Advertisement
Business

Trump taps Wall Street executive and Hollywood producer Steven Mnuchin for Treasury secretary

President-elect Donald Trump has chosen Steven Mnuchin, a wealthy Wall Street executive and Hollywood movie producer who served as his campaign finance chairman, to be the next Treasury secretary.

Although there was no official announcement, Mnuchin confirmed the appointment Wednesday morning during an appearance on CNBC along with fellow billionaire Wilbur Ross, who said he had been tapped by Trump to be Commerce secretary.

“We’re really going to be focused on economic growth and creating jobs,” Mnuchin said, citing tax reform as a key to that goal.

“Our most important priority is sustained economic growth,” he said, adding that he thought the U.S. could sustain an annual growth rate of 3% to 4%. 

Advertisement

Economic growth has been about 2% a year since the Great Recession ended in 2009.

Tim Pawlenty, head of the Financial Services Roundtable, a Washington organization that represents the nation’s largest banking and financial services companies, praised Mnuchin’s selection. 

“Steve is a seasoned and results-oriented leader who is really smart, interested in public policy, and understands the urgent need to boost economic growth and opportunity,” said Pawlenty, the former Republican governor of Minnesota.

Mnuchin’s deep roots on Wall Street fit the mold of past Treasury secretaries but contrast with the populist stance that Trump took during his campaign.

Advertisement

Mnuchin’s net worth is unclear, but he could be the second billionaire member of Trump’s Cabinet, after Betsy DeVos, who is Trump’s pick for Education secretary. The third would be financier Ross.

Mnuchin’s selection — which was first reported Tuesday by the New York Times —  drew ire from Democratic and liberal groups, which have accused him of profiting from the financial crisis after buying the failed IndyMac Bank in 2009.

“So much for draining the swamp,” said Adam Hodge, communications director for the Democratic National Committee. He said Mnuchin “preyed on homeowners struggling during the recession,” calling Trump’s pick “a slap in the face to voters who hoped he would shake up Washington.”

Sen. Elizabeth Warren (D-Mass.) called Mnuchin “the Forrest Gump of the financial crisis” because he “managed to participate in all the worst practices on Wall Street” during his lengthy career.

“His selection as Treasury secretary should send shivers down the spine of every American who got hit hard by the financial crisis, and is the latest sign that Donald Trump has no intention of draining the swamp and every intention of running Washington to benefit himself and his rich buddies,” she said.

Officials with Trump’s transition team declined to confirm Mnuchin’s selection.

Mnuchin, 53, co-chief executive of hedge fund Dune Capital Management, served as chairman of the Pasadena-based bank, which was renamed OneWest Bank after he led a group of  investors to purchase it. The bank has been criticized for a large number of foreclosures and hit by allegations of discrimination against minorities. It also helped finance high-profile films such as “Suicide Squad,” “American Sniper” and “Mad Max: Fury Road.” 

During the campaign, Trump sharply criticized his Democratic opponent, Hillary Clinton, for being too cozy with Wall Street.

Advertisement

Now Trump has tapped Mnuchin, who spent 17 years at Goldman Sachs Group Inc., to be one of the federal government’s most important economic and financial officials.

Mnuchin rose to partner and chief information officer at the legendary Wall Street investment bank, where his father also had been a partner, before leaving in 2002 to work with billionaire investor George Soros.

Two years later, Dune Capital Management was co-founded by Mnuchin as a spinoff from Soros’ firm.

If confirmed by the Senate, Mnuchin would be the third former Goldman executive to become Treasury secretary in recent years, following Robert Rubin under President Bill Clinton and Henry M. Paulson under President George W. Bush.

As Mnuchin’s name emerged as a leading candidate for the Treasury post, the Progressive Change Campaign Committee called Mnuchin “a second-generation Goldman Sachs banker who made a fortune by foreclosing on working families’ homes.” The group criticized him for opposing tough Wall Street regulation.

Mnuchin would become a key player in world economics, meeting frequently with foreign finance ministers, and in overseeing the U.S. tax and financial system.

He would take the helm of an agency whose regulatory responsibilities swelled under the 2010 Dodd-Frank financial reform law. 

The Treasury secretary serves as chairman of the Financial Stability Oversight Council, a panel of top regulators created by the law. Republicans have criticized the council as wielding too much power.

Advertisement

Trump has called for Dodd-Frank to be dismantled. But on Wednesday, Mnuchin did not say he wanted a wholesale repeal of Dodd-Frank.

“We want to strip back parts of Dodd-Frank that restrict banks from lending,” Mnuchin said. “The number one priority will be to make sure banks lend.”

The Treasury Department also includes the Office of the Comptroller of the Currency, an independent agency that supervises national banks; the IRS; the Bureau of Engraving and Printing; and the Mint.

Mnuchin is a Yale University graduate who is divorced with three children. He owns a $26.5-million mansion in Los Angeles’ exclusive Bel-Air neighborhood and has strong connections to Southern California.

In 2009, Mnuchin and other investors put up about $1.6 billion in cash to purchase IndyMac, one of the leading subprime mortgage lenders. 

They sold the bank to CIT Group last year for $3.4 billion. Mnuchin now serves on CIT’s board of directors.

The deal was nearly derailed by complaints about OneWest’s foreclosure practices. 

OneWest had agreed to participate in a federal program to modify the mortgages of borrowers so that they would not lose their homes. But community groups said the bank aggressively pursued foreclosures, particularly in minority areas.

In 2011, dozens of activists protested the practices on the lawn of Mnuchin’s 22,000-square-foot Bel-Air home. That same year, the federal Office of Thrift Supervision hit the bank with a regulatory order saying it had failed to follow procedures when foreclosing on homeowners.

This month, two California advocacy groups asked federal housing regulators to investigate OneWest over allegations that it discriminated against or failed to serve minority communities. 

The groups said OneWest has violated federal fair lending laws by “failing to effectively market, offer and originate mortgage loans and other loan products in communities of color.”

The groups also said the bank has a below-average level of branch locations in minority communities. 

On Wednesday, Mnuchin defended OneWest.

“We bought the worst mortgage portfolio in the history of time,” he said of IndyMac, adding that the bad loans that led to the foreclosures had been originated before his purchase of the bank.

“We saved a lot of jobs and we created a lot of opportunities for corporate loans,” Mnuchin said.

 

jim.puzzanghera@latimes.com

Follow @JimPuzzanghera on Twitter

ALSO

A recount won’t change the election results, but Trump and the political fringes are debating it anyway

Trump the president-elect: So far, acting a lot like Trump the candidate

Hire judges, boost prosecutions and cut funds: What Jeff Sessions could do on immigration as attorney general


UPDATES:

5:35 a.m.: This article was updated with comments from Tim Pawlenty, head of the Financial Services Roundtable.

4:40 a.m. Nov. 30.: This article was updated with comments from Steven Mnuchin from a CNBC interview.

7:50 p.m.: This article was updated with comments from Sen. Elizabeth Warren.

5:25 p.m.: This article was updated to reflect Ross’ selection as Commerce secretary.

4:10 p.m.: This article was updated after Mnuchin’s selection was confirmed by staff sources.

This article was originally published at 3:40 p.m. Nov. 29.


Advertisement