Why Steven Mnuchin's confirmation hearing could be truly disastrous for Donald Trump
The president-elect's pick for treasury secretary ran a bank that has been accused of fraudulently foreclosing on thousands of Americans. Uh oh!
Donald Trump won the White House by saying that Americans are getting screwed — and that Hillary Clinton was in on it.
During his campaign, President-elect Trump railed against "the global special interests" who are "rigging the system," destroying jobs and shipping Americans' wealth abroad, and doing so with Clinton's blessing and cooperation. His framing played footsie with anti-Semitic stereotypes and indulged in conspiracy mongering: The idea that Clinton was anything more than a fair-weather fan of Wall Street is silly. But it's still true that Americans' livelihoods are being systematically strip-mined by the economic elite.
In a few weeks, that fact will give Democrats the chance to hoist Trump by his own petard.
Steven Mnuchin, Trump's pick for treasury secretary, will soon get his confirmation hearing before the Senate. While Clinton may have made six figures giving speeches to Goldman Sachs, Mnuchin literally ran a national bank, OneWest, that kicked tens of thousands of Americans out of their homes at the height of the housing crisis. There's a mound of evidence that plenty of those foreclosures were illegal and fraudulent. It's hard to imagine a candidate who more perfectly embodies Wall Street's depredations against ordinary Americans.
OneWest began life as IndyMac, a mortgage lender that went belly-up in the 2008 collapse. In 2009, Mnuchin's hedge fund bought out IndyMac, renaming it OneWest. Mnuchin himself took a major leadership role as the bank's primary owner and chairman. Then OneWest began handing out foreclosures like mad — over 36,000 in California alone between 2009 and 2015 — to sell off homes and thus stanch the bleeding from the crisis.
To say OneWest went about this task ruthlessly is a massive understatement. Sixty-eight percent of the California foreclosures were on non-white families. A 90-year-old woman was foreclosed on over a 27-cent payment error. In 2011, protesters descended on the lawn of Mnuchin's mansion when OneWest threatened to evict a California homeowner for being just two weeks late on her payments.
Moreover, the paperwork OneWest used to justify its legal standing to foreclose allegedly wasn't up to snuff. The bank's vice president, Erica Johnson-Seck, acknowledged signing off on 6,000 foreclosure-related documents per week — 30 seconds per foreclosure. David Dayen, who has doggedly covered these stories, reported that "Johnson-Seck admitted to not reading the documents before signing them, to not knowing how the records were generated, and to not signing in the presence of a notary, all of which made the affidavits she signed false evidence in court."
The latest revelation from Dayen is that the Consumer Law Section of California's attorney general office actually recommended filing a massive civil suit against OneWest. The office didn't have jurisdiction to subpoena OneWest because it's a national bank, and OneWest blocked their other efforts to obtain documents. But the evidence the office did amass led them to suspect OneWest put fraudulent dates on nearly all the California foreclosures, so it could clear legal hurdles and finish out the process more quickly. The extent of its behavior in the other 49 states is anyone's guess.
Unfortunately, California's then-Attorney General Kamala Harris didn't go through with the suit.
Democrats like Sen. Sherrod Brown (D-Ohio) and Sen. Elizabeth Warren (D-Mass.) are eager to nail Mnuchin to the wall for all this. They're inviting people to share their personal stories of being foreclosed on by OneWest, and there are plans for some of the victims to testify at Mnuchin's Senate hearing. It's not clear how Mnuchin could respond, other than by saying he wasn't personally aware of or involved in OneWest's practices — an argument that didn't go so well for Wells Fargo CEO John Stumpf.
The problem for Democrats is their own history shows how these sorts of stories can do lasting damage to a major Cabinet nominee. News that former Treasury Secretary Tim Geithner failed to properly pay certain taxes cast a shadow over his nomination and solidified the narrative that the Obama administration was too cozy with the financial elite. And not unfairly: Under Geithner's guidance, the White House refused to prosecute the major executives of the big banks, and threw homeowners under the bus to stabilize Wall Street.
Democrats and Republicans alike happily confirmed George W. Bush's treasury secretary, Goldman Sachs alumnus Hank Paulson, who went on to engineer the bank bailout. And Kamala Harris, the attorney general who didn't prosecute OneWest, is now one of the Democrats' two senators from California.
So both parties have made use of the message that Americans are getting screwed by the elites, and both parties can plausibly be accused of using that message for rank opportunism.
The good news for Democrats is Trump's White House is taking this bait-and-switch to an entirely new level. Geithner's misdeeds were piddling compared to those of Mnuchin and OneWest. And the 2016 loss may have finally slapped some sense into the party: Brown and Warren are part of a more populist, leftist wing of the Democrats that's starting to take the lead.
The lesson of Trump's victory is not that the American people are dupes. It's that telling voters they're being screwed by the powers-that-be is effective because it's true. It's so effective, it even works when the messenger himself is a wealthy con artist.
Democrats are about to get the chance to reclaim that message, and use it to bury the Trump administration in its own hypocrisy. Since they would only need to be joined by a few GOP defectors, they might even be able to scuttle Mnuchin's nomination. That would deal Trump a major political black eye right out of the gate.