WASHINGTON — President-elect Donald Trump selected a former Goldman Sachs trader and Hollywood financier as secretary of the Treasury on Wednesday, handing Democrats a high-profile target to make the case that Trump is abandoning his populist campaign promises to clear out monied elites and make Washington work for the average Joe.
Trump named Steven Mnuchin
As with his other Cabinet choices, the selection elevates one of Trump’s early supporters to a plum government role. Mnuchin served as the national finance chairman for Trump’s campaign, joining shortly after the president-elect clinched the Republican nomination in May.
“Steve Mnuchin is a world-class financier, banker, and businessman, and has played a key role in developing our plan to build a dynamic, booming economy that will create millions of jobs,” Trump said.
Also Wednesday, Trump named billionaire investor Wilbur Ross, 79, an early financial backer of Trump’s campaign, to be his secretary of commerce. The choices further boost the rich, white, and largely male makeup of Trump’s emerging Cabinet.
Democrats and their allies signaled they will make Mnuchin’s confirmation as turbulent as possible. Readying their line of attack, they seized on his role in the resurrection of a Southern California mortgage lending institution that failed during the 2008 financial crisis. As Mnuchin led the bank’s revival, it was the focus of complaints by consumer watchdogs that it engaged in unfair foreclosures and discriminatory lending practices.
“Given Mr. Mnuchin’s history of profiting off the victims of predatory lending, I look forward to asking him how his Treasury Department would work for Americans who are still waiting for the economic recovery to show up in their communities,” said Oregon Senator Ron Wyden, the top Democrat on the Senate Finance Committee, which will vet Mnuchin’s nomination.
“We need a Treasury secretary who will stand up to predatory lending, not one who practiced it,” tweeted Senator Jeff Merkley of Oregon, a staunch Wall Street critic.
Senator Elizabeth Warren was, not surprisingly, critical as well.
“His bank was infamous for its aggressive tactics in dealing with families that had been tricked on mortgages,” the Massachusetts Democrat said in an interview with the Globe, referring to OneWest Bank, which Mnuchin ran for six years. “People like Steve Mnuchin turned millions of lives upside down, and now Donald Trump wants him to run the United States Treasury. That is outrageous.”
The business community is also anticipating a fierce fight.
“We expect this nomination to be one of the more difficult lifts in the Cabinet,” predicted Isaac Boltansky, a Washington analyst with Compass Point Research & Trading, in a note to clients.
Mnuchin, responding to criticism that he doesn’t have the right experience, said Wednesday, “What I’ve really been focused on is being a regional banker for the last eight years,” an apparent reference to his time at the helm of OneWest and on the board of CIT Group, which bought OneWest last year.
“I know what it takes to make sure that we can make loans to small- and mid-market companies, and that’s going to be our big focus, making sure we scale back regulation so we make sure the banks are lending,” he said.
In 2009, Mnuchin and a team of fellow investors bought from the federal government the remains of IndyMac, a California-based lender that collapsed under the weight of shoddy home loans made during the housing bubble frenzy. The group renamed it OneWest, and Mnuchin became its chairman and chief executive. Under his watch, OneWest gained a reputation for moving quickly to foreclose on delinquent borrowers — carrying out foreclosures on 36,000 households in California alone, plus an unknown number around the country, according to the California Reinvestment Coalition, a housing advocacy group that has dubbed OneWest a “foreclosure machine.”
Last year, Mnuchin and his fellow investors sold OneWest to CIT for $3.4 billion, more than double what they paid for IndyMac’s assets in 2009. Trump cited that financial success in his statement announcing his Treasury pick. Mnuchin ran OneWest “very professionally. . . . That’s the kind of people I want in my administration representing our country,” Trump said. Mnuchin is now a member of CIT’s board of directors.
High-level Republicans showered Mnuchin with praise Wednesday. Orrin Hatch of Utah, the Republican chairman of the Senate Finance panel who will run the confirmation hearing, lauded the “depth and breadth of Steven’s private sector experience.” He predicted the former investment banker would help lead the Republican-controlled Congress to “revamp the nation’s outdated tax code to create a healthier economic environment for American businesses and families here at home.”
Mnuchin said Wednesday that Trump’s proposed sweeping tax rewrite would be his top priority. He made waves by saying that while the plan is to cut the overall tax rate for the richest Americans, it would be coupled with scaled back deductions so the highest earners would overall not get a tax break.
“There will be no absolute tax cut for the upper class,” Mnuchin said during an interview on CNBC. “There will be a big tax cut for the middle class.”
Thanks to Senate rule changes ushered in by Democrats several years ago, Democrats aren’t able to filibuster Trump’s Cabinet picks, meaning a nominee can be approved with a simple majority vote. The Democrats would need a number of Republicans to turn against the nomination as well, a highly unlikely prospect.
Still, Democrats see an opportunity to make a lot of noise in an effort to hurt Trump’s standing with the voters who backed him and his populist message.
“Donald Trump is defining his own presidency with these appointments,” Warren said, acknowledging Democrats have little hope of derailing the nomination. “He’s making it clear what he ran on and what he plans to do are very different.’’
Critics charge that OneWest reaped its profits at the expense of the type of working-class and middle-income Americans Trump said he would fight for in Washington. Housing advocates say the lender employed questionable foreclosure practices — for instance, not trying to help borrowers take advantage of government loan modification programs designed to help people keep their homes — and in at least some cases improperly kicked people out of their houses.
The backlash even got personal when in 2011 more than 100 protesters marched on Mnuchin’s multimillion-dollar Bel Air mansion in the wake of a controversial Los Angeles-area foreclosure.
A request for comment from Mnuchin directed to Trump’s transition team was not returned. A spokesman for CIT did not respond to a request for comment.
In her interview with the Globe, Warren said OneWest was known for engaging in what is known as “dual tracking,” where the lender would pretend to negotiate with delinquent borrowers while quietly pursuing foreclosure proceedings at the same time, causing unwitting homeowners to lose their houses right when they thought things were getting better.
“This is someone who has shown himself not to understand the plight of everyday Americans and has profited immensely on the backs of the suffering of working-class families,” said Kevin Stein, deputy director of the California Reinvestment Coalition. His group recently filed a complaint, along with another consumer watchdog group, against CIT with the Department of Housing and Urban Development, accusing OneWest of discriminating against blacks and other minority groups, in some instances while it was still under Mnuchin’s direction. CIT has denied the accusations.