Mnuchin’s Incomplete Treasury Staff Could Be a Risk in Crisis

  • Mandelker is serving as acting deputy Treasury secretary
  • Only half of agency’s political appointees are in their jobs

Mnuchin Shorthanded at Treasury Could Be a Risk

The Treasury Department still lacks permanent officials in half of its highest-ranking political jobs more than eight months into Donald Trump’s presidency, leaving Secretary Steven Mnuchin shorthanded as he tries to carry out the administration’s ambitious economic agenda.

Only nine of the 18 positions in Treasury requiring Senate confirmation have been filled, and only three additional nominees have been named by the Trump administration.

Steven Mnuchin

Photographer: Andrew Harrer/Bloomberg

Among the vacancies is deputy secretary, who is Mnuchin’s top lieutenant and can be a key figure in the day-to-day operations of the department. Trump has yet to find a nominee for the job since Goldman Sachs partner Jim Donovan removed himself from consideration in May.

“I cannot imagine having this skeletal staff if a crisis were to hit,” said Stephen Myrow, who worked at Treasury during the George W. Bush administration when the global financial crisis began. “So many people go into government with a set agenda but what we’ve seen time and time again is that you spend your time working on crises -- no one knows that better than those of us that served in 2008.”

Mnuchin’s responsibilities include helping to shepherd two major Trump initiatives: a tax overhaul and intensified sanctions against U.S adversaries North Korea, Iran and Venezuela. To help fill in the ranks as he pursues an ambitious economic agenda, Mnuchin has offered financial industry executives advisory roles in his department in order to sidestep congressional oversight.

Mnuchin also manages the $14 trillion U.S. Treasuries market that could soon be under the threat of another debt-limit crisis, and faces the possibility of a federal government shutdown if a spending agreement isn’t reached in Congress in December.

Two Jobs

For now, Mnuchin is relying on the undersecretary for Treasury’s sanctions unit, Sigal Mandelker, as his acting deputy, said White House spokeswoman Natalie Strom. Another vacancy lacking even a nominee is undersecretary for Treasury’s domestic finance office, one of the department’s three main units.

A Treasury spokeswoman said that Mnuchin has two undersecretaries and several counselors to assist him in his work. Mnuchin has publicly praised career public servants in Treasury for keeping the department running smoothly as Trump assumed the presidency. Career officials run much of the department’s non-political work, such as auctions of Treasury bills.

Mandelker follows Andy Baukol, a career Treasury staffer, who had been Mnuchin’s temporary No. 2 since January.

While the names of top officials running the federal government ordinarily are public, Treasury has not updated its staff directory website since the Obama administration ended. A page dedicated to the deputy secretary is blank.

The White House is “actively working” to fill important appointments, Strom said.

Political Friction

Part of Mnuchin’s problem finding candidates for Senate-confirmed jobs predates him: longstanding political friction in Congress. Treasury hasn’t had a confirmed undersecretary for domestic finance since 2014, the result of political obstruction. Antonio Weiss, a banker at Lazard Ltd. at the time, was nominated for the job in 2014 but withdrew in the face of heavy opposition from within then-President Barack Obama’s party.

Weiss instead became an influential senior counselor at Treasury. Mnuchin is still spreading the word to banking executives leery of the Senate confirmation process that similar jobs are available, according to two people familiar with the matter. Counselors bypass vetting by the Senate, which includes oversight of their ethics agreements and can require additional financial divestitures. They also are not required to testify to Congress.

Read more: Mnuchin’s Treasury Picks Stalled by Trump Loyalty Questions

The political affiliations of some candidates has been a stumbling block as well. One person whose name was put forward to Mnuchin for an appointment withdrew out of concern about past ties to Democrats that might draw scrutiny in Congress, the media and even at the White House, according to a person familiar with the matter.

Some Confirmations

Mnuchin ran Treasury with an even more skeletal political staff through July. Before the Senate left for its August recess, it confirmed five top officials. Mnuchin has also had four counselors in place in the domestic finance unit since March, helping with deregulation, a tax overhaul, legislative affairs and budget issues.

Treasury said in May that some political appointments may remain vacant, citing Trump’s interest in trimming the size of the federal bureaucracy.

Mnuchin and Trump are lagging their predecessors in hiring for the department. By this time in the Obama administration’s first year, the president had announced nominations for all positions in the Treasury Department. After one withdrew, the White House appointed a Bush-era official to the job.

Obama did struggle to get candidates through the Senate for two key posts -- the heads of domestic finance and international affairs -- until more than a year after his inauguration, despite having a Democratic-controlled Congress.

Mnuchin’s Counselors

There is no limit on the number of counselors Mnuchin can hire. Both Republican and Democratic administrations have used the counselor position to bring on top aides without the scrutiny of Senate confirmation.

A fully staffed Treasury isn’t in sight. The White House has a backlog of vetting for political appointees, which has slowed announcements of nominations across the administration and even at the Federal Reserve. The Senate also needs time to vet nominees, hold confirmation hearings and then vote.

The Russia investigation has also slowed progress at the Treasury Department.

Senator Ron Wyden of Oregon, who is both the senior Democrat on the Finance Committee that overseas the agency and a member of the Intelligence Committee, has blocked consideration of Trump’s nominee for assistant Treasury secretary for intelligence and analysis, Isabel Marie Keenan Patelunas. He says Treasury has refused to provide Russia-related documents to the intelligence panel.

    Before it's here, it's on the Bloomberg Terminal.