President-elect Donald Trump announced Wednesday that former Goldman Sachs partner Steven Mnuchin--a man described as "the anti-populist from Hell"--is his pick for Treasury secretary.
His appointment, according to Sen. Elizabeth Warren (D-Mass.), "should send shivers down the spine of every American who got hit hard by the financial crisis." Mnuchin, she added, "is the Forrest Gump of the financial crisis--he managed to participate in all the worst practices on Wall Street."
Warren and other critics of his appointment say Mnuchin's background--including running a bank described as "a foreclosure machine"--is further evidence that Trump has no intention of fulfilling his campaign promise to "drain the swamp" of corporate lobbyists and Wall Street executives.
"This isn't draining the swamp--it's stocking it with alligators," said Sen. Sherrod Brown (D-Ohio), ranking member of the Senate Banking, Housing, and Urban Affairs Committee.
Indeed, the Wall Street Journal wrote that "Mnuchin's Wall Street pedigree presents a stark contrast with the populist themes Mr. Trump struck in his campaign, railing against big banks and vowing to close tax loopholes that benefit hedge funds."
The Progressive Change Campaign Committee (PCCC) minced no words in its reaction, calling Mnuchin "a self-dealing Wall Street tool," while journalist and The Intercept co-founder Glenn Greenwald said on Twitter that Mnuchin is "basically the cartoon-villain personification of everything alt-right rails against and Trump put him in charge of Treasury."
The son of a Goldman partner, Mnuchin spent 17 years at the bank, has funded Hollywood films including American Sniper, profited millions off the Bernie Madoff scheme, and, as NPR reports,
[i]n 2009, he put together a group of billionaire investors and bought a failed California-based bank, IndyMac. It had been taken over by the Federal Deposit Insurance Corp. after its sketchy mortgage loans went bad.
Mnuchin and his partners bought IndyMac on the condition that the FDIC agree to pay future losses above a certain threshold. They renamed the bank OneWest Bank and, after running it for six years, they sold it last year for a profit, estimated at close to $1.5 billion.
Kevin Stein of the California Reinvestment Coalition, a housing advocacy group, says that profit was made on the backs of suffering California homeowners. "In essence what they did is they bought a foreclosure machine," he says.
According to the coalition, OneWest foreclosed on more than 36,000 homeowners under Mnuchin. During that time, the FDIC made payments to OneWest totaling more $1 billion. Those payments went to the "billionaire investors of OneWest Bank," says Stein, "to cover the cost of foreclosing on working-class, everyday, American folks," many of whom lived in California.
David Dayen adds at New Republic:
Even among the many bad actors in the national foreclosure crisis, OneWest stood out. It routinely jumped to foreclosure rather than pursue options to keep borrowers in their homes; used fabricated and "robo-signed" documents to secure the evictions; and had a particular talent for dispossessing the homes of senior citizens and people of color.
Once the new administration takes the reins, one of the things he'll focus on, he said to CNBC Wednesday, is slashing the corporate tax rate. He also promised the administration would bring about "the largest tax change since [President Ronald] Reagan."
Dennis Kelleher, president and CEO of Wall Street reform organization Better Markets, also warned that a Treasury Secretary Mnuchin could help claw back reforms, thus allowing another financial crash.
Mnuchin, Kelleher said, "was a pioneer in fixed income, currencies and commodities (FICC) trading at Goldman Sachs. FICC was the very dangerous, high risk, high stakes gambling that Dodd Frank in general and the Volcker Rule in particular were meant to end at Wall Street's biggest banks. Eliminating the Volcker Rule and the other financial reform rules that Mr. Munchin is talking about will bring back Wall Street's Wild West gambling that caused the 2008 financial crash and economic calamity."
"If Mr. Munchin and President Trump de-regulate and unleash Wall Street's biggest banks as they are suggesting, then it's time to start the countdown clock to the next financial crash which will make the last one look mild by comparison," he added.
PCCC added in its statement that "Trump's supporters did not vote for him to put a second-generation Goldman Sachs banker who made a fortune foreclosing on working families' homes in charge of the economy," and called him "yet another out-of-touch billionaire who is more concerned with self-dealing for Wall Street than protecting Americans from the too big to fail banks."
Describing Mnuchin, Bess Levin wrote at Vanity Fair that he "is, in other words, a man of the people. Or at least one who, like Trump, knows how to leverage their economic distress for personal profit."
As the BBC notes, Mnuchin would be the third Goldman Sachs veteran to hold the post in recent years, following the footsteps of Robert Rubin, who served under Bill Clinton, and Henry Paulson who served under George W. Bush. Paulson drew praise on Wednesday from former governor of Vermont and Democratic National Committee chair hopeful Howard Dean. Paulson, who secured the deal to bail out the nation's big banks in 2008, "was one of the people who kept the show together while the country and the world was falling apart," Dean said.
Also on Wednesday, Trump announced that billionaire investor Wilbur Ross was his pick for Commerce secretary. Ross has been described as "the king of bankruptcy."
