Cybersecurity, financial reg reform, debit limit highlight Treasury secretary’s testimony in House

Cybersecurity vigilance, passage of financial regulatory reform legislation and increasing the debt limit of the U.S. government were all key points of testimony by the Treasury secretary before a House committee Tuesday.

Steven Mnuchin, providing testimony on the 2017 annual report of the Financial Stability Oversight Council (FSOC, a body he chairs as Treasury secretary), told the House Financial Services Committee that the financial system’s “heavy and increasing reliance” on technology increases the risk of significant cybersecurity incidents which “could disrupt the financial sector and potentially impact U.S. financial stability.”

Mnuchin noted that the FSOC annual report includes a recommendation to create a private sector council of senior financial services executives to “collaborate with regulators in order to mitigate cybersecurity threats.”

The concern, Mnuchin said, is that the regulators work together in concert with the industry in providing protections. In response to comments from Rep. Blaine Leutkemeyer (R-Mo.), he agreed that streamlining a “patchwork of regulations” would be a sound approach in ensuring cybersecurity. “I am participating along with DHS (Department of Homeland Security) and with the NSC (National Security Council) to coordinate across government,” Mnuchin said. “We are not immune to these issues ourselves; what we are learning to protect government we are using to protect industry as well.”

In other comments, the Treasury leader said he commended both the Senate and House for developing financial regulatory reform legislation, specifically pointing to the Financial CHOICE Act (H.R. 10, passed by the House in June 2017 by a vote of 233-186).

That legislation as passed by the House, would, among other things, bring independent agencies such as the Consumer Financial Protection Bureau (CFPB) and the National Credit Union Administration (NCUA) under the congressional appropriations process; convert the CFPB into a consumer law enforcement agency; eliminate the CFPB’s supervisory authority over financial institutions; and limit the bureau’s authority to take action against entities for abusive practices. The legislation is pending in the Senate.

On the debt limit, Mnuchin pleaded with the committee and Congress generally “to act as soon as possible to protect the full faith and credit of the United States by increasing the statutory debt limit.” Mnuchin pointed to a letter he sent to Congress last week providing notification of his determination that a “debt issuance suspension period” (DISP) would last until Feb. 28.

Mnuchin also called the indefinite conservatorship for housing secondary market organizations Fannie Mae and Freddie Mac “neither a sustainable nor a lasting solution.” He said the administration of President Donald Trump “looks forward to working with Congress to reform America’s housing finance system in a manner that helps consumers obtain the housing best suited to their own personal and financial situations while, at the same time, protecting taxpayers.”

Testimony of Treasury Secretary Steven Mnuchin on FSOC 2017 annual report before House Financial Services Committee