WASHINGTON (AP) — Donald Trump’s pick to lead the Treasury Department, Stephen Mnuchin, built his reputation and his fortune as a savvy Wall Street investor. But one of those investments has put him in the crosshairs of Democrats as he heads into his confirmation hearing Thursday: sub-prime mortgage lender IndyMac bank.
Mnuchin, who served as Trump’s finance chairman during the campaign, has defended his role in the purchase of the failed bank, whose collapse in 2008 was the second biggest bank failure of the financial crisis. Mnuchin, who assembled a group to buy the bank from the government, renamed it OneWest and turned it around, selling it for a handsome profit to CIT Group Inc. in 2014.
But critics have cited the bank’s foreclosure policies under Mnuchin as a prime example of the kind of Wall Street greed that Trump, the candidate, campaigned against. They planned to question Mnuchin about the foreclosures during his confirmation hearing before the Senate Finance Committee.
Mnuchin has called the criticism unjustified, saying in a CNBC interview right after Trump nominated him in November that buying IndyMac was “one of the most proud aspects of my career” because his successful efforts to turn the bank around saved jobs. He said the foreclosures reflected the fact that the bank before he took over had accumulated the one of the worst portfolios of bad mortgage loans “in the history of time.”
A group of 10 Democratic senators led by Sen. Elizabeth Warren participated in a forum Wednesday to hear testimony from some of the people who lost their homes after Mnuchin’s bank foreclosed.
“OneWest was notorious for its belligerence and for its cruelty,” Warren said, contending that OneWest gained a reputation as a “foreclosure machine.”
Liberal groups began airing a television ad on the foreclosures seeking to bring pressure on five Republican senators, including Sens. Chuck Grassley of Iowa and Dean Heller of Nevada, who are both members of the Finance Committee, to vote against Mnuchin.
“Steven Mnuchin, the foreclosure king, made millions by taking people’s homes with no regard to anything but his own bottom line,” said Stephanie Taylor, co-founder of the Progressive Change Campaign Committee, one of the groups running the ad.
But Mnuchin’s supporters include Finance Committee Chairman Orrin Hatch, R-Utah. He called Mnuchin a “leader and a manager through his career, demonstrating an ability to make tough decisions and to be accountable.”
Mnuchin, who as Treasury secretary would serve as the administration’s chief economic spokesman, is also expected to face questions about Trump’s ambitious plans to double the country’s growth rate through tax cuts, reducing government regulations and boosting government spending on infrastructure projects.
Mnuchin said in November that the administration’s “No. 1 priority is tax reform. This will be the largest tax change since Reagan.”
Trump during the campaign also vowed to target countries including China and Mexico that he contended are pursuing unfair trade practices that have cost millions of U.S. jobs. He has said one of his first actions after taking office will be to label China a currency manipulator. It would be Mnuchin’s Treasury Department that would make that finding.
While Trump campaigned against Wall Street during the campaign, attacking Hillary Clinton for the speaking fees she earned from Goldman Sachs, Mnuchin is just one of a number of former Goldman Sachs executives tapped by the president elect for top economic jobs in his administration.
Mnuchin worked at Goldman for 17 years, making partner in 1994 and overseeing the firm’s mortgage trading desk before becoming chief information officer. He left Goldman in 2002 and, after running an investment fund set up by billionaire investor George Soros, he and two former Goldman colleagues set up a new hedge fund, Dune Capital Management in 2004.
Mnuchin led Dune into financing Hollywood movies including a number of blockbuster hits including “Avatar.”