Updated | Rose Guidel was in trouble. It was 2009 and the United States was in the grips of the Great Recession. Her brother, who had helped pay the mortgage on her modest home outside of Los Angeles, had been murdered, so she contacted her bank to say her payment would be late. The bank apparently told her it couldn’t help until she was actually behind. So she waited. When Guidel was in fact behind, the bank said she would need to modify her mortgage. But that process dragged on for two years, until she came home from work one day to find a foreclosure notice attached to her door.
“It was a moment of all my dreams crumbling down,” Guidel says. She went “from being a person, a citizen that paid her stuff and needed assistance this one time,” to someone on the verge of homelessness. Her parents, who were in their 60s and lived with her, would be out on the street too. Her mother was in a wheelchair.
The bank behind the foreclosure was OneWest. And the man behind OneWest was Steven Mnuchin. On Wednesday, President-elect Donald Trump announced he is nominating Mnuchin for treasury secretary, a move that has people like Guidel concerned. Those who have challenged his banking and housing practices for years through protests, federal complaints and in court are worried that what his bank customers experienced could prove to be a microcosm of how he might treat the country.
“It’s actually very concerning,” says Guidel. “He was in charge of OneWest Bank. Now we’re talking about giving him a position that’s way bigger and can affect a lot more families.”
Asked to comment, a representative for Mnuchin and CIT Group, which bought OneWest in 2015, said in a statement by email, “CIT is committed to fair lending and works hard to meet the credit needs of all communities and neighborhoods we serve.”
Until May, when Mnuchin became Trump’s campaign finance chairman—a position he was reportedly thrown into unexpectedly—he had little experience in politics. The 53-year-old New York native had made campaign contributions, but almost exclusively to Democrats, including Hillary Clinton (in previous election cycles) and Barack Obama. He also has strong ties to businessman George Soros, a Clinton donor who seemed so vilified in one Trump campaign ad that the Anti-Defamation League said it appeared anti-Semitic.
During the presidential campaign, Trump repeatedly criticized Senator Ted Cruz for his ties to Goldman Sachs. But the president-elect is now putting his faith in a former Goldman Sachs partner. Mnuchin spent 17 years at the banking firm, where his father had also worked. He then founded a private investment company, Dune Capital Management, which did business with Trump. (Trump ended up suing Dune over one project.)
Mnuchin also reportedly joined a media company, Relativity Media. His 34 executive-producing credits include the movies Sully, Suicide Squad, Batman v Superman: Dawn of Justice and Mad Max: Fury Road, according to the Internet Motive Database. He has one acting credit too, a cameo as a Merrill Lynch executive in Rules Don’t Apply, Warren Beatty’s new drama about 1950s Hollywood.
In 2008, when the recession hit, Mnuchin saw an opportunity. He and a handful of investors purchased the failed California-based bank IndyMac from the Federal Deposit Insurance Corp. It was unusual for unregulated private investors to buy it instead of a bank holding company, The New York Times reported in 2009, and only possible because the federal government had eased regulations on such transactions. The buyers renamed the bank OneWest and worked out a loss-share agreement with the FDIC so the agency would partially reimburse the bank for handling foreclosures. This meant OneWest could get federal money for kicking someone like Guidel out of her home.
Fair-housing advocates have decried OneWest’s loss-share agreement, prompting the FDIC to issue a statement in 2010 saying, “OneWest has not been paid one penny by the FDIC in loss-share claims.” But through the Freedom of Information Act, the California Reinvestment Coalition, which monitors housing issues facing communities of color and low-income communities, found that between 2009 and 2015, the FDIC paid the bank more than $1 billion for at least 36,000 foreclosures.
As chairman and CEO of OneWest, Mnuchin was likely largely behind those foreclosures and strategies. “This is someone who profited by running a bank that foreclosed on tens of thousands of people in our state, so making money off of the misfortune of working families,” says Kevin Stein, deputy director of the California Reinvestment Coalition. He has called OneWest “a foreclosure machine.”
When OneWest’s investors sold it to CIT, they reportedly made more than double what they had paid. But they also made enemies. In 2011, when Guidel learned that OneWest planned to foreclose on her house, she teamed up with fair-housing advocates and organized a protest outside of Mnuchin’s Bel Air mansion in California. The group of roughly 200 blew vuvuzelas and carried furniture up the winding hills outside his property.
“I wanted him to be able to see that this is who you’re putting out—people that are working class that need the home,” Guidel says. “Maybe in his office it’s about numbers, numbers, numbers, but this is the people you’re putting out.”
Guidel’s protest seems to have worked. Days later, OneWest called her to say that she qualified for a mortgage modification and that she could keep her house. Mnuchin was rattled. “It was terrible,” he told Bloomberg about the protest. “Something I never want to experience again.”
Opponents continued monitoring OneWest and Mnuchin. Several homeowners have sued the bank over mortgage disputes. One plaintiff told the New York Post that dealing with the bank was “like dealing with organized crime.” The judge in that case said in his 2009 ruling that the bank’s actions were “harsh, repugnant, shocking and repulsive.” In 2014, when the federal government was tasked with approving OneWest’s merger with CIT Bank, which would make it part of the financial holding company CIT Group Inc., more than 21,000 people and 100 organizations voiced their opposition. A year later, the merger went forward anyway. Mnuchin remained involved in the company, as a CIT board member and, for a time as chairman of CIT Bank and vice chairman of CIT Group. On Friday, CIT Group announced his resignation from the board, given his Treasury nomination.
In November, two weeks before Trump’s nomination announcement, some of those same opponents filed a complaint with the U.S. Department of Housing and Urban Development (HUD), alleging that OneWest violated the Fair Housing Act, which protects people from discrimination when buying or renting a home. The complaint alleges that the bank has too few branches in communities of color (of its 74 branches, 11 are in Hispanic-majority tracts, one is in an Asian-majority tract, and zero are in African-American majority tracts). The complaint also says the bank gave fewer mortgage loans to African-Americans, Asian-Americans and Latinos than would be expected, given the population sizes and industry averages. And based on their investigation of 16 properties OneWest was selling, the complainants allege that 100 percent of those in communities of color had five or more maintenance or marketing deficiencies (trash outside, broken doors), while just 33.3 percent of the properties in white communities had as many. A HUD spokesman says the complaint is under review.
“OneWest is failing in its community reinvestments and particularly failing communities of color,” says Caroline Peattie, executive director of the Fair Housing Advocates of Northern California, a nonprofit that helped file the HUD complaint. As Occidental College professor and urban policy scholar Peter Dreier has pointed out, Trump has faced accusations of housing discrimination too.
“The bank is an outlier,” says Stein, whose California Reinvestment Coalition also helped file the complaint. Its actions, he adds, are “legally questionable and morally reprehensible.”
Mnuchin, of course, is up for secretary of the Treasury Department, not HUD. But the issues go beyond fair housing, his critics claim. His nomination, Peattie says, “signals a blatant disregard for consumers, consumer protections and civil rights.” She and other advocates worry that he will loosen banking industry regulations, including protections put in place through the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act and ditch the Consumer Financial Protection Bureau, an agency created after the 2008 financial crisis to protect Americans from lawbreaking companies.
Since Trump nominated him, Mnuchin has said he plans to boost economic growth by 3 to 4 percent, ease financial regulations and implement a new tax plan, which will involve “lowering corporate taxes to make U.S. companies more competitive” and cutting personal income taxes. He has also said that Fannie Mae and Freddie Mac should no longer be under government control. This sort of change to what are called government-sponsored enterprises would be “to the benefit of the hedge fund investors,” Stein says.
Not everyone is a critic. Describing Mnuchin’s time at Goldman Sachs, the company’s CEO, Lloyd Blankfein, told The Wall Street Journal, “He did very well. He is a smart, smart guy.” Henry Paulson Jr., who held the Treasury position under President George W. Bush and had also been a Goldman Sachs CEO, said to The New York Times, “He is very talented, has a deep understanding of finance and markets, he knows how to bring people together and get things done, and—importantly—he has a working relationship with and the confidence of the president-elect.”
If the Senate confirms his appointment, Mnuchin may not get much blowback on his attempts at deregulation. On Thursday, the House of Representatives passed a Republican-backed bill that amends Dodd-Frank to ease restrictions on certain financial institutions. The bill gives the Treasury secretary the power to decide which banks are eligible. CIT would likely qualify.
“The interest has been self-interest, corporate interest, and has not been the public interest,” Stein says of Mnuchin’s track record. “The concern is that that dynamic would extend to the country.”
Dreier says, “He’s going to be Wall Street’s spokesperson in the Cabinet.”
This article has been updated to reflect that CIT Group announced Steven Mnuchin’s resignation from its board of directors shortly before the article was published.
Correction: This article previously incorrectly stated that a complaint filed with the U.S. Department of Housing and Urban Development alleged that 100 percent of OneWest’s properties in communities of color had five or more maintenance or marketing deficiencies, while none in white communities had that amount. In white communities, 33.3 percent did, according to the complaint. Further, the complaint was based on an investigation of only 16 OneWest properties, not all of them.
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