US Senate Finance Focuses On China In Treasury Nominee Hearing

As the Senate Finance Committee considered the nominations of three senior Treasury Department appointments Friday, the U.S.'s policies toward China loomed large, especially China's currency policies.

The Finance panel considered the nominations of Lael Brainard, nominated to be Treasury's undersecretary for international affairs, Mary John Miller, the nominee to be Treasury's assistant secretary for financial markets, and Charles Collyns, nominated to be Treasury's assistant secretary for international finance.

Sen. Chuck Grassley, the top Republican on the Finance Committee, said he is "frustrated" that the Obama Treasury did not name China a currency manipulator in its foreign exchange report, adding that he was also critical of the Bush Treasury for avoiding this designation.

"I believe we should be calling a spade a spade," he said, adding there is little doubt that China manipulates its currency in ways that are harmful for the American and global economies.

Brainard said China's currency policy played a "stabilizing" role in the early phases of the recent financial crisis but now these currency policies are "getting in the way of global recovery."

She said working on this matter would be an "absolute top priority" if she is confirmed.

Brainard, in a clear reference to China, said the administration believes "domestic demand led growth" by other key nations is critical for a balanced global economy.

"They are going to have to reorient their economies fundamentally," she said.

Brainard said that the global economy is "coming back slowly and haltingly," adding there is now "the first signs of growth" emerging in the world economy.

Collyns said the yuan is "clearly undervalued" and that this is a "major concern" for the Treasury. The undervalued Chinese currency, he said, is "blocking the adjustment needed" to get the global economy back on track.

Collyns also said he sees signs of hope regarding the global economy.

"The global economy is beginning to emerge from a very difficult period," he said, adding that the administration wants "strong, sustained and balanced growth" internationally.

Miller said that if confirmed she wants to help rebuild the "confidence of investors large and small in our financial markets."

Sen. Kent Conrad, serving as the acting chairman of the panel because of the absence of Finance Committee Chairman Max Baucus, told the nominees that he hopes the Senate can "move your nominations expeditiously."

Brainard's nomination has been delayed by a months-long investigation by the Finance Committee into her tax returns that revealed several late payments of property and unemployment insurance taxes.

Grassley said Brainard's tax problems makes her part of a "growing list" of administration nominations with tax problems.