A California consumer group on Thursday urged the Senate Finance Committee to delay an upcoming nomination hearing into Treasury Secretary-designate Steven Mnuchin after a leaked 2013 memo described alleged illegal foreclosure practices at OneWest Bank when he was chairman and CEO.
The California Reinvestment Coalition said the claims against Mnuchin should be investigated by Congress. The memo, published Tuesday by the news site The Intercept, documented alleged evidence “suggestive of widespread misconduct,” in OneWest’s foreclosure operations.
Mnuchin’s nomination hearing is expected soon, but has not yet been scheduled because he has not submitted all the required paperwork.
The memo recommended that a civil enforcement action be filed against OneWest; ultimately no case was filed by Sen. Kamala Harris, D-Calif., who was California’s attorney general at the time. The memo described how the California investigation was hampered by an inability to subpoena OneWest, and the bank’s efforts to block third parties from turning over loan files to investigators.
“The Senate should demand that Mr. Mnuchin turn over all evidence that the bank clearly obstructed an investigation and determine whether he broke the law,” said Paulina Gonzalez, the California Reinvestment Coalition’s executive director, in an interview. “Is the Senate going to vote in favor of a Wall Street insider who profited at the expense of the American people and flouted the law, when they promised to protect working class families?”
Mnuchin was chairman and CEO of OneWest for six years until the bank was sold in 2015 to CIT Group. The Federal Deposit Insurance Corp. was the conservator of the former IndyMac Bank for several months before the bank’s assets were sold in 2009 to a group of Wall Street investors led by Mnuchin.
Since 2009, OneWest foreclosed on roughly 35,000 California homeowners and initiated foreclosures on another 45,000 homes.
The 22-page memo could become an issue in Mnuchin’s nomination hearing. The memo, written by four deputy attorneys general, described the pros and cons of California bringing an enforcement action against the bank including the possibility that the Office of the Comptroller of the Currency would side with OneWest or that the FDIC would intervene.