Capitol Report: Tillerson’s Russia ties, Mnuchin’s IndyMac purchase to be issues in Senate hearings

Donald Trump’s choices to head the State Department and the Treasury can expect to face a barrage of questions during Senate confirmation hearings about their past business dealings, with lawmakers already zeroing in on ties to Russia and Wall Street.

Rex Tillerson, the Exxon Mobil Corp. XOM, +1.76%   CEO tapped by Trump to be the top U.S. diplomat, has already come under biting criticism from some Republican senators over his ties to Russia. One, Sen. Marco Rubio of Florida, has said being a “friend of Vladimir” isn’t what he’s hoping for in a secretary of state — a reference to the CEO’s relationship with President Vladimir Putin.

Rubio is a member of the Senate Foreign Relations Committee, which plans to hold a confirmation hearing for Tillerson in early January. Sen. Lindsey Graham, a South Carolina Republican, said in a statement on Tuesday that “there are many questions which must be answered,” based on Tillerson’s business dealings with the Russian government.

Read: Opinion: Donald Trump’s cabinet choices mean big business.

Democrats, meanwhile, are expected to turn up the heat on Trump’s Treasury pick Steven Mnuchin over issues including his leading the purchase of failed subprime mortgage lender IndyMac in 2009. Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, said in a statement that Mnuchin has a “history of profiting off the victims of predatory lending.” Sen. Sherrod Brown, an Ohio Democrat also on the finance panel, criticized Mnuchin’s Wall Street background and said: “This isn’t draining the swamp — it’s stocking it with alligators.” The committee hasn’t set a date yet for a Mnuchin hearing.

Mnuchin can be expected to vigorously defend the IndyMac deal, having told The Wall Street Journal: “We turned around a huge economic disaster.”

Exxon Mobil CEO Picked for Secretary of State

President-elect Donald Trump picked Exxon Mobil Corp. Chief Executive Rex Tillerson as his secretary of state, choosing a veteran chief executive whose relationships with foreign leaders could complicate his confirmation prospects. Photo: Associated Press

With Republicans holding the Senate majority, confirming a GOP president’s choices should, in theory, be a given. But there is reason for Trump to be especially nervous about Tillerson, as he or other nominees cannot afford many Republican defections. The GOP is set to control the Senate next year with 52 seats to Democrats’ 48, and confirmation requires a simple majority in the full Senate.

In announcing Tillerson, Trump’s transition team highlighted his experience in Russia, among other countries. It did not mention the CEO’s being awarded the Order of Friendship decoration from Russia after striking an oil deal in 2011. With Republican leaders joining a call for a probe of Russian hacking during the U.S. presidential election, Tillerson’s ties are certain to come under extra scrutiny.

Tillerson and Mnuchin will both have staunch defenders on Capitol Hill. Senate Foreign Relations Committee members Ron Johnson of Wisconsin and Jeff Flake of Arizona, both Republicans, tweeted statements of support for Tillerson on Tuesday morning. The panel’s chairman, Sen. Bob Corker of Tennessee, said Tillerson has “an extraordinary working knowledge of the world.”

“His nomination is a close call but we suspect Tillerson will ace his confirmation hearings and squeak through,” wrote Greg Valliere of Horizon Investments, in a note Tuesday morning.

Senate Finance Committee Chairman Orrin Hatch highlighted former Goldman Sachs GS, +0.58%   banker Mnuchin’s private-sector experience in a statement last week. The statement didn’t mention Mnuchin’s lack of government experience — something Tillerson lacks as well.

Mnuchin can be expected to stress his banking background, and has already had a hand from Trump himself in defending the IndyMac purchase.

“He purchased IndyMac Bank for $ 1.6 billion and ran it very professionally,” Trump said in a statement on Nov. 30, “selling it for $ 3.4 billion plus a return of capital. That’s the kind of people I want in my administration representing our country.”

Foreclosures on the homes of delinquent IndyMac borrowers sparked protests outside Mnuchin’s residence in Los Angeles, according to The Wall Street Journal. The bank was later renamed OneWest Bank and is now part of CIT Group Inc. It is under civil investigation by the Department of Housing and Urban Development for loan-servicing practices, the Journal reported.

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