Big Short II
After an effort to purge lobbyists from his quickly arranged transition team, President-elect Donald Trump, who campaigned on a “drain the swamp” message, is set to promote another swamp-dweller to a high-ranking position in his administration.
Mnuchin served as Trump’s national finance chairman during the campaign after a long history in private investment banking and on Wall Street. Like Trump himself, Mnuchin was a donor to Hillary Clinton in prior campaigns. According to filings from the Federal Election Commission, he has contributed more than $8,000 to Clinton since 2000.
Prior to joining the team, Mnuchin worked at Goldman Sachs for 17 years and OneWest Bank, which got into hot water for a series of attempted home foreclosures after the 2008 housing bubble burst. He also founded RatPac-Dune Entertainment, a movie-production company that bankrolled Avatar, as well as other films. After OneWest was sold to CIT Group in 2015, Mnuchin went on to serve on its board and became the chairman and chief executive of the private investment firm Dune Capital Management.
During his tenure at OneWest, the bank was responsible for attempting to remove families from their homes against the families’ wills. A New York judge erased $525,000 in mortgage debt owed by a Long Island couple to OneWest Bank in 2009 because the institution was harassing them. Suffolk County Judge Jeffrey Spinner blasted the bank’s “harsh, repugnant and repulsive” acts as they attempted to toss the family out on the street around Thanksgiving.
Spinner wrote that the bank refused to work out a deal with the couple to help make mortgage payments they owed and called the bank’s conduct “inequitable, unconscionable, vexatious, and opprobrious,” according to a report by the New York Post.
Around the same time, Mnuchin’s bank was hounding an 89-year-old widow, attempting to foreclose on her home in California.
Irene Jones, the woman in question, is reported to have said in court that the stress of repeated foreclosure threats from OneWest Bank and its predecessor IndyMac Bank made her husband depressed and contributed to his death.
That same year, the bank changed the locks on Minnesota woman Leslie Park’s home. She discovered that she had been locked out when she returned home in a blizzard. The bank later acknowledged that the incident was a mistake.
OneWest Bank also disproportionately foreclosed on senior citizens. Using a Freedom of Information Act request, the California Reinvestment Coalition determined that OneWest’s reverse-mortgage servicing subsidiary Financial Freedom was responsible for 39 percent of reverse-mortgage foreclosures nationwide, typically something that goes to senior citizens. But Financial Freedom only serves 17 percent of the market, so OneWest was foreclosing at twice the rate one would expect.
Upon learning that Mnuchin was likely to earn the administration spot, Paulina Gonzalez, executive director at the California Reinvestment Coalition, released a scathing statement.
“If Mr. Mnuchin is nominated to the position of secretary of the Treasury by President-elect Trump, it will continue an alarming trend of a series of appointments by Mr. Trump that signals a coming attack on civil rights, working families, and consumer protections by the administration,” she wrote.
“We expect that the Senate will dig into Mr. Mnuchin’s track record, and we imagine the many families who lost their homes at the hands of OneWest will be watching closely and will also want to share their experiences as part of any confirmation hearings.”
One-hundred-and-three-year-old Myrtle Lewis ran into such issues with OneWest in 2014. She accidentally allowed her insurance to lapse, which prompted the bank to attempt to foreclose on her property. Lewis reinstated her insurance and the bank still didn’t back off. It is unclear what happened to the property.
Similarly, OneWest Bank foreclosed on more communities of color than white communities, according to the California Reinvestment Coalition. Of the 35,877 foreclosures the bank conducted in California from April 2009 to April 2015, 68 percent occurred in areas where the non-white population was 50 percent or higher.
The next Treasury secretary is far from a beloved figure.
In 2011, Bloomberg News reports, the “notoriously press-shy” Mnuchin endured “protests on the lawn of his Bel Air mansion by foreclosed homeowners angered at his lender’s handling of soured mortgages.”
In terms of policy, it is unclear what Mnuchin would prioritize in a Trump administration, but it appears that they are relatively on the same page with a primary issue.
In a July interview with CNBC, Mnuchin said that Dodd-Frank Wall Street Reform and Consumer Protection Act “needs to be looked at,” and said there were good and bad parts of the law that regulates the finance industry. Trump has expressed interest in dismantling Dodd-Frank.
During his presidential campaign, Trump made an issue of his opponents’ Wall Street ties, first criticizing Ted Cruz’s wife for her job at the financial titan Goldman Sachs and then skewering Hillary Clinton for her paid speeches to the firm.
“I know the guys at Goldman Sachs,” Trump said last February. “They have total, total control over [Cruz]. Just like they have total control over Hillary Clinton.”
Yet Mnuchin, and his father, worked for Goldman—as did Steve Bannon, Trump’s White House strategist who also served as Trump’s campaign CEO and ran the far-right media outlet Breitbart.
Mnuchin explained away his ties to a campaign that was widely hated by generally more liberal Hollywood executives by suggesting it would all be worth it if he landed an administration job.
“Nobody’s going to be like, ‘Well, why did he do this?’ if I end up in the administration,” he told Bloomberg in August.
Looks like everything went according to plan.
Filed under: foreclosure |