>> i -- >> i know you're running out of time. >> i need another 30 seconds. >> can i just answer this? ill they are important entities to provide necessary liquidity for housing finance, and what i committed to is i will work with both the democrats and republicans. what i said and i believe, we need housing reform. we shouldn't just leave fannie and freddie as is for four or eight years under government control without a fix. that i believe we can find a bipartisan fix for these, so on the one hand, we don't end up with a giant bailout, and on the other hand, we don't run the risk of completely limiting housing finance. >> i appreciate those comments. i look forward to working with you. >> thank you. >> our two -- since i took 30 seconds on your statement, two quick questions. i hope you can answer them. with yes or no answers. one is, in light of those

comments about recap and release, you commit to support no kind of administration effort that bypasses the congress in terms of this. >> i don't want to make commitments about legislative or not. what i will commit because it's my responsibility and treasury, you know, as it relates to certain issues with fannie and freddie, but i commit to my objective to find a bipartisan solution and invite the opportunity to sit down with you. >> the bipartisan consensus that the banking community was that that solution, we can argue, discussed about how we get there, should end up in the housing finance system that prereceivers things like the 30-year mortgage and makes sure there's not the current status that has when things are going well, private sector gain, but when things hit the fan, taxpayer holds the bag.

>> i have no interest in that. i think i understand this well enough that you will find that i won't support any policy that has that case. >> thank you. >> senator mccaskill. >> thank you, mr. chairman. mr. mnuchin, i found a quote. first, do you oppose lifting the current sanctions on russia? >> right now i do. >> do you think we should lift -- >> no, no, i'm sorry, i oppose right now lifting the current sanctions. >> do you support new sanctions against russia? >> well -- >> yes or no. >> the answer is i don't have the information. i have not been able to receive classified briefings. i would want to understand the classified information and want to work with others to understand it. i don't have an opinion right now as to whether we should have

more. i do have an opinion that we shouldn't be lifting the existing ones. >> would you agree that your new boss is famous for firing people? >> well, he has a show about it, but other than the show -- >> well, sometimes it's a blurred line at this point. we're not sure where the show stops and reality begins. do you think he'll hesitate to fire people if he disagrees with them or believes they are doing a bad job? >> well, if disagrees with them, no, and i can tell you the president-elect and i disagree on things, sometimes i can convince him, sometimes i have not. i have not been fired. if people do a bad job, absolutely, fire them. >> will he be able to hire and fire an ethics officer? >> translato >> as it relates to his trust? i have no idea. >> who hires and fires the ethics officer if not him? >> again, i don't have access to the trust document, and i don't know the answer. >> we're not talking about

trust, but he has said he'll have an ethics officer to oversee him in the government. who is going to hire and fire his ethics officer? him? >> i -- it's a good question. i would be more than happy to ask him and talk to him about it and come back. i think you raise an important issue, and i think he'll understand that. i don't have the answer. >> he's not divesting any business interests, correct? >> correct. i believe he sold his public stocks in his other -- >> i'm talking about his business. his -- would you -- is it fair to characterize him as app international businessman? >> i believe so. >> okay. and he will enjoy the benefits of his business's success while he is president, correct? >> again, i believe he'll do everything legally -- >> no, no, no. this is not my question. my question is, he's said very

loudly, going back to the business after he's president, would fire his sons if they had not done a good job. enjoyed in the presidency, he gets benefit on, correct? >> feels like something he may have said, but he's the economic own owner, and i assume they would have that. >> do you agree? >> so i've read, yes. >> and isn't it true that a lot of his debt is held by foreign interests? >> i don't know. i've just read in the papers. >> do you think you should know that as someone who runs the committee on foreign investments if we're talking about the commander in chief? should you, as secretary of the treasury, know what percentage of his debt?

i am told people familiar with the business that it's a huge percentage of his debt held by foreign interests. >> well, as i said, if i am confirmed, i ensure you i will make sure the requirements of the constitution are upheld, and i think you is a valid point about foreign debt and understanding foreign things and if i'm confirmed, i will research that and get back to you. >> okay, so i want a commitment from you today is you'll report to the committee what percentage of the debt against the trump enterprises is held by foreign interests. that is your job as the secretary of treasury, and i would -- your commitment that you'll report to the committee as soon as you get the information from the new president. >> i'm not making the commitment today to report to the committee on anything, but what i am willing to do is to the extent i am confirmed, i am willing to

speak to the chairman and make sure that whatever the committee thinks it needs, i'll discuss with the president. >> well, i can assure you the american people need to know, and you and your job as secretary and the treasury that is supposed to be determining national security interests based on foreign investment, the american people want to know how much debt that is owed by the trump businesses is owed to foreign entities because that could have a direct impact on our national security. thank you, mr. chairman. >> senator, i think you asked interesting questions, which i will follow-up. >> thank you, senator. senator byrd. >> mr. chairman, i'd love for the staff to look and see if that is the responsibility of the secretary of the treasury to actually ask the president what percentage of foreign debt -- i don't think that's part of your job, mr. mnuchin, and let me say

your employment history is quite complex, the most complex i've seen of any nominee here. what i read into that is your sort of a road map for things we need to do if the goal is a simpler, more transparent, understandable tax policy in this country, so let me ask you, do you pledge -- do you commit to the committee to work towards a simpler, more understanding tax code in this country? >> i do, absolutely. >> do you commit and pledge to this committee to divest yourself of any assets that may be perceived as a conflict with the job that you are considered. >> i agreed to that and signed with the ethics officer. >> i know that many of the questions i've heard on this committee -- >> thank you. >> suggested they did not hear

it, but i wanted you to have the opportunity one more time to repeat it. mr. mnuchin, the internal revenue service paid out $2.8 million in bonuses as well as tens of thousands of hours of leave and pay step increases, tax late, and committed serious misconduct including fraud and abuse, and more lately in the april 2015 report, inspector general found 108 of 364 employees with left lane tax not in compliance cases closed between october 1, 2008 and september 2013 received one or more rewards, promotions, payments after a year of being disciplined for tax

noncompliance. will you commit to me today to change this policy, this insane policy. >> seems very concerning. i commit to work with you on the staff on it, absolutely. >> thank you. >> in another report, december 2014, inspector general, the irs discovered they had repeatedly hired employees that were fire for poor conduct and performance after lengthy -- >> i want to call your attention to the right side of the screen, the main box here, donald trump, obviously, speaking live at a leadership luncheon in washington, d.c. he arrived there within the last hour or so. if he makes any news, there's headlines, we'll bring them to you here on cnbc. donald trump speaking in washington ahead of the inauguration. right now, though, let's head back to the confirmation hearing of mnuchin.

>> the irs rehired them. do you pledge to the committee that policy? >> sounds like the most common sense thing i've heard, so, yes, absolutely committed to that. >> i appreciate it. i think that with all the questions you've been asked today and all the places you've been asked to make, i try to see the point of view of the american people. the american people deserve better than this. in the private sector you wouldn't stand this. >> absolutely not. >> wouldn't have a company that paid people for nonperformance or poor performance. you wouldn't reward individuals by rehiring them if, in fact, they did a poor job last time, and i think the american people look at insane policies like this, and they really do question those that had agencies and, quite frankly, committees like this that have oversight

over the agencies, so i go back to where i started. you have a very complicated and fascinating employment background. it spreads more areas than any of us can ever imagine. do you pledge to use that experience to make changes at the treasury department and within the branchs of the treasury department that the american people sense need to be changed? >> absolutely. it would be a great honor to lead the treasury department and work for the american people, and that's why i'm here. >> thank you for being here today. i yield back. >> nasenator scott. >> thanks for coming by the office. we're having a good conversation about economic growth. this should be our focus and part of the finance committee focus as well. to follow-up on comments about a simpler tax code, i think about many of the comments about the president-elect, making sure the folks work paycheck to paycheck

experience better quality of life. >> think about the tax code. >> i think about folks in -- >> we're going to go back to -- or go to the president-elect or under another 12 hours, listen into donald trump at a leadership conference in washington. >> we're going to have -- i think we're going to do a lot of great things, right? thank you for going through this. you did a fantastic job. thank you. tom price, it was so nice to talk, right? where's tom? mented to end that career so fast, and then they had many smart -- we have a lot of smart people. one -- >> all right, donald trump saying moments ago before going into that, that steven mnuchin

was grill on capitol hill, but doing a great job. supporting his pick for treasury secretary. speaking of, back a couple blocks to capitol hill to the confirmation hearings of the mr. mnuchin. >> delivering a middle class tax cut, make u.s. business taxes to compete effectively and aggressively and create more jobs. this is about creating better economics and more jobs for the american public. i'm very concerned about the number of jobs lost, the decrease in manufacturing, number of people still leaving the work force. these are concerning issues. when you look at the unemployment rate, that absolutely doesn't tell the story of what's going on in this country. >> follows that same thread,

what do you think about similar mying the tax code, could be a challenging conversation about the expenditures in the tax code. i hoped administration plans to treat very carefully the mortgage deduction and the charitable deduction going forward. i know that the house plan, i believe, capped the mortgage deduction at a home value of around $1.1 million. i saw at least in your political document that the approach that you guys were taking had more to do with the interest that you pay and not the actual value of the home, so i would not -- i don't need a comment right now, but i hope that you would take seriously the importance of those two dedunctions from my perspective. lower the corporate rate, we become more competitive, but noi don't know that it stops inversions. your thoughts? >> i think it absolutely has a huge impact on stopping inversions, so i think there's some other things that we may be able to do, but i think the

biggest issue that creates inversions is incentive for many, many lower taxes abroad than we have here. something just as competitive would be wonderful, stopping inversions, probably going to a place we can't be competitive with. 12.5% or the innovation box at 10%, whatever we can do to become competitive is helpful, but i do believe we have to look for other remedies outside the tax code in order for us to sell, perhaps, the haven of america is a great place to do business beyond the tax code itself, but speaking of that simpler tax code, i have -- we have spoken before about legislations about investing in opportunities. it essentially defers capital gains tax for up to seven years if you reinvest resources into distressed communities. we have 50 million americans,

more than a million in south carolina, living in distressed communities. my goal that i hope we have is to look for ways for incentives for private capitals to come back into the stress communities. love your comments on that. >> absolutely. as a matter of fact, i have in the notes here investment opportunities act we talked about -- >> glad you supported it, thank you very much. >> i want to follow up with you and learn more about it and whether we use that or we use other tax incentives i think is absolutely critical that the areas that are most struggle in using tax incentives to get there. i look forward to following up with you on that. >> one more question, mr. chairman -- thank you, i thought it was a ringing endorsement, i'll take it for that for my ears, not necessarily what you said, but on the trade policy, south carolina has been a place

of provocative rates, we are today a haven from the high-tech manufacturing perspective, trade agreements are very important part of what makes us successful, attracting the brands for boeing, caterpillar, bmw. it's support to the state. i know you guys are moving away from multilateral agreements, but towards bilateral agreements. i hope that that bilateral approach includes some of the countries in the growing markets around the world, specifically in the tpp footprint. >> absolutely. as i said, you know, president-elect trump believes in trade. he just wants better deals, so he wants us to grow exports and he wants better deals. >> all right. thank you, mr. chairman. >> we have two more to go here. can we finish up -- >> absolutely, keep going. >> we'll take a short break and

give you a little bit time and come right back. senator portman and then senator from washington. >> thank you, mr. chairman, mr. mnuchin, thank you for being here, it's your kids who deserve the award for stamina. my kids at that age would have been long gone, so you are doing a good job. >> i said they could leave after app hour, but they opted to stay. >> well, good for you guys. >> listen, i think you're right about the fact that the tax code on opportunity for us to give the economy a shot in the arm, and median income has not gone up looking at the prerecession levels. that's the middle class squeeze and higher health care. in terms of unemployment, you're right. go back to the labor force participation rate, it was in effect at 66% before the recession and you compare to today, unemployment would be about 9.5%. so this economy is not humming. we are not doing great. we're not receivering middle class families making ends meet,

and tax reform is one way within your purview to make up the difference there. i appreciate what you said to senator scott on that. i think we should be focusing on wages, and not just overall economic growth, but how to ensure we're creating opportunities for the families we represent. one thing you didn't talk about when i was hear was on the business side, repatriations, lower the rate, but don't you think there's an opportunity to repatriate profits that are locked in overseas and the number i hear is over $2 trillion. what's the number you believe and what can be done to bring money back here to invest in jobs, plant, and equipment? >> the president-elect says over $3 trillion. his number thinks he's $3-4 trillion. we're getting a lot of money back. i spoke to several ceos who, you know, want to bring money back to create a one-time

repatriation, and the trump plan we put that at 10%, in the house gop plan, it was slightly lower, but i absolutely believe, and i heard ceos say this, and some of them are without naming names, some of the biggest holders of cash abroad, so absolutely want to do it and we're committed to it. >> committed to working with us to ensure we can do that? >> absolutely. >> has bipartisan support here, we have to invest the funds back here including for things like infrastructure. with regard to trade, there's been discussion i heard on trade. as yo know, i believe in expanding export and trade, and we're not doing enough that, but i believe in a level playing field, one area there's contention is on currency manipulation. we tried in the legislation called trade bush authority to get it done. we introduced an amendment that was close, but didn't quite get it done to make it a trade objective in our trade negotiations, but we did pass something in the customs bill that directly relates to trade.

treasury has enhappensed authority to take action on this. there's some conditions that have to be met, but, frankly, trade ma nnipulators will meet, and at the end of the day, the country feels it needs to change policy, the treasure si secretary recommends the president take actions like procuring goods and services from the country, calling on findings at the imf, international monetary fund, and if confirmed, would you commit today to take full advantage of the enhanced authority begin in the department? >> absolutely. that's very important. in particular, i want to point out thank you. i knew you took the opportunity to meet with me several time, and i enjoy the working lunch yesterday in your office, and we talked a lot about these issues, and i'm absolutely committed to work with you on this, and it sounds like a very important issue. >> again, one where there's bipart san agreement about the need to address currency manipulation, and i appreciate your commitment to work with us

and on other authorities. another topic is the irs. i understand there was some discussion when i stepped out to another hearing regarding the irs. i heard what was said about some of the examples of irs poor management including promotion policies. obviously, politics involved in the irs, making decisions based on political matters which is inappropriate, so the irs has created huge problems, by the way it is, not performed in a way anybody would expect as a taxpay taxpayer. on the other hand, by underfunding the irs, taxpayer service is eroded. that affects my constituents in direct ways. are you committed to fixing these problems at the ir certification, but working with us to ensure there's adequate funding and support so that the tax system works better under a simplified tax code? >> absolutely. this is something i feel very

strongly about, and it's something that i hope we do have bipartisan support on because this is one of the areas where i think we'll all agree to the extempt we add resources, we can collect more money. one of the things i've heard is one of the reasons why we have technology problems is because based upon the guidelines we can't afford to higher technology people internally while i think there's some external technology, we need external expertise in the irs to manage our own technology systems, and i think in this day and age, like any other entity, we need to have good customer service that if people are seeing taxes, they have the right to get the information. they have the right to understand their information, and i will look at the real

estate tax bills in california, and see my information there. i don't see why we don't have good systems that people who pay taxes can see their information securely on line. i look forward to working with you, and i also think that we should be monitoring customer satisfaction like anything else. we should understand what the taxpayers think of the service we've provided them. >> i know my time's up, but chair, ranking member would agree with me on this, but focus on the irs is an opportunity for us, and years ago, i cochaired this with bob keri, senator at the time, i was a house member, and every 20 years, we looked at it, you know, including technology. this is an opportunity here. i appreciate your comments on that today, and i appreciate you being here today. >> thank you. i look forward to working with you on it.

>> senator cantwell. >> thank you, mr. chairman, and i caught some of your testimony, but i apologize for being at the hearing with energy secretary governor perry for most of the morning, so i missed most of your -- >> it's a busy day and you're accommodating a lot of us so thank you. >> thank you. i want to ask, do you support returning to glass-stiegl. >> i don't support going back to it as is. what we've talked about with the president-elect is perhaps we need a 21st century but don't support going back to it as is. >> is that the position of what the republican platform was? >> again, the republican platform did pass at the

convention, and the president-elect talking policy with the president-elect, our view is we need a 21st century. >> when did that change? >> oh, that's been -- again, that's been part of the campaign, been in the speeches. >> so, like, what? october? >> i don't know. >> at the convention, it was glass steagall. >> it was glass-steagall. >> his position never was, or all along he met a different version? >> again, i can only tell you that post convention this is an issue that we have discussed, and something -- >> do you think leaving has anything to do with the change? >> no. >> do you think -- to me, this is a very important issue, in fact, i would have seen in august that the republican platform had a stronger position on glass-steagall than the

democratic platform. now i understand the president-elect doesn't really support glass-steagall, but some modern version which i don't understand. maybe you can help me, tell me what the modern version is. >> again, i think that separating out banks and investment banks under glass-steagall would have big implications to the liquidity and the capital markets is capital lending, and regulatory issues, the administration will look at glass-steagall and 21st glass-steagall is part of regulatory reform, have a view as to what's appropriate. >> so to be clear, you alluded

to the damage that was caused by the implosion of our economy brought on by toxic financial instruments that did not have the backing they needed. according to the dallas fed, it's 14 trillion whole in our economy, so i think you alluded to the damage that that caused. so, now, what i also -- what i think you answered in the notes here from the other colleagues, that you believe in the concept of proprietary training did not belong with the bank. >> that's correct. >> okay. so where does that go? then -- so you're saying you don't think that today there's a clear prohibition, and you want to see a clear prohibition? >> no, no. what i said is that in the rule today, we have a prohibition of proprietary trading with banks. >> with loopholes. >> the problem --

>> with loopholes. >> the problem is the definition of that was left to the regulators to decide, and so the first issue is, again, i'm a believer in proper regulation, but i'm also a strong believer in people need to understand the regulation, so we need to be able to explain to banks what's proprietary trading and what's not proprietary training. i think we all agree if we were all sitting in this room and just betting on things, what i referenced is the federal reserve had their own independent report on a lack of liquidity in many of the important markets, so what i'm in favor of is that we have clear definition around the rule and that the regulators come out with that and do it in a way so that it doesn't eliminate lickety in many of the important markets.

>> you would tighten rules out there, lessen the rules that are already passed in dodd-frank? >> no, that's not what i said. what i've said is that i support the rule, but there needs to be proper definition around the rule so that banks understand what they can and can't do and provide necessary function of liquidity in customer markets, and, again, i'm referencing a problem that the federal reserve has independently raised. >> i think, to me, this election was about the frustration of the american people. on the implosion of the economy and fact they have not recove d recovered. i think the president-elect, whether he directly meant to or -- i was pleased his party adopted coming up with a very bright line of separating commercial from investment

banking. so now i think where we are today, we're not sure. hopefully we'll get a chance to vote on this now that our colleagues have to answer to platforms and committees hopefully will bet an answer where colleagues are on this, but i will tell you not only is it an issue of people wanting to see a bright line and be protected from this ever happening again when it comes to the tax code and tax policy, the american people have not recovered. lowering the corporate tax rate without getting a plan for the average american who lost pension, couldn't send kids to school, maybe lost their home, what is the tax policy that the president-elect and you are going to pursue that is going to help restore them from that major implosion and protect them from ever happening again? >> well, let me just tell you from having travelled with the president-elect for the last

year, i absolutely understand why he got elected, and that is because, as you point out, the average american worker has gone nowhere. the unemployment rate is not real. the average american worker has gone nowhere, and president-elect is committed, as am i, as his economic adviser to work for the american people and grow the american economy so that the average american worker does better, and that's why i've been willing to sell all my investments, okay, i've been willing to give up my businesses, my desire is to work for the american people to create a better economy and i understand that i've traveled for the last year. i've seen this. the president-elect understands that very clearly. >> so just one question on that. i know my time's expired. so did you mention in your -- what tax break policy you would give to that american worker? >> absolutely. we specifically said that the objective is to create a middle

income tax cut and to create business taxes that insent businesses to grow and make businesses more competitive and hire more people and create more jobs. >> not specific to education and pensions abroad tax -- >> well, as we've talked about it, i think pensions are a very important issue -- >> thank you. >> i would be happy to work with your office another time, okay. i think that the people who have earned pensions absolutely deserve to have those pensions maintained to be safe, and i'm very concerned about the retiree issue in this country, and that's something i look forward to working with you and others on. >> thank you. >> we need to protect pension holders in this country. >> thank you, thank you, mr. chairman. >> we are going to take a ten minute break as friends on the other side requested a second

round, and we're going to grant that, and so let's recess for about ten minutes. maybe a little longer. >> all right, you've been watching the confirmation hearing of donald trump's pick, treasury secretary mr. mnuchin, welcome to power lunch. i'm michelle caruso-cabrera. tough grilling. we expected it. a lot of it spent on the past, one which eventually became one west, roles in foreclosures, but, ultimately, towards the end, we got towards more forward looking policy. tax reform. how does he feel about fannie and freddie, even the volker rule, explain liquidity issues. >> yeah. >> what struck you guys? >> issues investors are paying attention to as well as, michelle, the u.s. dollar in light of the completing's

comments the other day talking down the u.s. dollar. how does a treasury secretary approach a strong dollar policy in the u.s. that's a key for investors, particularly thinking about earnings and the head winds that the multinationals could face with the stronger u.s. dollar. they were really keying into that. >> ron wyden of oregon grilling into mnuchin before testimony began and one offered him a valium semijokingly. he did not take it so. some other senators commented on that, too. so there were fireworks even before the testimony began. >> there was clearly a lot of tension going into this, and specifically you could see it come up over and over again when it came to steven's purchase of indymac, but to melissa's appointment, i listen closely about the dollar and historically, the treasury secretary has the policy of saying we have a strong dollar

policy here in the united states. steven did not say that today. >> no, he didn't. he chose words very carefully, and he was very delicate as senator warrened asked if the voice would be one. he had to pick his way through that mind field with the president known for speaking his mind extemp rain yously on it. >> let's get to aman following the hearing on capitol hill joining us now. one of the toughest hearings thus far as far as i can tell. any damage done? any threat to getting confirmed? >> a tough hearing here on capitol hill, not necessarily, though, as tough as others for trump nominees, but if you're the trump team, trump transition

team today, you are feeling good about where it is right now as they go ahead and take a ten minute break. the democrats felt he was the one opportunity they had to derail a trump nominee, but steven mnuchin as they went to break did not feel like a nominee on the ropes struggling in the hearing. tense and awkward moments and moments where he disagreed with president-elect donald trump, but nonetheless, you don't get the sense this is a nomination at least to this point in the hearing that is in serious danger, and brian mentioned that in a moment with pat roberts about the valium. that was sort of unheard of in senate decorum. that's not the thing senators say to each other. we got that moment on tape. let me play it for you. >> i just have an observation. i think that to date, mike, what have you done -- here it is. senator wyden, i've got a valium

pill here that you might want to take before the second round. [ inaudible ] >> just a suggestion, sir. >> just another suggestion, we've got a lot of colleagues waiting if you could brief, it would be helpful. >> i'm going to be very brief. >> and then there was another moment where mnuchin could have apologized on behalf of the people fore closed by his banks. that was an important moment politically for him. the democrats have been very keen on that issue emphasizing that the human trauma of the people who lost their homes, but he apologized and cleared that off the table and showed a bit of human emotion here. here's that moment. >> to the extent we made any errors or foreclosed on anybody, i completely understand that the hardship that created. i earnestly feel terrible for any mistakes at the bank. >> you are right, testy moments

back and forth, particularly with brown asking a series of questions. he did not feel like he got an opportunity to respond to questions. that moment got heated as well. here's that tape. >> it seems to me, in all do respect, you want to shoot questions at me and not let me explain what are complicated issues. >> i will after i go through the questions because one answer takes all time. you can explain when i'm done. >> at least understand these are complicated questions. >> they are. >> let me at lease explain otherwise there's no point at shooting them at me and i don't have the ability to respond. >> and, guys, so far, he appears very well prepped for this hearing. he's not somebody with extensive experience on capitol hill or somebody who's done this before or faced skrult e ed scrutiny,p with thank you so much for the time we met privately, appreciate the issues, complimented them on business

careers, states, senators love that. a good way to engrashuate yourself and run out the clock, and you can sense democrats get frustration with him. at one point, accusing him of filibustering in the answers. a classic strategy when you testify. say what you want to say for as long as you want to say it and don't let them get in another tough question, guys? >> a lot of the fireworks from senator brown of ohio and the nominee came using another sort of familiar senatorial tactic. give me a yes or no answer. give me a yes or no answer. that's what they insist upon. >> that's right. >> the questions sometimes do not admit to simple yes or no answers. that was an interesting rope a dope that was going on there. thank you very much. be back with you, i'm sure, shortly. on the phone now, an assistant secretary for economic policy at the treasury department from december of 2006 to january of 2009. welcome, sir.

simple question, how did he do? >> caller: oh, you know, i think he did really well, even keeled. knowledgeable. i looked at his answer in the rule where he got into the details, knew the fed put out a paper acknowledging the rule had reduced liquidity in the corporate bond markets, that is really impressive. >> on that, his answer was nuanced. he did not say he wanted to restore glass-steagall, but he said he was thinking more in terms of a 21st century glass-steagall and rules that separated proprietary trading from other banking activities, but one that did so in ways that were definitionally correct. that did i summarize that correctly? >> that is correct. this is benefits from this kind of regulation, but there's also costs, and we got to look at the cost. he said that more broadly, look, i'm not trying to get rid of all financial regulation. i'm trying to get it right. >> what about points on the

dollar? >> you know, the dollar, as you pointed out, it's going to be a tough one for him, right, the fire from the administration, the building next door, the white house. it's a test of the administration's method of discipline, get people to allow him to be the guy talking about the dollar. i think he will, but -- >> were we correct in that historically, a rogue response on the strong dollar. >> caller: absolutely. it's awkward for him. his name will be on the dollar bill, and, you know, he can't be out there saying i'm in favor of a weak dollar. he's got to say i want low inflation, competitive with the economy. that could be the focus, not saying i want that a strong dollar. >> disappointment on the right people heard him say there's a role for fannie and freddie.

arch right wants no involvement when it comes to housing, but to see entities go away and not be connected to the government in any shape or form seems to suggest he wanted reform for the institutions, but getting rid of them is not -- at least in his plan. >> i took that as a good sign. he's pragmatic. people understand the institutions and firms are the lynch pips of the housing system. if they did not exist, we'd create them. have a better system, better protection for taxpayers, but we need the activity to take place. i was hardened by the answer there. >> cfpb should exist, another area with a lot of hope if a republican president were to emerge, that's what we got, that the cfpb, committee for financial production, would go away, but he doesn't think it should go away. >> yeah, again, i agree. it's an interesting answer. again, he's pragmatic.

she's saying we can do this better. a lot of instances in which under richard cordray did good things protecting service members, for example, but the way it's funded and govern does not make sense. it needs to be changed. again, i'm hardened by him saying, you know, look, the activity to protect consumers is important, by we can do better. that's the focus. >> all right. thank you. thanks for joining us. >> caller: thank you. >> all right. i'll take it. we'll take a quick break here as the confirmation hearing continues in recess. we'll talk markets and other confirmation hearings on the hill. much more "power lunch" after this. whe memp

welcome back to "power lunch", the senate committee conducting the hearing for steven mnuchin, donald trump's nominee for treasury secretary of the united states. let's bring in chief washington correspondent, john harwood, here on set with me in washington, d.c. tough hearing. we expected it to be tough. the assessment is maybe perhaps unsaved at this point. >> i suspect he'll be confirmed. i think this is posing increasing dilemmas for democrats. on the one hand for the same reason they were reassured, they were on substance. he doesn't want to entirely get rid of dodd-frank. said in an interview on our air in november that he was going to oppose or not support a tax cut that gave an absolute reduction to people at the top. democrats like hearing that.

however, the foreclosure issue, the failure to initially disclose assets coming out in the last 24 hours i think is giving a little blood in the water for democrats, and there's one republican of nevada who may not vote for mnuchin, with 52 votes in the senate, he can only lose two. so iffed efe moderates put in , that's a problem. again, though, i do expect in the end he'll make it. >> we have been showing confirmation hearings simultaneously, rick perry, governor of texas now, wanting to be the energy secretary of the country. that's what happensing in that hearing? >> it's over now. rick perry did very well. remember, this is a politici politician -- unlike mnuchin who is new to this, rick has been elected repeatedly in the state

of texas. he was very skilled in the back and forth. he had a little humor in his answers, and he said things reassuring to democrats. for example, he believes in climate change, that it's real and human activity crickets to it. he also, interestingly, renounced previous statements made as a presidential candidate that he want the to abolish the departmentment take a listen. >> my past statements made over five years ago about abolishing the department of energy do in the reflect my current thinking. after being briefed on vital functions in the department of energy, i recommend elimination. >> i can want fail to note that we had that exchange in our debate, the oops moment for perry, but he's got a level of

demeanor bouncing back for things like this. this was a hearing where he did not. >> as we see, historically, a president and incoming president loses one or two when it comes to the cabinet, right? is that going to happen this time around? any prediction, who is it going to be? >> if i had to name one the least likely to make it, and i'm not predicting he'll lose, but most likely, tom price, nominee for health and human services secretary for two reasons. one, the issue surrounding stock trades, and ethical question. he answered it yesterday, but nevertheless, democrats are pushing it, but the other that he's taking positions on medicare and medicaid that are at odds with what donald trump said in the campaign and that democrats are eager to fight him about, so i think the combination of the two things makes him the most vulnerable of all. rex tillerson a little bit because of russia, but i expect him to make a difference.

>> thank you, john, john harwood, melissa? >> check iing the markets now, l in the red, fractionally in terms of percentage, losses on the eve of trump's ig august ration. a key stat, 68th straight day the s&p 500 has not had a 1% or great greater drop. the dow stalled. john augustine, rob morgan, guys, good to see you. you say appropriately because we are, in fact, in a confirmation hearing timeout, that's what's going on with the trump rally part one, which implies a trump rally part two, and what happens between the rallies? >> well, we think we're in the middle of that, getting through the inauguration, and we're going to see what programs they come out with. is the treasury secretary elect alluded to today, and we think that's going to fuel a trump rally two with some big and bold policy coming out of the cabinet and coming out of the

administration. that's what we're looking forward to, melissa. >> rob, the way you are positioned, you are leaning into the idea that the trump administration brings about deregulation and tax reform in a meaningful way. >> absolutely, melissa. i agree with what you just said, what john just said, but i also, too, think that we're going to see some pretty good earnings growth from the s&p 500 this year. i'm expecting double digit earnings growth and, you know, stocks in the long haul follow earnings growth. i really think the s&p 500 could have another double digit up year, but absolutely deregulation is coming as well. >> what's the risk, rob? >> well, it seems like market analysts, brian, when they are looking into the crystal balls for the year whether it's the market or stock or a stock, the most optimistic time for them is beginning of the year, and as reality sets in, those can ratchet back. i hope for enough momentum when

ratcheting occurs it's minimal. >> john, where do i concentrate the bets? >> stocks, small, mid, in sectors to follow rob's theme on earnings growth. look at the financials. look at energy. look at technology. they are the ones accelerating. 2016-17, we're still pro-cyclical u.s. growth. that's where we have our clients positioned. >> why do you like small and mid? they are typically more u.s. focused and not subject to the swings of the dollar for one thing, swings in international economy for another? >> three things. the dollar's number one, strong dollar usually helps them. secondarily, strong economy helps them. thirdly, large caps might need to buy some of them to get their rev thu growth up. three areas we're looking at. >> fourth, in fact, reduction in the corporate tax rate.

i want to ask about the fed. we have not -- in the whole conversation, not brought up the fed once, and chairwoman yellen said last night a few times in terms of rate hikes through 20 is the, there's been a selloff in the bond market today. does that mean that money goes in equities? what's going on with bonds? >> yeah, i think that money goes in equities, melissa, and, again, combined with what i mentioned before, double digit earnings growth, it's more fuel to what should be a good year for the s&p 500. >> leaving it there. john, rob, thank you so much. let's get to sue herrera with breaking news. >> we do. concerning an investorship. nbc news confirmed that woody johnson, owner of the new york jets, will be the next u.k. ambassador. the president-elect calling him out at the luncheon, mentioning that he was going to assume that position. mr. chairman johnson was an nbc news confirmed that woody johnson will be the next u.k.

ambassador. brian, back to you. >> wow. perhaps fuelling speculation that the jets move to london. i'm kidding on that one. i'm kidding, sue. >> i know you are. >> they may have a team, but not the jets. >> maybe the queen can find a quarterback. >> maybe she can at this point. >> the steven mnuchin hearing reconvening. hearing comments about gdp, growth, the dollar, and his roll in the financial crisis. could be heated. waiting part two. taking a quick break and "power lunch" will be right back. y ni. hayoup

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>> welcome to the second hour of power lunch, i'm brian sullivan. michelle is in washington, d.c. gearing up for the inauguration, and all the action until then on the way, two hours until stock markets' closing bell. this is what we're watching at this hour. trump's treasury secretary pick grilled on the hill, round two for steven moments away. lawmakers making another round of questions/comments. mnuchin defending his role during the financial crisis. we speak with one congressional leader at the hearing where he and fellow lawmakers is

impressed or satisfied with what they heard. this all as president-elect trump arrives in washington ahead of tomorrow's inauguration. melissa? >> let's go to phil lebeau for a news alert on tesla. >> cleared by the federal government in regards to the auto pilot investigation. remember, this has to do with an investigation that started in may after the death of a driver in florida. the vehicle on auto pilot, hit a semiturning in prompt of him on the highway, and when it came out last may, people said it's the end of auto pilot, shares will be under pressure. now they accountaconcluded no dd no recall. at t safety comes first and appreciate the thoroughness of the report and its conclusion. take a look at shares of tesla since last may, and while it's moved all over the place, it is up 5% since this crash which happened back on may 7th. guys, back to you.

>> yeah, and, fill, appropriately on the day where we are watching closely steven mnuchin confirmed by the senate, and an analyst on tesla mentioned the trump administration ties as a positive. the upgrade on tesla today. >> right. what's interesting there is that they talk about it, and the analyst, they talk about, look, there's a relationship at least building between musk and donald trump, and if you look at it from trump's perspective, he wants companies to add jobs in the united states. well, what's tesla doing between the factory and expansion at the plant, it's adding jobs. his belief is that that's a positive for tesla, and one reason why that stock was upgraded today. >> absolutely, phil, thanks. >> you bet. let's welcome in our fabulous biotech reporter with a news alert on set.

>> you remember the pricing of the epi pen, more than $608 as a list price for two pens. there was a competitor pulled from the market, we knew it would be coming to the market again this year from a manufacturer, but we learn today is that the list price of two of these is going to be $4500 on the list price, more than six times the list price of the branded epipen. they say no one pays for it, a lot of patient assistance programs in place, and commercially insured patience pay $0 copay out of pocket and provide free products, but at the same time, a will the of people raising eyebrows at the list price for two auto injectors. i spoke with the company today. they expect good commercial insurance coverage. interesting how it play out. >> you wonder two things.

number one, there was a competitor -- >> the same one. >> okay. this is the -- i know it got back and came back, and i was going to say at the time it was a little more expensive. >> we have that data to pull up. >> what's the one in pennsylvania? trying to create a competitor, based in pennsylvania. private for now. >> i don't know they are based there, but there's a company called impact laboratory, and last week, of course, we learned cvs partnered with them to go to 110 at pharmacies or less. >> justification on the part is basically, we have all the programs to make it affordable at kaleo and we have a right to list it at $4500 because nobody pays that. they talk about the list price nobody pays, and it was not so complicated, but these they took heat after the interview, and since then, spoke with her in san fransisco last week, but in

a way, this validated a little bit about what she was saying because you price it one way, a rebeat, channel, and all the other people get hands in there, and ultimately, why do you price it like this anyway? a system that complicated. >> this is what the drug companies say, it is this complicated. what we saw is there's a lot of pushback, including pharmacy benefits managers who negotiate drug discounts on employers say they do not have the key price and list price. keep it the same. there's an argument going on between different people in the health care system that is playing out. >> bottom line me here. who wants prices higher? the pbms mostly or drug companies mostly. it's not the consumers. >> well, you're right. the pharmacy managers don't want prices higher -- >> they make money when they do. >> that's what -- >> when prices go up.

>> that's what drug companies argue because they negotiate rebates and get a percentage, they get a little bit of the rebatings, higher the list price, the more money they make. that's the argument of the drug companies in the situations. >> you do wonder, we talked about trump as ceo, you wonder if there's an element of companies knowing they get hammered, so come in high, come in high, they come away with a win, lowered prices, but, really -- >> guys, done you think part of it ultimately everybody thinks, oh, it's the insurance company that pays for it, right? this is what it's design to do. make the insurance companies pay for it. they almost never pay that, so who cares. >> great point. i said who pays for it, is anyone stuck with this bill. the company said even insurance company will not pay $4500 because they get some kind of rebate for discounts, so what is this $4500 number, and will

anybody pay for it? exactly. >> thank you. >> we're monitoring the confirmation hearing, treasury secretary nominee for president-elect donald trump. we'll keep on top of that bringing you news, but in the meantime, senator richard shelby of alabama is here, the chairman of the senate banking committee, sir, good to have you here. so much of today's hearing focused on steven mnuchin's banking past, a role that became one west. did you hear anything that concerned you, and will he have trouble getting confirmed? >> i believe he'll be confirmed. he brings a lot of experience to the job. we -- i believe we have the votes to do this. we stick together. the sooner we put our nominees by the president-elect in place, better the country will be, i believe. sure this man has been in the

banking business, investment banking and others, but, my gosh, that could be a plus to him if he's going to want to serve america now rather than his investors, i believe that will be overall a good thing. i look forward to assuming nothing happens in the meantime to support him. people on the right are upset by what they heard today. he doesn't think the cfpb should go away, but a role for fannie and freddie. would not say there's a strong dollar policy, but do you see issues on those fronts which have traditionally been republican positions? >> well, some of those issues i would differ with him, like i would like to -- either expand or, of course, i'd like to repeal all the dodd-frapg, but to the expand the role of the cpp. if we're going to keep them, make a counsel there of five

people. i hope we can change all of that. the only game in town basically right now on horm morning mortgages. we have to come up with something, and i hope in the private sector we do this. i do not like government sponsored enterprises. i defer on the man with that. i think sometimes differences of opinion are healthy for the debate. >> on the overall issues we've heard over the last two days, he was asked about trade policy, and there's going to be the treasury secretary, when you look at the positions that donald trump took during the campaign continues to appear to support when it comes to his tweets, what we heard from ross yesterday, there could be a rock n' roll ride in the markets if they are aggressive when it comes to tariffs, restrictive trade policies. worried about that over the last

48 hours? >> well, i think we have to go with the basic premise. we have to be involved in trade. trade makes things happen. a lot of people believe, and i do at times that some of the trade agreements are lopsided. we've got to look at them, but that doesn't mean we're going to put a tariff on everything. what we have to promote trade, not stifle it. >> how do you feel about the border adjustment tax provision in the house gop plan taxes imports, but no tax on exports. it's been controversial. do you support it? >> i have not seen the details of it, but i'm interested in not just that, but i'm interested in overall tax reform, period, and see what the details are. we get into the weeds, i know the president has misgivings on it, but we have not seen the particulars yet. it's a little early, but a healthy debate, out in the open,

see what congress, how they feel about it and what we think it will do. >> should tax reform have been first, sir, instead of obamacare? it's being called a quagmire and tax reform would have been an easier win. >> could be a quagmire for some people, but, listen, the tax code is broken, made up of who gets a special provision, and we all get a sum of that, every person in the country, but on the other hand, i believe we can do better. when 5% of the people are paying what 70% or more of all the income tax, something's wrong in the country. when 50% of the people are paying nothing, something's wrong. >> what do you think about donald trump speaking about the dollar and steven mnuchin not taking the traditional strong dollar policy? >> donald trump did not run as a traditionalist. he ran as somebody who was going

to try to transform the country. try to make america great again, change america, and people like that overall. some people are concerned. always winners and losers in trade in economic policy, you name it. financial policy. i think this country can do better than what the status quo brought us. >> historically, an incoming president loses -- spoke about this with john harwood moments ago, one, sometimes two, people they like in the cabinet but do not pass confirmation hearings. donald trump is going to lose anybody in the process? is there anybody who is going to be eliminated or is he going to be a rare exception where everybody he wanted in the cabinet gets through? >> if the republicans stay together, when i hope they will, we will confirm every nominee. you never know what's going to happen up here. there's a lot of slips around this place. >> senator, thanks so much for joining us. >> thank you. >> we'll get back to the

hearing, senator shelby in the banking hearing. melissa? >> billionaire mark cuban tweeted moments ago about the confirmation hearing on capitol hill as treasury secretary saying, i actually think he would be for the job, and this, of course, you know, mark cuban has been known to be donald trump's most vocal critics but said on "halftime report" in december we have to wait and see what trump brings us when he actually assumes office. we want to give him the chance. he's open minded, apparently. >> all right. speaking of that hearing, it has begun again, and new jersey senator robert menendez is speaking. back to washington, d.c., testimony confirmation hearing of steven mnuchin. >> without objection, part of the record. >> thank you. what about one of your haven'ts admitting to robo signing 750 foreclosure documents a week without even reading or reviewing them. how is that considered making every effort to prevent foreclosures?

can you honestly say that your bank made every effort to keep families and seniors in their homes when they were robosigning one foreclosure document every three minutes? >> so, senator, yes, i can absolutely say that we made every effort, and, again, our programs were audited by the treasury, fcc, and you can message being a private equity person who bought a bank, we lived in a glass house constantly viewed by the regulators. the comment you're making, there was an industry issue, okay, which had nothing to do with loan modifications, which had to do around the processing of foreclosures. that was a procedure that was start started at mac, continued under fdic ownership, and in the beginning of the oip, okay, we unfortunately did not change procedures, as i said. the industry -- >> well --

>> it was solved. >> i'm not worried -- i'm only worried about what your direction at your bank, did you keep referring to entities. the office of supervision hit you with consent orders because you were putting homeowners on a fast track to foreclosure. that was part of the 750 foreclosures a month. you were also had an independent government audit of one west foreclosures in 2009 and 2010 that a lone identified more than 10,000 homeowners who were owed 8.5 million dollars in damages. among those memories, 54 incidents over the course of of two years where the bank violated the rights of active du duty, across the globe, under the civil members relief account. if you did all of that, how is that you feel you can honestly say here in sworn testimony your

company did everything. >> first of all, senator, and i preerpt t appreciate the issue. as i said before, we regret the extent we made one error, especially to the servicemen, and, yes, we had all of those reviewed, paid $8 million, many, many firms paid billions and billions of dollars, but we regret any issue there. what you referred to with the ots and it was one in the same. as i referenced in the testimony, we were one of 14 banks that signed consent. at the time we were urn the ots. it was later taken by the occ who took over the consent order, and we were there the only bank that actually completed that independent foreclosure review, and we are proud of that. >> the fact it was completed at the end of the day ultimately showed that your company took

people out of their homes and created consequences for them that they should not have had. i'm -- i'm not sure what's one to be proud of. do you know a woman named sylvia oliver? >> i do not. >> i didn't think so. she's from scottplain, new jersey, she's the sister of the immediate past speaker of the new jersey general assembly. she received a loan in 2008, and after hours being cut, could not pay the mortgage. she tried eight times for loan modifications, which i believe she would have qualified, every time your bank denied each and every one. she's been fighting to save her home for seven years. she nearly lost her home yesterday. she now has a 30 day reprieve. there's no guarantee she won't louis it next week. i look at her and, mr. chairman, i want the testimony of several

individuals who face these realities be included in the record at this time. >> without objection if they pertain to the record. >> they certainly pertain to the record, pertain to having been forecasted on and seeking loan modifications up successfully although they should have qualified for them. they are more than eligible for the record. in closing, i see this as an example of prooivatizing profit and socializing losses. in the financial crisis, and you friends were looking for stores to raid, and you found it, and with the government subsidizing risk, you engineered a highly lucrative equation that made billions of homeowners of seniors, minorities, military men and women. i have a problem understanding how does that create confidence in the secretary of the treasury nominee when you have to look out for every american.

when you have a chance to do that, incentive, i argue by the backstop the fdic gave you in $400 million you took from hamp, which you disparaged before, that was the drive. i need to be convinced it's going to be your drive now that you're the nominee secretary supposed to represent all americans. >> senator, i hope i have the opportunity to convince you going forward, and i apologize because i did not recognize the name, but now that you mentioned it to me, it's been postponed, and i don't know any of the specifics, but as a curtesy, cit did inform me that your office had requested an extension, and they did honor that, and give an extension to revisit that, and i'm not involved in cit anymore, but i encourage you to make sure you have, again, if there's complaints, there's a department within the bank that responds to this. as i said earlier, and any complaints that came through any government or regulatory

agencies were responded to carefully, and reviewed by the occ, and, again, i apologize to the extent there were any errors whatsoever that is something i'm very sorry for, but having said that, we took over a mortgage servicing business that was not part of what we were trying to build. it was a mess when we got there. we fixed it. we clean it up. to the extent we made ere lore rors or issues, we compensated people for that as part of the agreement we entered to the regulators, which we think is the right thing to do. >> senator carper. >> thank you. you introduced your dad, sitting there behind you. how old is your father? >> 83. >> 83. >> blessed to have him with you. >> thank you. i feel that way. >> he looks good for 83 is all i can say, and i'm in a position

to say that. [ inaudible ] [ laughter ] >> i'm glad you said that, that is true. my parents are both deceased, but what they said to my sister and me growing up over and over again, i don't know if your parents did that hoping it'd sink in, but figure out the right thing to do, not the easy thing to do, the right thing, just do it. treat other people the way we wanted to be treated, the golden rule. my dad was big on doing things well, doing everything well. if it is not perfect, make it better. my dad said, use common sense. he said that to me and my sister a lot. we must not have had any. can you just think of word of advice that your dad or mom had given you over the years that you could have used or should have used with respect to the foreclosures that you're facing in what you did, briefly. word of advice from them. >> well, again, first of all, thank you. i agree with those many things that you were told, and as i

mentioned, not only has my father had a big influence on me, but my mother, who passed away, and my grandmothers -- >> we listen to the confirmation hearings of treasurety secretary nominee. we'll monitor the hearings and bring you developments as they happen. meantime, railroad stocks soaring now, csx, look at this, up 18%. what's fuelling them higher? the story next on "power lunch," and as we break, check out the markets. we are at session lows, and the dow is down almost 100 points now. stay tuned. ng

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shares rising by 20%, and other railroads rallying. explaining the big move in lowball stocks, this is fascinating, dramatic tale. >> it is, dramatic, and potential to get much more dramatic as well. csp is surging to new high on reports it could be the target of two well-known names in the rail industry. hunter harrison and pauling and harson, a highly regarded railroader stepping down immediately as ceo role at canadian pacific, forfeiting $89 million in compensation to pursue opportunities involving other railroads. he says he's if final negotiations to today up with a approximaty fite, and they parted ways last year to start his own fund.

they raised a billion dollars, sold out of the stake last year and told there's not investment or involvement in the fun, but harrison turn around operations at pacific with that stock, doubling since 2012 taking the helm there, and analysts say a similar strategy could create tail wind for earnings there if harrison were to be a ceo or top management physician. it could also stir renewed talks between cp where the property jay becomes ceo of earnings call last night, he said consolidation will, quote, occur in the industry, and says that could happen possibly as soon as next year. now, mantle ridge and csx declined comment on this. if you look at shares of the rail stocks, csx, canadian pacific, and norfolk southern and yunion pacific surge on the

reports today. >> look down the road, you know, a year, two years down the line -- >> the rail. >> the railroad, do they tie up eventually? i mean, if they get their way, and mantle ridge is successful, is that sort of a possible outcome here? >> i think it's a possible outcome. you know, i was speaking to one person just a few minutes ago, it's a saga. first chapter, they come in, in the process, wager a approximaty fight, and then they turn things around. then they talk about mergers. >> harrison is a turn-around guy. >> very much so. >> he's no stranger to controversial departures from railroading companies. he loeeft to go to cp from cn. >> yes. >> i believe that was tied up in some legal -- noncompete type things, but he's -- extraordinarily good railroad

guy. >> in all respect -- >> other than ksu. upon pacific up 20%. kansas city southern -- >> other issues, though. >> huge mexico presence out there by themselves, and one wonders if there's value there and the mexico thread not what some think it is. >> potentially. they report tomorrow morning. real quickly, in terms of hunter harrison and cp, in two years he basically took the operating ratio, which is key metric for railroads, took that ratio from over 80% to below 60%. >> wow. >> that is a huge, huge improvement in a key metric for a railroad. >> no wonder why the stock is up. morgan, thank you. a reminder, we are monitoring confirmation hearings on capitol hill and watching this market. stocks hitting session lows, down triple digits right now, downtown to bob pasani at the nyse where, again, bob, we're

not internally talking about down 20,000 at this point. >> quite a ways. let's look what happened here. markets generally flat and slowly have drifted lower. we saw a little bit of a program put up the s&p here, a little bit of a sell program at 2:00. baskets of stocks for sale. it may be technically call, dropped below low levels from earlier in the morning at 2:00. that may have triggered it, but, brian, no particular macro event out there. w we're not seeing the dollar going or the ten year, but just drifting lower. i think a lot of this, and i've been saying this for days, we needed clarity from mr. mnuchin about the state of the tax cuts, state of infrastructure. the market wants that because that moves dials on earns. what heard today is not much from the topics. spent the first hour discussing other potential tax dodges, not

a lot of other progress made from tra since lunch. again, a little more clarity would be helpful here. there's the bank index here, and the reason i say there's not a lot of macro going on, take a look at ten year or you look at the dollar, and not a lot of movements overall here. again, i think this is a little inertia, a self-program, and a little disappointment there's not been more. back to you. >> bob, thank you very much. let's go back to the confirmation hearing. >> we have an income tax system and other countries do, and that's one of the things -- >> and, of course, the rest of the world uses consumption taxes, that is border adjusted. we use income taxes, income taxes are not border adjusted. that's drift to grow exports, so, and also, of course, does not reward savings, which is -- another area during the best of times, when ratios were not competitive of other countries. use more inacceptabilityives for savings, the other area we

talked about in the office that senator portman and i and others worked on, and that is to increase the opportunities for americans to save particularly retirement savings. i don't believe that's a partisan issue, and as we work for tax reform to make the tax code fairer and more competitive, i urge you to work with us on retirement savings and other savings initiatives that we make progress in a short period of time. >> looking forward to working with you. >> thank you. i apologize, senator stabenow should have been next. turning to you now. >> well, thank you very much, mr. chairman. mr. chairman, i thank you very much for allowing us to have an opportunity to fully ask questions and go around, really appreciate it and the way you are conducting the hearing. >> hopefully we only have two rounds. >> thank you, thank you for allowing that. mr. mnuchin, it's a physical marathon, endurance just in the

nomination hearings, so we appreciate your hanging in there as well. >> thank you. >> and a couple different things, first of all, following up on colleagues, speaking -- >> okay, we'll monitor the hearing for treasury secretary nomin nominee. a quick break here. we wanted to listen about corporate tax reform. they hinted at the border tax issue, he did not address it directly. we'll be right back. don't move here on "power lunch" here on cnbc. and

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welcome back to "power lunch," everybody, oil is closing for the day, and let's go to the cnbc energy desk. i guess oil is a retail product, isn't sure. used all around the world, ramifications in the global market, crude oil settling around the $51 and change mark several minutes ago of the we saw the trade in crude oil reverse after the department of energy's weekly inventory report showed a much larger than expected build in inventory this morning. the bigger stockpile pressuring the price of oil. you see it in the chart. crude gives back the gaining logged earlier on in the session after the international energy

agency data showed a cline in production last month. remember, they were going to do that. while imports fell, the domestic crude inventory built offset it. the data revealing oil refinery slowed production to 90.7% capacity, down from 93.6% last week. part of the reason for the story and something we expected. now the bigger surprise came from gasoline inventory, though, ballooning by 6 million barrels, three times what the market looked for and marks the highest level for this time of the year on record. gas prices actually fell more when we're looking at the rbob contract, by more than a percent off the lows. >> phil. >> tesla's stock up 14% this year, and it upgraded today. analysts who made the call why it could go up 25% from where it

is now. we're monitoring hearings on capitol hill, and "power" is back in two. heer speelhthte.clsr

back to the confirmation

hearing for steven mnuchin where he's questioned by senator brown of ohio. >> first month on the job -- >> i don't want to make the commitment, but happy to work with the office -- >> you don't want to make a commitment to the first month or that you'll put a comprehensive plan to address global overcapacity? >> i'll make the commitment to sit down with the office and work on this issue and then figure out the time frame and whether we should be making it public, but i understand the issue, the president-elect is concerned about these issues and we'll work with you on this. >> thank you. i want to follow up on you said you left goldman 15 years ago, correct? >> i did, 2002. >> you're aware, i think, that during part of the time you were at goldman, one of two firms, not saying you worked on this personally, but gotman was one of two managing the portfolio, and i think you're aware while goldman was a manager of the

funds of central states, the plan lost 40% of value more than double the average losses for a defined pension benefit plan during that period due in part to losses in, part due to goldman sacks, i call it mismanagement of the plan, the central state's pension fund, and said it was in distress. there's a certain irony if confirmed, you're a member of the board as you know, and responsible in many ways for impacting pensions of more than 400,000 working families. you, i assume, don't know who butch and rita louis are, constituents of mine, and senator portman's, he was a trucker for 40 years, a temperature steer, led the south retirement committee's fight against cuts. he passed away on new year's eve due to a stroke doctors attributed at least in part due to the stress faced over proposed pension cuts. he lives in -- she lives in

southwest ohio, picking up this fight, losing almost her entire pension, so i know you said you are not for finding a way to make pensions whole, but understand that this congress bailed out wall street bank's including goldman, and i hope you change your mind on making pensions hold. >> and i appreciate the significance of pension issue, and i can assure you i had nothing to do with that issue at goldman sacks. >> i know that, but i -- >> that doesn't make rita feel better. >> i completely understand that, senator, i appreciate that. >> i just -- i just know there's an ideological antipathy in the body from the more conservative members to help the wall street banks but not workers like rita's husband. >> i don't know anybody on -- okay, mr. chairman, i'll finish my comments.

i -- one more point i wanted to make. last year, i worked with some manufacturers concerned that a metals warehouse own by your former employer, goldman, was driving up aluminum costs. the fed proposed rules to reign in merchant banking authority say we have done hearings on that. will you make a priority to help the fed finish merchant banking rules and address authorities for the unfair practices. >> absolutely. i'm happy to look into that and work on that. >> thank you. i understand treasury has joint rule making authority in merchant banking. you have a role. they have a role. i hope you exercise it. >> thank you. >> thank you. >> one of the key issues we're waiting for it the issue of corporate tax reform and specifically, border adjustment tax, part of the house plan.

he was asked about that earlier sort of by senator wyden. >> there was a tax that the president-elect is doing a fair amount of tweeting about. could you tell the american people what products would be subject to this tax, and i'm not interested now in all the complicated theories about the dollar. i think it's a question worth talking about, but can americans -- they want to know what products would be subject to it. working class people want to know is gas part of this? i mean, give me your responses. are there any products exempt? >> well, first of all, thank you, and i think that's an important issue, and i think that this week the president-elect came out and suggested that he had concerns about the house gop border adjusted tax, and part of it is

the complexities around it. >> i'm not talking about what the house is doing with border adjustment. i want to hear about the border tax the president has been talking about. >> all right. so we heard him echo what we heard from donald trump, but there are concerns and complications about border adjustment. there's also a little bit of con flags there by senator wyden about what's going on within the house. the boarder adjustment tax, the border tax as written by the house, essentially the same thing, guys. i play that not to criticize senatorwide wyden, but highligh how confusing the whole thing is and how inprecise the terminology is we highlighted on this show so much when it comes to the dramatic change that the house is considering for corporate tax reform. >> yeah. it was not exactly clear what senator wyden was pointing to, whether he was talking about tariffs that apply on goods that come in from other countries or

that border adjustment that gives basically a credit or doesn't count sales that -- >> exactly. >> that american companies make overseas, but simultaneously doesn't allow companies to deduct cost of imported goods that they then sell. or use in their as a cost of doing business. >> i would give senator wyden a complement, though, at least he addressed an issue impacting us going forward. heretofore, comments have been on goldman sachs and aluminum warehouse and a mutual fund they won that he had nothing to do with. i'm not saying they are not viable things, but the american public zephyrs to know what he does if confirmed rather than things 15 years ago. >> there's been a lot of that. not just here, but in the hearings yesterday. focus on representative price's stock trades and so on and so forth. >> along the lines of the theme

of the election, right? it's -- >> a character issue, too, i understand that. >> sure. not to diminish these things. >> at least wyden addressed something that may happen down the road -- >> agreed, yes. >> rather than something that happened in the clinton administration. >> something investors want to hear more on, definitely. all right, of course, continuing monitoring the hearings, but in the meantime, morgan stanley has a big call on tesla motors upgrading to outperform, now up to 305. the man behind the call at morgan stanley, adam, great to have you with us. thanks for the time, appreciate it. >> thanks. >> you had the rating on tesla, a note out in late november. one of the major reasons behind this upgrade according to the note is this esc and the gig factory tour. what did you see or hear from the two events that made you much more bullish on your forecast of the model 3? >> sure. there's been a few events that

tra transpyred since the november report you referenced, melissa. we spent time with management as many people in the market did outside of reno, nevada at the factory tour, and we hosted a similar pose yum and summit at cps with a range of public and private companies, oems, those involved sharing thought, and during that time with tesla management and surrounding ecosystem, we were able to have a bit more confidence in the ability, we think, to launch a bit sooner than we had. we previously thought the model 3 launched at the end of 2018 or full six quarters later than the company's target, and at this point, especially considering the company themselves were reiterated again and again that they are on track, we did not have enough evidence to, let's say, invalidate that kmecommento we dialled back conservativeness a bit. we have a soft launch at the end of the year, but numbers for

2018 are about 65% below management's half a million unit target. >> less skeptical. >> less skeptical characterization. >> all right. another point to know the highs potentially to the trump administration, you made a good point tesla employs 20,000 in the united states. a lot of the other companies in the coverage universe are tweaked by the president elect because of moving jobs overseas and producing cars in mexico, et cetera. how much of that linked to the president-elect is behind this upgrade? >> well, listen, it's an important change. we're not able to quantify what that is worth, but our -- right after the election, it was difficult for us to spend trump victory positively for folks involved in clean tech. there was just not enough information and facts how it's tough to spin positively, particularly given the

administration's stance on fossil fuels, et cetera. during the time there was important developments, of course, including the one-on-one with mr. musk and the president-elect, and then also the ceo of tesla being a special strategic adviser to the administration, to the president, and it started, i think, to change perceptions that, wow, we have 20 -- i believe the number's 25,000 jobs in the united states, melissa. >> okay. >> that this company is arguably a -- at the epicenter of high-tech manufacturing jobs in this country, and that come biened with the strategic, and even i argue almoelements of national security, department of defense, spacex as well, relations there, it struck us as they have quite overlapping -- i don't want to say agendas, but overlapping interests of creating, preserving, and

protecting job creation in the country. >> right. ad adam, thanks for the time. a busy day, as you can imagine. >> thank you. >> with the upgrade on tesla. >> do not lose sight of the fact nasdaq 100 hit an 100 hitting a high today. trading tech and trading nation next. stuma you t.atvivintan50el ier dia it

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the nasdaq 100 rising to a new record high today. the question is not what's happened, it's what will happen. so what is ahead for the big name technology stock. let us ask our trading nation team. matt maley and boris. it's been a pretty good run, matt. where do you see it headed? >> it is getting a little over bought on a near-term basis. i wouldn't be surprised if it did pull back and i wouldn't be chasing it. it has broken out. dow and s&p in a sideways trading. sorry, the nasdaq represented by the qqq has broken out to the up side. it's broken out above its trend line going back to 2015. that's also the upper line of what could be looked at as an

ascending try angle. so the gates bear the potential of that formation as well. it looks great. i'd want to buy it on weakness. >> you're not chasing it up here, if it falls you would be interested. the boris, do you feel that way? >> i do. i think the single most important thing about tech is our most important currency post industrial america is our attention span. if you think about it, tech controls all of our attention almost 24 hours a day. more importantly, alphabet, facebook, amazon, all of those companies command all of their attention in their particular domains. their margins are fat and they control more and more of our life. you have to be bullish tech as you go forward. >> you're not a buyer, i want to be clear, boris? if it falls, then you're interested? >> i am happy to put a toe in the water because i don't know if it's going to pull back strongly. i think it's a long-term good hold so you have to scale in bias it goes. can't try to time this. >> matt maley, patriots beat the steelers? you're guaranteeing it? >> guaranteeing it.

>> boris, thank you both very much. guys,s more trading nation. head to our website trading nation.cnbc.com. "power lunch" is back in two minutes. and now the latest from trading nation.cnbc.com and a word from our sponsor. eppi cash bon

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senator claire mccass kill, democrat from missouri questioning steven mnuchin now about obamacare. >> again, i think we're going to look at tax reform as overall in what it does and no different than when we -- when obamacare was put in it was a tax hike on those people. >> people who made over $200,000 a year. >> yes. >> i mean, most of it was on people who make more than a million a year. so the answer is not one dime of the tax cut that the congress -- the republican congress is about to do on the repeal of obamacare will go to one american who makes less than $200,000 a year. finally, let me talk about

pensions. you supported the bank bailout, so did i. you support the stimulus, so did i. we talked about this in my office. i think we both agreed it was necessary in light of what our country was facing. but to the pensions. you have an incredibly important role in the stability of guaranteed pensions in this country in the new job that you seek. i have 32,000 people in my state that worked hard for decades, most of them driving trucks, and they planned their lives around their pensions. my question to you, we can find the bailout for the banks and we can provide stimulus, we can do an awful lot of things around here to help a lot of people who have a lot of money. will you commit to meet with

some of the truck drivers in my state so they can look you in the eye and explain to you the guarantee of their pension -- you know, your new boss did an amazing job connecting with people like these missourians in the country. i want to hear from you that you are not going to leave these people behind. >> what i will say is i will commit to meet with them and i will commit to work with your office on us figuring out what is an appropriate bipartisan solution to this issue that i appreciate the pension issue we've talked about several times today is a significant issue. >> thank you, mr. mnuchin. >> all right. senator casin. >> thanks, mr. chairman. mr. mnuchin, i wanted to start with a question you've no doubt come across in your preparations. we're going to break in for a moment here as we continue the coverage of the confirmation hearings of ste