President-elect Donald Trump could face a classic choice between a Wall Street insider and a GOP strategist — investor Steve Mnuchin and House Financial Services Chairman, Texas Republican Jeb Hensarling — as he moves to replace outgoing Treasury Secretary Jacob J. Lew.
Trump advisers such as investor Carl Icahn and Stephen Moore, a visiting fellow at the Heritage Foundation, describe Mnuchin, Trump’s campaign finance director, as the front-runner for the Treasury post. But GOP allies of Hensarling — including Senate Majority Whip John Cornyn, Sen. Ted Cruz and former Sen. Phil Gramm, all fellow Texans — say they believe Hensarling has emerged as a strong challenger after meeting with Trump on Thursday.
Gramm said in an interview that the next Treasury secretary would need several qualities: “Knowing public finance, knowing the tax system and, obviously in this case, knowing how to dismantle Dodd-Frank. All of those would be helpful.”
During the campaign, Hensarling visited Trump’s team in Manhattan to explain his proposal to repeal and replace Dodd-Frank, the 2010 financial services overhaul. Hensarling’s bill has broad GOP support.
Trump’s choice may be a bellwether of his fiscal and regulatory priorities, and it may reveal whether he puts more value on an emissary to Wall Street or an architect of legislation with ties to Republicans.
While Mnuchin has support from Icahn, Moore and other Trump associates, Hensarling has a key ally in Vice President-elect Mike Pence, chairman of the Trump transition team.
In an interview this week, Hensarling described Pence as a friend, and recalled being a passenger on Pence’s campaign plane when it skidded off the runway at New York City’s LaGuardia Airport on Oct. 27.
Both men also became well-acquainted as leaders of the conservative Republican Study Committee in the House.
In his visit to Trump Tower on Thursday, Hensarling said he asked Trump to “tell me what position you want me to play” while also making clear that he was happy to remain a House chairman. “We were talking tax policy. We were talking Dodd-Frank. We were talking trade. This was a wonderful conversation,” Hensarling said.
Gramm called Hensarling “the best and the brightest” and a quick study in the money and banking class that the former senator once taught as an economics professor at Texas A&M University. Gramm is now vice chairman of UBS Investment Bank and serves as a senior adviser for Gramm Partners, a consulting and lobbying firm.
Cruz told Roll Call he agreed with Gramm’s assessment: “Jeb is smart, talented and principled. He does a terrific job representing Texans in the House, and I am sure he would do a terrific job in any number of positions in a new administration.”
Kentucky GOP Sen. Rand Paul played down the idea of picking a Treasury secretary with Wall Street experience in an interview and called Hensarling “a very bright congressman.”
“I think it should be based on policy more than where you work and things,” Paul said.
While Republicans weigh the Treasury candidates, many Democrats are focusing their fire on Mnuchin, chairman and co-CEO of Dune Capital Management. Liberal critics are taking jabs at Mnunchin’s role as a former Goldman Sachs executive and former owner of California-based OneWest Bank, which he sold last year.
Two advocacy groups, the California Reinvestment Coalition and the Fair Housing Advocates of Northern California, filed a complaint with the Housing and Urban Development Department, charging that the bank failed to place enough branches or mortgage loans in minority communities.
“I think we’ve had enough Goldman Sachs people running the Treasury Department. I think you need a perspective that represents working people and not Wall Street,” Vermont independent Sen. Bernie Sanders said.
Sanders pointed to the Goldman Sachs experience of three former Treasury secretaries: Henry M. Paulson Jr., Larry Summers and Robert Rubin. If selected, Hensarling would be the first lawmaker to head the department since former Sen. Lloyd Bentsen, a Texas Democrat, under President Bill Clinton.
Others mentioned as potential candidates for Treasury secretary include billionaire investor Wilbur Ross, chairman of a private equity firm; Jamie Dimon, chairman and CEO of JPMorgan Chase; and Lawrence Kudlow, a CNBC commentator and former chief economist for Bear Stearns.
If Hensarling is nominated for a new post, it would set up a competition to replace him as chairman, with several candidates including Foreign Affairs Chairman Ed Royce of California, Frank D. Lucas of Okalahoma, Patrick T. McHenry of North Carolina, chief deputy whip; and Blaine Luetkemeyer of Missouri, a former banker and insurance agency operator.
Lucas said Hensarling would be a strong choice for several administration jobs. “Whether it’s Treasury secretary or Office of Management and Budget director, or any other senior position, he would bring energy, enthusiasm, and a never-say-die spirit,” he said.