House Democrat presses Mnuchin on ‘alleged rampant corruption’ at Treasury
Rep. Bill Pascrell (D-N.J.), on Tuesday pressed Treasury Secretary Steven Mnuchin on “alleged rampant corruption” at the department, after The New York Times reported that Mnuchin instructed the department to take an action that benefited former “junk bond king” Michael Milken.
In a letter addressed to Mnuchin, Pascrell, a member of the House Ways and Means Committee, chided the secretary, warning him that the government does not exist for the benefit of its higher-ups.
“It should go without saying that the United States government is not a piggy bank to be looted for the sole benefit of the President and his friends. Yet this is not only what is occurring in your department, but it is happening at your direct supervision.”
President Trump‘s tax-cut legislation created a program called “opportunity zones,” under which individuals and businesses who make investments in designated distressed areas can receive capital gains tax breaks. Opportunity zones have received some bipartisan support, with backers hoping that it can help to revitalize low-income communities. But the program has also faced criticism that is primarily helping wealthy investors and will provide little benefit to low-income people.
Pascrell said in his letter that the opportunity zone program has a “noble goal,” but that the goal isn’t “being fully realized as the program, much like the rest of the tax scam law, has been perverted to profit the super-rich, including Donald Trump’s relatives and other friendly associates.”
The New York Times reported Saturday that the Treasury granted an opportunity zone designation to an area in Nevada last year — after having previously determined that the area was ineligible — at the instruction of Mnuchin.
The area includes land co-owned by Milken, and the decision to grant the area opportunity zone status came after Mnuchin spent time with Milken, the Times reported.
Pascrell asked Mnuchin to provide him with information about his interactions with Milken and the decision to grant opportunity zone status to the Nevada area.
“More generally: do you see your job as protecting the interests of the entirety of the American people or a handful of plutocrats and personal friends?” Pascrell asked. “Do you think it is appropriate for the Secretary of the Treasury of the United States to seek special favors for one of the most prolific financial criminals in world history? To begin to get to the bottom of corruption within your department, we need answers to these questions.”
In a statement over the weekend, Treasury spokeswoman Monica Crowley called the Times story “highly inaccurate and deeply misleading.” She said that Mnuchin had no knowledge of Milken’s investments in the Nevada county and that Treasury considered adding the tract as an opportunity zone at the request of public officials in the state.
“Nevada identified a discrepancy between the Opportunity Zone nomination instructions and an IRS revenue procedure governing the program,” Crowley said. “Nevada asked Treasury to consider a nomination that complied with the revenue procedure. The IRS and Treasury concluded that Nevada’s request was permissible and, after appropriate review, approved the nomination.”
Milken also blasted the Times story, saying in a letter Sunday that he “played no role in any recommendations to any government officials regarding changes in opportunity zone regulations.”
Pascrell isn’t the only Democrat who has criticized the Trump administration in the wake of the New York Times story.
Sen. Bernie Sanders (I-Vt.), a Democratic presidential candidate, tweeted the Times article on Saturday, saying “when we defeat Trump, we’re going to end this tax scam [and] invest in working-class communities that have been fleeced.”
Senate Finance Committee ranking member Ron Wyden (D-Ore.) said in a statement Monday that “this is an egregious example of corruption that demands a serious congressional investigation.”
U.S. Treasury’s Mnuchin open to bank liquidity relief following overnight funding crunch: Bloomberg
U.S. Treasury Secretary Steven Mnuchin said on Tuesday he is open to loosening liquidity requirements for big banks to relieve possible cash crunches in short-term funding markets, Bloomberg reported.
“The banks have raised an issue around intra-day liquidity, and that is something that makes sense for regulators to look at,” Mnuchin told Bloomberg in an interview on Tuesday in Tel Aviv.
His comments came after weeks of turmoil in overnight lending markets that banks rely on for short-term funding needs.
While Mnuchin has sway over general financial policy-making in Washington, the Treasury Secretary has very little direct control over the nuts and bolts of bank regulation. The overwhelming share of that work falls to independent banking regulators including the Federal Reserve, which so far has resisted calls to ease liquidity regulations.
The Fed was forced to step in and provide liquidity in those markets after rates suddenly spiked, its first intervention there since the global financial crisis. The New York Federal Reserve already extended its support to that market, committing to offer at least $75 billion a day in cash injections market through Nov. 4.
Big U.S. banks have said liquidity requirements imposed by the Fed contributed to the market issues and that those required buffers have discouraged banks from lending in those markets. Fed Chairman Jay Powell said in September he did not believe liquidity requirements were too high.
“It’s not impossible that we would come to a view that the (liquidity coverage ratio) is calibrated too high, but that’s not something that we think right now,” he said at a press conference.
Mnuchin told Bloomberg he agreed with the Fed’s assessment that the turmoil was largely caused by a “technical issue,” but expressed openness toward broader policy changes.
“It’s a reasonable question: Have we gone too far in the other direction in requiring the banks to maintain this excess liquidity for intra-day operations?,” he added.
While specific rule changes would likely have to go through a formal and lengthy Fed rule-making process, the central bank can take a more relaxed approach when enforcing existing rules.
Earlier this month, Reuters reported that banks believed they had received the greenlight from Fed supervisors to hold more Treasury debt and less cash, a move that could help boost liquidity in that market.
A Treasury spokesman declined to elaborate on Mnuchin’s remarks when asked by Reuters. A Fed spokesman declined to comment.