President-elect Donald Trump is planning to name investor and former Goldman Sachs executive Steven Mnuchin as Treasury Secretary, opting for an industry insider with no government experience to helm the agency in charge of the nation’s finances, according to people familiar with the matter.
Mnuchin (pronounced mah-NEW-chin) joined Trump’s whirlwind campaign in May as finance chairman, despite the fact that he has never worked in politics and that he donated to Democrats in the past. He quickly earned Trump’s trust as he worked closely with the Republican National Committee to raise substantial amounts of money in a short period of time. On the policy front, he was instrumental in crafting the details of Trump’s proposal to overhaul the tax code.
Mnuchin is the latest member of Trump’s top advisers to secure a high-level and influential post in the nascent administration, highlighting the importance the president-elect places on loyalty as he builds out his White House team. Last week, officials confirmed that industrialist billionaire Wilbur Ross would be nominated for Commerce secretary after serving as an economic adviser during the campaign. Trump also plans to install RNC Chairman Reince Priebus as his chief of staff and named his combative campaign adviser, Steve Bannon, as his chief strategist.
Mnuchin has close ties to Wall Street, and his nomination could undermine Trump’s campaign promise to “drain the swamp” of special interests. Trump frequently lambasted big banks while on the stump – and Goldman Sachs in particular – and advocated the reinstatement of Glass-Steagall legislation that once separated retail and investment banks. In addition, Mnuchin’s involvement in the purchase in 2009 of a failed bank at the heart of the housing bust could create conflicts of interest down the road.
“Anyone concerned about Wall Street billionaires rigging the economy should be terrified by the prospect of a Treasury Secretary Mnuchin,” the activist campaign Take on Wall Street said in a statement.
Mnuchin did not immediately return a request for comment. But Stephen Moore, one of Trump’s economic advisers during the campaign, called Mnuchin “extremely knowledgeable.” He added that Mnuchin’s primary focus would likely be to shepard passage of Trump’s tax plan through Congress.
“He clearly, like Donald Trump, understands that the number one goal for this administration is going to be to grow the economy and get jobs,” Moore said.
In news interviews, Mnuchin has said he was not previously close to Trump, but the two move in the same circles of big-money financiers, willing to take big risks in the face of improbable odds.
Trump’s campaign was just the latest big bet in Mnuchin’s varied career in the upper echelons of finance, which has stretched from New York to Hollywood. Goldman Sachs, the New York investment bank, is a family affair for Mnuchin. Before he worked at the Wall Street giant, his father, Robert Mnuchin, spent more than 33 years at the bank. His brother, Alan, was a Goldman Sachs’ vice president.
Mnuchin spent 17 years at the bank rising from its savings and loan business to mortgage-backed bond training before becoming the bank’s chief information officer in 1999. Mnuchin is a “very smart guy,” Lloyd Blankfein, chief executive of Goldman Sachs, said earlier this month.
“He was a very senior guy at a very young age at Goldman Sachs,” he said.
Blankfein said Mnuchin reported to him when he ran the fixed income division, but they haven’t spoken much in recent years. “I’m sure he stayed just as smart as he was when he was at Goldman,” he said.
After leaving the bank, Mnuchin worked for storied billionaire investor George Soros – a well-known Democratic donor. He then founded his own private equity fund, Dune Capital Management. Among its most notable investments was the purchase of IndyMac from the FDIC during the depths of the financial crisis in 2009.
Dune was part of a consortium of investors who bought the failed subprime lender for about $1.3 billion, and Mnuchin oversaw the rebuilding of its business as chief executive of the re-named OneWest. (A member of Trump’s economic advisory team, John Paulson, was also part of the investor group.)
Under Mnuchin, the bank more than doubled its branches and increased its assets. But it also faced criticism from advocacy groups who complained about aggressive foreclosure tactics. At one point, activists marched to Mnuchin’s home in Bel Air to protest its treatment of customers.
As Treasury Secretary, Mnuchin would be responsible for the Trump administration’s ongoing response to the aftermath of the housing bust. A crisis-era program that helps homeowners refinance their mortgages, for example, is not scheduled to end until next year.
“The notion that a candidate who got elected in part due to the ongoing consequences from the housing crisis would hire someone who profiteered from the housing crisis is just kind of appalling,” said Jeff Hauser, executive director at the Revolving Door Project at the liberal Center for Economic and Policy Research.
In 2014, OneWest was sold to financial services firm CIT Group for $3.4 billion. Mnuchin is chairman of CIT’s board of directors but is not involved in day-to-day operations.
After moving to California with the purchase of IndyMac, Mnuchin also became involved in financing Hollywood films. Dune Capital invested in several blockbusters, including American Sniper, Gravity, Avatar, and Life of Pi.
According to Open Secrets, Mnuchin donated more than $200,000 to the RNC during the election. Together with his wife, Heather, they have contributed a total of $465,000 since 1995 – with $13,400 supporting Trump rival Hillary Clinton’s campaigns for Senate and even the White House.
(c) 2016, The Washington Post · Ylan Q. Mui, Philip Rucker