the biggest, what are some of your proposals? what are you working on? you have got a lot of smart people working on this for the small businesses and so forth? because i for one would not want to support a big reduction just for the biggest of the biggest and do nothing for our basic base and job creation, small and medium sized businesses. are you working in that area? >> yes, thank you senator, we share your concerns. and i have referred to this in the plan as a business rate as opposed to a corporate rate. we need to figure out and we have a large team working on how we would deal with pass throughs. i also just want to emphasize that we are committed to make sure that rich people do not use pass throughs as a loophole to pay lower rates. so we do want small and medium sized businesses to have the benefit of lower rates. but we will make sure that, you know, not every single accountant, lawyer, and doctor

who should be paying higher personal rates sets up an llc or a pass through to get around the system. >> but, again, this is the backbone off your economy, is it not? >> it is. and we are working hard on how we create growth in that part of the economy. >> i don't know to put you on a calendar right now, but as you flesh this out and you get into the weeds on this, i hope you will be briefing us. i know the finance committee has jurisdiction of this, but we have more than a passing interest in all of it? >> absolutely. we will be more than happy to come back and brief you and your staff on this. >> thank you very much. >> thank you senator shelby. senator hide camp. >> thank you mr. chairman. welcome mr. secretary, your first appearance in front of this committee. i couldn't agree with you more. one of the demands of the american public and the responsibility of washington, d.c. is to encourage economic growth. that can solve a lot of our

problems as we go forward. so i want to talk a little bit about the xm bank. not a big surprise to a lot of people on this committee that i will be raising it. in 2014, xm's last fully functioning year, the bank supported 164,000 jobs across the country. that's compared to about 52,000 jobs in 2016. that's because we didn't have a quorum. in 2015 alone three chinese expert credit agencies financed a total of $500 billion. the potential there is that those could have been markets that were accessing but were not getting access to today. do you believe that the xm bank is a critical tool for enabling american manufacturing competitiveness? >> i do. i have actually spent a lot of time looking at this. and i am concerned that without more members on it they can only make loans up to $10 million.

i think that the board should obviously look at credit risk and everything else, but the xm bank is an important tool and the president has proposed adding new members. >> one of the great fears that we have is that suggestion of the leadership of the xm bank going to former representative scott garrett, who really is not just a critic of the bank and a reformer. i think he is someone that we are very concerned would not advance the interest of the bank and does not believe in the mission of the bank, not just reforming the bank. do i have your commitment to work on a bipartisan basis to forward leadership in the bank that would in fact make sure that the bank is fully functioning and that these credits are actually come before the board for up or down approval? >> i'm sorry, i just want to make sure i understood your question. is it on -- >> my question is, if in fact

scott garrett's name is advanced to lead the bank as chairman, we are deeply concerned that many of these credits that are, you know, $30 billion worth of manufacturing today will not even see the light of day because the head of the bank has the ability to set the agenda for the board. so it's very important that, you know, i don't -- quite honestly don't care if mr. garrett is on the board but i do care if he is setting the agenda for the xm bank. so my commitment to you -- or my question to you is are you willing to work on a bipartisan basis so we can move these nominees as expeditiously as possible without getting into the weeds on someone that many of us suspect might be a sabture of the bank. >> i can't comment on his specific situation. he was proposed by the president. i would say i can assure you that the president is interested

in making sure that the xm bank can lend. we have had lots of business people come in and talk about this. it is something that director cohn and i are deeply involved in. >> i would tell you that i raised this issue as early as december with the president. and was grateful to hear that he was supporting the bank. but as we move forward, we are already in may looking to june. we don't have nominees yet. and the nominees that have been proposed i think cause great hesitation on our part. and so we'll leave it there. i wrote you a letter may 11th. should have received it by now -- >> we will continue to monitor the testimony, first testimony in congress fortressry secretary steven mnuchin taking questions on a range of topics, from the xm bank to tax reform, financial

regulation. elon moi has been standing by. didn't break a ton of new ground, what did you hear that moved the kneeling? >> it's important to realize he is testifying before the senate banking committee. a lot of the discussion was financial regulatory reform, there was a lot of discussion about fsoc and which institution should be designated as sfis and how you dedesignate a institution as being important to the system. he also talked about the need of transparentsy in fsoc. there were a few questions on tax. internet sales tax and whether small businesses should collect that. steven mnuchin did say he shared the senator's concerns about that tax. and you also just heard an exchange with one senator over the pass-through rate and whether or not small businesses should be taxed at the same rate as large corporations. now the white house's plan does include a 15% tax rate for

businesses of all types. and secretary mnuchin reiterated that they do plan to try to find a way to ensure that rich people don't take advantage of that as a potential loophole but he gave new further details how they plan the do that. >> thank you for summarizing some of what we heard from the treasury second. we will continue to watch that, bring you the headlines. back here on squawk alley with jon fortt and johnson tolly. watching the market having a come back. some of that is the tech, that got battered yesterday. apple up by 50 points along with goldman sachs. >> cisco's guidance was disappointing. can't help but draw a line on what internet spending was. cisco adding a wrinkles. one was federal spending. and the government line. another spending in mexico, specifically pointing to

economic investment uncertainty in mexico as hitting them. now you have got to look at president trump's policies there and the stories that we have heard about investment kind of freezing as we wait on clarity on nafta. we are starting to see little movements on that. in the meantime, perhaps some businesses, tech businesses feeling the heat. >> another reminder about how the public sector is such a big business for cisco specifically. i do see the semiconductors hard hit yesterday up about a pars and a half today. a lot of big down moves bounc g bouncing. on the s&p we've redwayned a fifth of the yesterday's losses right now. tentative at the start but it has built. >> l brands is surging 4% on the back of what was a better than feared quarter, which has become a common thread. walmart coming in better than expected. i think it was an 11th straight quarterly gain for same store sales, 1% or higher. >> ten year high. >> children's place.

>> up 3%. seems like in every specialty retail category you have one winner. that's children's place. >> let's get back to capitol hill. test resect mnuchin taking questions from the senate banking committee. >> this is another area that i'm more familiar with than when i first came during my hearings. we have had several internal meetings where i have been briefed on this. we have actually heard -- we've reached out to industry. and we are aware of there is people who support it and people who don't support it. the agreement specifically, this is something we do in conjunction with the u.s. trade representative. now that the trade representative has been confirmed we will be close to making a decision but we would be more than happy to reach out to you and hear your views before we make that final decision. >> thank you. i just think some of the questions which they have asked really do deserve to be able -- we should be able to get an answer to them one way or another before we actually --

>> i can assure you we will. this is something i am familiar with. >> all right. thank you mr. secretary. also just in following up a little bit on senator shelby's discussion in terms of the tax rates and so forth and the fact that a lot of our job creators are not c corps, they are s corp.s. we have a lot of discussion about tax reform. within a 74,000 page tax bill, some of those phages giveth and some taketh away. every time we talk about simple fix we can talk about people that get hurt and people that receive an advantage. when we start talking about doing, there are going to be individuals who will lobby hard about not allowing some of the reductions to be removed even if there is a lower tax rate once they have done the calculation in their own situation. while we want to see a simple

fix, and i think a lot of people out there would love to see that happen, there is also a concern that as the president would suggest it is truly time to prime the pump similar to the way it occurred during the kennedy administration and during what was a successful reagan administration where we refueled the economy. part of it has to be regulatory reform. the second part is allowing more dollars to remain with individuals so they can reinvest back into businesses as well. when we get right down to it, are we stuck with only a program which is revenue neutral, meaning that we basically are going to take away as much as we give back? or could we actually consider some sort of a down payment, perhaps, on a tax plan in which we allow for a reduction in actual taxes collected so that that can be reinvested back into the economy is, in a small nature, perhaps as in a bill i'm suggesting and i will be introducing in which we take our take our basic tax rate from

those individuals at 10 down to 8, from 15 to 13, from 25 to 23, from 302028, from 35 to 33, from 39 to to 37. it is not a huge expend. yet it may impact those at the bottom a little bit more than those at the top. and it will be a down payment to americans clearly giving them resources they can invest back into businesses and the economy. >> the president and i fubdly belief that tax reform is critical to growing the economy and getting back to sustained economic growth. we look forward to working with you. i think different people will have different views as to under what scenarios it should be revenue neutral. as we've heard today some people belief in dynamic. some people believe in static. the president does believe that we need to create economic growth and that we are willing to have lower tax revenues in the short-term if that will

create economic growth. i think as i have said, the difference between 2% and 3% gdp is roughly $2 trillion over a ten-year period. it is a lot of money and economic growth will help us deal with a lot of other complicated economic issues we have. >> thank you mr. secretary. thank you mr. chairman. >> thank you senator. senator van holland. >> thank you mr. chairman. thank you secretary for your service. recently i sent you a letter together with many of my colleagues on this committee objecting to your decision to put keith norega in charge at the occ by using a maneuver that evaded senate confirmation. as you well know the occ serves as the chief banking regulator, overseeing over 2,000 banks. and mr. norega has spent most of his career working very closely to protect the interests of

those banks. i appreciate the letter i got back yesterday. it raised some additional questions. and i'm going to be sending you another letter to ask you to respond to the following questions. why were you willing to install him as head of the occ before his ethics prevetting has actually been certified? so that the american public can know whether or not conflicts exist now that he is in charge, at least for now, of regulating 2,000 banks. and second, your letter indicates that his special temporary 130 day status allows him to avoid president trump's ethics pledge. i want to know whether that would allow him to immediately go leave the occ and lobby and work on behalf of big banks? i'm also interested in whether all this means all this be presenting a nomity me in the next 230 130 days. i'm going to send you a letter to ask for your fom up on that. i want to ask you a question about tax policy. and i agree with my colleagues who have said that if we are

going to do tax reform, and i think tax reform can work, can be an important step, that we should focus on middle incomes relief and not another round of tax breaks for the very wealthy and special interests n. fact, mr. secretary, last november you agreed with that statement. and i quote what you said in november, any reduction we have in upper income tax will be offset by less deductions so there will be no absolute tax cut for the upper class. that's what you said. now, senators reed and tester have asked you questions about the tax reform plan that you are thinking of submitting or will be submitting. i have a question related to a tax cut plan that's already in progress that you and president trump have strongly endorsed. and that's the house health care plan which according to the congressional budget office has

$900 billion in tax cuts, including $270 billion in tax cuts that go to higher income families. and the analysis of that tax cut is that millionaires will get on average $50,000 a year in tax cuts. and that's because what we did in the affordable care act is we applied capital gains in net income taxes, medicare taxes on very high income individuals on their investment income so they could help shoulder their share of the medicare trust fund. that totally violates, totally violates the standard you set forward in november, doesn't it? >> allow me just first -- >> it is a really yes or no question, secretary. >> no, i want -- the first question you asked i wanted to respond to, which was on the controller of the currency at the occ. yes, it is our intention. we actually have someone who the president has approved that's

going through the fbi vetting process. i think as you know unfortunately with all the candidates this is a time consuming process. but we do hope that there will be somebody who is cleared and somebody who will go through a senate confirmation process. so this was in no way an attempt to put someone in who wouldn't be going through. this is someone who is in on an acting basis. on your second comment, i have been only partially involved in the health care. that's not really in my priority area of responsibility. my comments are really more focused on tax reform. and yes, the president's intent is that there is middle income tax cut. and that is our major folk news mr. secretary, my question was, it is a fact that the health care bill, so-called health care bill that passed the house has $900 billion in tax cuts. combined with almost $900

billion in cuts to medicare. a huge pillar of this bill is tax cuts. isn't it that the tax cuts flatly contradicts your test that any reduction we have in income taxes will be offset by less deductions? so there will be no absolute tax cut for the upper class? isn't it a tax cut for millionaires. yes or no. >> again, my comments were based on contacts reform. >> this bill is a tax policy. mr. chairman, what's been interesting about this health care debate is you have a major tax change mask raiding under the cover ever health care. why is there a big tax cut in the health care bill? you are the secretary of the treasury. you deal with tax policy? >> again, i think the idea was that that tax was hurting

investment and jobs in this country and that, again, it was part of the health care repeal. so, yes, factually, that tax will help people who are investing money back into the economy and will create jobs. >> all right mr. chairman, it flatly contradicts your statement of no absolute tax cuts for the upper class. it is a flat contradiction. >> senator -- >> thank you, chair. mr. secretary, thank you for being here. >> thank you. >> i appreciate you being willing to step up and do this. it's nice to have a private sector guy in here trying to figure this out. i want to go in the debt and the portfolio. we have got about $20 trillion of debt all in. that's about a third of all sovereign debt in the world. 200 total debt. $200 trillion of total debt in the world. one out of every three government debt dollars that are out there are ours. we have got also the largest fed balance sheet in history.

the question is, during this period of low interest rates, about a little over 50%, i think, are three years or less in maturity. while the uk has about 48% of their bond portfolio is 20 years or longer. so my question is, is this something that you guys are taking a look at? do you plan to go a little longer while interest rates are still in somewhat of a low environment? >> it is. it's something i have talked about. we are studying ultralong bonds, which would be 50-year bonds or even longer. we have been working with the treasury borrowing committee, which is outsiders to advise us on what the market for that is. it's something that we'll consider as we look at debt management. no decision has been made. and we are seeking guidance as to the demand. >> all right. thank you. let's move to basil three. can we talk about that? >> we can. >> it's part of your job, as i

understand it. looks to me we are unilaterally way ahead of our other signatory partners in bass ill three. looks to me for small banks, community banks, regional banks they are hampered by the cost of compliance and also by the reserve requirement. is there any attempt in your future priorities to look at what we are doing regarding our future commitments to basil three and what we can do no get the other partners in basil three to line up and at least catch up with us in terms of the commitment of safety for banks? >> there is. and i have had conversations most recently when i was at the g7 with other board governors and other finance ministers about basil three. it's something we will be looking at as part of president's executive order. >> no decisions taken yet? >> no, no decisions have been taken. and i think as you know, chair

woman yellen -- the fed is the one who tech clikly participates in bass ill but it is something in a we are looking at. >> i met with her this week and talked about that and talked about the fact that we have got $6 trillion of liquidity that's not at work in the economy tonight between the russel liquid it sheets which are the strongest ever, a few trillion dollars in the bank balance sheets because of this capital requirement. and also unpaid u.s. pay troit profits. >> let me move on. capital is one that is part of our future in terms of getting the economy moving again. looks to me that the cbo said 1% of gdp is $3 trillion over a decade in terms of federal impact on the federal budget. yet we tend to talk in the senate about spending cuts or tax increases.

it is a bilateral conversation. yet growth really is rarely talked about because it is an esoteric term here in the senate. i know that's job one for you guys. can you talk about how to balance those, and relative to the 800 pound gorilla in the room relative to our deficit responding and that is mandatory expenses and how the president and the administration sees fiscal policy now marrying up with the monetary policy of our future? >> well, let me just comment. you did talk about repay treeation. that is something we are looking at as part of tax reform. because there are literally trillions of dollars sitting offshort. it's not a surprise what the highest corporate tax rate worldwide taxation and this concept of defeveral, why would u.s. kpts bring money back? as part of tax reform we hope there are literally trillions of dollars that come back. as it relates to the other economic issues, we look forward

to continuing to talk to you about them. >> the corporate tax rate also puts u.s. companies at risk for foreign companies who have liquidity who can come in and make an acquisition of a u.s. company and use the tax arbitrage to basically pay for that acquisition, can they not. >> they can indeed. and i hear that every day as i meet with business leaders, reminding me of that, particularly u.s. companies who feel they are at rick of getting taken over and at risk of having the jobs moved outside of the united states. we have an uncompetitive system that we need to fix. i would also just comment, there are several economic reports that over 70% of the corporate tax burden is actually born by the workers. and for far too long workers in this country have not had wage increases. that's something that we clearly saw when we met with hundreds of business leaders across the country, and something we are focused on. >> thank you for that, thank you

mr. chairman. >> thank you, senator warner. >> thank you chairman. secretary. >> nice to see you. >> good to see you again. i don't want to belabor the point that senator van holland was making but i would add beyond the fact that the health care legislation which i strongly oppose offed a massive tax cut for folks like you and me, it also, i say this as a former governor is really just a transfer of obligation from the federal government which used to share in the medicaid responsibility to the states. it is an $830 billion transfer of responsibility back to the states. now the states can cut their medicaid or they can end up resulting in dramatic tax increases to continue to pay for that medicaid, which will slow the kind of growth that senator purdue and i would like to see. i hope -- i know today is tax reform, but the health care debate is going to influence how

many of us approach the tax reform debate. because when it comes to repatriation and other measures i want to work with you. we have got to do it in a way that is at least deficit neutral and doesn't fall upon something that frankly doesn't do the best for health care, disproportionately benefits folks like you and me is candidly is something that is just a transfer of responsibility to the states. i want to move to other topics in my time. one is, as you are aware, i'm up to my eye balls in the issue around the russia investigation. and it is i have said repeatedly, maybe the most important thing i ever do in public life. senator burr and i have asked the treasury department for cooperation from the finsen division on getting appropriate documents that will be part of our investigation. i'm happy to see that there

were -- we received some of those documents yesterday, and we are reviewing them. my understanding the kind of how we query that big do it is going to require some collaboration. is i just would like to ask you at this hearing that you -- that we will have your commitment, your personal commitment, that you will continue to work with this bipartisan committee and bipartisan investigation in a way so that we can get to the bottom of it and get the facts out to the american public? >> yes, you have my assurance. and i did meet with my general counsel and review and make sure we were being responsive to you on that. >> i appreciate that because this is an area of enormous interest in this particular area in terms of in a sense following the money is something that's terribly important. so i appreciate that and i'll try to hold you to it. i want to actually -- i know -- i think somebody else raised this issue but i want to take you through at least a hypothetical in terms of the kind of orderly liquidation authority in title two of

dodd/frank. title two, which was my good friend senator corker and i spent a lot of time on it the one part of dodd/frank that actually got 80 votes. so the hypothetical is this, if we have a large trillion dollar plus cfi ins shoogs headquartersed in the united states and operating across the world with multiple sib sid years, if i runs into a credit crunch and the rest of the financial industry stops doing business with this cfi, and it therefore fails, in order to have an orderly failure and wind down, would you agree that shareholders need to be wiped out in that cfi institution? >> again, it's hard to respond to a hypothetical situation. >> but the normal course would be if the institution got into trouble and we don't want to have a taxpayer bail out, you would want to have first of all the shareholders wiped out, right? >> again, let me comment that it's hard to comment on a

hypothetical. >> a large institution is fail. i would think you would want, based upon earlier comments and everybody else's comments, you would want the shareholders wiped out, want the creditors to take some losses, you you would want the management fired? >> i would expect that shareholders would be wiped out before the government -- >> right. >> i'm only saying it's a hypothetical situation, there could be situations, okay, wherefore various regulatory reasons that title one and title two may not be appropriate. >> i guess what i'm -- what i believe is that if you wipe out the shareholders wipe out the management, end up having the creditors take the loss and you have still got a liquidity issue you need some back stop there. and i believe that while not perfect by any means the orderly liquidation process we set up in title two makes the most sense. i know my time is running out

here, but back when we had your confirmation we talked about this. i referenced the fact in a the national bankruptcy conference, which is composed of bankruptcy judges and lawyers believes quote orderly liquidation authority under title two should continue to be available even if the bankruptcy code is amended. i just hope that as you go through this process -- i know you are reviewing title two, if there are ways to improve but some folks who are characterizing title two as a bailout, i think are -- frankly it's not accurate. and there is a recruitment clause, as you know, for any of that liquidity that may be needed in the short term. thank you. i know we are going to have more conversation on this. but i wanted to at least put this out for further -- >> yes, and thank you. let me just assure you, we have not reached any conclusions on this. so this is something we are looking at. we haven't reached a conclusion. and i do share your concern and concern of other senators that have expressed the currency

bankruptcy code does not work for financial institutions. and liquidity is a serious concern as to even if we went through a bankruptcy process. i look forward to continuing to work with you on this. >> thank you. >> senator kennedy. >> thank you mr. chairman. good morning, mr. secretary. for your benefit and mine i'm going to ask you to encaps laid your answers within 30 seconds if you could. we can cover more ground. a few months ago the chair woman of the federal reserve was with us. she was asked what if anything the community banks and credit unions defined as less than $10 billion in assets did wrong in 2008. and she said, nothing. do you agree with that? >> i do. >> would you support a bill that would eliminate community banks

and credit unions defined as less than $20 billion in assets from supervisor under dodd/frank? >> that is likely going to be one of the recommendations that we make when we come out with the report. >> because if you do that, it's not as if the community institutions aren't going to still be regulated. is that not accurate? >> that is correct. they would be regulated by their primary regulator, which would make sense. >> okay. do you we still have financial institutions in america that are too big to fail? >> i do not believe that anything is too big to fail. some of them may be too big to succeed. >> do we still have financial institutions in america that are so big that if they did fail, it would have a substantial represehensible reprehensible, if you will, impact on the american economy? >> it could. >> do you think dodd/frank has eliminated that risk? >> again, i would just make the

comment that it's very fact specific as opposed to being hypothetical. >> okay. if those financial institutions that i just referenced had more capital, would that help them? >> i believe right now that the large financial institutions actually have plenty of capital. >> but if they had more, it would make them safer, wouldn't it? >> more is obviously always better than less. but the question is, is more is stopping them from lending, that's concerning. >> uh-huh, okay. my question is not meant to suggest my thinking about this. i honestly want your opinion, what do you think about glass steagall? >> we do not support a separation of banks from investment banks. we think that that would have a very significant problem on the financial markets, on the economy, on liquidity, and we think that there is proper

things that potentially we could look at around regulation but we do not support a separation of banks and investment banks. >> okay. why is that protectivity growth so low in your opinion, in our economy? >> i think that's a complicated question that is going to take more than 30 seconds. >> you have got a full 30 seconds. >> i will be abhappy to come ba and talk to you about it. >> the cliff notes version? >> i think it is a multifactor issue. it is a combination of regulatory issues. it is a combination of job training issues. it is a combination of tax issues. i think it's a lot of issues that leading to lower productivity. >> if we could increase productivity growth from 1% to what i think is normal, 2%, wages you had at to go up, right? >> that's true, and we would create huge growth in gdp.

>> okay. just -- once again, this is a question, not a suggestion. do you think it's possible to do legislation to insent businesses to do more profit sharing so that it is a win/win? the idea being that it would -- it would increase profits for the entity as well as incent workers to work harder and be more productive and therefore make their wages go up? >> i think there has been very successful scenarios of companies with profit sharing. but i support leaving that to private industry to decide what's best. i don't support legislation for that. >> okay. i've got 30 seconds. could you tell me why gdp growth is so anemic? >> you know, i listened to a lot of economists tell me why we're in a secular situation, and give

me all the reasons. i have repeatedly said that may be the case, but we are going to do everything, i think fundamentally we need to grow gdp. and our focus is a combination of tax reform, regulatory relief, and renegotiating trade agreements, that will create economic -- sustained economic growth. >> thank you mr. chairman. thank you mr. secretary. >> thank you. senator warren. >> thank you. so i want to go back to your remarks about glass steagall. as you know the original glass steagall was put in place to divide commercial banks and investment banks. the law was repealed in 1999 which created the too big to fail banks like citi group and jp morgan chase that got so large. since then, there have been many proposals including my own bipartisan bill with senators mccain, can't well and cain for a 21st century glass steagall that would break up the banks and modernize the wall between

commercial banking and investment banking. now i want to look at the history of this. the president and this administration have said repeatedly that they support a 21st century glass steagall. it was in the republican party platform. donald trump said it specifically a few weeks before the election. you said, quote, we need a 21st century glass steagall at your confirmation hearing. and now you have just said exactly the opposite. you know n the past few months, you and the president have had a number of meetings with big banks ceos and lobbyists, is that the reason for reversal on glass steagall? >> no, not at all. there wasn't a reversal. >> that wasn't a reversal. >> let me explain. the republican platform did have glass steagall. we during the campaign and i had the opportunity to work with the president on this specifically came out and said we do support

a 21est is entree glass steagall. >> yes. >> which means we think there are aspects of it we think may make sense. we never said we support a full separation of banks and investment banks. >> i'm sorry. let me stop you there. >> you are not letting me finish. >> i'm not. because i really have to understand what you have just said. there are aspects of glass steagall that you support, but not breaking up the banks and separating commercial banking from investment banking? what do you think glass steagall was if that's not right at the heart of it? >> again, i'm well aware of what glass steagall was. as you may know, the original concern about glass steagall was about conflicts not about credit risk. if we had supported a full glass steagall, we would have said at the time that we believed in glass steagall, not a 21st century glass steagall. we were very clear in differentiating. i now realize that i had not

realized that your bill was named the 21st sentry glass steagall. >> and has been three years now. apologize that i was not aware of that. so we were -- >> but i still haven't heard the answer to my question. what do you think glass steagall was if it wasn't separating commercial banking from investment banking -- from ordinary banking? >> again, the fundamental part of glass steagall was as you have just outlined, the separation of investment banking from commercial banking because people were concerned about conflicts in issuing security. >> how do you separate without breaking up the big banks that have integrated these two things? >> again, the -- the integration of commercial banking and investment banks has gone on for a long period of time. that is not what caused the problems during the financial crisis. and if we did go back to a full separation, you would have an enormous impact on liquidity and lending to small and medium

sized businesses. >> let me get this straight. let me get this straight. you are saying that you are in favor of glass steagall, which breaks apart the two arms of banksing. >> no. >> regular banking and commercial banking except you don't want to break apart the two parts of banking. this is like something straight out of george orwell. you are saying simultaneously you are in favor of breaking up the banks. that's what glass steagall is. >> i have never said we are in favor of breaking up the banks and separating. if we had, it would have been very simple. >> let me try it one more time. we are going to run out of time here. i have to try this one more time. what does it mean to be in favor of 21est century glass steagall if it does not mean breaking apart these two functions in banking? >> you know what i would be more than happy to come see you and follow up and talk about this. >> tell me what it means? >> we never came out and said we should separate banks. >> tell me what 21st century

glass steagall means if it doesn't mean breaking apart those two questions, it is an easy question or an impossible question. >> it is a implicated question. >> i'll bet. >> many aspects of it. the simple answer, which we don't support is breaking up banks from investment banks. we think that would be a huge mistake. again, i am happy to listen to your ideas on it, you obviously have strong views and i would be happy to follow up and listen to you. >> this is bizarre, the idea that you can say we are in favor of glass steagall but not breaking up -- >> we never said we were in ifr if a of glass steagall, we said we were in favor of a 21st century glass steagall. >> we are in favor of a bill that calls for breaking up the banks only don't branch up the banks. thank you secretary. >> that was quite the exchange between the treasury secretary steven mnuchin and senator elizabeth warren over some comments that he made about glass steagall.

and specifically the separation of functions within the banks. right now, house speaker paul ryan is taking questions in his weekly q and a with the press. here he is. >> i'm not going to give credence to that. i'm not going to comment on that. >> that's what your members were saying. >> there is not a point of making a comment on that. >> the appointment of a special counsel does that give you breathing room? >> like i said the ayou peyton manning of a special counsel i think helps assure people and the justice department they are going to do their jobs independently and thoroughly, which is what we've called for all along. so i think it was perfectly appropriate to do that. in the meantime, we are going to keep doing our jobs. we are going to keep our russia investigations going with our intelligence committees and look what i just described, energy and -- not the energy and commerce committee -- the education work force committee,

closing the skills gap getting the mack thorn bury and armed services committee, streamlining the way the point procures weapons, weighs and means working on tax reform. let's fix people's problems. all of our committees are doing that. as i said i know the people are consumed with the news of the day but we are here working on people's problems every day. we have all of these committees that do different jobs. our job is to make sure we still make progress for the american people and we are doing that. >> [ inaudible ]. >> i want to ask about tax reform? yeah. >> rt will. go ahead. mike emmanuel. you will get picked on if you say tax reform. all right. >> mr. speaker, thank you. regarding tax reform, there are some folks who think it can slip beyond this year? >> i don't think that's the case. our goal, and i feel confident we can meet this goal is calendar year 2017 for tax reform. i think we are making good progress. does bloomberg have a tax reform

comment? >> i do. -- [ inaudible ] rather bleak -- yet he still said it should be neutral. what are the alternative -- either have a transition that would make it more palatable or some kind of -- >> i think you can say yes to all of the above to what you just said. what we have to do, as an old tax writer i would say this is you have to weigh alternatives off one another. it is obvious that you can and should have some kind of an adjustment and phase in period if you are going to have a border adjustment. i honestly think the border adjustment is the smart way to go. i think it makes the tax code the most internationally competitive of any other version we are looking at. i think it removes all tax incentives to move over seas. if you are not going to do border adjust men then you have

to look at alternatives to that. there is always up sides and downsides to alternatives. that's the process we are going through right now. we are going through the process of looking at what is the best way to reform the tax code and lower tax rates for businesses to make the american tax system internationally competitive. right now it is literally one of the worst tax systems in the industrialized world. we are losing companies who are becoming foreign companies. we have a system that tells companies outsource your manufacturing. why on earth where we doing that. we believe this is again we are working on this, fixing people's problems. that is why tax reform is so critical. i do believe there are serious and legitimate concerns to any version of tax reform and we have to actid date those concerns as we move to a new tax system. >> last question? >> yes. >> two questions. following up on rachel's question, you talked about the russia investigation. can you talk about where the question of mr. trump's relationship with mr. comey is

on the potential obstruction of justice issues, you said you want to get the faction on that. on health care, insurers are getting ready to set rates. >> yeah. >> kyung there is any possibility that whatever comes out of congress will affect next year or are we already looking at two years down the road. >> we have a deadline monday. we will meet that deadline, do a status report with the court, the house republicans will. that issue is still unresolved. but i would have to defer you to secretary price on csr payments. >> potential obstruction of justice? >> oh, yeah, yeah. that's what investigations are for. you now have a special counsel who will take over that portfolio within the justice department. up it's appropriate. the whole point is to have an independent investigation and follow the facts where ever they may lead. it is practice mature to prejudge anything at this point. only that we have a process in

place. we have a he process in place here in congress and the administration now has a process in place in the jut department. i will have to leave it at that. >> [ inaudible ]. >> i'vely it up to the committees to determine that. thanks. >> that was the house speaker, paul ryan n his weekly press briefing with capitol hill reporters saying that the appointment of the special counsel does not interfere with the congressional probes of russia, but he has been supportive of the appointment of the former fbi director for special counsel. also said that tax reform is something achievable in calendar year 2017. john harwood has been listening and standing by with more headlines. john. >> paul ryan was trying not to make news today. he started out by giving a litany of some of the incremental advances the house made this week. overall, he was trying to push back against the idea that the cloud over the trump white house was slowing him down. he in particular got a question

from a reporter as to whether congressional republicans would be better off with a president pence than a president trump that's in light of all the difficulties that president trump has been dealing with this week. he said good grief i'm not even going to give credence to that. as you indicated, he said the kong investigation would go on, even as the special counsel, robert mueller continues with his investigation. and he pretty much shunted aside substantive comment beyond that. >> john harwood, thank you for the recap. watching the market, mike, it's doing okay. i mean we are off the highs off the lows. s&p up a quarter of a percent an point after a brutal day yesterday. >> it's flagging a lib. the bank stocks turned negative. the treasury rolled over. it seems to be a nasdaq bounce. the large tech stocks recovering some of yesterday's losses. >> probably the leasted surprised people with the glass

steagall exchange was the banks. they never took the trump administration seriously when they were talking about 21st century glass steagall. some of them who were taking them more seriously, the senate. >> two takeaways from the test reseth. number one on glass steagall, he does not support separating commercial banks from investment banks. does support 21st century glass steagall. under pressure to explain that to elizabeth warn and other. and tax reform concerns will deficit neutrality and tax cuts for the wealthy from the democrats. let's continue to listen in to secretary mooun mnuchin. >> stand against the executive order and rolling back wall street reform. why doesn't president trump's executive order that rolls back the wall street reform mention consumer or investor protection even once? why don't it direct you to consider the financial needs of borrowers, students, service

members, seniors, homeowners? what are you doing to ensure that you are looking out for those best interests? and who are you surrounding yourself with so that you just don't hear from executives but you also get the perspective of homeowners and victims of that 2008 collapse? because i have not heard today anything that you have said that is looking out for the interests of the people that i just talked about. >> well, i can assure you we are interested in looking out for all those people -- >> and what are you doing specifically? >> on homeowners, on the mortgage side, we will -- we are absolutely looking at people who don't have proper access to mortgage credit. we are looking at all different aspects, and this is not about rolling back regulation for big banks. this is about making sure that small, medium-sized businesses,

homeowners have access to proper credit. that is what we are focused on to grow this economy. >> well, let me tell you my concerns. first of all, i am troubled by the people you are bringing into the treasury. press reports suggest that you're advocating for the appointment of another one west executive to head the office of the comptroller of the currency, overseeing 2,000 national banks and your senior counsel whom you hired to run finance policy was instrumental in managing the line of credit to morgan stanley to new century, a toxic subprime lender, that went bankrupt in 2007. as attorney general, i sued for this very conduct, and this conduct was the subject of a $2.6 billion justice department settlement in 2016. do you have anyone on your leadership team that has advocated for borrowers or worked on behalf of homeowners? >> absolutely.

first of all, we absolutely are very interested in protecting borrowers and homeowners. it is -- it is very critical to everything that we're doing. and this is something that is going to be a big focus of the treasurer when she starts, who has lots of experience having worked at the small business administration and also having come up the ranks through u.p.s. and managed a big part of their business and a big part of her focus will be on community outreach and making sure -- sorry you feel that way about our appointments at the treasury. i think we have an enormously incredible staff. we have an incredible career staff. we have lots of people inside the treasury who have been with us that have tremendous

experience. and i think as you may know, i started loan modifications at indy mac and that's something we were very proud of. >> i don't have very much time and i think we're going to disagree with what you did to help homeowners in nevada. i hope i'm wrong. i hope that you prove me wrong and your out there advocating and the people around you are advocate for the very constituency that i just talked about. because i tell you what, right now i have not heard any specifics with middle class tax breaks, i have not heard any specifics on how you're going to address the people i just talked about, talking in absolutes and without bringing specifics into the conversation concerns me. and so i'm looking for very specific information. so i hope that you have that and will have the ability to work together. >> i will contact your office and i look forward to getting together with you and your staff

and we'll come over and talk about -- we appreciate the issues in nevada and the housing issues and i will follow up in the next couple of weeks to come and see you. >> thank you. >> senator shotz. >> thank you, mr. chairman. mr. secretary, thank you for being here. i have some questions about your tax proposals. the first is a process question. there are basically two paths for the administration and for the congress in terms of tax policy, whether or not you're going to move through reconciliation which requires 51 votes or whether you're going to move through the regular order for legislation which would require 60 votes and of course result in a bipartisan product. so the first question is do you intend to work through reconciliation or through the regular order? >> that's a decision for the senate. i would say i hope we can get bipartisan support for tax reform. as we've outlined, middle income tax cuts, making businesses

competitive, i hope the democrats support that. >> mr. secretary, i have a lot of questions, and they're mostly about process, so yes or no or a quick sentence would be great. do you have any more details since this piece of paper was released on april 26th? >> we have a large team of people that is working. yet i met with the finance committee. we are having outreach to lots of different people and we expect in the near term to have something with a lot more details. >> so is it fair to say, i mean i'm looking at your proposal and media reporting around it. yes or no, is it accurate to say the plan cuts the corporate tax rate, reduces the marginal tax rate for individuals, eliminates amt and eliminates estate tax? >> is that correct. >> so i think it was two days ago leader mcconnell made a statement that tax reform must be paid for. is that the view of the

administration? >> it will be paid for through growth. so yes. >> i just -- sorry, my colleague got a chuckle out of that. i'm trying not to. but i guess the question i have, and let's just be really blunt here. you understand your position, which is essentially tax cuts pay for themselves, but i think what i'm hearing is that you're not concerned with the sort of formal processes that determine whether or not at least in the context of the legislative branch something is paid for. you're basically asserting not just through dynamic scoring, which is a new technique of measuring the impact of legislation that the congress adopted over the last four or five years, but you're saying, you know what, we're just going to ignore cbo and just hope, allege, assert that tax cuts always generate more revenue and pay for themselves. that's a change in the way the tax policy is being made. >> again, let me just comment

that this is math, so, you know, you can create models, as we've seen during the financial crisis, sometimes models work and sometimes malls don't work. >> are you going to rely on the math of cbo or generate your own arithmetic. >> again, what i've said, and let me just be clear, the tax reform is something that obviously the administration is driving forward but needs the support of the house and senate. i believe that we will have three scores, a static score, a dynamic score per the process with joint tax. >> and then your score? >> we will likely have developed out of treasury, we have over 100 people, a different view of growth and show those numbers. and when it's voted on -- >> so you're going to have a static score, a dynamic score and then a treasury score. >> again, what i'd say is there will be a joint tax score and there will be a score that shows what we believe the impact is.

that's correct. >> so senator mcconnell also said that a border adjustment tax would not pass the senate. my view is that the same is true for a value-added tax. and i guess as i'm looking at the so-called loopholes that you're looking at closing without a v.a.t. or a b.a.t., you're not going to generate the revenue to do tax reform, so my concern is that you're going to try to jam a v.a.t. or a b.a.t. through, you're doing tax cuts not paid for with a little spin on the ball. could you just allay my concerns that you actually -- i understand we may have a different view of the revenue impacts of tax cuts. that's an interesting and legitimate conversation to have. but you can't possibly believe that we don't need to generate some revenue to make up for the holes that we're creating in the tax code. >> first of all, we absolutely believe that we have to generate

revenue, and that's why, again, we're trying to -- >> so if not a v.a.t. or a b.a.t., then where? >> can i just answer? >> sure. >> we absolutely believe we need to generate revenue, we're very concerned about the debt. we will go through the math and show you this is clearly in the case of business taxes, there are many, many companies that pay much less than the 35% rate. and there's many companies that leave foreign profits offshore. this is all about broadening the base. and in regards to the b.a.t., we have said to chairman brady in its current format it doesn't work, although we'll look at something else if they want to present it. >> i'm overtime. i'd just like to make one final comment with the permission of the chairman. >> briefly. >> and i apologize. what concerns me is it seems to me that you're very sure about where you want to cut taxes and very vague about how you want to

generate the revenue to make up for those tax cuts and that is a dangerous position to be in because all the things that you're sure you want to do -- >> you've been listening to treasury secretary steven mnuchin taking questions on taxes and bank regulation. run us through some of the highlights. >> secretary mnuchin is in the home stretch of that testimony, and the most heated exchange so far came with senator warren, when she tried to press him on his position on glass steegall. he said the administration does not support separating commercial banking from traditional banking, investment banking. senator warren tried to push him on that saying the administration had previously said that they support a 21st century version of glass-steagall and tried to ask him what thatment. when he did not give an answer and she said that was bizarre and described his comments as close to orwellian. so there was some tuesdssel the. we'll