Treasury pick Steve Mnuchin grilled over foreclosures

Yahoo News

A contentious exchange Thursday between treasury secretary nominee Steve Mnuchin and Sen. Sherrod Brown, D-Ohio, marked the most direct attack by Democrats on the Goldman Sachs banker whom some groups have attempted to brand as “the foreclosure king.”

“Is it true,” Brown asked during Mnuchin’s Senate confirmation hearing, “that OneWest’s independent audit firm found it violated the Civil Service Relief Act by initiating foreclosures on 54 active duty military families. That’s what the independent audit firm said, yes or no?”  

“Well, you have the document in front of you. I don’t,” replied Mnuchin.

“I’m pretty surprised you don’t know these things because you’ve been rather defensive — probably for good reason — about what happened at OneWest.”

“I do want to just comment for the record,” said Mnuchin. “We unfortunately did foreclose on certain people in the military. It was quite unfortunate, it was inappropriate, we responded to those people and made them whole. Every single person had the opportunity to have their mortgage reviewed and we corrected any errors. It’s not that I’m being defensive; I’m proud of our record.”

“Well, I wouldn’t be proud of all these findings,” said Brown.

In January, a leaked 2013 memo from the California attorney general’s office stated that OneWest might have engaged in “widespread misconduct,” including backdating documents. Then-Attorney General Kamala Harris — who was elected to the U.S. Senate in November — declined to pursue charges. The memo did not state that Mnuchin personally participated in or was even aware of the potential fraud.

According to Bloomberg’s calculations, the sale of OneWest in 2015 may have generated $380 million in profit for Mnuchin alone.

OneWest was the name given to the failed bank IndyMac after Mnuchin and a group of investors took over the company in 2009, following the market collapse. Yahoo Finance’s Rick Newman covered the bank’s issues when Mnuchin was nominated in November:

Like most banks during the housing bust, the newly named lender, OneWest, began to foreclose on borrowers who couldn’t make their mortgage payments as the housing crisis intensified and a brutal recession left millions unemployed. Protesters began to target OneWest in particular for what they said were callous decisions regarding homeowners in distress. On one day in 2011, protestors briefly overwhelmed security guards at OneWest’s Pasadena headquarters and occupied the lobby. On another occasion they showed up outside Mnuchin’s Bel Air mansion, demanding help for one woman who lost her home after her brother’s death left her struggling to pay her mortgage.

By 2015, OneWest had foreclosed on 36,000 homes, according to a nonprofit called the California Reinvestment Coalition (CRC), which tracked the bank’s activities. The CRC also said the FDIC had committed to absorbing $2.5 billion of current or future OneWest losses on loans issued by IndyMac—considerably more than Mnuchin’s group paid for the bank in the first place. As part of that deal, OneWest was supposed to be lenient with distressed borrowers and help them avoid foreclosure if possible. Housing advocacy groups accused OneWest of violating its pledge to help troubled borrowers and excessively targeting minority neighborhoods for foreclosures.

The hearing got off to an odd start when Sen. Pat Roberts, R-Kan., offered Sen. Ron Wyden, D-Ore., a Valium, inciting an interjection from Brown calling the entire thing “outrageous.”

Wyden replied that “a pinprick of humor might help this committee from time to time, which I engage in.”

Start the Conversation

Your email address will not be published.