Steve Mnuchin Expected To Lead Treasury In Trump Administration

Steve Inskeep talks to David Wessel, director of the Hutchins Center at the Brookings Institution and a contributing correspondent to The Wall Street Journal, about Steve Mnuchin's qualifications.

STEVE INSKEEP, HOST:

We know a little more this morning about President-elect Trump's economic team. He has selected billionaire investor Wilbur Ross, Jr. for commerce secretary. And Trump has picked his campaign finance chairman Steven Mnuchin as treasury secretary. He's had a career on Wall Street and in Hollywood.

David Wessel joins us next. He's director of the Hutchins Center at the Brookings Institution and a contributing correspondent to The Wall Street Journal. David, welcome back. Good morning.

DAVID WESSEL: Good morning.

INSKEEP: So what do you make of this choice?

WESSEL: Well, I think it's incredibly ironic. Here's Donald Trump, who ran for president as an outsider, challenged the elites, criticized Hillary Clinton for speaking for money to Goldman Sachs. And he picks Mnuchin, who not only spent 17 years at Goldman Sachs, but is the son of a Goldman Sachs lifer and the brother of another Goldman Sachs person. So it's just wonderfully ironic, I think.

INSKEEP: And it does point to the way these things sort of work. When you campaign against the elites and get them out of power, you tend to bring in your own elites. But how did he end up connected with Donald Trump?

WESSEL: Well, that's kind of interesting. He did business with Donald Trump in the past. Trump actually sued him at one point over a real estate deal. They settled out of court. He seems to have stumbled into the Trump orbit in April 2016, around the time of the New York primary. I think he essentially bought a lottery ticket that's paid off handsomely. You know, some of his friends expressed surprise that he was signing up with Trump. And he told Bloomberg Businessweek in August, hey, no one's going to be like, why did he do this, if I end up in the administration.

INSKEEP: I'm kind of enjoying the idea that part of their acquaintance was a lawsuit because Trump may know lots of interesting people that way, given his history with lawsuits.

WESSEL: Right. We could flesh out his cabinet with people he sued, plenty of people.

INSKEEP: (Laughter) Well, what do we know about Mnuchin's views on economic policy? The treasury secretary is a vitally important job.

WESSEL: Well, we don't know much. I mean, we're talking about a card-carrying capitalist here for sure. As you mentioned, he went - after he left Goldman Sachs in 2002, he went into the hedge fund business. He went into the business of financing movies, including "Avatar," "Life Of Pi." And he teamed up with some financiers to buy a failing bank called IndyMac in the dark days of 2008. They sold it at a huge profit seven years later after taking some flak for their foreclosure practices.

I think he knows his way around financial markets, which some people in Washington thinks disqualify you from being treasury secretary. I actually think it could be useful if we have another financial crisis. But he's not been one of these bankers or business people who's been around Washington a lot. He is said to have influenced Trump's tax plan. But we really don't know much about his economic views.

INSKEEP: It is interesting, though, there are a number of very, very wealthy people and Wall Street people who have surrounded Trump who seem to be on their way to key posts in the administration. And I wonder if that does inform their perspective somewhat.

We were talking on the program with Anthony Scaramucci, another Wall Street figure who has been close to Trump, and got a sense of that perspective when he was telling us everybody's being unfair to Wall Street, that Wall Street is blamed too much or blamed solely for the financial crisis. Let's listen to a little bit of that.

(SOUNDBITE OF ARCHIVED BROADCAST)

ANTHONY SCARAMUCCI: I mean, if you really want to understand the narrative, there are three people to be blamed here and I'll speak very generally. Number one, it's Washington, the push for over allocation of capital into that housing area. Number two, it was the greed of Wall Street in terms of the production of these products. And number three, frankly, was Main Street because many people overreached in their homes because there was easy money and easy credit before the financial crisis.

INSKEEP: Blaming Main Street, even partially, that's a different perspective than I guess if Elizabeth Warren were in the cabinet.

WESSEL: Well, and that's for sure. Look, I think that there's nothing wrong with Scaramucci's three-part list. The question is how much do you assign to Wall Street and how much do you assign to Main Street and Washington? And the question is if you come from Wall Street, will you tend to blame Main Street and Washington more? And that will lead you to be reluctant or hesitant about regulating or keeping the regulations that are already there to restrain Wall Street. I think that's a really big question. What Mnuchin has said is there's some good and there's some bad in the Dodd-Frank bill that was regulated Wall Street after the crisis. But he hasn't said what was good and what was bad.

INSKEEP: What do you think Mnuchin's biggest challenge will be if he's confirmed as treasury secretary?

WESSEL: Look, I think the most important thing is can he influence Donald Trump and his inner circle? A successful treasury secretary has to be able to convince the president to do things that are good for the economy even if they're politically unpopular. And he has to be able to convince him not to do things that are bad even if some of his advisers are telling him. And we really don't yet know whether Mr. Mnuchin will have that kind of courage and that kind of influence in a rather chaotic Trump White House.

INSKEEP: One other bit of news to ask about, David Wessel, President-elect Trump during the campaign denounced the Carrier Corporation for a plan to move 1,400 and then up to 2,000 jobs out of Indiana. Now the Carrier Corporation, it has said, has agreed to keep not all of those jobs but some of them in Indiana. What does that mean?

WESSEL: Right. Well, we know what the headlines are going to be. We don't know the details. We don't know what the state of Indiana - where Mike Pence, the vice-president elect is the governor - has promised in return. It's hard for me to believe that President Trump is going to be able to shame or negotiate every plant that threatens to close. There's another one in Indianapolis that's moving to Mexico, a bearing plant called Rexnord - 300 jobs. Is he going to intervene there, too?

But it is an incredibly important symbol. It bolsters his image as a guy who'll stand up for American workers against big business the way John F. Kennedy did a couple generations ago with steel people. And it suggests to me that he's going to be willing in a very non-Republican way to restrain employers whose ability to hire and fire and move production has been largely unfettered. I mean, he's doing things that the socialist president of France does when somebody threatens to close a plant there.

INSKEEP: Very interesting and that's just the beginning of the story. David, thanks as always.

WESSEL: You're welcome.

INSKEEP: That's David Wessel, director of the Hutchins Center at the Brookings Institution and a contributing correspondent to The Wall Street Journal.

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