© 2024 WLRN
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Trump Treasury Nominee Defends Role In Foreclosure Crisis


On Capitol Hill today - a rough welcome for President-elect Trump's choice for treasury secretary. Steven Mnuchin, a former Wall Street banker, was grilled by Democrats on an array of issues. But it was Mnuchin's actions during the financial crisis nearly a decade ago that lawmakers returned to again and again. NPR's John Ydstie reports.

JOHN YDSTIE, BYLINE: In the midst of the financial crisis in 2008, Mnuchin and some partners bought a California bank that failed under the weight of bad mortgage loans. It was renamed OneWest Bank, and under Mnuchin's management, it foreclosed on tens of thousands of homeowners. Housing activists dubbed it a foreclosure machine. In his opening statement at today's Senate hearing, the ranking Democrat, Ron Wyden of Oregon, signaled OneWest was in the crosshairs.


RON WYDEN: OneWest was truly unique. While Mr. Mnuchin was CEO, the bank proved it could put more vulnerable people on the street faster than just about anybody else around.

YDSTIE: That brought this caustic response from Kansas Republican Pat Roberts.


PAT ROBERTS: Senator Wyden, I've got a Valium pill here that you might want to take before the second round.

YDSTIE: And that brought a quick retort from Ohio Democrat Sherrod Brown.


SHERROD BROWN: I hope that that comment about Valium doesn't set the tone for 2017 in this committee. I just am (unintelligible).

ROBERTS: I said that to the president of the Unites States at one...

BROWN: Perhaps you did. That's...


YDSTIE: Mnuchin sat silently as the senators bickered, but when he got his chance to speak, he said he was proud of the work he'd done at OneWest. He claimed that the bank had offered loan modifications to a hundred thousand borrowers to help them keep their homes, which he said was in the bank's interest as well.


STEVEN MNUCHIN: Banks are highly incented to do loan modifications. Anybody who thinks that we made more money foreclosing on a loan than modifying a loan has no understanding of this.

YDSTIE: But the Democrats, including Sherrod Brown, continued to pursue the issue.


BROWN: Is it true that OneWest's independent audit firm said that it violated the Servicemembers Civil Relief Act by initiating foreclosures on 54 active duty military families? That's what the independent audit firm said - yes or no?

MNUCHIN: Well, you have the document in front of you. I don't. I do want to just comment for the record. We unfortunately did foreclose on certain people in the military. We responded to those people and made them whole. As I said, every single person had the opportunity to have their mortgager reviewed, and we corrected any errors. Our errors were less...

BROWN: Perhaps.

MNUCHIN: ...Than anybody else, so...

BROWN: Yeah, I'm going to cut you off (unintelligible).

MNUCHIN: It's not that I'm being defensive. I'm proud of our (unintelligible).

BROWN: Well, I wouldn't be proud of all these findings.

YDSTIE: When questioned by Republicans, Mnuchin did have a chance to talk about his goals and President-elect Trump's proposed policies. He said he shared Trump's concern about slow growth.


MNUCHIN: Our No. 1 priority from my standpoint is economic growth. I believe that tax reform will be our first and most important part of that.

YDSTIE: There was one area where Democrats took some encouragement. That was on the subject of the IRS. Mnuchin said he'd noticed its staff had been cut by 30 percent in recent years and that it had old technology. He suggested it needed more resources.

Democrat Ben Cardin of Maryland observed that the president-elect has called for a freeze on federal hiring, and he urged Mnuchin to convince his boss that the IRS needs more people.


BEN CARDIN: I assume that you'll have an opportunity to talk to the president and hopefully get the number of people you need.

MNUCHIN: I can assure you that the president-elect understands the concept of where we add people, we make money.


MNUCHIN: And he'll get that completely. That's a very quick conversation with Donald Trump.

CARDIN: Great.

YDSTIE: Whether that will be enough to produce Democratic votes for Mnuchin remains to be seen. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

John Ydstie has covered the economy, Wall Street, and the Federal Reserve at NPR for nearly three decades. Over the years, NPR has also employed Ydstie's reporting skills to cover major stories like the aftermath of Sept. 11, Hurricane Katrina, the Jack Abramoff lobbying scandal, and the implementation of the Affordable Care Act. He was a lead reporter in NPR's coverage of the global financial crisis and the Great Recession, as well as the network's coverage of President Trump's economic policies. Ydstie has also been a guest host on the NPR news programs Morning Edition, All Things Considered, and Weekend Edition. Ydstie stepped back from full-time reporting in late 2018, but plans to continue to contribute to NPR through part-time assignments and work on special projects.
More On This Topic