WASHINGTON – Steven Mnuchin, Donald Trump's pick to lead the Treasury Department, on Thursday defended his handling of thousands of foreclosures during the height of the financial crisis, saying he had worked hard to assist homeowners to refinance so they could keep their homes.
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"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," he said in testimony at his confirmation hearing. "Nothing could be further from the truth."
Mnuchin, a former Goldman Sachs executive, was expected to face sharp questioning from Democrats on the panel for his actions after taking over the failed IndyMac, whose collapse in 2008 was the second biggest bank failure of the financial crisis. Mnuchin assembled a group to buy the bank from the government, renamed it OneWest and turned it around, selling it for a handsome profit to CIT Group Inc. in 2014.
Critics have cited the bank's foreclosure policies under Mnuchin as a prime example of the kind of Wall Street greed that Trump, the candidate, campaigned against.
Mnuchin denied press reports that said he ran a "foreclosure machine."
"On the contrary, I was committed to loan modifications intended to stop foreclosures. I ran a 'Loan Modification Machine.' Whenever we could do loan modifications, we did them."
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Mnuchin told the Senate Finance Committee that his bank extended over 100,000 loan modifications to borrowers who had fallen behind in their mortgage payments.
Mnuchin said whenever possible OneWest offered loan modifications using guidelines from a variety of government programs, but "unfortunately, not all of the homes could be saved through these programs and despite my best efforts, some were sadly subject to foreclosure."
After being nominated for the Treasury job in November, Mnuchin said his bank's foreclosures reflected the fact that before he took over the failed IndyMac, it had accumulated one of the worst portfolios of bad mortgage loans "in the history of time."
A group of 10 Democratic senators led by Sen. Elizabeth Warren participated in a forum Wednesday to hear testimony from some of the people who lost their homes after Mnuchin's bank foreclosed.
"OneWest was notorious for its belligerence and for its cruelty," Warren said.
Liberal groups began airing a television ad on the foreclosures seeking to bring pressure on five Republican senators, including Sens. Chuck Grassley of Iowa and Dean Heller of Nevada, who are both members of the Finance Committee, to vote against Mnuchin.
"Steven Mnuchin, the foreclosure king, made millions by taking people's homes with no regard to anything but his own bottom line," said Stephanie Taylor, co-founder of the Progressive Change Campaign Committee, one of the groups running the ad.
But Mnuchin's supporters include Finance Committee Chairman Orrin Hatch, R-Utah. He called Mnuchin a "leader and a manager through his career, demonstrating an ability to make tough decisions and to be accountable."
Mnuchin, who as Treasury secretary would serve as the administration's chief economic spokesman, is also expected to face questions about Trump's ambitious plans to double the country's growth rate through tax cuts, reducing government regulations and boosting government spending on infrastructure projects.
Trump during the campaign also vowed to target countries including China and Mexico that he contended are pursuing unfair trade practices that have cost millions of U.S. jobs. He has said one of his first actions after taking office will be to label China a currency manipulator. It would be Mnuchin's Treasury Department that would make that finding.
While Trump campaigned against Wall Street during the campaign, attacking Hillary Clinton for the speaking fees she earned from Goldman Sachs, Mnuchin is just one of a number of former Goldman Sachs executives tapped by the president elect for top economic jobs in his administration.
Mnuchin worked at Goldman for 17 years, making partner in 1994 and overseeing the firm's mortgage trading desk before becoming chief information officer. He left Goldman in 2002 and, after running an investment fund set up by billionaire investor George Soros, he and two former Goldman colleagues set up a new hedge fund, Dune Capital Management in 2004.
Mnuchin led Dune into financing Hollywood movies including a number of blockbuster hits including "Avatar."