In an often combative confirmation hearing before the Senate Finance Committee today, Treasury Secretary-Designate Steven Mnuchin made a strong defense of his banking career and emphasized the Trump administration’s plans for regulatory relief and tax reform.
Mnuchin led a group of investors in 2008 to buy the failed IndyMac Bank. “Despite the global panic, I saw a way to save the bank,” he said, noting that the buyers invested $1.6 billion of capital “into a failing financial institution when most investors were running for the hills,” ultimately “sav[ing] thousands of jobs.” Mnuchin became chairman and CEO of the bank, renamed OneWest, which was later sold to CIT Group.
While many Democrats have said Mnuchin ran a “foreclosure machine” during his time at OneWest, he responded that “I was committed to loan intended modifications to stop foreclosures. I ran a ‘loan modification machine.’” He said that while strict, externally imposed rules often tied OneWest’s hands, the bank modified 100,000 loans allowing people to stay in their homes. In addition to describing bankers’ desire to prevent the personal difficulties associated with foreclosures, he added that “anyone who thinks we made more money foreclosing than modifying a loan doesn’t know what they’re talking about.”
Mnuchin also defended Trump’s vision for regulatory reform. “Sensible regulation is a necessity for healthy markets,” he said. “However, I saw first-hand how regulatory excess can inhibit lending by financial institutions, resulting in a lack of access to capital for small businesses and entrepreneurs.”
“My biggest concern [is that] regulation is killing community banks…and their ability to make loans,” he added. He also said it was important to maintain a diverse banking system so that “we don’t end up in a world where we have just four big banks in this country.”