In a tense hearing Thursday morning, the new administration’s Treasury Secretary nominee Steven Mnuchin faced scrutiny from Democratic senators concerned about his profiting handsomely off homeowners who lost their homes during the housing crisis.
Mnuchin, whose career includes a 17-year stint at Goldman Sachs and Hollywood movie production, won early praise from Republicans. But stiff questioning followed from Democrats for his role as CEO of a company that took over IndyMac Bank, now known as OneWest, which failed because of its bad home loans and later pushed through many controversial foreclosures, ultimately yielding massive profits for Mnuchin.
Oregon Democrat Ron Wyden, the ranking member of the Senate Committee on Finance, called his practices “predatory.”
“While Mr. Mnuchin was CEO, the bank proved it could put more people on the street faster than just about anybody else around,” Wyden said in his opening statement. Wyden added, “Treasury secretary ought to be somebody who works on behalf of all Americans, including those who still wait for the economic recovery to show up in their communities. When I look at Mr. Mnuchin’s background, it’s a real stretch to find hard evidence that he would be that kind of Treasury secretary.”
Committee Chairman Orrin Hatch, a Republican from Utah, rushed to Mnuchin’s defense early, accusing the Democrats of obstructionism.
“Objectively speaking, I don’t think anyone can argue that Mr. Mnuchin is unqualified for this position, so I hope we don’t have those type of stupid arguments,” Hatch said.
There is no evidence that any laws were broken in Mnuchin’s management of OneWest bank, he added.
Mnuchin was ready with his response: “Let me be clear: My group had nothing to do with the creation of risky loans in the IndyMac loan portfolios,” he said, and the group invested $1.6 billion in the bank. “We renamed the business OneWest bank and saved thousands of jobs.”
Mnuchin, 54, a divorced father of three children, followed his father’s footsteps to Goldman Sachs, where he worked for 17 years.
Campaign finance records show Mnuchin contributed to the political campaigns of many Democrats, though he was an early supporter of Trump’s, having met him about 15 years ago, after Mnuchin left Goldman Sachs and started a hedge fund that later invested in at least two Trump real estate projects. More recently, he has been a money man in Hollywood, with a production company that produced The Lego Movie, American Sniper and Suicide Squad.
Mnuchin’s appointment was controversial in part because it departed from Trump’s rhetoric on the campaign.
As a presidential candidate, Trump vilified Wall Street bankers, arguing they were part of an establishment more allied with Hillary Clinton. One television ad featured video of Goldman CEO Lloyd Blankfein, while Trump says in a voice-over, “it’s a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations and political entities.”
But the toughest questioning from Senate Democrats will focus on how OneWest handled its portfolio of troubled mortgages, after he led a group of investors who took over the bank from the Federal Deposit Insurance Corp. The Democrats cited cases where the bank aggressively foreclosed on 35,000 homeowners and did not modify loans to enable more of them to remain in their homes.