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Steve Mnuchin, Trump Treasury pick, to face Senate on Jan. 19

Former Goldman Sachs, OneWest Bank exec likely to be grilled by Democrats

While the confirmation hearings for President-elect Donald Trump’s choices for some key cabinet positions began taking place this week, one of the most important hearings is finally on the schedule.

On Friday, the Senate Committee on Finance announced that the confirmation hearing for Steve Mnuchin, the Trump administration’s choice to lead the Department of the Treasury, will take place on Thursday, Jan. 19, 2017 at 10:00 a.m. Eastern.

Mnuchin’s hearing will be closed watch by those in housing, considering the Treasury Department’s role in housing, which Mnuchin already pledged to change.

Shortly after being named as the Treasury Department nominee, Mnuchin, a former executive at Goldman Sachs and former chairman of OneWest Bank, said that one of the top ten priorities of the Trump administration is to “get Fannie Mae and Freddie Mac out of government ownership.”

That claim sent the stocks of Fannie Mae and Freddie Mac soaring to heights not seen since June 2014.

Recent reports also state that Mnuchin himself has a stake in Fannie and Freddie, based on his investments.

Situations like that and Mnuchin’s previous history all but guarantee that he will receive a more hostile reception than Ben Carson, the Trump administration’s choice to lead the Department of Housing and Urban Development.

Carson’s hearing, which many thought would be contentious, turned into a virtual love fest, as far as Senate confirmation hearings go, with only Sen. Elizabeth Warren, D-Mass., seriously pressing Carson on any issue.

Warren made some national headlines with her questioning Carson on whether any HUD money will be funneled to Trump’s businesses, but other than that, Carson’s hearing was relatively calm.

That likely won’t be the case with Mnuchin, considering his background.

During Mnuchin’s 17 years at Goldman Sachs, he oversaw trading in government securities, mortgages, money markets, and municipal bonds, and eventually became the company’s chief information officer.

After leaving Goldman Sachs in 2002, Mnuchin founded Dune Capital Management, a private equity firm.

Mnuchin and his partners at Dune Capital formed OneWest after buying the remains of IndyMac Federal Bank from the Federal Deposit Insurance Corp. in 2009.

Mnuchin and his partners sold OneWest to CIT Group in 2015 for a hefty profit, but recently two housing advocacy groups accused OneWest of violating federal fair housing laws by redlining minority neighborhoods and engaging in discriminatory lending practices during Mnuchin’s time as chairman.

In the time since the announcement of Mnuchin’s nomination, Senate Democrats then took to calling Mnuchin the “foreclosure king” based on OneWest’s lending practices.

The Democrats even went so far as to solicit complaints from OneWest customers about the bank’s practices during Mnuchin’s time there, presumably to share those customers’ experiences during Mnuchin’s confirmation hearing.

“Also known as the ‘Foreclosure King,’ Mnuchin earned the nickname for his bank’s practice of buying distressed mortgages during the financial crisis and evicting thousands of homeowners,” the Democrats’ wrote in December. “As the Chief Executive Officer and owner of OneWest Bank, Mnuchin oversaw what housing advocates called a ‘Foreclosure Machine.’” 

Those claims were supplemented by a January report from The Intercept, which claimed that California officials pushed then-Attorney General Kamala Harris’s office to sue OneWest over allegations of foreclosure violations in the state of California.

Those violations reportedly included backdating mortgage documents to speed up foreclosures and manipulating the results of home auctions, according to coverage in Bloomberg.

A spokesperson for Mnuchin denied the claims in the Intercept report, calling them “meritless” and stating that the bank’s mortgage servicing records were first-rate.

“OneWest was the only bank in the country to complete the grueling independent foreclosure review by the OCC and received the top rating from government regulators for compliance,” Mnuchin Spokesman Barney Keller said in an email to HousingWire.

“Steven Mnuchin and OneWest managed to issue over 100,000 loan modifications including thousands that reduced borrower principal, on loans that he did not even originate,” Keller added. “Memos like this belong in the garbage, not the news.”

When he announced the nomination of Mnuchin, Trump praised Mnuchin’s time at OneWest.

“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.

“His expertise and pro-growth ideas make him the ideal candidate to serve as Secretary of the Treasury,” Trump continued. “He purchased IndyMac Bank for $1.6 billion and ran it very professionally, selling it for $3.4 billion plus a return of capital. That’s the kind of people I want in my administration representing our country.”

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