Thursday's Senate hearing to confirm the next Treasury Secretary returned time and again to the foreclosure crisis that caused millions of Americans to lose their homes — and to the nominee's own role in the crisis.
Democratic senators questioning Steven Mnuchin, President-elect Trump's pick for Treasury Secretary, focused in on his record as the head of OneWest, a mortgage lender formerly know as IndyMac, which he purchased as part of a consortium of investors in 2009.
Democrats and advocacy groups have pilloried Mnuchin over OneWest's record with customers losing their homes, accusing him of running a "foreclosure machine," that completed 36,000 foreclosures under his leadership. In some cases, elderly people were kicked out of their homes after missing trivially small payments.
OneWest was not alone. Banks foreclosed on more than 4 million homes between 2007 and 2012, as part of a housing crisis that defined the economic challenges of the Obama administration. They have since paid tens of billions of dollars to settle charges of illegal behavior before and during the crisis.
The Republicans on the committee largely sought to insulate Mnuchin from the Democratic criticism. Orrin Hatch, the committee's chair, said in his opening statement that issues regarding foreclosures at OneWest were "essentially unrelated" to Mnuchin's qualifications to be Treasury Secretary.
Mnuchin himself sought to "correct the record" on OneWest's foreclosure policies, saying that he had been "maligned as taking advantage of others' hardship to earn a buck."
He said loans that went into foreclosure because homeowners couldn't keep up with their payments were made before he had bought the bank. "The responsibility landed on me to clean up the mess others made but we inherited," he said.
While his Democrat questioners threw plenty of punches, Mnuchin largely managed to avoid the unforced errors that caused headaches for other nominees such as ExxonMobil CEO Rex Tillerson and Republican megadonor Betsy DeVos.
Sherrod Brown, the Ohio Democrat, attempted to pull of an Elizabeth Warren-esque grilling of Mnuchin, presenting him with several regulatory findings of improper behavior by OneWest, as well as a leaked memo from the California Attorney General’s office where lawyers “identified over a thousand legal violations in the small subsection of OneWest loans they were able to examine” (California prosecutors never pursued a case).
But Mnuchin did not wither under the questioning, saying that where the bank did improperly foreclose on homeowners, including military service memebrs, “we made them whole.” He described the leaked memo as “highly inappropriate” and said the bank's primary regulator was the Office of the Comptroller of the Currency, not the California Attorney General.
Mnuchin accused Brown of wanting to "shoot questions at me and not let me explain.” After Brown said the nominee was being “defensive,” Mnuchin replied that he wasn’t “defensive” of OneWest’s record, but instead “I am proud.”
Democratic Senator Elizabeth Warren even got in on the action, despite not being a member of the Senate Finance Committee.
After working at Goldman Sachs for 17 years and gaining a coveted partnership at the investment bank — as his father did decades before him — Mnuchin left to work in the hedge fund industry, founding Dune Capital Management in 2004 and buying OneWest in 2009 for $1.6 billion. In 2015, OneWest was sold for $3.4 billion. Mnuchin has also worked as a financier for major Hollywood movies like Avatar and Mad Max: Fury Road.
Mnuchin looks likely to be successfully confirmed as Treasury Secretary — the Republicans that control the committee largely praised him and chided their Democratic colleagues for their criticisms.
One exception was Nevada Republican Senator Dean Heller. He asked Mnuchin several pointed questions about OneWest's practices in his state, including how many Nevada residents it foreclosed on and how many had gotten assistance modifying their loans. Heller said that he had asked Mnuchin the same questions in a private meeting, in writing, and on the phone.
“This is the seventh time I’ve asked. I asked you in my office and had my staff follow up on it,” Heller said. "We still can’t get the answers.”