Mnuchin Might Have to Wait Until February for His Final Start Date

  • Rules suggest final confirmation vote unlikely before Feb.
  • Analyst says any delay is political, not institutional issue

Mnuchin Holds More than $50M in CIT Group: Disclosure

President-elect Donald Trump may take power with the top post at the Treasury Department temporarily vacant.

A Senate hearing date for his Treasury Secretary nominee, Steven Mnuchin, is set for Jan. 19 at 10 a.m., though Finance Committee rules suggest a final confirmation vote is unlikely before February. That’s raising the prospect of a longer-than-usual gap between Trump taking the oath of office Jan. 20 and Mnuchin starting.

For the Treasury job, the former Goldman Sachs partner faces a rigorous path to Senate confirmation, having to submit more personal tax information than other cabinet contenders. He’s been advancing his cause: Mnuchin’s 42-page financial disclosure and an ethics agreement outlining steps he’ll take to resolve conflicts of interest were released this week, and he’s filed his last three tax returns and a standard questionnaire on his background.

Treasury chiefs from a newly elected party have rarely started on day one, with delays between a confirmation hearing and the swearing-in ceremony typically lasting at least a few days. There was a similar predicament with the incoming Obama administration during the 2008-09 financial crisis.

While the stakes may not be as high with the U.S. economy stronger now, a slow start for the 54-year-old Mnuchin could hold back plans in the new administration’s first 100 days such as labeling China a currency manipulator, as Trump has pledged to do immediately.

Transition laws require all federal agencies to have civil servants ready to keep day-to-day operations running smoothly. Should Mnuchin’s confirmation be gummed up by protocol, the department has hundreds of career staff members to rely on for core functions, such as handling debt auctions for the $13.8 trillion Treasuries market.

The staff in the Treasury’s Office of Debt Management are solid and “the market is very familiar with the length of the confirmation process,” said Amar Reganti, a fixed-income strategist in the asset-allocation group at GMO LLC in Boston and a former deputy director of the office.

Read more: A snapshot of early deadlines the next Treasury chief faces

The real implication is that higher-level decision-making may take longer or grind to a halt, on issues ranging from government funding needs to planning on addressing the debt ceiling by March 16 to avoid a default. Mnuchin is also expected to play a leading role in the new administration’s tax-cutting agenda.

“If you want to move the ship of state, you need people in place at the top,” said Sarah Binder, a political science professor who focuses on Congress at George Washington University.

Laying Groundwork

Mnuchin has started laying the groundwork for his new job, according to people familiar with the matter. He has met with current Secretary Jacob J. Lew and with Senators on the banking and finance committees that oversee Treasury operations. The transition team also has about 10 representatives with access to the department who have started planning. And, for good measure, Mnuchin has also met with JPMorgan Chase & Co. CEO Jamie Dimon, who later praised him.

The Treasury may see more than the usual amount of turnover among career staffers during this transition, according to two people familiar with the situation. Many non-political appointees, some who have lasted through several administrations, are unnerved by Trump’s aim to overhaul the Environmental Protection Agency and identify staff involved in promoting President Barack Obama’s climate policy, the people said. That’s raised concern about similar reshaping at other agencies.

Should Mnuchin’s swearing-in ceremony lag Trump’s start, it wouldn’t be the first time. In 2009, Obama nominee Timothy Geithner’s hearing was delayed until the day after the inauguration because of a scheduling conflict in the Senate. Geithner was confirmed less than a week after Obama took office.

Obama asked Stuart Levey, undersecretary for terrorism and financial intelligence in the Bush administration, to serve as acting Treasury secretary.

In response to questions about whether Mnuchin is preparing for a similar scenario, spokeswoman Tara Bradshaw said it “sounds like a hypothetical.” She spoke before the committee on Friday set a date for the hearing and didn’t immediately respond to a new request for comment. A transition spokesman did not reply to a request for comment.

Read More: Mnuchin to Divest Stakes in 43 Investments

Hearings can sometimes last more than a day, and Senate procedures mean it could take well over a week after they wrap up for the secretary to be sworn in. For the last three Treasury secretaries, a vote to confirm the nominee took place between a few days and two weeks after the hearing.

The Treasury has about 300 political jobs. Trump advisers who don’t need confirmation, such as the chief of staff, can start work immediately after the new president is sworn in.

“The real problem for Mnuchin with any prolonged delay is political: The longer his nomination hangs out there, the more time Democrats have to raise red flags about his investments, past financial sector businesses and potential future conflicts,” said Binder at George Washington University. It’s a “political, not institutional, problem.”

— With assistance by Michelle Jamrisko

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