Steven Mnuchin Would Be the First Wall Street Vet Turned Treasury Secretary in 8 Years
The U.S. Senate is expected to confirm former Goldman Sachs (GS) banker and Hollywood financier Steven Mnuchin as Treasury secretary on Monday, returning a Wall Street veteran to the top U.S. economic and financial job for the first time in eight years.
Mnuchin’s appointment to Treasury signals the Trump administration’s trust in bankers and other senior business executives after Democrat Barack Obama launched his presidency with career regulator Timothy Geithner running Treasury and a mandate to rein in Wall Street for its role in the 2007-2009 financial crisis.
Democrats, who boycotted Mnuchin’s approval by the Senate Finance Committee, are expected to vote against Mnuchin. But no Republicans have declared opposition, setting the stage for a party-line 52-48 vote. The vote is set for around 7 p.m. EST (00:00 GMT).
Mnuchin’s focus will shift from defending his foreclosure record in the aftermath of the financial crisis to tackling major issues such as tax reform, financial services deregulation and international economic diplomacy as major trading partners fret over President Donald Trump’s “America First” strategy.
Mnuchin, 54, will need to build a team of officials quickly to handle a Group of 20 finance ministers meeting in March and make decisions on how far to roll back the Dodd-Frank Wall Street reform law enacted during the Obama administration with the aim of preventing a repeat of the financial crisis.
Treasury and White House representatives did not respond to requests for comment late on Sunday on a Bloomberg report that Trump would soon nominate David Malpass, a former economist at failed Wall Street bank Bear Stearns, as Treasury undersecretary for international affairs.
Malpass, a Trump campaign adviser who had been leading Treasury transition efforts, was seen as a leading candidate for the job, with experience from international economic posts in the Ronald Reagan and George H.W. Bush administrations.
His role at Bear Stearns could set off a new round of protests from Democrats over his forecasts in 2007 dismissing the hazards building in credit markets that fueled the U.S. housing collapse. Bear Stearns was the first major financial failure of the financial crisis in 2008.
FORECLOSURE RECORD UNDER FIRE
Mnuchin, who left Goldman Sachs in 2002, has come under fire over his investor group’s 2009 acquisition of another failed lender, IndyMac Bank, a deal in which the Federal Deposit Insurance agreed to absorb most of the losses on IndyMac foreclosures. The bank, rebranded as OneWest, subsequently foreclosed on more than 36,000 homeowners, drawing charges from housing advocates that it was a “foreclosure machine.”
Mnuchin grew OneWest into Southern California’s largest lender and sold it for $3.4 billion in 2015. He has also helped finance Hollywood blockbusters such as “Avatar,” “American Sniper” and this past weekend’s box office champion, “The Lego Batman Movie,” which took in $55.6 million.
In a last-ditch effort to derail Mnuchin’s nomination, Democratic Senator Elizabeth Warren charged on Friday that Mnuchin “flat-out lied” to senators about OneWest’s use of so-called robo-signings, a practice in which signings of court documents are automated without adequate review by bank officials.
But Mnuchin, who joined Trump’s campaign as finance chairman in May 2016, has been well-received by Republicans because of his extensive finance experience.
“Objectively speaking, I don’t believe anyone can reasonably argue that Mr. Mnuchin is unqualified for the position,” Republican Senate Finance Committee Chairman Orrin Hatch said at Mnuchin’s confirmation hearing in January.