Steven Mnuchin’s confirmation hearing to be the next treasury secretary is almost certainly going to be contentious.
The former Goldman Sachs banker and producer of movies like “Suicide Squad” was also the CEO of OneWest Bank, which has been accused of lending discrimination and unfair foreclosure practices.
In addition to questions about his personal record, Mnuchin will also get grilled about key fiscal policies that are likely to be face the Trump administration.
Debt ceiling
Among the first issues looming for the treasury secretary is the debate over the debt ceiling, the cap set by Congress on how much the federal government may legally have in outstanding debt. There is a March 15 deadline to raise that cap. The treasury secretary can use some budget maneuvers to buy extra time, but at some point the Trump administration will need Congress to raise the limit or face the nation’s first default.
Some conservatives in Congress have balked at hiking the debt ceiling in the past, but it’s not clear whether they’ll push the issue with Republicans in control of Congress and the White House. Still, it could spark some tough questions during Mnuchin’s hearing.
Tax cuts
President-elect Trump’s vow to enact widespread tax cuts and tax reform are certain to be a hot button issue during the hearing. And lawmakers are likely to focus on what such cuts might mean for both the budget deficit and income inequality.
But Mnuchin’s policy seems to differ from what Trump proposed. Soon after he was tapped by Trump, Mnuchin said there would be no net tax cuts for the rich.
“Any reductions we have in upper-income taxes will be offset by less deductions, so there will be no absolute tax cut for the upper class,” he said in an interview with CNBC.
In the latest version of Trump’s tax reform plan, everyone would get a tax cut, but the rich would see the biggest cut of all, according to independent analyses. The Tax Policy Center, for instance, found that those in the top 0.1% would see an average tax cut of roughly $1 million.
Dodd-Frank
Trump has been a frequent critic of the Dodd-Frank Act, the banking regulation bill passed under Obama in the wake of the financial meltdown of 2008. Indeed, the post-election stock market rally has been fueled by bank stocks and the hope that big banks will soon be unshackled of many of the law’s rules. But turning the banks loose so soon after the financial crisis has its own political risks. In a November interview, Mnuchin said he only wants to “strip back parts” of Dodd Frank.
OneWest Bank
The harshest questions on this topic are certain to come from Democrats. They’re ready to hammer the nominee on his record at OneWest, the bank he formed by buying the assets of failed subprime lender IndyMac from the FDIC in 2009. He sold OneWest for a huge profit in 2015.
Two advocacy groups have filed a complaint with the Department of Housing and Urban Development claimingthat OneWest discriminated against minorities. The bank is accused of trying to avoid offering home loans in minority neighborhoods, a practice known as redlining. It is an accusation a spokesperson for Mnuchin adamantly denies. HUD won’t comment on it.
He’s also certain to be questioned about OneWest’s foreclosure practices, especially as they apply to reverse mortgages sold to elderly borrowers. Critics claim a unit of OneWest had the worst foreclosure record of any reverse mortgage lender, and that that it threw widows and widowers out of homes when they should have been allowed to stay. Spokespeople from the bank have denied the charges in previous public hearings.
Mnuchin’s investments
Finally, Mnuchin could face questions about his private investments. While he vowed to divest himself of 43 investments when he filed a recent financial disclosure statement, he is keeping a private investment management entity he controls and completely owns, known as Steven T. Mnuchin Inc. He hasn’t disclosed what investments that entity holds.