Mnuchin To FBN: We can’t Fannie Mae Under government control for the next four years

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Mnuchin To FBN: We can’t Fannie Mae Under government control for the next four years

Fannie Mae

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a higher 20 percent tax or 25 percent levy. But what if the dollar doesn’t cooperate Secretary Mnuchin? I mean what if the dollar doesn’t go up? What then? Can you really count on the dollar making a move to actually have a Border Adjustment Tax be successful?

MNUCHIN: Well, Maria, again we haven’t come out with our view on the Border Adjusted Tax and what aspects of that may or may not be included. One of the issues as you’ve pointed out is it has certain complexities; it has certain assumptions on what happens to the currency. These are complicated issues. We are taking this all into account. And I can assure you when we come out with the plan we will have very carefully thought through all of these issues and included it in the plan.

BARTIROMO: OK.

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MNUCHIN: And that’s something I have a lot of confidence in.

BARTIROMO: So just to be clear, you think you will have tax reform out, a plan out by August but the real impact will likely happen in 2018?

MNUCHIN: That is correct.

BARTIROMO: Let me move on to the government-sponsored entities Secretary Mnuchin. Because obviously we had a major issue happen, a split ruling by a Federal Appeals Court in Washington, most of them rejecting the hedge funds appeal that you know after the bailout sending the mortgage bailout plunging.

What is your plan for Fannie Mae and Freddie Mac? The last time you were with me here in the studio you said you’ve got to get them out of government hands.

MNUCHIN: Well, again, let me just say, housing reform is a priority for me. It’s something I know a lot about. I’ve been involved in this business for a long period of time. As it relates to the legal case, that’s something that belongs in the courts.

I think this was a ruling that was favorable to the Treasury. But having said that the DOJ is representing the Treasury, that’s for them to deal with. What we’re dealing with in this building is really how we look at housing reform going forward.

What I’ve said is we can’t leave these entities in the exact state they are, under government control for the next four years. We need to solve the issue. This issue is just kicked down the road.

So it is something we’re carefully looking at. I’ve had the chance to meet with Jeb Hensarling on this. I’ve had the chance to meet with Mel Watt this week and talk about it. Again, it’s something that we’re going to very carefully consider before we come out with a plan.

It’s something that we want to make sure that there is liquidity in the 30-year mortgage. Real estate finance is a very big part of the economy and we want to make sure there’s plenty of liquidity on the real estate markets.

On the other hand we want to make sure that we protect the taxpayers. And we don’t want to do anything that will put the taxpayers at risk going forward.

So this is something that’s going to take us a little bit more time. It’s not something that we’re going to deal with as quick as taxes which is our number one priority. But we’re committed to a solution. I think hopefully there’s a bipartisan solution here. But I’m optimistic as well that we can create housing reform under this administration.

BARTIROMO: Yeah because that’s really what you want. Liquidity this is one of the most critical parts of the economy.

MNUCHIN: It is indeed. And we’re going to make sure that whatever we do, that we don’t limit the liquidity and make sure that middle income has access to mortgage liquidity to buy homes.

BARTIROMO: What are expecting in terms of growth Secretary Mnuchin? I mean we have been under 2 percent for so long. Do you think we could reach 3 percent this year? Or is that a 2018 expectation?

MNUCHIN: Again I think this year it’s hard to already impact. You know we’ve inherited the Obama administration economy and the plan. And there’s really nothing we can do in the short-term. Whether it’s the budget or whether it’s other issues that are really going to have an impact on the economy right away.

I mean what you do see in the markets are, people have confidence in where we’re going to get the economy. And as I’ve said before, our goal is to get back to 3 percent or better sustainable growth. We think that’s very doable. And we think we can make this country very competitive again.

BARTIROMO: Well, obviously the markets have great optimism. Everything’s up, the dollar is also up better than 20 percent. Let me ask you about that. The president has made some comments, look a strong dollar is not a good idea. But then you said longer term, a stronger dollar is helpful. He said the strong dollar can be hurtful obviously.

When does the dollar become too strong in terms of hurting economic growth?

MNUCHIN: Well, Maria, you know as I like to say it, markets react in the short-term and markets will do what markets will do. I think that in the short-term there are certain issues of a strong dollar that are beneficial. There are certain issues that are not beneficial. And we acknowledge that.

I think as it relates to the long-term again the dollar has been the major reserve currency. It’s been where people want to invest. And I think if you look at the strength in the dollar, it’s like the strength in the stock market. That’s people voting with confidence in the Trump administration plan and the economy for the US.

So again our focus is not short-term where the dollar is. The markets will determine that. And again I think the short-term increases in the dollar which have been very significant are a reflection of the optimism of the economic plans.

BARTIROMO: Yeah no doubt about it.

MNUCHIN: And certain parts of that are beneficial to the economy and certain aspects of that have issues.

BARTIROMO: Right.

MNUCHIN: So we acknowledge that both on whether you’re importing or whether you’re exporting.

BARTIROMO: And of course people feel that the president is making good on all of his promises, even as it relates to immigration. And what we’re seeing on the borders. Secretary of State Rex Tillerson and Homeland Secretaries (PH) John Kelly are in Mexico this morning to ease any tensions there. Are you worried about our trade relations with Mexico right now?

MNUCHIN: I’m not. I’ve had very good conversations with the Finance Minister there. You know I, there are issue with NAFTA. We’ve talked about those issues. I think there’s a win-win result for us and Mexico on this. We’ve got to do things that are good for us and good for them.

But I think like all these other counterparties, we’re going to look at trade, we’re going to look at issues from the American workers standpoint, but we acknowledge we have to do things that are beneficial to both sides when we negotiate a deal. And nobody can negotiate a deal better than this president.

BARTIROMO: Right. So do you think that we will see a bilateral deal with Mexico sooner rather than later?

MNUCHIN: Again I think

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