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  • Writer's pictureMichael McAuliff

Mnuchin's Metrics For Financial Stability Ignore Risk To People, AOC Says

Alexandria Ocasio-Cortez tried a different tack with Treasury Secretary Steve Mnuchin at Thursday's Financial Services Committee hearing -- just get him on the record saying all the things he and other top regulators don't see as threatening to financial stability.


They tend to leave out things that actually threaten people.

Rep. Alexandria Ocasio-Cortez quizzes Steve Mnuchin on the Financial Stability Oversight Council.l
Rep. Alexandria Ocasio-Cortez

Things like $1.5 trillion in student debt, $1 trillion in new, risky "leveraged debt," medical debt, climate change and housing costs.


"My strategy on Financial Services is a little different than my strategy on Oversight because I think that as development in the domestic and global economy happens, it is really important to get people on the record now about what they think is systemic and not, when those systemic risks come [home] to roost," the freshman New York rep said after a hearing on the Financial Stability Oversight Council.


"So I'm asking him about student loans, mortgages, medical debt, leveraged lending, climate change because these are the systemic risks," Ocasio-Cortez said. "To have someone in Mnuchin's position not bring this up, particularly with FSOC -- these are intractable systemic problems and you need to have a coalition of people stitching together how we're going to address this and how it's rippling throughout our economy."


With the exception of climate, which he said he would consider, Mnuchin said in the hearing that the items on Ocasio-Cortez's list were all things the Oversight Council has some interest in, but not ones that represented any sort of imminent threat to financial stability.


In one sense, Ocasio-Cortez was taking the long view in getting Mnuchin's statements on the record about things that other observers do fear could threaten stability. If he's wrong, she can point back at what conservative, Trumpian economics missed or caused.


In another sense, she was making the point that differing world views perceive threats to stability in very different ways.


For Mnuchin, the metrics were strictly about the banking system. For Ocasio-Cortez, they should be about the people who use the system.


"The real problem is the fact that the public servants that should be most in charge of our economy are outwardly focusing on Wall Street indicators, and are not focusing on the variables that are most important to working people," Ocasio-Cortez said later.


"What is the point of saying the economy is good when medical debt is going up, when student loans are going up, when people can't afford their housing, when quality of life is decreasing?" She said, noting that her generation is one of the first that is expected to have a lower quality of life than their parents.


"If everyone's life, materially, is eroding and people are saying the economy is great, then I think we need to change the measurements by which we measure our economy," she said.


Climate is a signature part of the erosion for Ocasio-Cortez. And although Mnuchin said he'd raise he issue of climate, she was not impressed by his argument that it was not really a matter for the Financial Stability Oversight Council, and left not in the near term.


"The question is, How long?" Ocasio-Cortez said. "Because we're talking about losses as soon as 2030. And the losses aren't all going to happen in 2030, they're going to happen up to then and we're having losses right now."


She has a long list.


"What is the negative economic impact of the wild fires in California? Of Hurricane Maria? Of the floods in the Midwest that have decreased farm yields so that food prices are going up? This is happening right now, and it doesn't seem like they're paying attention to this," she said.


"Cumulatively, this is just the beginning of a massive negative economic impact that climate change is going to wield on the U.S. and the global economy," she said. "If we're not measuring it now, people are going to continue thinking about it as some, like, dystopian futuristic fantasy, but it's not. It's happening right now."

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