President-elect Donald Trump's pick for treasury secretary, Steven Mnuchin, will face the Senate Finance Committee today. It promises to be a barnburner.
Democrats are up in arms over the nomination of the former Goldman Sachs banker and film producer. One liberal group called him "a self-dealing Wall Street tool." Sen. Elizabeth Warren (D-Mass.), scourge of high finance, condemned the pick, and held a forum yesterday for Americans foreclosed on by a bank Mnuchin ran during the financial crisis. Sen. Sherrod Brown (D-Ohio), another hard-charging left-winger, sits on the Senate Finance Committee itself and has asked for the FBI files on Mnuchin's old film production company.
In short, Trump's opponents are gearing up for a fight. So here's a rundown of the questions Mnuchin's critics should ask if they really want to land some blows.
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1. How do you propose to "drain the swamp" when you spent almost two decades at Goldman Sachs?
Mnuchin spent 17 years at the legendary Wall Street investment bank. Despite Trump railing against Goldman Sachs on the campaign trail, three more of his most important picks also spent time there.
This is almost an American tradition. Bush's treasury secretary, Hank Paulson, was a Goldman CEO. Bill Clinton tapped Robert Rubin, a co-chairman of the firm, to run his treasury department. So ties to the financial company symbolize a very long and bipartisan history of Wall Street currying favor and friendly policy from the White House and lawmakers — what Trump might call "the swamp."
This is important because treasury secretary is the most important economic post in the executive branch, with a vast influence over policymaking, financial regulation, and more. And more so because we literally have no idea what Mnuchin's views are on almost anything, save for an apparent enthusiasm for massively slashing taxes, particularly for corporations. The man is a sphinx, whose only obvious qualification in Trump's eyes was his banking career and his ability to raise money for the Trump campaign.
Given his background, can Mnuchin honor Trump's supposed populist values? How will he not simply be another fox guarding the hen house? Can Trump's own commitment to "drain the swamp" even be taken seriously given the plutocrat-fest his administration is shaping up to be?
2. Why did you kick 36,000 Americans out of their homes at the height of the financial crisis?
In 2009, Mnuchin's hedge fund bought out the bank OneWest, making Mnuchin himself the primary owner, CEO, and chairman of the board. The bank was bleeding heavily from the housing collapse, so under Mnuchin's watch it began foreclosing on homeowners like crazy.
The Great Recession was built on the twin pillars of financial engineering that made bad mortgages look like AAA investments and massive fraud by the financial industry to create as many mortgages as possible. When the debt bubble popped, banks ruthlessly kicked huge numbers of Americans out of their homes and resold the properties, despite often lacking the proper paperwork and legal standing to do so. OneWest was up to its eyeballs in all of this.
Democrats were originally planning to have some of OneWest's foreclosure victims testify at the hearing, but the Senate Finance Committee's GOP chairman shut down that idea. Hence Warren's forum on Wednesday. But Brown and other Democrats should still rake Mnuchin over the coals for this. OneWest embodied how big finance gutted American livelihoods and how the American government basically let it happen — all while Mnuchin was literally in charge of the bank. Why on Earth would you put someone with that history in charge of the U.S. economy?
3. Have you adequately divested to avoid conflicts of interest? If so, why hasn't your boss?
This could be the most complicated part. Mnuchin committed to sell off 43 different investments and step down from 42 different positions to avoid conflicts of interest. The idea here is you don't want the treasury secretary (or any government official) in charge of policies or regulations that affect a business he or she could personally profit from. So you have them liquidate all their holdings into cash, then someone else reinvests the money, without the official's knowledge — a.k.a. a "blind trust." This appears to be the route Mnuchin is taking.
That's praiseworthy. But the break won't be totally clean. Mnuchin's ethics statement said he would keep an "unpaid position" at Steven T. Mnuchin, Inc., but that he would "not participate personally and substantially in any particular matter" that might have a "direct and predictable effect on the financial interests" of the company. Furthermore, no one seems to have any idea what Steven T. Mnuchin, Inc. does or what its holdings are. Mnuchin's questioners should ask what's the deal with that little mystery, and why they shouldn't be disturbed by it.
Even more dramatically, Mnuchin's agreement to divest stands in stark contrast to Trump's insistence on keeping his business while president. (Trump said he'd hand the company over to his kids, but this doesn't meet the qualifications for a blind trust at all.) Granted, the president isn't required by law to avoid conflicts of interest the way federal officials like the treasury secretary are. But the spirit of the problem remains the same. So how come Mnuchin's incoming boss doesn't seem to share his level of commitment to ethical principles? And does that worry Mnuchin himself?
4. Why so stiff?
There's chatter that Trump's team is worried about Mnuchin's performance. During practice sessions for the hearing, he apparently came off as "uneven and stiff." On top of that, he's likely to face demonstrators and hecklers at the hearing, which could rattle him further.
This may seem a shallow thing to bring up, but it matters. A Congressional hearing is still ultimately a social interaction between a relatively small group of people. Mnuchin's ability to come off as affable, charming, and relatable (or not) will affect how much traction his critics can get. If Brown and the Democrats can get under Mnuchin's skin, they may be able to make an early example of the nominee, and put the Trump administration on notice.
So the senators could try to throw Mnuchin off his guard by burying him in highly technical questions. Does he think Dodd-Frank and Basel III capital controls are adequate? Does he think they're high enough to serve as an alternative replacement for Dodd-Frank's regulations? Why or why not? Test his wonk knowledge to the fullest.
Alternatively, of course, they could just mess with Mnuchin's head: What did you learn as producer of Mad Max: Fury Road that applies to being treasury secretary?
