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Steven Mnuchin Mostly Meh on Market Drop

Treasury secretary says Russia sanctions are on the way

Treasury Secretary Steven Mnuchin mostly shrugged off the recent market drop. (Tom Williams/CQ Roll Call)
Treasury Secretary Steven Mnuchin mostly shrugged off the recent market drop. (Tom Williams/CQ Roll Call)

Treasury Secretary Steven Mnuchin told lawmakers Tuesday that he’s unworried about the sharp drop in equity markets in recent days and noted the stock market is still much higher than it was at the start of the Trump administration.

Mnuchin also said President Donald Trump would be able to appoint a regulator next year for Fannie Mae and Freddie Mac, the government sponsored mortgage giants, adding that the official would have the power to unilaterally curtail affordable housing programs backed by Democrats.

In testimony to the House Financial Services Committee on the Financial Stability Oversight Council’s annual report, Mnuchin said economic fundamentals are “quite strong.” The Dow Jones Industrial Average fell more than 1100 points on Monday and opened trading Tuesday with another sharp drop. But it subsequently rebounded and closed on an up note. 

“I’m not overly concerned about the market volatility,” he said. “I think you’ve seen a normal market correction, though large.”

He said the administration will “still claim credit that it’s still up over 30 percent since the election.”

Trump has frequently claimed credit for the stock market gains since his election in 2016.

Mnuchin repeated the warning he gave last week to a Senate panel that Congress should raise the debt limit as soon as possible. His ability to use extraordinary measures, known as the debt issuance suspension period, will run out on Feb. 28, he said.

Mnuchin is chairman of the FSOC, the body established by the 2010 Dodd-Frank financial overhaul to monitor risks to the financial system.

Financial Services Chairman Jeb Hensarling urged Democrats to join talks to overhaul Fannie and Freddie, the two housing giants that were put into conservatorship in 2008 because of the financial crisis that led Congress to enact Dodd-Frank. Federal Housing Finance Agency Director Mel Watt’s term expires next January.

The Texas Republican said the FHFA director has wide powers, and Trump’s appointee could suspend payments to affordable housing funds and to curtail affordable housing efforts.

“The FHFA can essentially choose not to enforce the statutory housing goals of the GSEs (government-sponsored entities),” said Hensarling.

Ranking member Maxine Waters of California complained that Mnuchin had been negligent in answering letters from committee Democrats concerning Trump and his family’s ties to Russia. Last summer, Waters lost a party-line committee vote on a resolution (H Res 442) asking Treasury to turn over documents relating to such financial ties.

Waters also complained that Treasury had yet to increase sanctions against Russia despite delivering reports to Congress last week on Russian political leaders and oligarchs, a requirement of a law (PL 115-44) that calls for reports and sanctions by Jan. 29.

Mnuchin said he expected sanctions would follow, adding that Trump has asked the State Department to develop the required penalties.

Waters complained that “this administration continues to let key deadlines in the Act to come and go” and that the law had required Treasury, not State, to impose the sanctions.

In later questioning, Mnuchin apologized to Democrats for delivering answers only recently to questions posed in July.

“We will do everything we can to make sure it’s 30 days, but it won’t be as long“ as it took to answer the questions from July, he said.

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