The confirmation of former Goldman Sachs Partner Steven Munchin, who is Trump’s pick for Treasury Secretary, may have gotten just a little more problematic today, after Mnuchin declined to answer questions from Democratic senator Sherrod Brown of Ohio about his views on financial regulations, sanctions and his time as head of a bank accused of unfair foreclosure practices.
Brown, the top Democratic on the senate banking committee sent a letter on Dec. 21 asking Mnuchin to detail his position by Jan. 6 on issues that are under the committee’s purview, including fair lending laws and foreclosure-prevention programs. As Bloomberg reports, Mnuchin doesn’t plan to respond to the senator in writing, though several weeks ago he requested a meeting with Brown, who hasn’t yet accepted, according to Mnuchin’s spokeswoman Tara Bradshaw.
“Mnuchin will work with Senator Brown within the protocol of the finance committee – and will not be providing written answers in advance of a deadline yet to be established by the finance committee,” Bradshaw told Bloomberg on Tuesday in an e-mailed reply to questions.
Naturally, Brown was displeased by the very public snub by the former Goldmanite: “Senator Brown wants to have a substantive, productive conversation with Mr. Mnuchin, not just a quick handshake and hello,” according to an e-mailed comment from Brown’s office on Tuesday. Should Mnuchin, 54, further antagonize Brown, he may face daunting complications during his public hearing with the Senate Finance Committee members; he will also have to respond to follow-up questions in writing before they vote on his nomination. Brown also sits on that committee.
As Bloomberg notes, while Mnuchin can count on the support of the Republican majority in the Senate for confirmation, Democrats have signaled a tough fight. The former Goldman partner profited from the 2007-2008 housing market crash when he and a group of investors bought a failed mortgage lender that was later renamed OneWest Bank. It’s being investigated over allegations of unfair foreclosure practices.
Incidentally, it is Mnuchin’s actions at One West which are likely to be an incendiary topic during the confirmation hearing especially after today’s Intercept report, in which a leaked memo penned by the leaders of California’s state attorney general’s Consumer Law Section said they had “uncovered evidence suggestive of widespread misconduct” in a year-long investigation into Mnuchin’s One West Bank.
Some more details:
OneWest Bank, which Donald Trump’s nominee for treasury secretary, Steven Mnuchin, ran from 2009 to 2015, repeatedly broke California’s foreclosure laws during that period, according to a previously undisclosed 2013 memo from top prosecutors in the state attorney general’s office.
The memo obtained by The Intercept alleges that OneWest rushed delinquent homeowners out of their homes by violating notice and waiting period statutes, illegally backdated key documents, and effectively gamed foreclosure auctions.
In the memo, the leaders of the state attorney general’s Consumer Law Section said they had “uncovered evidence suggestive of widespread misconduct” in a yearlong investigation. In a detailed 22-page request, they identified over a thousand legal violations in the small subsection of OneWest loans they were able to examine, and they recommended that Attorney General Kamala Harris file a civil enforcement action against the Pasadena-based bank. They even wrote up a sample legal complaint, seeking injunctive relief and millions of dollars in penalties.
But Harris’s office, without any explanation, declined to prosecute the case.
Mnuchin, the former CEO of OneWest, was already facing challenges in his upcoming Senate confirmation hearings on account of his bank’s ruthless foreclosure practices, ranging from locking out one homeowner during a Minneapolis blizzard to foreclosing on another over a 27-cent payment shortfall.
“After years peddling the kind of dangerous mortgage-backed securities that eventually blew up the economy, Mnuchin swooped in after the crash to take a second bite out of families by aggressively — and sometimes illegally — foreclosing on their homes,” Sen. Elizabeth Warren said in a statement last month. Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, warned: “Given Mr. Mnuchin’s history of profiting off the victims of predatory lending, I look forward to asking him how his Treasury Department would work for Americans who are still waiting for the economic recovery to show up in their communities.”
The consistent violations of California foreclosure processes outlined in the memo would indicate that Mnuchin’s bank didn’t merely act callously, but did so with blatant disregard for the law.
Whether Mnuchin directed efforts to prevent scrutiny of his bank’s practices could be a focus of the confirmation hearings.
According to the memo, OneWest also obstructed the investigation by ordering third parties to refuse to comply with state subpoenas. The memo also raises questions about then-California Attorney General Kamala Harris, who was sworn in as a U.S. senator on Tuesday, and who will soon have to vote on Mnuchin’s appointment.
Why did her office close the case, deciding not to “conduct a full investigation of a national bank’s misconduct and provide a public accounting of what happened,” as her own investigators had urged?
Continue reading the full Intercept report here.
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