Coverage: Examining the new Treasury secretary
Steven Mnuchin, the former Goldman Sachs banker who is president-elect Donald Trump’s pick as Treasury secretary, drew scrutiny Wednesday from the financial media for his role in the economic crisis of 2008.
Gina Chon of the New York Times had the news:
Mr. Mnuchin’s career as a financier will not make for a smooth ride though confirmation hearings. He spent 17 years at Goldman Sachs, working in mortgage securities before becoming chief information officer. He left in 2002 to set up his own hedge fund, Dune Capital, which helped finance hit movies like “Avatar.” And he and fellow investors made a 150 percent profit in five years turning around the defunct mortgage lender IndyMac Bank, which they bought in 2009 and renamed OneWest Bank.
Lobbying groups are already coming out against his nomination, in part because of accusations that OneWest Bank’s foreclosure policies were too aggressive. People “should be terrified by the prospect of a Treasury Secretary Mnuchin,” the Take on Wall Street campaign said on Tuesday.
Republicans, though, have the majority needed to confirm him. He is not a Republican through and through. He has given money multiple times to Senator Chuck Schumer, Democrat of New York, who will be the next Senate leader for the Democrats. He donated to President Obama’s first presidential campaign and raised money this year for Kamala Harris, a Democrat who won a California Senate seat in this month’s election.
He even recently floated the idea of creating an infrastructure bank, a plan pitched earlier by Hillary Clinton. That suggests a more pragmatic approach to the job than, say the attorney general nominee, Jeff Sessions, or the health and human services appointee, Tom Price.
James Rufus Koren and Jim Puzzanghera of the Los Angeles Times focused on the potential for overturning regulations of financial services:
During the campaign, Trump said he would seek to dismantle much of the Dodd-Frank Wall Street Reform Act, a sweeping 2010 bill that sought to rein in big banks and prevent another financial crisis.
Mnuchin said on CNBC that he does not want a wholesale repeal, but does want to make substantial changes.
“We want to strip back parts of Dodd-Frank that restrict banks from lending,” Mnuchin said. “The No. 1 priority will be to make sure banks lend.”
Kelleher said that Mnuchin should instead subject more financial firms to the kind of strict scrutiny now reserved for the largest banks. He noted that as Treasury secretary, Mnuchin would serve as chairman of a federal financial committee that has oversight of large nonbank firms such as insurance companies.
Joe Light of Bloomberg News noted that Mnuchin wants Fannie Mae and Freddie Mac to leave government control:
The fight over the future of the mortgage companies has been raging since they were bailed out in 2008 for an eventual cost of $187.5 billion. There’s been competing legislation proposed in Congress and battles with shareholders over the U.S. Treasury taking most of the companies’ profits. Since the takeover, the companies have sent the Treasury more than $250 billion.
Mnuchin in the interview said that government ownership of the companies displaces private mortgage lending.
“We will make sure that when they are restructured, they are absolutely safe and don’t get taken over again. But we’ve got to get them out of government control,” Mnuchin said.
Mnuchin isn’t a stranger to the mortgage market. In 2009, he joined with a group of former Goldman Sachs Group Inc. colleagues and billionaires to buy the remnants of IndyMac, turned it around and sold the bank for a big gain last year.