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Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
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.
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.
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 Timesreported 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.
\u201cTalk about nepotism: Six months after leaving the White House, Jared Kushner secured a $2 billion investment from a fund led by the Saudi crown prince, a close ally during the Trump admin, despite objections from the fund\u2019s advisers about the deal. https://t.co/zA1ZjsLukn\u201d— Citizens for Ethics (@Citizens for Ethics) 1649634695
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.
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."