Steven T Mnuchin discusses federal coronavirus response

Govt stimulus plans Steven T Mnuchin Mnuchin public pension crisis Steve Mnuchin debt

CNBC Transcript: Treasury Secretary Steven T Mnuchin Speaks with CNBC’s “Squawk on the Street” Today on The Federal Coronavirus Response

WHEN: Today, Friday, March 13, 2020

WHERE: CNBC’s “Squawk on the Street

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CNBC’s full interview with Treasury Sec Steven T Mnuchin on federal coronavirus response

All references must be sourced to CNBC.

JIM CRAMER: Leading the White House discussions is Treasury Secretary Steven Mnuchin. And he joins us now live first on CNBC. Mr. Secretary, thank you for finding the time to speak to us. How are the negotiations going with the Speaker of the House?

SEC. STEVEN T MNUCHIN: Jim, it's great to be here with you and the negotiations are going very well. This has been a bipartisan effort. I spoke to the President and vice president over 10 times yesterday to go through the issues and get direction. I’ve spoken to Mitch McConnell and Kevin McCarthy constantly. I spoke to them both already this morning as well as the speaker. And I think we're very close to getting this done. This is a very important bill for small and medium-sized businesses, for people that are impacted by the Coronavirus.

And let me just emphasize, I think we view this as, this is the second inning in a baseball game. The first inning was the $8 billion bill. This is the second inning. The speaker already came out and said she's prepared to work with us in the Senate on other issues. We'll be coming very quickly back on issues dealing with the airline industry. Just as after September 11. We are very committed to make sure that our U.S. airlines have the ability and have the liquidity to get through this.

JIM CRAMER: Mr. Secretary, I know you're a student of history and a student of history, the Treasury Department. We had a secretary Henry Morgenthau during World War Two. We had a Fed Chairman Marriner Eccles, they worked hand in hand together to be able to make it so there was as much liquidity as necessary to beat the axis. Is this an outright war? because what I'm hearing is real part rail dropping a Parson ship, you're working closely with Secretary Pelosi, I mean with Speaker Pelosi, to be able to leverage whatever we can do to make it so the working person is able to handle and get through this period.

STEVEN T MNUCHIN: The President is absolutely committed that this will be an entire government effort. that we will be working with the House and Senate. And let me just say, I'm in constant conversations with Jay Powell, the Treasury and the Fed has many authorities. We don't have the same authority as we had before Dodd Frank and the financial crisis, but we do have authorities we will be looking at using those. The Fed yesterday injected a trillion and a half dollars in an unprecedented move. They announced $60 billion of bond purchases. So, we're looking at a whole range of alternatives.

And the other thing I would comment, Jim, is I know, you know, people have talked about companies drawing down their bank lines and things like that. The banks have a lot of liquidity, but the discount window is available. I would encourage banks, there's no stigma about going to the discount window. They should feel free to draw from the discount window. That's another great source of liquidity for them to lend to companies.

JIM CRAMER: Well, many companies are pulling down their letters of credit all at the same time. I understand, of course, because of your efforts and previous secretaries, we have the best banking system. There is no doubt about that. Can you and the Fed work together to guarantee those letters of credits can be done through the discount window, so we can keep institutions alive that are employing millions of working people who cannot afford to be hurt by a virus that is not they're doing?

SEC. STEVEN MNUCHIN: Well, it's not as simple as just guaranteeing letters of credit. Again, we'll be going back to Congress for authorities that they took away that we think we need to deal with this. We do have certain authorities, but I can assure you, the president is determined we will do whatever we need. I think, you know, the President is looking at a major stimulus package, whether it's through the payroll tax cut, or whether it's through another means of delivering liquidity to hardworking Americans. We've announced what will be about $200 billion of liquidity through delaying IRS payments, so hardworking Americans who have tax payments do, or small and medium-sized businesses can delay them.

I can assure you, we will use whatever tools we need to make sure that the industries that are impacted by this get through this. And I thought Barry said a lot of things that were right. You know, this is a short-term issue, maybe a couple of months, but we're going to get through this and the economy will be stronger than ever. You know, I look back at people who bought stocks after the crash in 1987. People who bought stocks after the financial crisis. For long term investors, this will be a great investment opportunity.

STEVEN T MNUCHIN: Well, certainly that's an interesting point because there's so much money on the sidelines. But is it? Is it possible to waive the restrictions on 401 Ks and IRAs for people to take advantage of this? And is it possible to waive the restrictions on banks, particularly smaller community banks, to be able to get them in there to buy stock well below their book value? Is it a time where we can stress that there are bargains and opportunities?

Because we will beat this virus. You will help us do it. I know you'll put together working group of top scientists and top CEOs to beat it. We'd like to be able to have people participate. But the money they need to participate with is not able to get into the stock market because of restrictions that I believe can be waived right now so they can take advantage of this.

SEC. STEVEN MNUCHIN: Well, Jim, I'll follow up with you afterwards and get your list of ideas. but whatever we can waive, we will waive. And I want to give you another interesting statistic. In South Korea, they tested 200,000 people with symptoms in 96% of them didn't have Coronavirus. So there will be there will be people who get this but again, I just emphasize for healthy Americans, and for young people, they may not even know they have this and not everybody who has sniffles will have the Coronavirus and I'm not traveling this weekend because I'm way too busy but I get on a commercial airline and fly to L.A. if I wasn't working 24 hours a day.

DAVID FABER: You know, in some ways, Mr. Secretary, it's David Faber. I'm surprised to hear you say that, though. There are not enough test kits still available, apparently, for us to actually share in what seems to be your optimism about the lack of actual infection. You know, when are we going to get to the point and when we do with all those test kits out there, get to the point that we certainly realize there are more people who do have the virus? Are you not concerned that that's going to stoke more panic?

STEVEN T MNUCHIN: Well, people should understand the numbers are going to go up before they go down. I think as you have said, we have heard about the test kit issues. We talked about that again yesterday at the task force, I can assure you, the Vice President and the entire team are focused on this and making sure that people have test kits. One of the things we have in the bill is that people who are not insured will be able to get tests, we want to make sure that tests are available. For people, and we realize we got to roll them out. But people will be able to get testing and that's something that is being worked on. I can tell you 24 seven right now,

JIM CRAMER: Mr. Secretary during times like this, as you might imagine, I tried to call as many senior members of our financial services industry as I can to get their thoughts. Many of them don't like to go on the record, as you well know. But with increasing frequency over the last 24 hours, they've said the following to me, we need a two-week or even more national holiday, we need the markets closed. We need the Fed and the Treasury to provide unlimited liquidity to businesses and banks and everything else. We need to shut it down.

So that then we can get started again and give people peace of mind.  Is that something-- I'm sure you've heard it. I know you're talking to these same people. What do you say when you hear that?

STEVEN T MNUCHIN: Well, let me just comment on the second part first, which is: the Fed and the Treasury are doing everything we can to provide what you've described as almost unlimited liquidity, as I mentioned. One trillion-and-a-half-dollar program is unprecedented. We'll be rolling out other programs. we're in constant touch with the Fed. As I've said, the discount window banks have plenty of liquidity. So there will be a massive amount of liquidity. In regard to shutting down the markets, I'm not hearing that actually, I'm hearing the exact opposite from the professionals. We intend to keep the markets open. That's a sign of confidence to people. To the people who want to come in and buy we want to have markets open. We've kept markets open through many, many times. the circuit breakers work. I've had discussions with all the regulators. the markets are working orderly.

So no, I heard rumors yesterday which I think are ridiculous about New York City closing down and markets closing day. They aren't. quite the opposite. We intend to do everything we can to keep markets open. Now I have heard yesterday I heard there were some issues and off the run treasuries and liquidity. We're working on that. I've heard there's issues in the CPP We're working on that. But let me tell you, we've got 100 things on our list. And as soon as we get done with the speaker on this bill will be going back for more things.

And as I said, the President wants a stimulus package. We're going to do whatever we need to do to support hardworking Americans who are impacted by this. And there's no question. There's a short-term economic issue. But we will get through this and the economy will be stronger than ever when we get through this.

DAVID FABER: Understood, but the economy, regardless of what you may say, is kind of shutting down. I mean, corporate America seems to have taken the lead here. when you look at the NBA and the NHL, and the NCAA's and Major League Baseball and Disneyland are all closed. I mean, things are shutting down, aren't they, Mr. Secretary?

STEVEN T MNUCHIN: I Well, they are. And I would say, look, the corporate America is responding to the medical advice, I think is you know, the President made the decision to shut down travel with Europe because of the medical professionals thought this would stop the spread of the virus. Fuses are shutting down sporting events. So, there's no question parts of the economy are going to be shut down. As I've mentioned, airlines are having issues, but we will provide liquidity in these parts of the economy to deal with this.

And again, this is not like the financial crisis where people don't know when this will end, we will we will get through this. And, again, the medical experts can't give us a definitive period of time, whether this is one month or two months or three months, but we're going to get through this by the end of the year. Again, I think you can expect we're going to have a big rebound in economic activity

JIM CRAMER: Mr. Secretary, it is so important for everyone for every working person to be able to get a break here. I think, whatever the Treasury can do, whatever this country can do. Let's just pick a group that you and I are no longer part of: millennials. They are burdened with a lot of student debt. Can we suspend their payments for the next three months, so they suddenly have money in their pockets? So, if we were going to beat this thing, and we need these people to be ready and willing to go back to work, but we need them to have enough money and be able to sustain this period. Suspending student debt just for three months. Not canceling. What do you think?

SEC. STEVEN MNUCHIN: Jim, I can tell you that's on our list of 50 different items we're bringing to the president for a decision. So that'll be something we're looking at. Again, we have lots of authorities. We also, things where we don’t have authorities, we're going to work with both the House and the Senate on a bipartisan basis. I can assure you the president is all about action, action, action.

CARL QUINTANILLA: Mr. Secretary, it's Carl. On corporate tax cuts, people now wondering whether it's time to finally admit that the tax cuts will not, in fact, pay for themselves. And were black swan scenarios ever accounted for in the drafting of that, that action?

SEC. STEVEN MNUCHIN: Well, I'm going to stick with my prediction. And as I said before, this is just math. Over a 10-year period of time, I think the tax cuts will pay for themselves. Again, it's about 30, 35 basis points of additional growth over 10 years. And again, this black swan event is going to be a relatively short period of time when we look at a 10-year span.

CARL QUINTANILLA: And as we watch headlines from the German government today, the EU reportedly ready to trigger crisis clauses. How much coordination is going on ahead of this G7 fin min call on Monday?

SEC. STEVEN MNUCHIN: I can tell you I've been in constant contact with other finance ministers in the G7 and the G20. I applaud what they are doing in Europe. I think their economy was significantly slower than ours coming into this. They had fiscal room. They should be using it. So, we are in constant contact, both the Central Bank governors and the finance ministers.

JIM CRAMER: Mr. Secretary, once again, I know, as a student of history, as you showed me around, you told me where Secretary Hamilton was, Secretary Galvin was, you understand Secretary Morgenthau. At that period, we had 100% cooperation among Congress, among the president, among the Federal Reserve and the Treasury Secretary, with the Treasury Secretary leading the effort to fight the axis. Are we on wartime footing, sir? Are you for -- getting the full cooperation of Treasury and Speaker Pelosi and of course the President, who I know you speak for?

SEC. STEVEN MNUCHIN: I think we are. And I’d add in Mitch McConnell, okay, and Kevin McCarthy in that who had been an important part of this. Mark Meadows who's just getting involved as Chief of Staff has been part of this the entire White House. Larry Kudlow. So, this is 100% team effort, and we are putting aside partisan issues to get things done. And again, let me emphasize, I think we're like in the second inning of getting things done. So, we'll be back. We'll be passing more legislation. And the President is prepared to act, do whatever we need to do. Again, I think people are going to look back at this. And again, I can't predict where the markets are in the short-term. But I think the economy and the markets will be a lot stronger later in the year.

JIM CRAMER: I totally agree with you, sir. How do we determine which industries are to be saved? Do we save cruise ships? And do we save airlines? Do we save restaurants? What do we find is worth saving? And what are we willing to let go of?

STEVEN T MNUCHIN: Well, Jim, let me just say, I mean, obviously, the President's first concern is the health issue and making sure we have the resources on the health side. But, on the economic side, our priority, again, round one here is around small and medium-sized businesses, making sure that people who can't work because they're home quarantined, or they're taking care of family members, or their kids are out of school because schools are shut down, that they continue to get paid for short periods of time. So that's the first priority.

I can tell you the airlines, I've met with or spoken to all the airline CEOs. That that is the next priority on my list only because, again, it's critical that we have domestic airline travel is no different than after September 11. This has hit the airline industry particularly hard. But I can also tell you, hotels, cruise lines, small businesses.

Again, these are all areas that we're focused on. But the good news is, there's many parts of the economy that people can telework, people can continue to do work, that is strong that it will come back and that there's lots of liquidity.

So again, this isn't like the financial crisis. There's a lot of businesses that will continue to be very strong. And as you said, there are industries that are going to be particularly hard hit. And that's what we're focused on. That's part of the reason why the President's considering a very large stimulus program to keep hardworking Americans have money to put back into the economy.

CARL QUINTANILLA: We spent the last year talking about tariffs on global trade. Are tariff rollbacks anywhere near being on the table and what kind of would it take to put them there?

STEVEN T MNUCHIN: That that's not something we're considering at the moment. But I can tell you, you know, Ambassador Lighthizer is looking at additional exemptions for companies that are particularly head and have issues with the virus. So, again, to the extent there are company-specific issues, we will address that with the president and react accordingly.

DAVID FABER: Mr. Secretary, do you think we're doing enough, as you said to stem what is a health crisis? Many medical professionals, I'm sure you've heard this, want to make sure we slow the spread of this virus to make sure the healthcare system is not overwhelmed. Do you think we need to do more in terms of limiting activity or are we doing enough?

STEVEN T MNUCHIN: Well, let me just say, and you know, I've been involved on the outside of a lot of crisis before I wasn't in the government. But let me just tell you, I am incredibly impressed over the last month the resources that we have within the government, both the medical professionals, the expertise that there is internally, and, again, every single agency is involved. The vice president has been leading this task force, we're literally meeting multiple times a day and focused on things. So, I can assure you, the President, the Vice President, the entire team is 100% focused on this. And things are moving fast. So, the President is making decisions to protect the American people and protect the American economy.

JIM CRAMER: So, Mr. Secretary, you know, as well as I do in 1987, on terrible Tuesday, midday when we felt that the Dow may go through 1400 to 1100, after being 2700, just a few weeks before Chairman Greenspan did something very bold. He just put out one line: there will be liquidity available. Do not worry about liquidity. Are you giving us that line right now? Do not worry about liquidity. There will be liquidity available. Which gave people tremendous confidence to go in and buy stocks at what we now know was one of the greatest historic buying opportunities ever.

STEVEN T MNUCHIN: Jim, let me tell you, I was a young trader in 1987. And that was a much scarier time than it is today. Okay. This is nothing compared to that. And yes, let me give you that one line, there will be liquidity available. Whatever we need to do, whatever the Fed needs to do, whatever Congress needs to do, we will provide liquidity and this will be an entire whole of government approach led by the president.

JIM CRAMER: Mr. Secretary, I also know—I’ve known you for a long time, that you were a tremendous business person, not just in Goldman, but also in private, private industry. You know, as well as I do, that while we like to tax -- any sort of tax abatement, that's terrific. We will have little businesses, I've had little business, I have little businesses.

I run two restaurants. We've already made the decision. You know what, we're going to keep them open even if we have no customers. Because we have a payroll of about 20 people. We're not going to let them down. But you and I both know, we're lucky enough to have the means to do that not bragging, just saying. But most of the restaurants on my blocks, most of us won't business.

I think they're going to if they don't get customers, they may be able to get through this. And that means American working people who did nothing but wash dishes, and be waitresses and waiters, which we love, and we support, they will not have any sort of taxes that they can possibly have cut. They don't have a payroll break, because they're not on payroll. What do we do for these American working people, who we know, did nothing wrong whatsoever?

STEVEN T MNUCHIN: Well, Jim, let me just start with -- and as you said, there's a lot of people who have had great success in the Trump economy, and a lot of corporations that have made a lot of money. And I would hope that these corporations are willing to lower their profits and keep their employees employed through this, even though there'll be short term difficult times.

There will be people, as you said, who are impacted. And again, we're going to look at every tool in the toolbox. So, stimulus can be done in a lot of different ways. We can do it for people who are working. We'll look at people who have been laid off specifically related to the Coronavirus. Again, let me just comment. This isn't like the financial crisis. We have a medical situation that has shut down and will shut down parts of the economy like we've never seen. But then they're going to open back up. And I think there's going to be a lot of demand.

So, you're right. What we need to focus on is particularly the small businesses, who are going to have big, big issues. And do everything we can. And again, the good news is we're an economy where there were more jobs open than workers. So hopefully, some of these people will be redeployed in other parts of the economy.

JIM CRAMER: Mr. Secretary, I want to thank you so much. We want to thank you so much. Everything you can do for the American working person will stand out as--put you in where we talk about with the Treasury Secretaries, when you walk the halls of the Treasury Department. You are -- I got I'll let you go. I know that. Let's get it done. Let's beat this.

STEVEN T MNUCHIN: Jim, we will. Thank you.

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About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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