Reed Floor Statement on Mnuchin Nomination
Mr. REED: Madam President, I rise in opposition to the nomination of Steven Mnuchin to be Secretary of the Treasury. No Cabinet official can have such a profound impact on our economy, on family budgets, on taxes, and on consumer protection as the Secretary of the Treasury. It is a job of immense reach that requires a steady hand, a commitment to fairness, and a deep knowledge of our Nation’s financial markets and the rules that protect the savings and investments of middleclass Americans.
In light of this reality, I do not think Mr. Mnuchin meets these requirements. I know that for many of my fellow Rhode Islanders and for many Americans, the economy is not producing the jobs and wages they want and they need. I share that sentiment and have pushed for job and wage policies like the minimum wage, paid leave, and health care that help struggling families cope. I have pushed for job creation by putting people to work by rebuilding our Nation’s roads, bridges, transit systems, schools, and new housing. But I think it is important that everyone in this Chamber take a step back and understand where our economy was, where it is today, and what is at stake.
In 2007, the housing market began to collapse. One measure of the housing market is the seriously delinquent rate, which is the percentage of loans that are 90 days or more past due or in the process of foreclosure. Here are just a few examples of the hardest hit States: 13.2 percent in Arizona in December 2009, 9.63 percent in Ohio in December 2009, and 20.61 percent in Florida in March 2010. By the end of President Obama’s term in office, here are the seriously delinquent rates for those same States: 1.35 percent in Arizona in September of 2016, 3.59 percent in Ohio in September of 2016, and 4.14 percent in Florida in September of 2016. Just to remind on this, Florida went from a seriously delinquent rate of over 20 percent in 2010 to just over 4 percent in 2016 because of the policy, the programs that were initiated by the President and supported by this Congress.
In 2007, the unemployment rate began to skyrocket. Again, here is what that meant in a few States at their highest unemployment rates: 11.2 percent in Arizona in November of 2009, 13.6 percent in Nevada in December 2010, 11 percent in Ohio in January 2010, 11.2 percent in Florida in January 2010, and in my home state, double digit unemployment rates also. By the end of President Obama’s term in office, here are the preliminary rates for those states as of December 2016: 4.8 percent in Arizona, 5.1 percent in Nevada, 4.9 percent in Ohio, and 4.9 percent in Florida. We have seen improvement across the Nation. I urge my colleagues to take all of this into account when they consider Mr. Mnuchin. These are sobering numbers, and behind each of these numbers is an individual or a family, our constituents, who suffered real and serious harm. We owe it to our constituents to do something so that these generational losses will be prevented from happening again. We came out of a deep abyss through difficult work, through cooperative efforts; we have reached a point where we are poised, I hope, to continue to move forward, and we don’t want to go back. That was at the heart of our work on the Dodd-Frank Wall Street Reform and Consumer Protection Act. It was to learn the lessons from this catastrophe so that we would never endure another in our history.
Unfortunately, for some of my constituents in Rhode Island and others around the country, the aftershocks of that financial crisis have not fully dissipated. We are still living in some respects with what happened. There are still too many looking for a decentpaying job or facing gut-wrenching financial decisions like whether to turn the heat off or to skip feeding the family another day, just to make ends meet. Indeed, one of my constituents recently wrote: My wife and I lost nearly half our assets in the 2008 financial crisis. Over eight years later, and our house is still worth less than the mortgage that remains on it. We are both professionals, and will have to stay that way until we are 75 in order to come close to the standard of living we enjoy now during retirement. The financial reforms enacted under Dodd Frank, and Obama’s regulation that requires financial advisers and brokers to act in their client’s best interests, are critical to my family’s well-being and to the health of the US economy. I would like to know how you plan to defeat any attempts to unravel these rules.
Given the clear threat that Trump poses to our economy, and the losses I have already suffered due to bankers’ greed and incompetence, without these rules I feel better off putting my money in my basement and will do exactly that. At least we won’t lose half of what we own. Those are the words of a professional family in Rhode Island who have seen this struggle firsthand, and they ask this question: What are you going to do to protect the reforms and the advances we have made that have been manifested in the economic statistics that I shared with my colleagues?
As you can see, for this Rhode Islander and for many others, the law we put in place to stanch the bleeding and stabilize the financial system is a critical help. But some have so demonized DoddFrank that they would have you believe otherwise. That may be why its opponents prefer calling it Dodd-Frank instead of its full name, the DoddFrank Wall Street Reform and Consumer Protection Act, because it is about reforming Wall Street and protecting consumers. It is a lot easier to be against something called DoddFrank than it is to be against Wall Street reform and consumer protection. But as my colleagues just heard in my constituent’s own words, DoddFrank is ‘‘critical to my family’s wellbeing and to the health of the US economy.’’ The question I have to answer as my constituent’s Senator is whether Mr. Mnuchin will support Dodd-Frank, push efforts to further reform Wall Street, and place as his highest priority the protection of consumers as our next Treasury Secretary. Based on a review of Mr. Mnuchin’s record, the answer, to me, is very clear: No, he will not.
As chairman of OneWest Bank, Mr. Mnuchin made a fortune employing questionable foreclosure practices that made the financial crisis worse for families and seniors. What is particularly worrisome is that OneWest engaged in so-called robo-signing, where companies cut crucial corners by not properly reviewing or even bothering to read foreclosure documents.Indeed, according to one news report: Erica Johnson-Seck, vice president of OneWest’s department of bankruptcy and foreclosures . . . robo-signed an average of 750 foreclosure documents a week, according to a sworn deposition she gave in a Florida case in July 2009 . . . Under oath, JohnsonSeck acknowledged that she did not read the documents she was signing, taking only about 30 seconds to sign her name. To speed up the process, Johnson-Seck said she shortened her first name on her signature to just an ‘‘E.’’ She said in the deposition that OneWest’s practice was to review just 10 percent of the foreclosure documents for accuracy. As part of the confirmation process, when asked whether his company engaged in robo-signing, Mr. Mnuchin responded that OneWest did not robosign documents. However, it is not clear that this was the case, and not just because of Ms. Johnson-Seck’s deposition. Quoting from a Bloomberg article written by one of Rhode Island’s finest exports, Joe Nocera, who writes: ‘‘But here’s the clincher: In 2011, the man who now says his bank never robosigned documents signed a consent order with the Office of Thrift Supervision, which had accused it of—you guessed it—robo-signing.’’ Disturbingly, Mr. Mnuchin’s response on this issue either raises troubling questions about his management capabilities or his willingness to be forthright, or potentially both.
Ironically, Mr. Mnuchin’s confirmation process mirrors his career in at least one way. While the Senate Finance Committee normally requires at least one Democratic Senator to be present in order to vote in committee on a nominee, the normal rules were suspended so that Mr. Mnuchin could be reported out of committee for consideration by the full Senate. In other words, the rules were not followed, special shortcuts were created for him, and much like the robo-signing that occurred at OneWest, Mr. Mnuchin is on the path to robo-confirmation without a full and proper vetting by the United States Senate. The last thing this body should be doing is robo-stamping Mr. Mnuchin’s nomination so that he, as Treasury Secretary, can change the rules and rig the system in favor of the insiders at the expense of working-class Americans who are working overtime just to, in many cases, make ends barely meet. For example, Mr. Mnuchin has stated that his first priority would be enactment of the Trump tax plan.
This plan makes deep, unfunded cuts to revenue, and roughly half of the reduced tax burden is just for the top 1 percent, the wealthy, who don’t have to worry about how much a gallon of milk costs, what it costs to ride the bus or fill the gas tank. We have seen what huge tax cuts for the wealthy will do to the economy. Just look at the economy in the late 2000s and the deficit. The economic plan endorsed by President Trump and Mr. Mnuchin will not help the middle class, but will only further skew the economy in favor of the wealthy and well-connected and do precious little for job growth. In addition, the incoming Treasury Secretary will be tasked with rolling back the Dodd-Frank Wall Street Reform and Consumer Protection Act in support of a President who said: We expect to be cutting a lot out of DoddFrank because, frankly, I have so many people, friends of mine that have nice businesses, and they can’t borrow money. They just can’t get any money because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank. Indeed, Mr. Mnuchin seems all too eager to assist because he himself has said that ‘‘we want to strip back parts of Dodd-Frank that prevent banks from lending.’’ We are simply not seeing this, though. According to JPMorgan’s chief financial officer, Marianne Lake, on an analyst conference call last month, ‘‘loan growth remains robust.’’
According to Bloomberg: At JPMorgan, the biggest U.S. bank, core loans increased 10 percent to $806.2 billion last year, with gains in every category, including credit cards and wholesale debt. Bank of America Corp.’s total loans climbed 1.1 percent to $906.8 billion, while Wells Fargo & Co.’s grew 5.6 percent to $968 billion. According to the same article, ‘‘banks now have a record $9.1 trillion of loans outstanding.’’ Based on this, it seems that big bank lending is actually doing well, and maybe the reason the President’s friends have not gotten loans is that they borrowed too much and possibly have gone bankrupt too much, and the megabanks want to be careful about whom they lend to. Indeed, Anat Admati, a finance professor at Stanford University and a member of the FDIC’s Systemic Resolution Advisory Committee, notes that: The claim that regulations are prohibiting lending is simply false. The banks have plenty of money and can raise more from investors like other businesses if they have worthy loans to make. If they don’t lend, it’s because they choose not to lend and instead do many other things. This is a key point. According to Bloomberg: Banks don’t actually ‘‘hold’’ capital. In banking, capital refers to the funding they receive from shareholders. Every penny of it can be loaned out. A 5 percent minimum capital requirement means that 5 percent of the bank’s liabilities has to be equity, while the rest can be deposits or other borrowing. The more equity a bank has, the smaller its risk of failing when losses pile up.
Given the protection that equity provides, you are left to wonder why Mr. Mnuchin and President Trump are so anti-capital. Indeed, from that same Bloomberg article: Former Goldman Sachs partner Phillip D. Murphy, who was a member of the banks’ management committee with [National Economic Council Director Gary] Cohn and Treasury Secretary nominee Steven Mnuchin, said he’s mystified with the changes they’re pushing. ‘‘To think that undoing those regulations is going to lead to a better result is folly,’’ said Murphy, who’s seeking the Democratic nomination in this year’s gubernatorial race. ‘‘The fox is in the hen house, that’s what this is. This is people on Wall Street who should know better.’’ For an administration that campaigned on a claim of dismantling a rigged system, I am confused why President Trump nominated Mr. Mnuchin to be his economic quarterback for working-class America.
Mr. Mnuchin has spent his professional life spotting value, and he has done quite well for himself. But despite this ability to value assets, Mr. Mnuchin still seems puzzled about how to value the assets that matter most to working class Americans. My constituents don’t need fancy Wall Street calculators or formulas to understand that there is a value and a benefit to reforming Wall Street and keeping reckless greed in check. There is a value and a benefit to protecting consumers and their hardearned wages. And there is a value and a benefit to keeping a family in their home and avoiding foreclosure. Indeed, an individual who made his fortune aggressively foreclosing on his fellow Americans does not possess the right values, in my view, to be our Treasury Secretary. Based on his record, I am not convinced Mr. Mnuchin is capable of draining the swamp, and I fear he may end up further rigging the system in favor of the 1 percent at the expense of working class Americans. For all of these reasons, I do not support Mr. Mnuchin’s nomination, and I urge all my colleagues to join me in voting no. Madam President, I yield the floor. I suggest the absence of a quorum.