Steven Mnuchin, the Wall Street executive tapped by President-elect Donald Trump to be the next Treasury secretary, faced some of the most blistering personal attacks of any Cabinet pick so far as Democrats accused him of foreclosing on the homes of thousands of struggling Americans while head of a Pasadena bank, even as he helped rich hedge fund clients shelter their wealth offshore.
Mnuchin was on the defensive during a more than five-hour confirmation hearing Thursday at which it was also revealed he initially had failed to disclose $95 million in real estate holdings and his position as director of a corporation in the Cayman Islands, a well-known tax haven.
Democrats questioned how Mnuchin could be expected to crack down on tax-avoidance schemes he helped clients use in the past. They also pressed him to ensure that Trump’s foreign investments didn’t compromise U.S. national security. Mnuchin said he would look into Trump’s foreign debt.
The 54-year-old hedge fund manager and former Hollywood movie producer had barely settled into his seat at the Senate Finance Committee when the panel’s top Democrat, Sen. Ron Wyden of Oregon, launched a nearly 15-minute fusillade of criticism.
A major target throughout the hearing was Mnuchin’s tenure as head of OneWest Bank, which Wyden said “churned out foreclosures like Chinese factories churned out Trump suits and ties.”
Wyden's opening statement was so aggressive that Sen. Pat Roberts (R-Kan.) told Wyden, "I’ve got a Valium pill you might want to take before the second round.”
The comment, delivered humorlessly, sparked objections from Wyden and Sen. Sherrod Brown (D-Ohio). The exchange demonstrated the deep partisan divide over one of Trump's most controversial Cabinet picks.
Republicans rallied to Mnuchin’s defense, and there’s no indication his confirmation is in jeopardy.
If confirmed, Mnuchin would become a pivotal player in the Trump administration on the economy, trade, taxes, entitlements, housing policy, financial regulation and relations with China and other global economic powers.
Mnuchin offered few policy details but was clear that producing economic growth of about 3% to 4% annually — significantly stronger than in recent years — was his main objective, and that cutting corporate taxes was the key.
“Our No. 1 priority from my standpoint is economic growth,” Mnuchin said. “I believe tax reform will be the first and most important part of that.”
He also told lawmakers that he supports current economic sanctions against Russia and would support hiring more Internal Revenue Service workers in order to help boost government revenues.
Mnuchin opened his testimony with a strong defense against charges leveled in recent days that OneWest, which he ran from 2009 to 2015, was a “foreclosure machine.”
“Since I was first nominated … I have been maligned as taking advantage of others’ hardships in order to earn a buck,” Mnuchin said. “Nothing could be further from the truth.”
Mnuchin said OneWest tried to help homeowners avoid foreclosure but often was limited by federal regulations.
”My experience confirmed that we must identify and eliminate unwise and burdensome policies which contribute to the disastrous outcomes that came in the wake of the financial crisis,” Mnuchin said.
In addition to supporting Trump’s deregulatory push, Mnuchin committed to reducing taxes and “reviving trade policies that put the American worker first.”
He said Trump’s trade plans do not include an “across-the-board 35% border tax” imposed on imports from certain countries, and instead would target companies that move American jobs abroad. Trump, in his own statements and tweets, has suggested doing both.
Liberals have criticized Mnuchin, a multimillionaire, because of his long career at Goldman Sachs Group Inc., and his role in dealing with the mortgages held by failed subprime giant IndyMac Bank.
He is one of the top targets of Senate Democrats among Trump’s Cabinet picks. In hopes of derailing his nomination, Democrats and liberal activists are focusing on OneWest’s foreclosures.
In 2009, Mnuchin and other investors put up nearly $1.6 billion to buy IndyMac and renamed it OneWest. They sold the bank to CIT Group in 2015 for $3.4 billion.
Democrats and housing advocates have dubbed Mnuchin “the foreclosure king” for what they said was the bank’s aggressive practices. They accused him of profiting from the 2008 financial crisis that left many homeowners unable to make their mortgage payments.
Mnuchin critics point to a 2011 regulatory order from the federal Office of Thrift Supervision that OneWest failed to follow procedures when foreclosing on homeowners.
During a forum Wednesday by Senate Democrats, Christina Clifford of Carlsbad choked up as she told of her experience with OneWest. The bank foreclosed on her Whittier condominium in 2010 after twice saying it lost her paperwork for a mortgage modification request despite cashing the checks she sent with the forms.
“Steve Mnuchin profited from people like me, even when we did everything we could to keep our homes,” said Clifford, who runs an acupuncture business.
As Democrats hit Mnuchin with similar stories, he said he regretted mistakes by the bank but denied he wanted to foreclose on homeowners.
“Anybody who thinks that we made more money foreclosing on a loan than modifying a loan has no understanding of this,” Mnuchin said.
Democrats also pounced on Mnuchin’s financial disclosure forms. According to a memo released by the committee’s Democratic staff, Mnuchin initially failed to disclose real estate assets, including homes in Los Angeles and Southampton, N.Y., and $15 million in holdings in Mexico.
The committee questionnaire Mnuchin submitted Dec. 19 also didn’t disclose his position as director of Dune Capital International in the Cayman Islands, and about $907,000 worth of artwork held by his children.
After questions from committee staff, Mnuchin included the information on revised questionnaires he submitted this month.
Mnuchin said Thursday oversight was unintentional.
"I think as you all can appreciate, filling out these government forms is quite complicated," Mnuchin said.
Sen. Elizabeth Warren (D-Mass.) wasn’t sympathetic. She is not on the committee but said via Twitter that, “When Mnuchin makes mistakes on complicated paperwork, he asks for forgiveness. When his customers made mistakes, he took their homes.”
Democrats also pressed Mnuchin on Trump's potential conflicts of interest.
The Treasury secretary chairs the Committee on Foreign Investment in the United States, an interagency committee that determines whether transactions involving foreign control of U.S. businesses affect national security.
Democrats questioned Mnuchin on how he would exercise that authority to make sure Trump's international investments don't diminish national security or violate the Constitution's prohibition on U.S. officials receiving benefits from foreign governments.
Trump has said he would turn over management of his company's assets to his sons but won't sell his interests.
Sen. Claire McCaskill (D-Mo.) asked Mnuchin if, as Treasury secretary, he should know what percentage of Trump's debt is held by foreign interests.
"I think you have a valid point about foreign debt and understanding foreign things, and I will research that and get back to you," Mnuchin said.
But Mnuchin would not commit to reporting back to the committee on that percentage.
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3:20 p.m.: This article has been updated with more background and analysis.
7:00 a.m.: This article has been updated with Mnuchin’s opening testimony
6:15 a.m.: This article was updated with Sen. Sherrod Brown’s request to the FBI for information about Mnuchin’s relationship with Relativity Media.
This article was originally published at 3 a.m.