President-elect Donald Trump’s pick to lead the Treasury Department is likely to face a contentious confirmation battle centered on his purchase of a failed subprime mortgage lender that repeatedly has been accused of wrongful foreclosures.
The formal vetting process for Steven T. Mnuchin, who served as Trump’s campaign finance chairman and worked at investment bank Goldman Sachs for nearly two decades, has not yet begun. A staffer at the Senate Finance Committee, which is handling the nomination, said it is waiting for his paperwork to be completed before starting the process. In the meantime, Democrats have already begun preparing a line of attack that accuses Mnuchin of preying on the middle-class workers that helped sweep Trump into the White House.
Adam Green, co-founder of the Progressive Change Campaign Committee, said political action committee plans to use paid advertisements and local organizing to pressure Republican lawmakers from states that suffered widespread foreclosures to oppose Mnuchin’s confirmation. The AFL-CIO issued a statement this month slamming Mnuchin for profiting from the worst financial crisis in generations. And Senate Democrats — led by Oregon Sen. Jeff Merkley, Vermont Sen. Bernie Sanders and Massachusetts Sen. Elizabeth Warren — set up a website calling him the “Foreclosure King” and soliciting complaints from his bank’s customers.
“Trump’s cabinet hearings are right around the corner in January and you better believe that by the time they're over, the American people will know that the Trump Administration is all about special interests and the super-rich at the expense of working people,” Merkley posted on Facebook recently.
Mnuchin led a consortium of investors that purchased the troubled bank IndyMac from the federal government in 2009, acquiring a $13.9 billion portfolio of some of the nation’s shoddiest loans for about $1.6 billion. Tara Bradshaw, a spokeswoman for Mnuchin, said about 178,000 loans were already in the foreclosure process when he took over the bank and renamed it OneWest. Bradshaw said he oversaw 101,000 mortgage modification offers, some of which forgave part of borrowers' principal balance. Mnuchin sold OneWest to CIT Group in 2015 for more than double what he paid for it.
“Steven is proud of his record at OneWest. He was able to save three institutions that were in receivership, did tens of thousands of loan modifications, saving homes and jobs, and developed OneWest Bank into a regional banking franchise that in turn made loans to consumers and businesses that helped create jobs,” Bradshaw said.
To avoid potential conflicts of interest, Mnuchin stepped down this month from his position on the board of directors of CIT as well as the board of Sears Holding. According to compensation research firm Equilar, Mnuchin owned about $100 million in CIT stock as of last month. Bradshaw said he is also working with attorneys to resolve other outstanding conflicts. Government ethics experts said Mnuchin will likely have to divest at least some of his financial holdings.
After Mnuchin visited Capitol Hill earlier this month, top Republicans on the finance committee praised his selection.
“Through his private sector background, Steven will have to untangle the web of red tape found in our mammoth tax code and navigate a minefield of heavy-handed regulations that have stifled opportunity and growth,” said Sen. Orrin Hatch (R-Utah), chairman of the finance committee.
The finance committee has received three years of Mnuchin’s tax returns and responses to a questionnaire but are awaiting his final financial disclosures and ethics forms, which must be reviewed by the White House Office of Government Ethics before they are sent to the committee. A Senate aide said that Mnuchin’s vast private holdings could take more than a week to review, pushing back the scheduling of a confirmation hearing. Beyond the purchase of IndyMac, Mnuchin was an active private equity investor with stakes in retail companies and Hollywood film studios.
Only 51 votes are required in the Senate to confirm Trump’s Cabinet nominees, after new rules passed by Democrats three years ago eliminated the need for a filibuster-proof majority of 60 votes. But Republicans have little margin for error, holding a narrow edge of 52 seats. A handful of defections could sink Trump’s picks.
“This is not a united Republican party,” said Jeff Hauser, executive director of the Revolving Door Project, a liberal watchdog group that scrutinizes executive-branch appointments.
Among the lawmakers Democrats hope to sway is Republican Sen. Dean Heller of Nevada, who is facing reelection in 2018 and has been mentioned as a possible gubernatorial candidate. Nevada was one of the hardest-hit states during the housing bust, and it still ranks third in the country in amount of foreclosures, according to RealtyTrac. Heller vocally opposed Trump during the election, even broaching the possibility that he would not vote for either major party candidate.
Mnuchin is not the only Cabinet nominee who could be in for a rocky confirmation hearing. Democrats have also sharply criticized Trump’s choice for secretary of state, ExxonMobil chief executive Rex Tillerson, and his pick to lead the Commerce Department, billionaire industrialist Wilbur Ross, among others.
But Green said that Mnuchin’s nomination deserves particular scrutiny because he would lead the agency responsible for carrying out the economic agenda that was central to Trump’s victory.
“Mnuchin is the poster child for Trump betraying his own voters by turning our economy over to Wall Street and giant corporations at the expense of American working families,” he said.
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