President-elect Donald Trump is planning to name investor and former Goldman Sachs executive Steven Mnuchin as treasury secretary, opting for an industry insider with no government experience to helm the agency in charge of the nation’s finances, according to people familiar with the matter.
Mnuchin (pronounced mah-NEW-chin) joined Trump’s whirlwind campaign in May as finance chairman, despite the fact that he had never worked in politics and that he had donated to Democrats in the past. He quickly earned Trump’s trust as he worked closely with the Republican National Committee to raise substantial amounts of money in a short period. On policy issues, he was instrumental in crafting the details of Trump’s proposal to overhaul the tax code.
“He’s an expert on finance issues,” said Stephen Moore, who worked with Mnuchin as an adviser to the president-elect on the campaign trail. “He clearly, like Donald Trump, understands that the number one goal for this administration is going to be to grow the economy and get jobs.”
The president-elect scored an early victory Tuesday night when air-conditioning manufacturer Carrier announced that it would reverse plans to move one of its factories from Indiana to Mexico. The company, which is owned by United Technologies, said about 1,000 U.S. jobs would be preserved.
Trump’s tough talk on trade during his campaign helped cement his populist appeal. But Trump — a real estate developer famous for his flashy style — appears to be staffing his Cabinet with advisers who also have amassed extraordinary wealth. Trump is expected to nominate industrialist billionaire Wilbur Ross to lead the Commerce Department, and Michigan billionaire Betsy DeVos was named as Trump’s pick for education secretary last week.
Mnuchin made his fortune on Wall Street, first at the storied New York investment bank Goldman Sachs and then as the head of his own private-equity fund. His close ties to an industry he would be in charge of regulating have the potential to complicate his confirmation and could undermine Trump’s populist message.
While on the stump, the president-elect frequently lambasted big banks — Goldman Sachs in particular — and advocated the reinstatement of the Glass-Steagall legislation that once separated retail and investment banks. In addition, Mnuchin was deeply involved in running a bank that had been at the heart of the subprime housing bust, eventually selling it for billions of dollars in profit.
“So much for draining the swamp,” said Adam Hodge, communications director for the Democratic National Committee. “Trump is already heading into office as the most corrupt, conflicted and unpopular president-elect in history, and now he’s breaking his signature promise to the voters who elected him.”
As treasury secretary, one of Mnuchin’s top priorities probably would be shepherding Trump’s tax plan through Congress. Trump has advocated cutting the corporate tax rate to 15 percent and streamlining individual tax rates into three brackets. Although Republican lawmakers have expressed enthusiasm for reform, there remains substantial debate over how to tackle corporate profits overseas, among other issues. In addition, key GOP senators are advocating for a more bipartisan approach that probably would require complex negotiations with Democrats.
“I think he’s extremely knowledgeable about taxes,” Moore said. But, he added, “most members of Congress don’t know who he is.”
In news interviews, Mnuchin has said he was not previously close to Trump, but the two move in the same circles of big-money financiers, willing to take big risks in the face of improbable odds. Trump’s campaign was just the latest big bet in Mnuchin’s varied career in the upper echelons of finance, which has stretched from New York to Hollywood.
Working at Goldman Sachs was a family affair for Mnuchin. Before he worked at the Wall Street giant, his father, Robert Mnuchin, spent more than 33 years at the bank. His brother, Alan, was a Goldman Sachs vice president.
Mnuchin spent 17 years at the bank, rising from its savings-and-loan business to mortgage-backed bond trading before becoming the bank’s chief information officer in 1999. Mnuchin is a “very smart guy,” Lloyd Blankfein, chief executive of Goldman Sachs, said this month.
“He was a very senior guy at a very young age at Goldman Sachs,” he said.
Blankfein said that Mnuchin reported to him when he ran the fixed-income division but that they haven’t spoken much in recent years. “I’m sure he stayed just as smart as he was when he was at Goldman,” he said.
After leaving the bank, Mnuchin worked for famed billionaire investor George Soros — a well-known Democratic donor. He then founded his own private-equity fund, Dune Capital Management. Among its most notable investments was the purchase of IndyMac from the Federal Deposit Insurance Corporation during the depths of the financial crisis in 2009.
Dune led the consortium of investors who bought the failed subprime lender for about $1.6 billion, and Mnuchin oversaw the rebuilding of its business as chairman of the renamed OneWest. (A member of Trump’s economic advisory team, John Paulson, was also part of the investor group.)
Under Mnuchin, the bank more than doubled its branches and increased its assets. But it also faced criticism from advocacy groups who complained about aggressive foreclosure tactics. At one point, activists marched to Mnuchin’s home in the Bel Air area of Los Angeles to protest its treatment of customers.
As treasury secretary, Mnuchin would be responsible for the Trump administration’s response to the aftermath of the housing bust. A crisis-era program that helps homeowners refinance their mortgages, for example, is not scheduled to end until next year. He also would head the Financial Stability Oversight Council, which oversees some of the country’s largest financial institutions.
“Putting a Wall Street CEO in charge of his administration’s oversight of Wall Street is dangerous and even more proof that Donald Trump is only interested in protecting corporations at the expense of working families,” said Jessica Mackler, head of American Bridge 21st Century, a Democratic political action committee.
In 2014, OneWest was sold to financial services firm CIT Group for $3.4 billion. Mnuchin is on CIT’s board of directors but is not involved in day-to-day operations. He owns about $100 million in company stock, according to compensation research firm Equilar.
After moving to California with the purchase of IndyMac, Mnuchin also became involved in financing Hollywood films. Dune Capital invested in several blockbusters, including “American Sniper,” “Gravity,” “Avatar” and “Life of Pi.”
Renae Merle contributed to this report.