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steven mnuchin
Trump Lackeys Run to Rescue Ailing Bank in Predictable—And Telling—Move
Political reporters must explain the consequences likely to ensue if Steven Mnuchin, Joseph Otting, or their pro-Wall Street doppelgangers return for a second Trump administration.
Mar 15, 2024
Earlier this week, two of Donald Trump’s appointees—former Treasury Secretary Steven Mnuchin and former Comptroller of the Currency Joseph Otting—officially joined the board of New York Community Bancorp (NYCB) as part of a deal to buttress the struggling regional lender.
It was only last March that a NYCB subsidiary, Flagstar Bank, acquired many of Signature Bank’s assets from the Federal Deposit Insurance Corporation (FDIC). But in recent months, NYCB has found itself floundering as a result of the post-Covid-19 devaluation of commercial real estate.
NYCB announced last week that multiple institutional investors, led by a private equity firm founded and headed by Mnuchin, raised more than $1 billion to prop it up. In exchange, the bank reconstituted its board—shrinking it to ten members while designating four new directors, including Mnuchin and Otting, who will also serve as CEO.
The announcement of the cash infusion and leadership shakeup had an immediate effect, as NYCB shares quickly rebounded following a steep decline earlier in the day. Investors—including Mnuchin’s Liberty Strategic Capital, Hudson Bay Capital, Reverence Capital Partners, and the hedge fund Citadel—stand to make “hundreds of millions of dollars of paper profits if the shares maintain their gains,” according to the Financial Times.
To see Goldman Sachs alum Mnuchin and his pal Otting team up again to lead a financial institution is unsurprising, and yet that doesn’t make it any less troubling. From 2010 to 2015, Mnuchin and Otting worked together as executives at a scandal-ridden bank called OneWest. During that time, they repeatedly violated foreclosure laws to kick elderly people with reverse mortgages out of their homes. Vice President Kamala Harris’ refusal to prosecute the Pasadena-based lender when she was attorney general of California was a colossal and indefensible mistake.
To see Goldman Sachs alum Mnuchin and his pal Otting team up again to lead a financial institution is unsurprising, and yet that doesn’t make it any less troubling.
In 2017, Trump rewarded Mnuchin and Otting for their rapacious conduct by appointing them to his administration. Tapping the predatory pair to regulate the financial industry was brazen, but it made Trumpian sense; his team was a veritable who’s who of revolvers uninterested in curbing the exploitative practices that have made them and their peers so wealthy.
Barring unforeseen circumstances, the 2024 presidential election will be a rematch between Trump and Joe Biden. As campaigns kick into full gear, the news media would do well to reacquaint voters with what Trump appointees were up to before 2017, what they’ve been doing since 2021, and what their potential return to the White House would mean.
The American Prospect’s David Dayen, who reported on OneWest’s cruel repossession machine several years ago, said last week that he hopes “there aren’t any 95-year-olds with an NYCB loan facing foreclosure, that hasn’t historically ended well at a Mnuchin-owned bank!”
As it turns out, NYCB is one of the nation’s largest residential mortgage originators and servicers, with a focus on apartment buildings. It’s also a leading warehouse lender. Mnuchin has promised to pursue “a diversified and de-risked business model that supports long-term profitability,” but that doesn’t tell us what malfeasance he and Otting have in store for the coming months.
The last time Mnuchin and his partners bought a bank in distress, they engaged in ruthless behavior and made out like bandits. In 2009, a Mnuchin-led group of investors purchased IndyMac, a failed residential lender, from the FDIC for about $1.5 billion and renamed it OneWest, after which the bank proceeded to gobble up several competitors that were reeling in the wake of the 2007-2008 crash. When CIT Group obtained OneWest in 2015 for $3.4 billion, Mnuchin alone netted roughly $380 million.
Although it’s hard to predict the extent to which the NYCB investors are poised to capitalize on another real estate-fueled financial crisis, it’s easy to agree with Dayen, who added last week that “putting the OneWest gang back in charge of a bank rather than readying indictments is really distressing.”
In any case, Mnuchin and Otting’s move to join NYCB’s board serves as a reminder that Trump and his appointees have consistently prioritized Wall Street interests—before, during, and after his presidency. As Trump eyes a return to the White House, it’s worth stressing that presidential elections are never only about individual candidates; they’re also about how those candidates would control the vast apparatus known as the executive branch, including the types of regulators they’d likely appoint.
Mnuchin and Otting’s move to join NYCB’s board serves as a reminder that Trump and his appointees have consistently prioritized Wall Street interests—before, during, and after his presidency.
This year, we don’t have to rely on prognostication, as is usually the case with at least one candidate. We can contrast the personnel choices that Trump and Biden made during their respective first terms. By nominating bona fide vultures like Mnuchin and Otting to oversee the financial sector, Trump made it abundantly clear that he intended to facilitate plunder.
Even though Treasury Secretary Janet Yellen has her own objectionable ties to corporate interests and major blind spots, her tenure atop the department has been preferable to that of Mnuchin. And whereas Trump picked Otting to chair the OCC, Biden nominated a legitimate progressive. Sadly, Saule Omarova was forced to withdraw following a vicious right-wing smear campaign full of red-baiting. Opportunistic Senate Republicans and a handful of Senate Democrats used Omarova’s upbringing in the Soviet Union to falsely equate her profoundly democratic desire to subordinate finance to the public interest with Stalinism.
The point is that while another Trump administration is guaranteed to oil the wheels of upward redistribution and graft, a second Biden administration could advance a downwardly redistributive agenda. But voters will not know this distinction without informative coverage of Trump’s cronies and their corporate agenda.
For their part, journalists covering the 2024 campaign should remember that their job is to convey to voters how the country is likely to differ depending on whether Biden or Trump wins. Given that Trump has vowed to impose the GOP’s fascist agenda with dictatorial force, the stakes couldn’t be higher. It’s high time for political reporters to start probing who would benefit if the likes of Mnuchin, Otting, and Trump’s other Wall Street allies are given another chance. Here’s a tip: it won’t be the average working American.
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'He's Cashing In': Kushner Firm Gets $2 Billion From Saudi Fund Run by Crown Prince
Watchdogs noted that the investment came after Kushner "used his position in the White House to advance Saudi interests"—and shield the regime from accountability for the Khashoggi murder.
Apr 11, 2022
A private equity firm created by former White House adviser and Trump son-in-law Jared Kushner has reportedly secured a $2 billion investment from a sovereign wealth fund directed by Saudi Crown Prince Mohammed bin Salman, a deal that watchdog groups and lawmakers viewed as part of Kushner's effort to cash in on his favorable treatment of the brutal Saudi regime.
"Just because the breathtaking corruption occurs in public doesn't make it not breathtaking."
The New York Times reported Sunday that Kushner's new firm, Affinity Partners, netted the investment six months after the end of the Trump administration "despite objections from the [Saudi] fund's advisers about the merits of the deal," heightening suspicions that the money is payback for Kushner's defense of bin Salman in the wake of the gruesome 2018 murder of Jamal Khashoggi.
The United Nations and U.S. intelligence agencies have concluded that bin Salman, the de facto leader of Saudi Arabia, likely approved the Khashoggi assassination.
"As a top aide to Donald Trump, Jared Kushner spent years building ties and currying favor with Saudi Arabia," said Noah Bookbinder, the president of Citizens for Responsibility and Ethics in Washington, in response to the Times story. "It's no surprise that an investment fund tied to the Saudi crown prince invested billions in Kushner's fund even though advisers raised objections."
Journalist Judd Legum added on Twitter, "Let's be very clear: Jared Kushner used his position in the White House to advance Saudi interests, including making sure Saudi wouldn't be held accountable for the brutal murder of a U.S.-based journalist."
"And now he's cashing in," Legum wrote.
According to the Times, the objections raised by the Saudi fund's advisory panel "included: 'the inexperience of the Affinity Fund management'; the possibility that the kingdom would be responsible for 'the bulk of the investment and risk'; due diligence on the fledgling firm's operations that found them 'unsatisfactory in all aspects'; a proposed asset management fee that 'seems excessive'; and 'public relations risks' from Mr. Kushner's prior role as a senior adviser to his father-in-law."
But days after the panel outlined its concerns, the full board of the $620-billion fund--which the Times notes is "led" by bin Salman--dismissed them and signed off on the investment in Kushner's firm.
The Times also revealed that Kushner was not the only official from Trump's White House to receive Saudi money after the former president was voted out of office in 2020. Former Treasury Secretary Steve Mnuchin's new private equity firm Liberty Strategic Capital has received $1 billion from the same Saudi fund that invested in Kushner's outfit.
"The Saudi fund agreed to invest twice as much and on more generous terms with Mr. Kushner than it did at about the same time with former Treasury Secretary Steven Mnuchin... even though Mr. Mnuchin had a record as a successful investor before entering government."
Despite public outcry over the regime's continued human rights abuses, a spokesperson for Kushner's firm told the Times that it is "proud" to have the Saudi fund as an investor. Affinity's latest public filings with the Securities and Exchange Commission show that the firm's primary fund has $2.5 billion under management, the bulk of which appears to be from Saudi Arabia.
The Times report, which came as Trump is gearing up for another presidential bid in 2024, drew the attention of at least one U.S. senator.
"Just because the breathtaking corruption occurs in public doesn't make it not breathtaking," tweeted Sen. Chris Murphy (D-Conn.), a member of the Senate Foreign Relations Committee.
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Last-Minute GOP Push to End Emergency Lending Programs Condemned as Effort to 'Sabotage the Economy,' Undermine Biden
"Republicans are threatening to blow up an agreement to provide basic relief to Americans now if they can't cripple the ability of Biden administration and the Fed to offer more help next year."
Dec 17, 2020
With congressional negotiators on the brink of finalizing a $900 billion coronavirus relief package, Senate Republicans are pushing at the last minute to include language that would end emergency lending programs for small and medium-sized businesses as well as state and local governments, a move seen as an attempt to hamstring the incoming Biden administration's ability to respond to the economic crisis.
Pushed by Sen. Pat Toomey (R-Pa.), the language would terminate the Federal Reserve and Treasury Department lending programs authorized under the CARES Act. As Bloomberg reported Thursday, "The issue is holding up the relief talks and the timeline for stimulus to reach millions of jobless Americans, because it puts Republicans at odds with Democrats who want to keep the programs running."
"Democrats have disagreed with [Toomey's] stance and said their reading of the law says the facilities can remain active until 2026," Bloomberg noted. "They have said Treasury Secretary Steven Mnuchin's moves to end the program are designed to tie the hands of Janet Yellen, the choice of President-elect Joe Biden to lead the Treasury."
"The GOP is drawing a line in the sand over policy that would sabotage the economy and tie the Biden admin's hands."
--Lisa Gilbert, Public Citizen
Bharat Ramamurti, a member of the Congressional Oversight Commission, the panel tasked with overseeing CARES Act funds, said in response to Toomey's effort that "Senate Republicans are threatening to blow up an agreement to provide basic relief to Americans now if they can't cripple the ability of Biden administration and the Fed to offer more help next year."
"In their quest to tie the Biden administration's hands," Ramamurti continued, "Senate Republicans are proposing a serious limitation of the Fed's emergency lending powers--one that would undermine the Fed's ability to respond to a future financial crisis."
Lisa Gilbert, executive vice president of consumer advocacy group Public Citizen, echoed Ramamurti's warning, tweeting Thursday that "holding up the stimulus to prevent the Fed from pursuing further lending past early January for facilities funded by the CARES Act is absurd."
"The GOP is drawing a line in the sand over policy that would sabotage the economy and tie the Biden admin's hands," Gilbert added.
Politico reported that Toomey's language would "prevent Treasury Secretary-designate Janet Yellen from restarting the Fed lending programs for small and mid-sized businesses, as well as for state and local governments, that are set to wind down at the end of the year."
Toomey's provision--which he characterized as a "bright red line" that has drawn significant support from other Republicans--would "prevent any money from the Treasury's rainy day fund, even money not set aside in March as part of the CARES Act, from being used to resume those programs after 2020," Politico reported. "It would also prohibit any similar programs from being created in the future."
The Republican push to ensure the incoming Biden administration will not be able to make use of CARES Act lending programs was one of several issues delaying completion of a coronavirus relief package that, as it stands, includes one-time $600 direct payments, a $300-per-week boost to unemployment benefits, funding for vaccine distribution, and other programs.
Progressive lawmakers and activists have criticized the emerging relief package as badly inadequate, raising alarm over the paltry amount of direct assistance and the possible omission of key lifelines such as an extension of paid leave benefits and a federal eviction moratorium.
"From failing to extend the evictions moratorium to trying to enshrine into law an end to the Fed's emergency programs, the GOP are doing all they can to sabotage economic recovery in 2021," said Alexis Goldstein, a senior policy analyst with Americans for Financial Reform. "The Covid relief bill should be about relief--not tying the Fed and Biden admin's hands."
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'Deeply Disturbing' Surge in Layoffs Spotlights Cruelty of Trump-GOP Refusal to Boost Unemployment Benefits
"The nation's health and economy are going backwards, not forwards, because Republicans and the leader of their party have spent months doing the very opposite of what is needed."
Dec 09, 2020
Hours after the U.S. reported a staggering 3,000 coronavirus deaths in just 24 hours, the Department of Labor announced Thursday that an additional 1.3 million Americans filed jobless claims last week, further bolstering the case for a bold relief package and spotlighting the cruelty of the Republican leadership's continued opposition to boosting unemployment benefits.
According to the latest figures from the Bureau of Labor Statistics, nearly 20 million Americans are currently receiving jobless benefits just over two weeks before funding is set to expire for a pair of key emergency unemployment insurance (UI) programs--a lapse that would hurl millions of people off a "benefit cliff."
"The 1.3 million who applied for UI last week was an increase of 276,000 from the prior week, bringing initial claims back to their highest point since September," Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, wrote in a blog post Thursday. "Further, last week's increase was not just due to week-to-week volatility in the data. The four-week moving average of total initial claims is now at its highest point since October."
"Mnuchin and the White House think now is a good time to propose gutting jobless benefits and cutting stimulus checks in half--the last thing vulnerable Americans need in this recession."
--Jeremy Funk, Accountable.US
"In other words," Shierholz added, "layoffs appear to be rising, consistent with the resurgent virus."
Faced with worsening economic metrics and widespread suffering--evidenced by miles-long food lines, overwhelmed unemployment systems, and a looming "tsunami" of evictions--the Trump administration and Senate Majority Leader Mitch McConnell (R-Ky.) are hawking relief plans that would not increase weekly unemployment benefits at all.
Additionally, according to the Washington Post, the White House plan "does not appear to extend the number of weeks people are eligible to be on unemployment programs," an omission that would leave the millions of Americans who have already exhausted their benefits with no lifeline.
Rep. Don Beyer (D-Va.), incoming chair of the congressional Joint Economic Committee, called the latest layoff figures "deeply disturbing" and slammed Republican lawmakers for attempting to "penny-pinch the American people during a pandemic."
"If Republicans refusing to extend unemployment benefits and other forms of relief are not convinced by the most recent unemployment numbers--19 million drawing unemployment benefits, 3.9 million long-term unemployed, 38 straight weeks of weekly unemployment claims greater than the worst week of the Great Recession--then nothing will convince them," said Beyer.
"The nation's health and economy are going backwards, not forwards," Beyer continued, "because Republicans and the leader of their party have spent months doing the very opposite of what is needed to contain the coronavirus and responsibly rebuild and recover from this recession."
In the place of a weekly UI boost, the White House has offered direct stimulus payments of $600 per adult and $600 per child--well short of the progressive call for $1,200 per adult and $500 per child on top of extra unemployment benefits. McConnell's plan would not provide any direct payments or aid to state and local governments, which economists say is desperately needed.
Speaking to reporters on Wednesday as relief talks appeared on the verge of collapsing once again, Treasury Secretary Steven Mnuchin--the administration's lead negotiator--insisted the White House's stimulus checks would be more beneficial than an increase in weekly unemployment payments.
But as the Post's Jeff Stein and Mike DeBonis noted, compared to the White House's call for one-time payments of $600 per person, "jobless Americans would receive at least an additional $4,800 for each unemployed worker" if weekly UI payments are increased by $300, as proposed by a bipartisan relief measure.
Jeremy Funk, spokesperson for government watchdog group Accountable.US, said in a statement Thursday that "with rising levels of food insecurity and a new wave of evictions in less than one month, the Trump administration should be working around the clock to get relief into Americans' pockets."
"Instead, Mnuchin and the White House think now is a good time to propose gutting jobless benefits and cutting stimulus checks in half--the last thing vulnerable Americans need in this recession," Funk added. "Congress and the Trump administration's priorities must be on containing the virus and getting relief into the hands of the millions of workers and thousands of small businesses that desperately need help."
"Mitch McConnell and Senate Republicans blocked relief bills for months as 284,000 people died and millions suffered under an economic crisis."
--George Goehl, People's Action
Unlike the plans offered by McConnell and Trump, the bipartisan coronavirus relief proposal currently being fleshed out on Capitol Hill would extend pandemic unemployment programs, add 16 weeks of benefits, and provide a $300 boost to weekly UI payments.
But that proposal would not provide any direct stimulus payments, a popular form of relief that progressives are demanding as an essential component of any relief package, in addition to a weekly UI supplement.
In a statement Thursday, People's Action executive director George Goehl said it is "unconscionable that we have Covid relief proposals on the table that deny people direct cash assistance and offer corporations a get-out-of-jail-free card for the consequences of forcing employees to work in dangerous conditions."
"Mitch McConnell and Senate Republicans blocked relief bills for months as 284,000 people died and millions suffered under an economic crisis," said Goehl. "A bill that doesn't include cash assistance fails to deliver on the most simple and direct means of providing short-term relief."
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'This Is Atrocious': Trump White House Proposes Covid Relief Plan With $0 Weekly Unemployment Boost
"The president's proposal starts by cutting the unemployment insurance proposal being discussed by bipartisan members of the House and Senate. That is unacceptable."
Dec 08, 2020
The Trump White House late Tuesday tossed into the middle of ongoing coronavirus relief negotiations a $916 billion proposal that includes one-time $600 stimulus payments in the place of a weekly boost to federal unemployment benefits, a trade-off that Democratic lawmakers and economic analysts immediately rejected as unconscionable.
Offered as Democratic and Republican negotiators are racing to strike a relief deal before year's end, the White House plan would provide $40 billion for an extension of federal unemployment programs set to expire on December 26--but no increase in weekly benefits, despite the dire state of the economy.
"We gave the biggest help to those who needed it. The Republicans would send one $600 check and that's it. This is atrocious."
--Rep. Don Beyer
The Trump administration's unemployment insurance plan, put forth by Treasury Secretary Steve Mnuchin, falls well short of a bipartisan framework that calls for $180 billion in funding to boost unemployment benefits by $300 per week through March.
"The president's proposal starts by cutting the unemployment insurance proposal being discussed by bipartisan members of the House and Senate from $180 billion to $40 billion," House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) said in a joint statement. "That is unacceptable."
As a substitute for the lack of a weekly unemployment boost, the White House proposed a round of direct stimulus payments amounting to $600 per adult and $600 per child.
By contrast, the $2.2 trillion CARES Act that Congress approved in March sent one-time payments of $1,200 per adult and $500 per child to most U.S. households, on top of a $600-per-week unemployment supplement that proved remarkably successful until Republicans allowed it to lapse at the end of July.
"We gave the biggest help to those who needed it," Rep. Don Beyer (D-Va.) said of the CARES Act. "The Republicans would send one $600 check and that's it. This is atrocious."
Andrew Stettner, a senior fellow at The Century Foundation, noted that "unemployed workers are going thousands in dollars in debt on paltry benefits."
"Stimulus checks are not a substitute," said Stettner, a sentiment echoed by other analysts.
With hiring slowing sharply as coronavirus infections rise nationwide, economists have warned that failure to approve a weekly unemployment boost would heighten the misery already being felt by tens of millions of people across the U.S. According to recent data, around 20 million Americans are currently receiving some form of unemployment insurance, 26 million are struggling to afford enough food, and 40 million could face eviction in the near future.
"The expiration of vital pandemic unemployment insurance (UI) benefits on December 26 will leave 12 million workers without a safety net, and over four million others will have already exhausted their benefits by this cutoff," Elise Gould, senior economist at the Economic Policy Institute, wrote in a blog post last week. "This spells trouble not only for workers and their families who are desperately trying to keep a roof over their heads and put food on the table--especially with the eviction moratorium also set to expire on December 31--but also for the recovery itself."
"The longer Congress waits to act, the more permanent damage will be done to American families and the overall economy."
--Dr. Mark Paul, Dr. Adam Hersh
In addition to being dramatically less ambitious than the CARES Act, the White House's new proposal and the bipartisan plan embraced as a starting point by Democratic leaders are both a far cry from the kind of bold stimulus that experts say is needed to prevent a prolonged recession and ensure a just recovery.
A paper (pdf) authored by economists Dr. Mark Paul and Dr. Adam Hersh and released Tuesday by the Groundwork Collaborative estimates that "Congress needs to provide economic relief of between $3-4.5 trillion in the short-term in order to get American families and businesses working at their full potential."
"This would include continuing to expand eligibility for unemployment insurance benefits, renewing the $600 weekly supplemental benefits, providing fiscal aid to offset budgetary pressures on state, local, and tribal governments, renewal and better management of the Paycheck Protection Program for small businesses, and resources to expand Covid testing and tracing and health insurance subsidies, among other measures," the economists wrote.
"The longer Congress waits to act," they warned, "the more permanent damage will be done to American families and the overall economy, and the harder it will be for the U.S. economy to regain prosperity."
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WATCH: Rep. Ocasio-Cortez Grills Treasury Secretary Mnuchin on Unused CARES Act Funding
Mnuchin has signaled he will return about $175 billion in unallocated funds, even as the coronavirus pandemic and unemployment crisis rage.
Dec 01, 2020
Rep. Alexandria Ocasio-Cortez on Wednesday grilled U.S. Treasury Secretary Steven Mnuchin on the return of around $175 billion in unused funds allocated for coronavirus pandemic relief.
The quarterly hearing before the House Financial Services Committee is mandated under the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, which was passed by Congress and signed into law by President Donald Trump in March.
Watch:
The pandemic stimulus bill provided most Americans with one-time $1,200 payments, while corporations and wealthy individuals were handed more than half a trillion dollars.
At the hearing, Ocasio-Cortez (D-N.Y.) urged Mnuchin to prevent some of the $450 billion in authorized CARES Act relief from reverting to the Treasury Department at the end of the year when the designated loan distribution period expires.
Mnuchin has indicated that he will return approximately $175 billion, even as unemployment and other economic hardship caused by the ongoing coronavirus pandemic persist.
"We are in such a desperate position given the unfortunate gridlock" in Congress, Ocasio-Cortez told Mnuchin. "We're all aligned in interest in trying to figure out where we can explore maximum flexibility as offered by the statute."
The freshman Squad member then pressed Mnuchin on the re-allocation of unused CARES Act funds.
Wednesday's hearing came as Congress struggled to reach a deal on a new pandemic relief bill. On Wednesday, Senate Minority Leader Chuck Schumer (D-N.Y.) and House Speaker Nancy Pelosi (D-Calif.) insisted that a bipartisan $908 billion proposal should be the starting point for any stimulus measure--a figure that Senate Majority Leader Mitch McConnell (R-Ky.) has rejected in favor of $500 billion in what he calls "targeted relief."
McConnell on Tuesday was accused of "economic sabotage" and of favoring corporations and the wealthy over people who desperately need relief.
"Leave it to Mitch McConnell and [President] Donald Trump to propose a bill that creates tax write-offs for fancy lunches and gives the middle finger to working families and 20 million unemployed Americans," said Rep. Don Beyer (D-Va.). "This is not a serious proposal, it is a slap in the face to people who need help."
Some progressive lawmakers also rejected the $908 billion proposal, with Rep. Rashida Tlaib (D-Mich.) blasting the bill as out of touch with the needs of everyday Americans. Tlaib especially objected to the exclusion of stimulus checks in the bill, which she said "shows the disconnect of the Senate with people on the ground."
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'Flat-Out Sabotage' Already Underway as Mnuchin Tries to Put $455 Billion in Covid Funds Out of Biden Team's Reach
"Burning it down on the way out the door. There is no reasonable justification for this."
Nov 24, 2020
Treasury Secretary Steve Mnuchin is under fire for attempting to undermine the incoming Biden administration's response to the Covid-19 pandemic on his way out the door after his department confirmed Tuesday that it intends to place $455 billion in unspent coronavirus relief funds into an account that requires congressional authorization to access.
Bloomberg reported that the funds, which Congress allocated to the Federal Reserve in March for emergency lending programs to assist local governments and struggling businesses, will be put in the Treasury Department's General Fund following Mnuchin's widely condemned decision last week to cut off the relief programs at the end of the year.
"As the economy backslides amid skyrocketing Covid-19 cases, Secretary Mnuchin is engaged in economic sabotage, and trying to tie the Biden administration's hands."
--Sen. Ron Wyden
Mnuchin requested that the funds be reallocated by the currently divided Congress, and the Fed has agreed to cooperate with the outgoing treasury secretary's move.
According to Bloomberg, "Mnuchin' clawback would make it impossible" for Janet Yellen, President-elect Joe Biden's pick to lead the Treasury Department, to utilize the funds "without lawmakers' blessing."
"The move leaves just under $80 billion available in the Treasury's Exchange Stabilization Fund, a pot of money that can be used with some discretion by the Treasury chief," Bloomberg noted. "By contrast, the CARES Act funds had specific uses, and weren't available for general government spending purposes."
While Mnuchin, a former Goldman Sachs banker, insisted he is attempting to ensure the funds are put to better use, Democratic members of Congress and other observers immediately accused the treasury secretary of a potentially unlawful ploy to hamstring the Biden administration's coronavirus response before the president-elect takes office. According to one analyst, Mnuchin's actions are an "explicit" violation of the CARES Act.
"This is Treasury's latest ham-handed effort to undermine the Biden administration. The good news is that it's illegal and can be reversed next year," tweeted Bharat Ramamurti, a member of the congressional commission established to oversee the use of coronavirus relief money. "For its part, the Fed should not go along with this attempted sabotage and should retain the CARES Act funds it already has."
Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, denounced as "shameful" Mnuchin's effort to pull back the congressional relief funds and place them out of the Biden administration's reach.
"As the economy backslides amid skyrocketing Covid-19 cases, Secretary Mnuchin is engaged in economic sabotage, and trying to tie the Biden administration's hands," Wyden said in a statement to Reuters on Tuesday.
Echoing Wyden, Sen. Elizabeth Warren (D-Mass.) tweeted late Tuesday that "Secretary Mnuchin's Covid-19 response has been a corrupt and incompetent failure."
"He needs to stop sabotaging the Biden administration from cleaning up his mess and helping states, cities, and small businesses," said Warren.
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'Monstrous Behavior': Mnuchin Slammed for Biden 'Snub' That Could Sabotage US Economic Recovery
On his way out the door, said one Nobel-winning economist, "Mnuchin is effectively trying to create a financial crisis.'
Nov 19, 2020
Treasury Secretary Steven Mnuchin was accused Friday of taking "exactly the wrong policy move right now" and sabotaging the economy for the incoming Biden administration after announcing an end-of-year cutoff to several key coronavirus relief lending programs at the Federal Reserve.
CNBC's reporting quoted one financial expert who likened the move by Mnuchin to stripping a ship of its lifeboats when they're most needed. The outlet explained:
Mnuchin announced Thursday that he will not extend the Federal Reserve's emergency lending programs that used Congress' CARES Act funds beyond Dec. 31. The move is expected to drastically reduce the central bank's ability to shore up the financial system.
"It's hard to find an economic rationale for it," Carl Weinberg, chief economist at High Frequency Economics, told CNBC's "Squawk Box Europe" on Friday.
"I don't think there's a good economic or public health or social reason to explain why they want to cut these programs," he added, "so it's kind of got to be politics, doesn't it?"
At issue are an array of relief loan programs facilitated by the Fed with funds provided by the Treasury that were authorized by Congress earlier this year. These programs include: the Primary Market Corporate Credit Facility, Secondary Market Corporate Credit Facility, Municipal Liquidity Facility, Main Street Lending Program, and Term Asset-Backed Securities Loan Facility.
"With respect to the facilities that used CARES Act funding," Mnuchin wrote Thursday to Federal Reserve Chair Jerome Powell, "I was personally involved in drafting the relevant part of the legislation and believe the congressional intent as outlined in Section 4029 was to have the authority to originate new loans or purchase new assets (either directly or indirectly) expire on December 31, 2020."
"As such, I am requesting that the Federal Reserve return the unused funds to the Treasury. This will allow Congress to re-appropriate $455 billion, consisting of $429 billion in excess Treasury funds for the Federal Reserve facilities and $26 billion in unused Treasury direct loan funds," wrote Mnuchin.
Mnuchin's letter, as Bloomberg News reported, elicited swift rebuke from Powell. In a statement released "minutes" after Mnuchin's letter, the Fed urged that "the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy."
"The central bank," noted Axios, "almost never issues public statements."
The Trump administration's move sparked a chorus of criticism from economists including Paul Krugman.
In a Friday Twitter thread, Krugman said "Mnuchin is effectively trying to create a financial crisis, or at least make one more likely." Krugman added that "basically we're looking at more sabotage by an administration on its way out."
Krugman was far from alone in his criticism:
Mnuchin's announcement also drew scathing rebuke from Neil Barofsky, former inspector general of the Troubled Asset Relief Program, who described the programs' move to the chopping block as a "reckless political decision," and called on the Trump administration "not [to] succumb to the political temptation to straitjacket its successor."
In his Friday op-ed at the New York Times, Barofsky urged Mnuchin to follow the approach of the George W. Bush administration's outgoing Treasury Department when it "did all that it could to preserve President-elect Barack Obama's discretion to use congressionally approved bailout funds from the Troubled Asset Relied Program ... to steer our nation's recovery."
Trump's Treasury Department, wrote Barofsky, "should reverse [its] reckless course and follow the precedent set with TARP by extending these programs to give the newly elected administration as much flexibility as possible."
"It makes no sense to celebrate the programs for the success they have had in calming markets," Barofsky added, "while at the same time pulling the rug out from under them at a time when they are likely to be most needed."
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Citing 'Dubious' Practices and Possible White House Interference, Schumer and Wyden Demand IG Probe Into IRS Trump Audit
"Not only has Mr. Trump broken decades of precedent by... refusing to publicly release his federal income tax returns, he has also made numerous public statements against IRS audits," the senators wrote.
Oct 08, 2020
Two top Senate Democrats on Thursday called on the Treasury Department to probe possible political interference in Internal Revenue Service audits of President Donald Trump's tax returns.
Senate Minority Leader Chuck Schumer (D-N.Y.) and Sen. Ron Wyden (D-Ore.), the ranking member on the Senate Finance Committee, sent a letter (pdf) to Treasury Department inspectors general asking for a "thorough investigation" of possible meddling in the audits of the president's tax returns "due to significant concerns of potential efforts to undermine the integrity of the mandatory audit process and other audits within the IRS."
The letter sent by Schumer and Wyden was addressed to Russell George, the Treasury Inspector General for Tax Administration (TIGTA), and Richard Delmar, Acting Inspector General of the Treasury Department.
The senators' request comes on the heels of a September 27 New York Times report that revealed the president paid minimal taxes--just $750 in both 2016 and 2017, for example--and is undergoing a decade-long IRS audit over a $72.9 million tax refund he claimed in 2010.
"Not only has Mr. Trump broken decades of precedent by rejecting transparency for the American people and refusing to publicly release his federal income tax returns, but he has also made numerous public statements against IRS audits, both as a presidential candidate and after he was elected," the senators' letter states.
"It has been reported that, when applying for this refund, Mr. Trump cited significant business losses--a total of $1.4 billion--for 2008 and 2009," the letter continues. "It is our understanding that this audit to determine the legitimacy of that refund is still ongoing and similarly deserves full protection from undue influence."
"Given the recent revelations about Mr. Trump's decades-long tax avoidance tactics and dubious business practices, as well as concerns about political interference in the IRS's mandated audit process of presidential returns," the senators urge the inspectors general to conduct an immediate investigation into "any undue influence," to "provide reassurance" to Congress on the matter, and "take expeditious action" in the event such interference is found.
Although the House Ways and Means Committee has been trying to obtain six years' worth of Trump's tax returns since last year, Treasury Secretary Steven Mnuchin steadfastly refuses to release the documents, claiming Democrats want to use them to harm the president.
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As 21 States Report Surge in Covid-19 and Flu Season Looms, Nursing Homes Implore Congress for Urgent Relief
"We need Congress to prioritize our vulnerable seniors and their caregivers in nursing homes and assisted living communities by passing another Covid-19 funding package before they leave town for the elections."
Sep 28, 2020
With Covid-19 infection rates reportedly surging in over 20 states across the United States, nursing home advocates on Monday urged Congress to pass a new relief package to avoid further outbreaks among vulnerable populations and avoid catastrophic closures of essential care facilities as the fall flu and cold season loom.
"Without replenishing funds for federal and state agencies, healthcare facilities, including nursing homes and assisted living communities, could find themselves less than completely prepared for the challenges of the upcoming cold and flu season, which could inevitably result in an uptick in new Covid-19 cases," Mark Parkinson, president and CEO of the American Health Care Association (AHCA) and National Center for Assisted Living (NCAL) said in a statement Monday.
More than 204,000 Americans have died from the virus, and the United States continues to lead the world in total cases, posting more than 7.1 million. Twenty-one states reported surges in cases on Sunday.
Long-term care facilities have been particularly plagued with Covid-19 outbreaks--nearly 40% of deaths and 7% of total cases in the United States have been linked to nursing homes, according to reporting from the New York Times. As of September 16, NYT data indicates, Covid-19 has infected more than 479,000 people at some 19,000 facilities.
"With the cold and flu season adding a real complication to the ongoing Covid-19 pandemic response," Parkinson said, "the need for extra testing, personal protective equipment and staffing, will need to be met in order to keep caregivers and residents safe."
The call for funding comes on the heels of a warning from the World Health Organization (WHO) Friday that global deaths from coronavirus could top two million before a vaccine is widely available. WHO officials urged diligent collective action to mitigate the spread of the virus. Rural hospital administrators also sounded alarms last week, expressing fears of facility closings as loans disbursed from a stimulus bill last spring come due.
According to a press release from AHCA and NCAL Monday, 70% of the $175 billion in funding for healthcare providers approved by Congress in April as part of Covid-19 relief legislation has already been distributed to facilities, and the remaining funds are likely to be allocated by early October.
While Democrats in the House passed a $3 trillion relief package known as the HEROES Act in May, Republicans in the Senate have refused to bring the bill to the floor for a vote.
Parkinson, according to the press release, is urging Congress to provide an additional $100 billion for the U.S. Department of Health and Human Services (HHS) Provider Relief Fund, which is accessible for all healthcare providers impacted by Covid-19. A sizable portion of the fund should be dedicated to helping nursing homes and assisted living communities acquire resources associated with protecting vulnerable residents and staff from the virus, including constant testing, personal protective equipment, and staff support, he said.
"Without adequate funding and resources," Parkinson warned, "the U.S. will repeat the same mistakes made during the initial outbreak last spring and the major spike over the summer."
As the death of Supreme Court Justice Ruth Bader Ginsburg and looming confirmation hearings for a potential replacement dominated the news cycle last week, and with revelations about President Donald Trump's tax returns coming to light Sunday night, Parkinson stressed the need for coronavirus relief to be passed before a planned Congressional recess in October.
"We need Congress to prioritize our vulnerable seniors and their caregivers in nursing homes and assisted living communities by passing another Covid-19 funding package before they leave town for the elections," he said.
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