Mnuchin Faces More Heat from Democrats on OneWest Foreclosures

Mortgage

Treasury Secretary nominee Steven Mnuchin is facing growing pressure from Senate Democrats to account for his leadership of a bank accused of shoddy foreclosure practices.

Sen. Sherrod Brown of Ohio, the top Democrat on the banking committee, sent a letter on Wednesday to the Treasury nominee, asking him to detail his views on issues including fair lending laws and foreclosure-prevention programs. Brown, who asked Mnuchin to respond to 11 questions by Jan. 6, says the nominee’s record on other issues related to the committee’s purview, which includes economic sanctions and financial regulations, are also unknown.

“Working people need a Treasury Secretary who will work for them, not Wall Street,” Brown said in a statement. “The American public deserves to know where Mr. Mnuchin stands on the important housing and finance issues that he will oversee. While he made a fortune from the financial crisis, far too many Ohioans have yet to recover from it.”

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 Sachs Group Inc. 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 was accused of unfair foreclosure practices and avoiding business in minority neighborhoods.

Mnuchin has said he’s proud of his leadership of the bank, which was bought by CIT Group Inc. in 2015. The presidential transition team’s press office didn’t immediately respond to a request for comment.

Brown’s questions to Mnuchin ask for details on the following issues: His purchase of the failed California lender and the amount of financial support it received from the Federal Deposit Insurance Corp.; Mnuchin’s time at Goldman Sachs’ mortgage-trading desk; his policy stance on regulatory efforts related to housing finance, fair lending laws and a federal investigation of OneWest during his time as an executive; and explanations of comments made last month about taking Fannie Mae and Freddie Mac out of conservatorship.

Mnuchin will face a public hearing with the Senate Finance Committee before it votes on his nomination, and must also respond to written questions, giving Democrats ample opportunity to criticize his business dealings. The party is still reeling from election results that revealed that an overwhelming number of Democratic counties where foreclosure rates were high voted for Donald Trump this year.

“From the Democratic party perspective, perhaps the greatest remorse from the last eight years surrounds the response to the housing crisis,” said Jeff Hauser from the Center for Economic Policy and Research in Washington. “They really did not take housing seriously enough. There’s pent-up frustration that Democrats know they need to address.”

Senate Democrats have set up a website encouraging Americans to share their stories of being evicted by OneWest Bank.

Mnuchin has submitted his three most recent years of tax returns and a questionnaire to the Senate, according to a finance committee spokeswoman. While tax returns may remain confidential, the financial disclosure documents and parts of the questionnaire will be made public.

Senate Republicans have rallied around Mnuchin. He has met with several members of the finance committee, including Orrin Hatch of Utah and Chuck Grassley of Iowa.

Mnuchin has “a deep understanding of the fiscal challenges we face and can play an important role to help bridge the divide and craft bipartisan solutions that will promote the long-term health and prosperity of the American economy,” Hatch said after his Dec. 8 meeting.

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