Treasury Secretary Mnuchin Testifies Before Senate Banking Committee, Provides Overview of Policies and Goals

Federal Issues Department of Treasury Senate Banking Committee

On May 18, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing entitled “Domestic and International Policy Update” with U.S. Treasury Secretary Steven Mnuchin—his first hearing since being sworn in. Committee Chairman Mike Crapo (R-Idaho) opened the full committee hearing asserting that “[w]e want our nation’s banks to be well-capitalized and well-regulated, without being drowned by unnecessary compliance costs. Undue regulation chills innovation and imposes significant and unnecessary costs and burdens on financial institutions and companies, often disproportionately on smaller ones.” Sen. Crapo further stressed that “[h]ousing finance reform remains the most significant piece of unfinished business following the crisis, and it is important to build bipartisan support for a path forward.” Ranking member Sherrod Brown (D-Ohio) likewise delivered opening remarks. Sen. Brown stated that regulation improvements for banks, shadow banks, and the financial services industry must be “based on facts” and that a better way to improve the economy and create jobs would be through “an effective means like infrastructure investment” rather than the “thoroughly discredited” trickle down approach.

Mnuchin was the only witness at the May 18 hearing, offering testimony and answering questions concerning, among other things, (i) currency manipulation; (ii) the establishment of a “Monitoring List” of closely watched economies; (iii) comprehensive tax reform (stating that a goal of 3 percent GDP or higher is “achievable if we make historic reforms to both taxes and regulation”); (iv) regulatory reform (noting that the Treasury’s initial report will offer “recommendations to provide relief for community banks and make regulations more efficient and effective and appropriately tailored”); (v) imposing sanctions and efforts to combat terrorist activities and financing; and (vi) housing finance reform (maintaining that Treasury plans to work with Congress to ensure both ample credit for housing and that taxpayers are not put at risk).

Mnuchin faced questions from several Senators after he testified, including Sens. Jon Tester (D-Mont.), Catherine Cortez Masto (D-Nev.), and Bob Corker (R-Tenn). In response Sen. Tester’s question as to whether Mnuchin could commit that the President’s tax relief plan would not add to the debt, Mnuchin replied that “any plan that we put forward we believe should be paid for with economic growth.” Sen. Cortez Masto asked what the Treasury was doing about the Trump Administration’s lack of focus on policies supporting American consumers and homeowners, questioning, “Why doesn’t President Trump’s Executive Order that rolls back Wall Street reforms mention consumer or investor protection even once? Why doesn’t it direct you to consider the financial needs of borrowers, students, service-members, seniors, homeowners?” Accordingly, Sen. Corker asked whether Mnuchin is "strongly committed to finally dealing with housing finance reform in an appropriate way,” to which Mnuchin replied, “My strong preference is to do it through congressional action.”