In this report, we analyze today’s House FinServ hearing with Treasury Secretary Steven Mnuchin, which at times devolved into shouting matches, forcing the Chairman to repeat the Committee’s rules on decorum for both Members and the witness.  Although the purpose of this hearing was ostensibly the international financial system, Members went beyond their usual penchant to raise political issues of the moment and constituent concerns.  The Volcker rule, the $50 billion asset threshold for enhanced prudential regulation, GSE reform, and the calibration of the SLR were all raised on multiple occasions by Republicans, while numerous Democrats asked about President Trump’s potential financial connections to Russia (citing this as a BSA/AML issue) as well as hitting the Secretary over the conduct of One West Bank.  Mr. Mnuchin for the first time said that he would prefer the bank SIFI threshold to be in the $250-300 billion range with a mechanism to exempt non-complex banks above that threshold.  On GSE reform, Mr. Mnuchin argued that an endless conservatorship is not sustainable and that, if there is to be a federal guarantee once the GSEs have been returned to private ownership, it must be explicit and paid for to protect taxpayers.  Despite the antagonistic nature of the hearing, there were a few moments of bipartisan agreement at least when it came to broad concepts – the need for community bank regulatory relief, improved cybersecurity in financial services, and tax reform.

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