Steven Mnuchin, President-elect Donald Trump's pick as Treasury secretary, clashed with Democrats during a lengthy confirmation hearing Thursday over his handling of thousands of mortgage foreclosures and his failure to initially disclose to the committee $100 million in assets and interests in a Cayman Islands corporation.
Mnuchin said the failure to disclose the assets was an oversight that he had corrected when it was brought to his attention by staffers of the Senate Finance Committtee. He said he had followed the advice of a lawyer who believed the disclosures were not necessary.
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But Democrats seized on the issue as evidence of serious ethics challenges among Trump's Cabinet nominees. "Never before has the Senate considered such an ethically challenged slate of nominees for key cabinet positions," Senate Democratic Leader Chuck Schumer said in a statement. "Mr. Mnuchin's failure to disclose his Cayman Islands holdings just reeks of the swamp that the President-elect promised to drain on the campaign trail."
In the hearing, Democrats on the Senate panel challenged Mnuchin's explanations, suggesting it was because he did not want to reveal his participation in a business that could be used as an offshore tax haven. Mnuchin said he had never used the Cayman Islands operation to avoid paying his taxes.
Democrats also attacked Mnuchin's record when he ran OneWest bank, saying he failed to do enough to keep people from losing their homes. All of the criticism on the committee came from Democrats. Republicans widely praised Mnuchin's record in business, indicating their support for his nomination.
During the hearing, Mnuchin defended his handling of thousands of foreclosures during the height of the financial crisis, saying he had worked hard to assist homeowners to refinance so they could keep their homes.
"Since I was first nominated to serve as Treasury secretary, I have been maligned as taking advantage of others' hardships in order to earn a buck," he said in testimony. "Nothing could be further from the truth."
Mnuchin, a former Goldman Sachs executive, was questioned by Democrats about his actions after taking over the failed IndyMac, whose collapse in 2008 was the second biggest bank failure of the financial crisis. Mnuchin assembled a group to buy the bank from the government, renamed it OneWest and turned it around, selling it for a handsome profit to CIT Group Inc. in 2014.
Critics have cited the bank's foreclosure policies under Mnuchin as a prime example of the kind of Wall Street greed that Trump, the candidate, campaigned against.
Mnuchin denied press reports that said he ran a "foreclosure machine." He told the Senate Finance Committee that his bank extended over 100,000 loan modifications to borrowers who had fallen behind in their mortgage payments.
Mnuchin said whenever possible, OneWest offered loan modifications using guidelines from a variety of government programs, but "unfortunately, not all of the homes could be saved through these programs and despite my best efforts, some were sadly subject to foreclosure."
A group of 10 Democratic senators led by Sen. Elizabeth Warren participated in a forum Wednesday to hear testimony from some of the people who lost their homes after Mnuchin's bank foreclosed.
"OneWest was notorious for its belligerence and for its cruelty," Warren said.
But Mnuchin's supporters include Finance Committee Chairman Orrin Hatch, R-Utah. He called Mnuchin a "leader and a manager through his career, demonstrating an ability to make tough decisions and to be accountable."
Mnuchin, who as Treasury secretary would serve as the administration's chief economic spokesman, is also expected to face questions about Trump's ambitious plans to double the country's growth rate through tax cuts, reducing government regulations and boosting government spending on infrastructure projects.
Trump during the campaign also vowed to target countries including China and Mexico that he contended are pursuing unfair trade practices that have cost millions of U.S. jobs. He has said one of his first actions after taking office will be to label China a currency manipulator. It would be Mnuchin's Treasury Department that would make that finding.
While Trump campaigned against Wall Street during the campaign, attacking Hillary Clinton for the speaking fees she earned from Goldman Sachs, Mnuchin is just one of a number of former Goldman Sachs executives tapped by the president elect for top economic jobs in his administration.
Mnuchin worked at Goldman for 17 years, making partner in 1994 and overseeing the firm's mortgage trading desk before becoming chief information officer. He left Goldman in 2002 and, after running an investment fund set up by billionaire investor George Soros, he and two former Goldman colleagues set up a new hedge fund, Dune Capital Management in 2004.
Mnuchin led Dune into financing Hollywood movies including a number of blockbuster hits including "Avatar."