo: thank you very much. thank you, mr. chairman. sen. hatch: thank you. senator nelson. sen. nelson. : thank you, mr. chairman. are no doubtyou aware that one of the things as treasury secretary you will have to face is the multiemployer in direfunds that are straits. these are ones that have become become unstable. and they are ones, pension plans for people like truck drivers and carpenters and miners. -- andeasury secretary the treasury secretary has the authority to temporarily or permanently reduce the pension benefits if the plan is projected to run out of money.
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are 2 bad outcomes. one, it is running out of money and you will be faced with the problem of what to do about it. folks that are living on the edge. pensionduction of the is going to mean something that they have to go without. you think about this, and how would you approach this heart wrenching issue? i appreciatewell, your concern, and we had the opportunity to talk a little bit about this when we met, and i believe you're always followed up and sent me information on this. it is something i look forward to working with you on. let me first say, i think that people who have worked very long periods of time and have built up a pension deserve to get
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their pension. that is very important. on the other hand, we have to be careful that on the other extreme, we don't have a bailout of the entire pension industry fund.nkrupt the guarantee but i commit to work with your office. i understand these issues. i understand the sensitivity of these issues. i share your concerns that cutting truck drivers' pensions and other people's is a significant outcome and we should go to great lengths to figure out if there is other solutions before we do that. sen. nelson: since folks like you and me have been blessed, we haven't often had to walk in the that of folks like that are living on the edge. mr. mnuchin: i completely understand. sen. nelson: and i asked in your position with this awesome authority as treasury secretary that you put yourself in those shoes.
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another financial disaster is what is happening in puerto rico, not only because of what they are at fault about, but the unequal way that they have been treated by the law, clerks in the law that i do not understand how they ever got that way. they are not treated the same on bankruptcy laws. they are not treated the same on medicare and medicaid laws. and they have a particularly tragic situation where they were given a block grant of medicaid money. that is running out this year. while at the same time, one third of the island's residents are infected with zika.
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and we know that 15% of those if they areh zika, pregnant, there is a 15% chance they will have a deformed child. i would like very much for you to keep that in mind because we have got to come up with a plan. i know a lot of responsibility is on us in the congress. the chairman led an effort and we tried to get some things passed in december. but the big things like medicaid are coming up in the future. , senator,n: well first of all, thank you for going through that. when i did have the opportunity andeet with secretary lew talk about certain issues he wanted to advise me on and bring to my attention that he thought i would have to deal with in the near future, puerto rico was high on that list.
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i must say, i wasn't an expert on puerto rico before the last 30 days. i started studying this issue. i share your concerns. i'm glad that the commission was established. i think that -- i understand that the treasury has been staffing the commission. i have someone i already asked internally who is going to be working with me to start working on and get debriefed by the treasury staff on this. this is going to be something that we need to figure out in a bipartisan solution. i am hoping it can be done in the context of the commission, but i look forward to working with you on. sen. nelson: thank you. mr. chairman. sen. hatch: ok, senator menendez. dendez: thank you, mr. chairman. mr. mnuchin, i've listened to your responses defending on yours foreclosures
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watch, and i understand you bought a bad book of loans to i don't think you are saying you have to say every single homeowner, but by taking the fdic backs out you had an obligation to at least try. so do you believe that you made every effort to prevent foreclosures and keep families in their homes? mr. mnuchin: i do, and i actually brought with me, if you want to make part of the record, the fdic asked the oig to come in and look at the loan modification -- sen. menendez: so you believe you did. mr. mnuchin: they independently reviewed that -- sen. menendez: i don't know if their determination is that you make every effort -- sen. hatch: without objection we will make a part of the record. mr. mnuchin: thank you. sen. menendez: what about one of your vice presidents admitting to robo signing foreclosure documents a week without reading or reviewing them? how could that be considered making every effort to prevent foreclosures? can you honestly say your bank
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made every effort to keep families and seniors in their homes when they were robo signing one foreclosure document every three minutes? yes, i can: senator, actually say we made every effort, and the loan modification programs were audited by the treasury, fdic, occ that you can imagine as being a private equity person who bought a bank, we lived in a glass house and were constantly viewed by regulators. the comment you are making -- there was an industry issued which had nothing to do with loan modifications which had to do with the processing of closures. that was a procedure that was , it wasat indymac continued under the fdic ownership, and at the beginning of our ownership, ok, unfortunately we didn't change certain procedures. as i said, the industry -- it was solved -- sen. menendez: i not worried about the industry.
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i'm worried about the direction and your bank -- you keep referring to entities. the office of thrift supervision hit you with the consent owner because you are putting homeowners on a fast-track to foreclosure. that was part of the 750 foreclosures a month. you also had an independent government on it of onewest foreclosures in 2009 and 2010 thanalone identified more 10,000 homeowners who were owed $8.5 million in damages among those homeowners were 54 incidents over the course of just two years where the bank violated the rights of active duty military servicemen and women. those defending our country across the globe, under the servicemembers civil service relief act. if you did all of that, how is it that you feel that you can honestly say in his sworn testimony that your company did everything? mr. mnuchin: ok, first of all,
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senator, and i appreciate the issue, and as i said before, we highly regret the extent we made error, especially to the servicemen. yes, we had all those loans reviewed, we paid $8 million. many firms paid billions and billions of dollars, but we regret the issue there. what you are referring to in the independent foreclosure review, it was one of the same. as i referenced in my testimony, we were one of 14 banks that signed a consent order. basically, the 14 largest servicers signed consent orders at the time we were under the ots -- it was later taken over by the occ, who took over the consent order. we were the only bank that actually completed that independent foreclosure review and we are proud of that. sen. menendez: and the fact that he was completed at the end of the day ultimately showed that your company took people out of their homes and created consequences for them they should not have had.
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sure what is to be proud of. do you know a woman named sylvie oliver? mr. mnuchin: i do not. sen. menendez: i didn't think so. she is from new jersey. she is the sister of the past speaker of the generals and she received a loan from indymac in 2008 and after her employer cut her hours she ran into difficulty paying her mortgage. she wanted to be a good borrower. four loan8 modifications, which i believe she would have qualified. every time your bank tonight each and every one. she has been fighting to save her home for seven years. she nearly lost her home yesterday. thanks to her tenacity she has a 30-day reprieve, but that is not a guarantee she will not lose her home next week. mr. chairman, i would like to have the testimony of several individuals who face these realities be included in the record at this time.
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sen. hatch: without objection, if they pertain to the record. sen. menendez: they certainly pertain to the record. they pertain to having been for tryingosed on and to seek loan modifications unsuccessfully even though they should've qualified. i think they are more than eligible for the record. i see this as an example of privatizing profits but socializing losses. in the darkest days of the financial crisis, it seems to me that you and your friends were looking for stores to rate and you found a gem in indymac. with the government subsidizing the risk, you engineered a highly lucrative equation that made billions off the fact that homeowners, seniors, -- billions off the backs of homeowners, seniors, military men and women. how does that create confidence in the treasury secretary nominee when you have to be looking out for every american? and it didn't seem that when you had a chance to do that, and even the incentive, i would
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argue, by the backstop the fdic gave you, and over $400 million or company took from hamp, which you are disparaging before. i need to be convinced that will be your drive now that you are the nominee for the treasury secretary is supposed to represent all americans. mr. mnuchin: well, senator, i hope i have the opportunity to convince you going forward, and i apologize that i didn't recognize the name, but now that you mentioned to me it has been postponed -- i don't have the specifics, but as a courtesy, cit did inform me that your office had requested an extension and they did honor that and give an extension to revisit that. anymore involved in cit but i would encourage you to make sure you have -- again, if there is complaints, there is a department within the bank that response to this. as i said earlier, any complaints that came through any government or regulatory agenci es were responded to very carefully and reviewed by the
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occ. again, i would apologize to the extent there were any errors whatsoever. that is something i'm very sorry for. having said that, we took over a mortgage servicing business that was not part of what we were trying to build. it was a mess when we got there. we fixed it, we cleaned it up. to the extent that we made errors or issues, we compensated people for that as part of the agreement that we entered into with regulators from which we think is the right thing to do. sen. hatch: ok, senator carper. sen. carper: thank you, senator, mr. mnuchin. you introduced your dad earlier. how old is your father? mr. mnuchin: 83. he is 83. senator carper: you are blessed to have him with you. mr. mnuchin: thank you, i feel that way. sen. hatch: he looks very good for 83. >> [indiscernible]
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[laughter] sen. hatch: i'm glad you said that. senator cover: my parents are both deceased. one thing based to say to me growing up over and over again, do the right thing to do, not the easy thing. what is the right thing to do? just do it. treat people the way you want to be treated, golden rule. if it is imperfect, make it better. my dad always used to say use common sense. my sister and me a lot. we must not have had any. can you give me advice you would have given you with respect to the foreclosures were facing and what you did? just briefly, a word of advice from them. mr. mnuchin: first of all, thank you. i agree with those things you were told, and not only has my
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father had a big influence on me, but my mother, who has passed away, and my grandparents, in understanding the importance of hard work. again -- sen. carper: one good thing from your mom and dad that applies to what guided you in foreclosures. mr. mnuchin: absolutely. as you suggested, treat people as you want to be treated, beeson pathetic, empathetic to those people, and understand what they are going through. sen. carper: good. the other thing i would add to that, everything i know i can do , i know i can do better, and you would acknowledge that as well. mr. mnuchin: absolutely. sen. carper: you can always do better. i want to go back to the issue of how to create a new -- and assuring environment -- nurturing environment for job creation, exports, access to markets across the world. the president-elect has i think several times, at least i have heard them talk about support for a duty on items imported from china.
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i think it is like 45%, 35% duty on items imported from mexico. i think he is also considering an executive order imposing a 5% tariff maybe on all imports. i have a question with really three parts. first, if the administration chooses to pursue such policies, how would you prevent those countries affected from imposing similar duties on american exports? mexico, as you probably know, is our second largest export market for goods. the top three exports were machinery, electrical machinery, vehicles. if mexico were to impose a 35% duty on american exports, any idea what the impact would be on manufacturing? third, what role with our government have in assisting small businesses and even not so small businesses harmed?
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closing of international markets to our mystic manufacturers? -- domestic many factors? mr. mnuchin: first of all, those letall good issues, and me assure you from my conversations with the president-elect on trade, i had the opportunity to work closely with wilbur ross over the campaign, who is also very involved in trade, as well as peter navarro, who will be in the white house. trade, i think as you know, at least certain enforcement issues of trade cut across both the ustr.ry, commerce, and i would be working with the other people on a unified position on trade. where the president-elect has talked about -- i've never heard him talk about 30 or 35% tariffs across the board. i have heard him specifically say, well, if certain companies want to move their jobs, we are going to specifically put a tariff on them. now, i think that that is
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something that needs to be looked at, and i don't think that it's a plan that is going into action. i share your issues with this is as much about growing exports as it is about growing imports, and specifically with mexico, i think most people acknowledge nafta was negotiated a long time ago, that we should reopen this agreement -- sen. carper: actually, we did, and we did it in the context of tpp, as you know. mr. mnuchin: i understand that. sen. carper: my hope is that once you get settled in, when you think about renegotiating nafta, make sure we understand what was even done. mr. mnuchin: i would hope that the starting point is the work that you have done and i am optimistic that we can renegotiate that deal that is both advantageous to us and advantageous to mexico, that it is a win-win for both countries. sen. carper: last thing. when you mentioned giving advice to the president-elect, another word of advice for my parents to
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my sister and me -- probably works on the tariffs -- what goes around comes around. might want to keep that in mind. just to clarify the record, i'm not mentoring him, he is mentoring me, but i do give him advice. i would not: entry. just call that mentoring. sen. hatch: senator cardin. ardin: tax issues for a moment -- we had a chance to talk about that in the office. i think we all would acknowledge that our income tax rates from personal incorporation, on global competition puts the united states at a disadvantage. it is something we need to deal with. we also organize that from a business tax point of view, it is not just the corporate rate, it is also the individual rates. it is 90%-plus businesses paid individual rate.
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i want to talk about 2 standards that i hope will judge the review of tax reform, so that we can have a simplified tax structure, one that is fair to the american people. one, i would hope that you would agree that we do not want tax reform to increase the size of the federal deficit. notes --in: i'm taking if you want me to answer them one at a time? is. cardin: well, the second that tax reform should be at least as progressive as our current tax code. that is, middle-income families should not be asked to pay more in regards to our tax code. mr. mnuchin: so, again, both of those issues i share your concerns. onon the first one, again, we do believe in dynamic scoring, and
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with the appropriate growth, i think we want to make sure that tax reform doesn't increase the size of the deficit. in regards to the second issue, as i've said in my discussions with the president-elect, he is very interested in us providing middle-income tax cut. that is his priority. sen. cardin: and i would just urge on the first part that recognize that we have to be disciplined as we deal with the federal budget. and i would hope that we would have consistent rules in regards cuts asspending and tax to the dynamic nature of those types of activities. it is a lot easier for us to use the current rules because they are objective and we have professionals who give us the ground rules. we start using subjectivity, it could be abused and at the end of the day we could have much larger deficits. your point is you do not want to add to the deficit of the country. mr. mnuchin: that is correct. sen. cardin: secondly, you want to make sure that middle-income families are not disadvantage by the tax code. so here's the challenge.
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we also believe we should be competitive globally because you want to grow our economy in terms of export. it is difficult to see how you can get that done within the context of using just income tax revenues. because the united states, among industrial nations of the world, has a relatively low part of this economy tied up in government, and yet we have marginal tax rates that are among the highest in the industrial world. the reason, of course, is we don't use the consumption tax and every other industrial mission uses a consumption tax. without bringing in other sources of revenue, we are going to have a very difficult time getting those competitive tax rates. i would just urge you, as i did in my office, to take a look at consumption tax. it is border-adjusted, it does reward savings and does make our tax code not only competitive, but gives us a competitive advantage over the industrial nations of the world. mr. mnuchin: well, again, i
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appreciated meeting with you and talking about these issues, and we will follow up. again, under the appropriate withh numbers, as i said dynamic scoring, we are not looking to grow the deficit. obviously, one of the concerns is the size of the debt and how it has gone up. in regards to your other issue, one of the issues, and this impacts trade policy, is we the flat tax system. we have an income tax system -- rest of the the world uses consumption taxes come that is border adjusted. income taxes are not border adjusted. that makes it difficult to grow exports. it also, of course, does not reward savings, which is another ofa -- during the best times, america's savings ratios were not competitive with other countries. we use more incentives for savings. the other area we talked about
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in my office that senator portman and i and others have worked on, to increase opportunities for americans to save, particularly in retirement savings. that i don't believe would be a partisan issue. as we are working for major tax reform to make our tax code fairer and more competitive, i would urge you to work with us on retirement savings and other savings initiatives that we could make progress, i think in a relatively short period of time. mr. mnuchin: look forward to working with you, thank you. sen. cardin: thank you, mr. chairman. sen. hatch: i have to apologize to senator stabenow, she should have been next. we will turn to you now. : mr. chairman, i want to thank you for allowing us an opportunity to fully ask weston's -- we only have 2 rounds. now: mr. mnuchin, this is a physical marathon of
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endurance in just the hearings so we appreciate you hanging in there as well. mr. mnuchin: thank you. sen. stabenow: first of all, speaking of colleagues and jobs going overseas, obviously a critical issue for michigan. we make things, pride ourselves on making things, manufacturing is one of the most significant parts of the economy. i've been working on a number of years on a bill we call green end thee act that would ability of the company to write the costs of moving overseas. i don't know why if the facility is closed, the workers and the taxpayers and the community should pay for the move. and that certainly seems in line with our incoming president has said. would you support stopping that? mr. mnuchin: i look forward to working with you on that. i can tell you it sounds like thething president-elect would like so i look forward to working with you on that. sen. stabenow: i think it is important that we take a step
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one with all the loopholes that are there. first, we shouldn't pay for the move. i appreciate and hope that that is something that will be embraced. different subject -- i know colleagues have talked about pensions, which are critically important. people throughout their lives often giving up the pay raise to put money into a pension. very serious, what is happening to pensions around the country, and certainly whether it be a multiemployer pension or single-employer pension, and concerned about what is happening to people. heard fromt -- we the gao in 2013 that if there was a multiemployer pension fund to become insolvent, a large troubled plan, we could see the estimated benefit paid by the pdgc to be reduced less than 10% of the guaranteed loan paid you
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would be talking about some of you who work hard all their lives that would be getting $2000 a month and then putting $125.h seems to me that is a pretty basic promise we need -- have been watching live coverage of the senate confirmation hearing for steven mnuchin. if you want to continue watching the hearing on bloomberg, it is available on live go. we want to check in with kevin's really -- kevin on capitol hill for the latest. they took a 10-minute break just an hour ago. what was your biggest take away back out -- biggest take away? kevin: couple things. standpoint,icy mnuchin is articulating a more center-right, traditionally conservative ideology, interpreting donald trump's rhetoric to be much more in line with what we are used to seeing from more traditional republican business circles.
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the second takeaway is it is going to be tough for democrats to stop mnuchin's nominee. they have a lot of times been trying to characterize him as someone out of touch, they have criticized his time with onewest bank and of course, the cayman islands on his tax returns. but i asked senator bob, democrat from new jersey -- not scarlet: kevin, i'm sorry, i need to cut you off, because we need to go to davos, switzerland, where franc francie lacqua is talking to george soros. use of europe is at risk of breaking apart and you would like to rectify that. , yes, i basically summed up my views very concisely. but i did overstate slightly. the danger facing the european union, namely that it is facing
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disintegration, that is a slight neithertion, because putin nor-- neither china want to europe to disagree. each have their own reasons. china needs europe as a market. putin needs europe to provide the capacity to produce putining, because the e is only capable of exploiting natural resources. they can't produce. and they need to europe to provide that capacity. europe is not going to disintegrate. but coming under the dominance russia would be
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, undermining all the values that europe stands for. it is really not much better being -- coming under the russia then putin's to disintegrate. francine: you also have said that open society needs defending. why is it such under attack? basically, it is threatened by a different model . i distinguish between 2 as a generalization, but basically, there are 2 forms of government. one where the leaders are ,lected in a democratic process and they are supposed to serve the interests of the people who have in acted them. "supposed" say
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because there is an element of hypocrisy there. but it is much preferable to the other model, where the rulers are manipulating the people to serve their purposes. that is the other model. and currently, unfortunately, rise.ther model is on the in, ofpreading, both course, russia, china possibly, and many other countries, including my own. get people we can who believe in an open society together and defend the principles of open society.
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francine: i think we are almost 24 hours away from the inauguration of the 45th president of the united states. where does he stand in an open society? george: well, i've described him andn imposter and con man would be dictator. but he is only a would-be dictator. the constitution and institutions of the united , thes are strong enough division of power is in operation. he would be a dictator if he could get away with it. but he won't be able to. francine: because he will be stopped at what point? if he goes too far -- george: that's right. francine: in foreign policy or domestic policy?
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george: both areas. obviously, on foreign policy has greater powers that domestic policy. but i think congress will be a rights.protecting its when trump overstepped the mark, they will fight back. and if they have a bipartisan coalition, they will actually succeed in limiting him. francine: the markets for the moment seemed to be behind donald trump. it lost you a lot of money. what are they seeing? george: well, they are facing really a unique victory, because of thee in control , effectively,
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congress. and it is not official, but of the supreme court as well. francine: this is the republicans. but what about the markets? the markets, the stock market? george: well, because the markets see trump dismantling regulations and reducing taxes. dream.s been their so their dream has come true. francine: what does it mean for the u.s. economy? george: well, that is a very open question, because right now the answer to the -- right now the uncertainty is at the peak. it is impossible to predict going toow trump is
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act because he hasn't actually thought it through. he didn't expect to win. he was surprised. he was engaged in building his brand. it by his success in attracting crowds. went he got only elected that he started seriously to think about what he is going to do. thatsonally am convinced he is going to fail, not because of people like me who would like him to fail, but because the ideas that guide him are self-contradictory.
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and the contradictions are actually already embodied by his advisors. he has got three chiefs of staff instead of one. .nd in his cabinet theefore we will have various establishments fighting with each other. and that is going to cause very unpredictable outcomes. uncertainty is at its peak. and actually, uncertainty is the enemy of long-term investment. i don't think the markets are going to do very well.
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right now they are still celebrating. but when reality comes, it will prevail. francine: why do you say you would like him to fail? is it because he could do a lot of damage if he continues? or is he ideologically different to you? george: because he actually stands for that other form of government, the opposite of open society. i called it open society, but it is really better described as state.rship or mafia that is the fact. but as i say, in america it will not succeed. but at the same time, america is
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going to be engaged in internal beneficialight, and influence in the world in defending open societies, imperfect as it was, will be absent. and that will have very far-reaching negative effects. in europe and other parts of the world. francine: will he unify or divide america further? george: obviously he will divide, because he considers -- he embodies the will of the people, and therefore anybody who disagrees with him is not really part of the people. francine: how should ceo's and businessmen deal with president trump? -- i willll, that is
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keep as far away from it as i can. [laughter] francine: you have been critical about russia in the past. are you concerned that this rapprochement between president trump and vladimir putin puts europe at risk? george: definitely. it also has put america at risk, exercised an has nefarious influence on trump. tohas gone out of his way help his campaign, and particularly to disrupt hillary clinton's campaign. beyond hissuccessful
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expectations, because even he -- it wouldn't think actually succeed. but he developed certain techniques of guiding and influencing public opinion that turned out to be more successful than he expected. francine: what can europe do in this new world order, at a time when europe is very fragile? well, europe, european union is in a process of disintegration. brexit -- last year was a disaster with brexit and the .ther elections the italian election and so on.
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and europe is, as i say, in the process of disintegration, and it needs to be reversed. it is not going to be easy. a lot of things have to go right. effort tot make an the european union in order to totally reinvent it, the eu the fact is that has become dysfunctional. laws which areby not appropriate to the current circumstances. in differentined
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conditions. those conditions that prevailed prevail,onger particularly after the financial crisis of 2008. treaties can be changed because the treaty change has to , andproved by referenda the last referenda were defeated netherlands, and --refore create change treaty change has become impossible. and therefore you have to find changeoundabout ways, to loophole.find some it takes a lot of effort to do
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that and we are now in the hands lawyers who find these loopholes. that makes the functioning of cumbersome.asingly result, actually it is very slow and very inadequate. so this cannot continue like this. one has to recognize that the european union has become too complicated, and people are the anti-european parties and movements are gathering force, and things look
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very bleak. francine: but how do you reconnect with that voter? doesn't have to be politicians in countries such as france or does it have to come from brussels? george: i think actually it has to come from the people and the political elite has to recognize that failing to fulfill the legitimate expectations of the electric -- electorate, and they are responsible for the breakdown of the european union, and they have to change the electorateand the make its voice heard. to thenately, due
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alienation, they are more likely anti-supporting the european parties. makes thes what political situation even more difficult. is there a link or is this way for population rooted in the financial crisis -- is this wave of populism rooted in the financial crisis? we did go through a huge financial crisis. is there a link? george: well, if europe breaks ben, the consequences would very dire. say, it is currently going in the wrong direction. could besee a way it
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saved, and i think it has to also come -- this is recognized by many of the people in .russels they can't say so publicly, but they know that europe is not functioning. francine: how do you see brexit playing out? be a long is going to process. that both sides will findze that they have to some common ground, that a bitter divorce would hurt both sides, both of the u.k. and the
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eu. but it -- the divorce will be a very long process. and as i think that people realize that they are going in the wrong direction, they want to come together, and i think it is already happening. , a tough negotiator has told the member of the divorce parliament that would hurt not only the u.k. but also the european union. and i think that hopefully the ine thing will happen, and my opinion, it is unlikely that prime minister may is actually going to remain in power.
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dividedshe's got a very majority iny small parliament. and, as i say, i think she will not last. francine: but she cannot go against the referendum. she cannot go against the will of the people of the u.k. inrge: at the moment, people the u.k. are in denial. situationt economic is not as bad as it was predicted. and they live in hope. but as the currency depreciates and inflation will be the
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will lead to that the declining living standards, this is going to take some time. but when it does happen, they they are earning less than before. as theon't rise as fast cost of living. francine: but then what happens? a new referendum? fresh election? george: well my think the i think theell, divorce is going to take a very long time. orces much harder to div than to get married. [laughter] george: and so the desire for rapprochement will develop. and in theory, maybe even in
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practice, you could have a 2020 where britain would leave the eu because it does have to take leave ont they could friday evening and over the weekend and have a new arrangement in place monday morning. francine: what kind of -- is it a coincidence come actually, that the chinese president is here in davos 4 days before the u.s. inauguration? george: yes, i think it is a first. will doink that trump china acceptable as
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a member -- leading member of the international community, then the chinese could do by themselves. [laughter] george: they would be greatly helped by trump. francine: do you see a trade war between the u.s. and china this year? george: well, definitely trump is gearing up for a trade war. but that is what is irreconcilable with economic prosperity. you can't have a trade war and a function -- well functioning international system. think, is where i actually, it is in everybody's interest to see
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china succeed in changing its economic growth model. and to become embedded in an and becomeal system leaderble as a potential . also think this is now very much recognized by europe, because europe is being attacked economically, and china is attacked by trump. there is a common interest for europe getting closer, finding common ground with asia. met several of the people
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from brussels who spoke about that. consideration. but i think there is a slight mistake in -- actually, not so slight -- in seeking an accommodation with china. areuse the asian countries anthe process of forming alternative -- always forget it -- regional comprehensive economic ownership. they are forming got right now. -- forming that right now. it was initiated by china.
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gotthe members -- it just 10 asian countries who are members. and i think there and i think there is a very good chance a lot of the other members of tppre , which they are very attached to, and they hope it will revive -- but is an idle hope if they combine and accurately participate in forming this, then you would have a original cooperation -- a regional cooperation which is not dominated by china. because the other countries, taken together, form a
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counterweight to china, and that would be a very healthy development. and it is really this, rather than china itself, that ought to be the partner of the european union, because it is also an association of states. so, the right partner for one association is with another association, and not with one particular country in that association. i mentioned that to the people i talked to, and i am happy to say this in public, because i think this will be a great improvement , and i think it will be a positive development. francine: if donald trump antagonizes or even labels china a currency manipulator, will china retaliate?
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george yes. --george: yes. using ping cannot afford not to. he is also in a political fight doors, behind closed except for a few articles that come out from time to time a very that this is strong fight. think the future of china is right now at a decision point. whether china becomes a more open society or a more closed society, will be determined in the next two years. xi jinping actually
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wants to move it toward a closed society that has more in common withputin's russia than the open society of the european union. that china will develop in the direction of open people in verye responsible positions are very much wedded to the idea of an open society. they appreciate an open society more than the people of america, because they take it for granted. they have been living in it for 200 years. but in china, they come from a dictatorial
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background, and they really are working for an open society. francine: one last question on the chinese economy. how would you stabilize their trilemma? so, they have outflows, the renminbi is dropping, and they you resolve how do the -- stabilize the three? george so, this is not resolved : so,se china has --george this is not resolved because china has not succeeded yet in changing its growth model.
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and probably won't do it in the next two years because xi jinping wants to maintain an unsustainable rate of growth, rekindling theby furnaces, and producing more goods that are already in supply. but, he is in a position to do that for the next two years. currentlyk this is , actually, the building roads and railroads in the rest of asia actually is a good way to put
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the surface production to good use. foralternative is to use it armaments. currently inhat is the balance. become either china will aggressive at home and aggressive abroad -- that is one way to go. the other one is the success in changing the economic growth model. francine: one last question from me, and that we're going to take your questions from the floor. hungary plans to crack down on
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all of your funded ngo's. george: well, that is a very serious threat, and i want to choose my words very carefully because the fate of our grantees stake. staff is at so, i actually wrote a statement, which i want to read. being made by members of the hungarian government against hungarian civil society are an affront to the values of the european union and to the commitment to the rule of wall -- rule of law, on which it has been built over decades. civil society is a vital component of democracy, and so
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is open debate about public policy. i have dedicated my foundations and my life to promoting open society. the current hungarian government stands for the exact opposite. fromry greatly benefits its membership of the eu. in that light, the current government's attempt to does -- to intimidate and discredit civil society is totally unacceptable. [applause] scarlet: and that was george soros speaking with bloomberg's francine lacqua at the world davos, and to in recap, he spent a lot of time ,alking about donald trump george soros saying he cannot predict how the president-elect will act and he does not think trump himself knows how he will
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act. but george soros, full disclosure, opposes trump as a leader here, he admits he has called him a con man. the ripple effect that has on china and relations with china, and the affecting the u.k. as well. oliver: i thought it was interesting, and francine asked about this -- he has been vocal about his positioning in the market. she addressed the question, what does he make of market participants that have driven stocks upward that has cost him money, and ultimately it is the same via -- idea, people do that on the expectation of financial regulations being removed. to your point, it speaks to the importance of the confirmation hearings happening right now. you're getting a lot of questions. not to speculate too much, but i think a lot of these congressmen and congresswomen believe trump's policy will come from
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advisors. scarlet: absolutely, and this came up in the steven mnuchin's confirmation hearing. there would be severe competitions. oliver: we are following the confirmation hearing for the many steven mnuchin. senators have sparred with my nation from -- from -- with steven mnuchin from foreclosures. you have been covering this close for months now. what did you take away from this hearing that was the most relevant, whether or not he could potentially get nominated, or approved --confirmed? mark: sure, one of the key questions was were any republicans going to look shaky -- and only one gave steven mnuchin anything was having a
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hard time. he was from nevada, a state that went for hillary clinton. he asked some tough questions, but they were processed things -- and steven mnuchin followthrough and gave him everything he asked for. he was not closing the door on supporting him at the end of the day. scarlet: he dropped the ball and did not pursue it further. for the democrats trying to put mnuchin in the hot seat, you mentioned you heard an interesting strategy, that had not been raised before by the democrats. that is right, few democrats, including claire mccaskill, took up the point of view that the treasury secretary, under his authority to oversee foreign investments securityt have competitions for the united states should be overseen donald trump's personal business conflicts with foreign lenders or investments he is doing overseas. it may be upt is
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thingshin to chair these on the committee on foreign investment. oliver: has that been a part of the secretary of treasury's role in the past? what has been the history here where mnuchin can argue i am obligated to this, or i am free from this? they include secretary of state and national security forces, but they have never had to think about a businessman president before. this is uncharted territory. typically, when you see them get chinese -- let's say a or russian company wants to acquire a u.s. asset. they review it and see if there are national security applications. if it is blowing, they will reject it. ben companies that might involved in technology, they might deem it to be too close to
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affecting national security. scarlet: it looks like in terms at -- action, steven mnuchin said he takes the role circe. the hearing.vering if you want to check it out on the bloomberg, it is available at tlivego. kevin cirilli spoke with new jersey senator bob menendez who is a member of the hearing. senator menendez: they left me with deep concerns. to try to argue that the reasons for an offshore corporation in the cayman islands or anywhere else is other than to avoid u.s. taxes and tax laws is pretty incredible. he was making profits through his clients on that. so, does that give you the moral authority, then, to be the treasury secretary who has to go after these entities?
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i am not happyz: with his answers on foreclosure, one west, the bank they ultimately purchased from the government. thousands of families, seniors, and service members were ultimately kicked out of their home, and to say you are sorry now or regret it is not helpful to those families. on thei want to stay question with regard to answers we heard from stephen mnuchin, but when you look at the map, and which republicans might flip, you heard from senator dean heller from nevada, who asked pointed questions, but realistically will be difficult for democrats to block his nomination, correct? senator menendez: well, look, my effort in the nomination process of any nominee is to get to the heart of whether they are came to run the office to have been nominated for, whether their philosophy is one that will help the american people and serve our government well, and bring out the truth.
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whether or not we can flip a republican at the end of the day is not my main focus. kevin: are you hopeful that you will? senator menendez: i certainly hope if republicans hear some of the testimony it will cause them to think about whether the nominee is worthy or not. kevin: quickly, i do want to ask what we heard in regards to mnuchin being the leader of administration on tax reform. you, clearly, along with some of your democratic colleagues have concerns about his own handling of tax, but what does it say this will be the person in charge from the administration standpoint to negotiate with congress on tax reform? senator menendez: i am not surprised the treasury designee would be that person, but to be honest with you, what i have isrd described as tax reform one half of 1% of the wealthiest people would get a tax cut, and the working poor would get $100,
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and you would blow the deficit even further. i do not know that 1/10 of 1% of the wealthiest people in the country need a $1 million tax cut while working families get $100,000 or less. if that is his tax philosophy, we're a lot to talk about. quickly, on dodd-frank, are you concerned at all about how much will be repealed? someone whondez: as lives in the process of the worst financial crisis in the nation's history, the last thing i want to do is to have a policy that privatizers profits and socializes -- privatizers profits and socializes costs. that is what we happened. the financial markets went out of bounds and it caused costs for all of us as american citizens. they got the cost, we got the burden. when it talks about -- when you talk about reforming dodd-frank me have to show me we're not going back to those days. scarlet: that was bob menendez speaking with kevin cirilli.
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kevin, as a confirmation hearing has gathered steam and continued through the day, what is the number one lesson we learned from steven mnuchin on his economic policy views? we learned friendly, his views are much more in line with traditional center-right business conservative orthodoxy than i think many in the new k street business community here in washington were looking to see. henceforth, i think this is a positive sign if you are, again, in that center-right thoughts -- thought process. he interprets president-elect donald trump's positions to be much more in line with what we have seen in the past, whether it is on issues like tax reform, repealing portions of dodd-frank, or looking to tweak title ii of dodd-frank, in terms of not codifying what he argues is too big to fail. what we saw here is on domestic issues he will work with the congress, and already has behind
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closed doors in looking to crack that agenda. internationally, when you take a step back, he is going to look to embolden some international seats at the u.s. domestic regulator conferences in order to embolden them to better position, in his argument, the u.s. abroad. awayr: kevin, so the take is whether or not he is going to get the affirmation. are they going to be able to convince the few republicans they need to keep him out? kevin: so, we just heard from senator menendez about his problems with steven mnuchin, but i put this question a couple of minutes ago to one of the republican on the senate finance --midi, mike crapo, committee, mike crapo, who chairs the senate banking committee, and i asked him if he thought any of his republican colleagues would flip and vote against mnuchin, and he was telling me he was feeling confident after the hearings. there were no major hiccups that in mike crapo's view would
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derail the candidacy, however we heard from senator dean heller, a republican from nevada who progressive groups are targeting and hoping will vote against mnuchin. they are running advertisements in nevada, a swing state, as we know. when you take, again, a step back and look at the questions coming from heller, it was more him expressing frustration at a lack of response from mnuchin find him answering his questions prior to the hearing than a disagreement over mnuchin's policy. i would anticipate that nuance has the folks in mnuchin's and trump's political orbit feeling quite confident after today's hearing. -- we: connect two points heard from george soros who has labeled trump a con man and who does not think he is familiar with policies, and you have attention on his advisers would i want to get your take on
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whether or not it is possible some of these congressmen and congressmen -- congresswoman leds will be the people dictating policy. at the end of the day, trump will be the one making decisions, but do you have a feeling these are the people that will be advising him more, perhaps more than some of president have in the past? kevin: i can tell you the capitol hill aides i am speaking with like jeb hensarling, and folks in gop leadership offices are telling me these meetings and conversations are already underway on a variety of issues. whether or not it is tax reform, which they are already looking to craft within the first 100 days of trump's presidency, as well as repealing key aspects of dodd-frank. a developing we heard today during mnuchin's hearing is that he would be the point person on tax reform. i think for a lot of folks here in washington watching today's hearings, they were looking for
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not only policy positions, but also who is in control. so, the issue of tax reform -- a huge issue for the first 100 assertingnuchin himself as the point person, working with gary cohn, who will the council of economic advisers. oliver: qr, kevin cirilli. where johno davos, mikel cheap sat down with theresa may. may: i have had meetings with bank ceos, as well as meeting -- ceos from tech companies and others, and the message i brought is we want to global clearly -- truly britain that is an advocate for free trade, free markets around the world, and a britain that is ensuring we are taking those
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opportunities. i want to negotiate a good free trade agreement with the european union when we come out, and i want the best possible access for treating with an operating within the european single markets, both goods and services. i value financial services in the city of london, and i want to ensure we can keep financial services in the city of london, and that global britain will do just that. john: you don't think financial services deserves more priority given it's usually value to the british economy? ms. may: financial services are a huge value to the british economy, and of course the services around the banks are important to us, too, but as we look ahead to the britain of the future, the global britain, britain outside of the european union, i want to ensure we have a good relationship, partnership with the eu. we have negotiated a free trade agreement, which i believe will work for the u.k., but also for the european union that will ensure stability and jobs and prosperity for the u.k..
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do you think a customs union is enough under that to keep the jobs? ms. may: a customs union is a separate issue, and i want to as least friction around the border as possible, and i want to negotiate deals around the world. australia has reiterated its agreement to a free trade deal to the united kingdom. we have countries around the world that want to talk about it. we have started talking to many about a free trade agreement. we want to look globally, around the world, a truly global britain. john: one last thing on finance -- and you think finance was to dominate on the british economy when you arrived? ms. may: it has always been important, post the events of 2008, there has been a rebalancing, not just in the u.k., but elsewhere in terms of financial services.
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other sectors are, of course, of value to us in the u.k.. a freewant to see is trade agreement with the european union that enables us to have that strong economic policy with countries in the eu that i believe will not just be to the benefit of the u.k., but be to the benefit of the european union as well. john: there is a rule coming in for the european union as a whole, which the u.k. is still a member of, of 1000 pounds, or levying something on foreign workers -- is that something you might do in the u.k., but if they hire foreign workers, they would have to pay a levy or something along those lines? ms. may: 12 people voted for in getting out of the european union was they also voted it was the u.k. government that would take decisions about immigration from that eu once we were outside of the eu. we are working on what it would look like, and there are number
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of ways we can achieve the control. when people want is the decisions to be taken by the u.k. government. john: to what extent do you think they voted against davos men or women -- there was an element, you seem to interpret the amended that this has happened to do with global elites, and redirecting the british economy in a more broadway. -- brought way. -- broad way. ms. may: it is important that we understand that some people feel this has -- or that britain has passed them by. i said this from the beginning of my time as prime minister. i want a country, an economy that works for everyone. one of the things we will do in the u.k. is introduced a modern industrial strategy about the economy of the future, ensuring business can grow and is encouraged to grow in the u.k., and it is also about ensuring
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that the benefits of prosperity are available across the whole country. that we see that economic growth and prosperity for everyone. oliver: that was u.k. prime minister theresa may interviewed in davos. rightt: and happening now, we will take you to a live shot of arlington national cemetery, the tomb of the unknown soldier, where president-elect donald trump is on his way there with vice president elect mike pence. they will be laying a wreath there. this is one of the many preinaugural rituals trump will be participating in today. you can watch the full ceremony on your bloomberg at livego. all right, this is bloomberg. ♪
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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. anything with a screen is a tv. stream 130 live channels, plus 40,000 on demand tv shows and movies, all on the go. you can even download from your x1 dvr and watch it offline. only xfinity gives you more to stream to any screen. download the xfinity tv app today. --lor: i am taylor riggs let's get to the first word news this afternoon. president obama, in his last major act is cutting short the
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sentences of 230 -- 330 prisoners committed of drug crimes. he has commuted the sentences of 1715 people, more than any other president in u.s. history. rick perry once called for the abolition of the energy department, but that was then. today, he appeared on capitol hill before the senate natural resources committee in an effort to leave the very department he once wanted to close. the former texas governor use the opportunity to backtrack on his 2011 proposal. perry: if confirmed, my thought is to lead this department surrounding myself with expertise on the core function of the department. my past statements made over five years ago about abolishing the department of energy do not reflect my current thinking. in fact, after being briefed on so many of the vital functions of the department of energy, i

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