Treasury Nominee Mnuchin to Defend Banking Record to Senators

Politics Reuters

(AP)

President-elect Donald Trump's choice for Treasury secretary, Steven Mnuchin, will defend his banking record in the aftermath of the financial crisis on Thursday and sell senators on why he should be given stewardship of the U.S. financial system.

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Mnuchin, a former Goldman Sachs executive, hedge fund manager and Hollywood film financier, would be the first Wall Street veteran to head the Treasury Department in eight years.

In prepared testimony for his confirmation hearing before the Senate Finance Committee, Mnuchin said accusations that his OneWest Bank was a "foreclosure machine" after the housing bubble burst were untrue and politically motivated.

"Since I was first nominated to serve as Treasury Secretary, I have been maligned as taking advantage of others' hardships in order to earn a buck. Nothing could be further from the truth," Mnuchin wrote in his opening statement.

Democrats see an easy target in the more than 36,000 foreclosures that OneWest pursued after Mnuchin struck a lucrative deal with the Federal Deposit Insurance Corp to absorb most of the losses from such actions.

Senator Elizabeth Warren, the anti-Wall Street Democratic firebrand from Massachusetts, organized a Capitol Hill forum where a group of foreclosure victims told of their difficulties in dealing with OneWest.

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"Steve Mnuchin’s company had no interest in helping us," said Heather McCreary, a Nevada mother of two who lost her home in 2010 after she was unable to secure a loan modification.

Mnuchin argued that his bank was a "loan modification machine," offering payment reductions to 101,000 borrowers to try to keep them in their homes, and said his turnaround of the failed IndyMac bank saved thousands of jobs and homes.

Mnuchin will also face questioning on how he will manage Trump's tax and spending plans, which could significantly increase the U.S. deficit, fuel inflation and further boost the dollar's value. He also must manage thorny economic relations with China even as Trump's trade team plans tough measures against the export powerhouse.

And Trump recently usurped a function usually reserved for Treasury secretaries: commenting on the dollar's value. The president-elect said the dollar was too strong, a move that roiled currency markets.

"Traditionally, the Treasury secretary is the lead spokesman on domestic and international economic policy, and if not the most influential, then among the two or three most influential voices on economic policy inside the administration," Brookings Institution senior fellow David Wessel said in a blog post. "But there’s not much traditional about the Trump administration."

Mnuchin is expected to get strong support from Republican senators, several of whom have lauded his business and investment experience.

"Mr. Mnuchin is an effective choice to lead our Treasury Department," Finance Committee Chairman Orrin Hatch said in a statement. "Getting America’s economy back on track is a top priority for this new administration, and his wealth of private sector experience will serve him well in this new role."

Republicans in Congress are keen to work with Mnuchin to pull together a Trump administration plan to cut business taxes and finance increased infrastructure spending.

 

(Reporting by David Lawder; Editing by Leslie Adler)