Mnuchin’s unfilled jobs leave Treasury stretched in crisis
Stock prices were tanking, the Federal Reserve was pouring unprecedented relief into the markets and Wall Street companies were in panic mode. Steven Mnuchin was due to gather the central bank chairman and other top financial regulators to assess the damage from the coronavirus outbreak.
But the Treasury secretary was stuck on Capitol Hill.
Lacking both a chief of staff and a legislative director, Mnuchin personally was negotiating details of what would become the largest stimulus legislation ever passed. The critical March 23 meeting with market overseers would have to wait.
As it confronts the worst economic disaster since the 2008 financial crisis, the Treasury Department is riddled with vacancies among its political appointments.
Of 20 Senate confirmed roles reporting to the secretary, seven aren’t filled, and four are occupied by acting officials. The domestic finance unit, which should be handling the brunt of the work related to the coronavirus outbreak, is particularly empty. It has no top boss and is missing three assistant secretaries, who are the next level down.
Treasury’s head of legislative affairs, Brian Mcguire, left the agency while rescue legislation was still being hammered out. Mcguire worked on the second phase of the virusaid bill and his departure was planned earlier in the year, according to a person familiar with the matter. Mnuchin, who boasts about his tendency to micromanage, hasn’t chosen a new chief of staff since the departure of Eli Miller to Blackstone Group LP a year ago.
The lack of leadership and expertise, bank executives say, was on display last week as the department rushed to meet its goal of beginning the small-business loan program Friday. Lenders complained they were urged to start pushing money out the door without detailed guidance from the Treasury on how to process the loans. One problem, the banks said, was how to show they’d verified the identity of applicants, a requirement of anti-money laundering laws.
The disarray caused some of the biggest banks, including Wells Fargo & Co., to say they wouldn’t be able to accept requests immediately. Another, Jpmorgan Chase & Co., held off until Friday afternoon.
Ultimately, more than $5.4 billion in loans were issued on the first day, according to the Small Business Administration, within one week of President Donald Trump signing legislation to create the new loan facility.
“We have a great team of political appointees and professional Treasury career people that are hard at work to support American workers and American business!” Mnuchin said Saturday in a tweeted response to the Bloomberg News report.
Stretched jobs
The Treasury vacancies are forcing the few senior managers who remain to stretch their job descriptions, sometimes dramatically. Deputy Secretary Justin Muzinich, for example, now oversees two-thirds of the agency: domestic finance and the sanctions office, neither of which has an undersecretary, the top official at the units.
But that’s not all. As a former Morgan Stanley executive, Muzinich is Wall Street’s main contact in the department. He’s also likely to supervise a half-trilliondollar loan program for big businesses hit by the outbreak, according to people familiar with the matter.
Bimal Patel, assistant secretary of financial institutions — who is responsible for watching over the banking industry — now is helping execute the small business loan program.
And Brent Mcintosh, undersecretary of Treasury’s international affairs unit, is playing a leading role in deciding how to dole out federal aid to U.s.-based airlines, the people said. They asked not to be identified discussing the department’s personnel issues.
A Treasury spokeswoman disputed Bloomberg News’ tally of confirmed officials in the agency, saying that with Muzinich serving as deputy secretary and filling two undersecretary roles in an acting capacity, along with similar other examples, all portfolios are covered.
Mnuchin now must help to rescue a U.S. economy in paralysis. That’s in addition to his regular full-time duties overseeing a dozen sanctions programs, monitoring the $16 trillion Treasuries market, and consulting with finance ministers across the globe — all of which are more important than ever as the economic crisis deepens.