President-elect Donald Trump’s choice to head the U.S. Treasury, Steven Mnuchin, denied on Thursday that a bank he owned had profited at the expense of vulnerable homeowners in the aftermath of the 2007-2009 housing crash.
In prepared testimony for his confirmation hearing before the Senate Finance Committee, the Wall Street veteran said accusations his OneWest Bank had operated as a “foreclosure machine” were untrue and politically motivated.
“Since I was first nominated to serve as Treasury Secretary, I have been maligned as taking advantage of others’ hardships in order to earn a buck. Nothing could be further from the truth,” Mnuchin wrote in his opening statement.
Mnuchin, a former Goldman Sachs executive, hedge fund manager and Hollywood film financier, would be the first Wall Street veteran to head the Treasury Department in eight years.
Democrats, however, see an easy target in the more than 36,000 foreclosures that California-based OneWest pursued after Mnuchin struck a lucrative deal with the Federal Deposit Insurance Corp to absorb most of the losses from such actions.
Senator Ron Wyden, the Finance Committee’s top Democrat, hammered Mnuchin on his record at OneWest, for the bank’s automated “robo-signing” of foreclosure documents and foreclosing on the widows of reverse mortgage holders.
He also criticized Mnuchin’s use of tax havens such as Anguilla and the Cayman Islands to shelter hedge fund profits, questioning his qualifications to oversee a major revamp of tax laws to make them fairer to working Americans.
“In Mr. Mnuchin’s case, millions of dollars in profits from Hollywood exports like the movie ‘Avatar’ were funneled to an offshore web of entities and investors,” Wyden said in his opening remarks.
Finance Committee Chairman Orrin Hatch, a Republican, sharply criticized Democrats’ attacks against Mnuchin, which included a Capitol Hill forum on Wednesday that featured former OneWest borrowers who lost homes to foreclosure.
“Objectively speaking, I don’t believe anyone can reasonably argue that Mr. Mnuchin is unqualified for the position,” Hatch said.
Mnuchin argued that his bank was a “loan modification machine,” offering payment reductions to 101,000 borrowers to try to keep them in their homes, and said his turnaround of the failed IndyMac bank, which became OneWest, saved thousands of jobs and homes.
The 54-year-old Mnuchin will also face questioning on how he intends to manage Trump’s tax cut and spending plans, which could significantly increase the U.S. deficit, fuel inflation and further boost the dollar’s value. He also must manage thorny economic relations with China even as Trump’s trade team plans tough measures against the Asian export powerhouse.
And Trump recently usurped a function usually reserved for Treasury secretaries: commenting on the dollar’s value. The president-elect said the dollar was too strong, a move that roiled currency markets.
(Reporting by David Lawder; Editing by Leslie Adler and Paul Simao)