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Mnuchin defends his financial record, Trump policies in Senate hearing

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Mnuchin defends his financial record, Trump policies in Senate hearing

One day before Donald Trump becomes the 45th president of the United States, Treasury secretary nominee and former Goldman Sachs Group Inc. executive Steven Mnuchin was tasked with explaining the cleanliness of his financial record, including business practices at OneWest Bank Group LLC, and clarifying the financial intentions of a Trump administration.

Senate Democrats hit Mnuchin on his time as CEO of OneWest, which was the subject of leaked documents from the California Attorney General's office revealing recommendations to sue the bank for "widespread misconduct" in violating notices and rigging foreclosure auctions among other things.

"While Mr. Mnuchin was CEO, the bank proved it could put more vulnerable people on the street faster than just about anybody else around," Sen. Ron Wyden, D-Ore., said in opening remarks.

Mnuchin acknowledged that his company, built from the failing IndyMac assets acquired by the FDIC in 2008, did foreclose on the homes of senior citizens and members of the military. One Republican member of the committee, Dean Heller, seemed agitated at Mnuchin's failure to provide details on OneWest foreclosures in his state of Nevada, which was especially hard-hit by the financial crisis.

"Do you know how many Nevadans OneWest provided assistance to loan modifications?" Heller asked. "The reason I ask these questions over again is that this is the seventh time I have asked you."

Mnuchin argued that his company was not a "foreclosure machine" but a "loan modification machine," having modified over 100,000 loans.

"If we had not bought IndyMac, the bank would likely have been broken up and sold in pieces to private investors, where the outcome for consumers could have been much bleaker," Mnuchin said.

Those answers were not good enough for Sen. Sherrod Brown, D-Ohio.

"He started by saying the economic incentives are aligned to do modifications instead, not foreclosures," Brown said in an interview. "And the logical question is, why were there so many foreclosures, including when people were trying to pay their bills?"

Mnuchin also had to answer questions on a revised financial disclosure received by senators less than 24 hours before the hearing, patching an error in his original ethics forms that forgot to include about $100 million in real estate assets. When pressed by Sen. Debbie Stabenow, D-Mich., on the omission, Mnuchin stated that his lawyer said those assets didn't need to be reported, further blaming the miss on the complexity of the ethics reports.

When Mnuchin was not defending himself or the actions of OneWest, he was deflecting concerns over the economic strategies of Trump and his incoming administration.

On concerns of Trump levying a 35% border tax, Mnuchin said it "couldn't be further from anything he'd possibly consider," though the president-elect did send out a series of tweets Dec. 4 that state otherwise.

He also fielded a question on whether or not he would support the reinstatement of the bank-breaking Glass-Steagall Act since it's a part of the GOP party platform.

"Perhaps we need a 21st-century Glass-Steagall, but no, I don’t support going back as is of taking a very old law and saying we should adhere to it as-is," Mnuchin said to the query from Maria Cantwell, D-Wa.

Responding to a question from Mike Crapo, R-Idaho, Mnuchin also dialed back comments he had previously made about the fates of Fannie Mae and Freddie Mac. Although he once said "we've got to get Fannie and Freddie out of government ownership," Mnuchin declined to comment on a specific plan during the hearing and said he hoped to avoid the extreme of either "another giant bailout" or "completely limiting housing finance."

On U.S. debt, Mnuchin said he saw it fitting to "raise the debt ceiling sooner rather than later" and acknowledged that the Trump administration intends to honor U.S. debt already issued. "There should be no uncertainty that we're paying the bills," Mnuchin said.