Steve Mnuchin, Treasury Secretary in the Trump administration. Thousands of
homes were foreclosed on under the leadership of Mnuchin, who was nicknamed
the "Foreclosure King." (photo: Alex Brandon/AP)
Steven Mnuchin: Foreclosure King of America, Secretary of the Treasury for
the .01%
By Nomi Prins, TomDispatch
12 November 17
Who can keep up with the madness of our never-ending Trumpian media moment?
Each day is a lesson in the bizarre, in ever-wilder comments, accusations,
charges, and claims of every sort from or against The Donald and crew. Each
day spotlights subjects you hardly knew were subjects until they burst onto
cable news and individual screens nationwide. Did an American president
really call the country's justice system "a joke and a laughingstock" (in
the context of the possible sending of terrorist Sayfullo Saipov to
Guantanamo) during a televised cabinet meeting? And that very afternoon, did
his White House press secretary flatly deny he had ever said such a thing?
Is a "seething" Donald Trump truly angry at his son-in-law Jared Kushner for
his advice on special counsel Robert Mueller's Russia investigation? Did
Paul Manafort really use (launder?) $1.3 million, assumedly from Russian
oligarchs, on clothes? Is special counsel Mueller about to be fired by the
president? Had you ever even heard of the Diversity Visa Lottery program
before Donald Trump pinned its existence on the Senate minority leader -- "a
Chuck Schumer beauty" -- even though it was actually signed into law by
President George H.W. Bush? Did the White House chief of staff, who
adamantly refuses to apologize for an erroneous accusation against a
Democratic congresswoman, actually call for "compromise" when it came to the
years leading up to the Civil War?
I mean, in your wildest dreams could you make this stuff up? And worse yet,
in the maelstrom of claims, tweets, wild statements, strange bits of
information, and god knows what else, it would be so easy for what truly
matters in our world to get lost in the shuffle. For instance, amid all
Donald Trump's bluster and tweets, it's not hard to forget who he really is:
our first elected billionaire president. (Nelson Rockefeller undoubtedly
came closest, historically speaking, but he was only vice president and was
in any case appointed, not elected.) Trump should be seen as the living,
breathing result of an inequality gap that first began to widen almost four
decades ago in the era of President Ronald Reagan and reached cataclysmic
proportions in this century. It was, of course, the Supreme Court which, in
2010, released all the money that has flowed so steadily upwards into the
political system big time with its Citizens United decision and so paved the
way for the truly wealthy to organize and fund a genuine 1% politics in
which a billionaire could finally become the people's candidate.
It's easy in the chaos of the moment -- every moment these days -- to forget
that Donald Trump appointed the wealthiest cabinet in our history by a
country mile and so prepared the way for the further promotion of a system
in which the benefits of... well, you name it... will flow ever upwards ever
more rapidly. Amid all the chaos and "fake news" of our moment, something
profound is happening and, under the circumstances, it's easy enough to
ignore. However chaotically, we're witnessing the creation of a new
American system of injustice, a true government of the plutocrats.
Fortunately, we still have TomDispatch regular Nomi Prins, author of All the
Presidents' Bankers: The Hidden Alliances That Drive American Power, to
remind us of this reality, as today when she focuses on Secretary of the
Wealthy... oops, I mean Secretary of the Treasury Steven Mnuchin. Tom
-Tom Engelhardt, TomDispatch
Steven Mnuchin, Foreclosure King of America
Secretary of the Treasury for the .01%
Treasury Secretary Steven Mnuchin doesn't exactly come across as the guy
you'd want in your corner in a playground tussle. In the Trump
administration, he's been more like the kid trying to cop favor with the
school bully. That, at least, is the role he seems to have taken in the
Trump White House. When he isn't circling the Sunday shows stooging for the
president, he regularly plays the willing fall guy for tax policies
guaranteed to stoke further inequality in America and for legislation that
will remove just about any consumer protections against Wall Street.
Mnuchin, a former Goldman Sachs partner, arrived in Washington with a
distinct reputation. Back in 2009, he had corralled a bundle of rich
financiers to take over California's IndyMac bank, shut down amid the 2008
foreclosure crisis by the Federal Deposit Insurance Corporation (FDIC).
Bought for $13.9 billion (but only $1.3 billion in actual cash), Mnuchin
turned it into a genuine foreclosure machine, in the process sealing his own
fate when it came to his future reputation. At the time, he didn't appear
concerned about public approval. Something far more valuable was at stake:
the $200 million that, according to Bloomberg News, he raked in personally,
thanks to the deal.
No such luck, of course, for the bank's ordinary borrowers. During Mnuchin's
reign, IndyMac carried out more than 36,000 foreclosures, tossing former
homeowners (including active duty military servicemen and women) onto the
street without hesitation or pity by any means necessary. According to a
memo obtained by investigative reporter David Dayen, OneWest, the new name
that Mnuchin and his billionaire posse coined for Indybank, of which Mnuchin
was now CEO and chairman, "rushed delinquent homeowners out of their homes
by violating notice and waiting period statutes, illegally backdated key
documents, and effectively gamed foreclosure auctions."
Now, Mnuchin remains bitter and frustrated that he can't kick the reputation
he got in those days. As he told a House Financial Services Committee
Congressional hearing this July, "I take great offense to anybody who calls
me the foreclosure king." Such indignation would ring truer if, in May, one
of Mnuchin's banking units, a company called Financial Freedom, hadn't
agreed to pay a more than $89 million settlement to the government for
taking unreasonable advantage of thousands of seniors through reverse
mortgages which convert equity in a home into a loan. (A few months later,
in August, a watchdog group, Campaign for Accountability, called upon the
Justice Department to investigate Mnuchin for allegedly making false
statements under oath to Congress about his actions at OneWest between 2009
and 2015.)
Like Donald Trump, Mnuchin is a man intent on making the rich richer and to
hell with everyone else. Continually channeling Trump's ego, whatever his
smoldering resentments may be, he soldiers on -- and in the context of the
Trump White House successfully indeed. After all, this administration has
lost 14 key people in less than a year, including an FBI director, a
national security adviser, a White House chief of staff, and a White House
communications director. Through it all, Mnuchin has remained in place, one
of the relatively few members of The Donald's original team not related by
blood or marriage who is seemingly thriving. (Admittedly, he and the
president were linked in what CNN once called a "business capacity" even
before he became Trump's campaign finance director in May 2016.)
Hamilton, Trump, and a Playbill for the Economy
There's a history of Treasury secretaries having a special rapport with
presidents that snakes back to the founding of the Republic. Alexander
Hamilton, the first of them, had the full confidence of the first president,
George Washington. With such backing, he established federal taxes and came
up with plans for real economic development. He understood federal taxes to
be essential to building America. In contrast, Mnuchin thinks the stock
market is the ultimate arbiter of economic health and appears to consider
taxation without representation (by the wealthy) the order of the day.
Since Mnuchin bagged one of the most influential economic positions on the
planet, he's been remarkably consistent on just one thing: making sure he
lends a helping hand to the world of big finance, his former universe. He
has, for instance, pushed hard for more bank deregulation by claiming that
it will help the smaller banks. Don't believe it for a second. His disdain
for reenacting the Glass-Steagall Act, which once made the merging of
commercial and investment banking operations illegal and so curtailed the
too-big-to-fail status of the largest banks, tells you all you need to know.
It reflects his real thinking when it comes to banks and the stability of
the economy. Emblematic of this has been the way he steered the Financial
Stability Oversight Council that he chairs to give AIG, the insurance
company at the core of the 2008 financial meltdown, a gateway back to
prominence by removing its too-big-to-fail label.
He's proven adept at blurring the lines between what effective banking
regulation would actually involve and how he can wordsmith out of pushing
for it. In May, testifying before the Senate Banking Committee, for example,
he noted that "we do not support [the] separation of banks and investment
banks." When Senator Elizabeth Warren pointed out that this was hardly the
position Donald Trump and his team had taken during campaign 2016 (or of the
Republican platform, which had explicitly called for the reinstitution of
the Glass-Steagall Act of 1933), he promptly waffled: "We, during the
campaign... specifically came out and said we do support a
twenty-first-century Glass-Steagall... That means there are aspects of it
that we think may make sense, but we never said before that we supported a
full separation of banks and investment banks."
In June, when pressed on the matter by Senator Bernie Sanders, the Treasury
secretary argued that Trump was not responsible for the language in the
Republican party platform and remained opposed to breaking up the big banks.
He added, "We think that that would hurt the economy, that would ruin
liquidity in the market. What we are focused on is safe and prudent
regulation for the large banks so we don't have taxpayer risk."
In other words, this is a man who has a real sense of the opportunity that's
embedded in this moment -- for the large banks and their CEOs to make a
bundle of money -- but no appropriate sense of the risks involved or fear
for a future in which he and his president might find themselves bailing out
such banks, 2008-style.
Lessons unlearned? If that isn't the Trump administration, what is?
Threatening the Market
Mnuchin may have little grasp of what constitutes real risk, but he can
still make threats about it. In an October interview with Politico Money, he
credited the stock market's postelection rally to positive expectations that
Congress would pass a major tax "reform" bill. If that bill doesn't go
through, he warned, the markets will suffer big time -- and so will everyone
else.
Coming from a Goldman Sachs alum, that should have rung a few bells. After
all, in the fall of 2008, with the stock market tanking and banks imploding,
then-Treasury Secretary and former Goldman Sachs CEO Hank Paulson took a
similar position with House Speaker Nancy Pelosi. Following that chamber's
initial rejection of a $700 billion bank bailout bill that sent the markets
into a tailspin, he warned that, if she didn't get it through, the big banks
would stop providing money to the American public. Sure enough, Congress
complied. With 91 Republicans joining 172 Democrats, the bill passed by a
vote of 263 to 171.
Nine years and a plethora of big bank subsidies later, Mnuchin conflated
market levels with legislation in a similarly threatening manner. As he told
Politico, "There is no question that the rally in the stock market has baked
into it reasonably high expectations of us getting tax cuts and tax reform
done." He then added, "To the extent we get the tax deal done, the stock
market will go up higher." But with that, of course, went a warning:
"There's no question in my mind that if we don't get it done you're going to
see a reversal of a significant amount of these gains."
And speaking of reversals, the "Mnuchin Rule," as it was dubbed in January,
2017, underscored the then-prevailing Trump administration position that the
wealthy should not be afforded tax cuts. By October, however, Mnuchin had
changed his rule. "When you're cutting taxes across the board," he explained
to Politico, "it's very hard not to give tax cuts to the wealthy with tax
cuts to the middle class. The math, given how much you are collecting, is
just hard to do."
Actually, the math isn't hard to do at all. My eight-year-old niece could do
it. If you make more than a certain amount, your tax rates shouldn't get
cut. That's the only math that makes sense. But in the land of tax
subterfuge, even if you leave a top tax bracket rate as it is, you can still
ensure that the wealthy get all the breaks in other ways.
On November 2nd, the Republicans finally released their "Tax Cuts and Job
Act," which contained new blows to middle-class wellbeing, including the
elimination of deductions for medical expenses, student loan interest, and
state and local taxes. For corporations, already flush with cash, the plan
calls for a significant, not to say staggering, tax break. Their tax rate
would be slashed from 35% to 20%.
And don't forget repealing the estate tax, that other classic benefit for
"the masses." Count on one thing: there will be no reversals from Mnuchin or
Trump on that because the math couldn't be clearer. Only the hyper-wealthy
have estates big enough to reap rewards from such a change. At an Institute
for International Finance conference, even Mnuchin had to agree that this
was a benefit of the rich, by the rich, and for the rich: "Obviously, the
estate tax, I will concede, disproportionately helps rich people." Indeed,
the heirs to the estates of fewer than 1 in 500 Americans who die each year
would benefit in any way from such a repeal, though the children or other
relatives of 13 of the 24 members of Donald Trump's cabinet and the
president himself would bag a collective estate tax break of about $1.5
billion.
Still, don't think that everything's coming up roses for our latest
secretary of the Treasury. Wall Street may now be king in Washington, but
Mnuchin is not (though he is clearly a prince to the one man who truly
matters right now, Donald Trump). In his efforts to promote the Trump vision
(whatever that might be), the Treasury secretary seems to be coming up
distinctly short, even with Republicans in Congress who have described his
approach to lawmaking in terms ranging from "uncomfortable" to
"intellectually insulting."
Donald Trump, of course, campaigned as an anti-establishment candidate who
would offer a hand to regular people, drain the Washington swamp, and have
our backs. Then he promptly began filling his administration, especially
when it came to the economy, with the richest of the rich, figures
guaranteed to promote the dismantling of whatever tepid regulations remained
to protect citizens from economic disaster while enriching the usual .01%.
Mnuchin has yet to even do something as simple and seemingly straightforward
as posting a full-scale explanation of the tax plan he's plugging so hard at
the Treasury Department's web page. Even though until November 2nd it
remained a chimera, that hasn't stopped him from rushing to its defense --
the defense that is, of giving the extremely wealthy yet more of their money
back. Welcome to the twenty-first-century American politics of the .01%.
Meanwhile, Mnuchin has noted that he's a big fan of biographies, though his
schedule doesn't allow much time for "pleasure reading." When asked about
Alexander Hamilton, he said, "I have a beautiful painting of him in my
office. He stares at me every day and I look at him for great advice."
But Hamilton understood that, without adequate taxation, you couldn't run a
country, or pay its debts, a stance that informed how he implemented federal
taxes in the new nation. As he said in 1801, "As to taxes, they are
evidently inseparable from government. It is impossible without them to pay
the debts of the nation, to protect it from foreign danger, or to secure
individuals from lawless violence and rapine." He also believed that those
with more money should pay more taxes. His excise tax plan, for example,
required the taxation of luxury items, bastions of the rich.
This government has, in fact, received more than $2.96 trillion in total tax
revenues so far in the first 11 months of fiscal year 2017. That figure
comes with a budget deficit of $673.7 billion, which means that if the rich
or corporations were to cease to pay various taxes (at least at present
rates), money would still have to come from somewhere. To begin to make up
for the shortfall, the less wealthy will simply have to pay more in some
fashion, as will states and cities, and cuts in social spending will
undoubtedly follow as night does day.
The High-Flying Treasury Secretary Covers Trump's Back
Mnuchin himself knows a situation ripe for the picking when he sees it, in
government or out. Take, for instance, his prodigious use of military
planes for his personal travel, both on government business and for
pleasure. These flights have pushed the boundaries of judgement, if not
legality. According to a report from Rich Delmar, the counsel to the
Treasury Department's inspector general, Mnuchin took military aircraft on
at least seven occasions without obtaining appropriate authorization,
skirting a "rigorous" preapproval process established to avoid undue use of
such expensive amenities. And though he withdrew a request to take his wife
on their honeymoon to Europe last summer by military aircraft, he did use an
Air Force jet to fly to Kentucky with her to watch the solar eclipse and --
he carefully added -- to "review the gold" at Fort Knox. Unlike Health and
Human Services Secretary Tom Price whose government aircraft fetish cost him
his job, Fort Knox covered the solar eclipse for Mnuchin.
He classified each of those trips as a "White House support mission," which
sounds dramatic and is a category technically reserved for situations in
which commercial flights aren't available or there is a national security or
other emergency. I checked, however. There are several $200 economy flights
from Washington to Kentucky, which more than beats the $10,000 per hour the
Pentagon charges as its official aircraft expense when its planes are used
in this way.
In addition to those flights, Mnuchin has been flying high as a kind of
second Kellyanne Conway on all sorts of non-Treasury-related topics that
threaten to eclipse his boss. With Trump embroiled in a bitter war of words
with National Football League players taking a knee over racism, Mnuchin saw
an opportunity and cruised the Sunday talk-show circuit attacking the
players. He used his platform to insist that they should "do free speech on
their own time" -- "off the field," not on it.
About a week later, he responded to the flak over the president's lackluster
support for Puerto Rican recovery after Hurricane Maria devastated that
island. Defending his boss and his tweets in another circuit of those talk
shows, he doubled down on White House criticisms of San Juan Mayor Carmen
Yulin Cruz. "When the president gets attacked, he attacks back," he told
Chuck Todd on NBC's Meet the Press, adding, "I think the mayor's comments
were unfair given what the government has done."
While the head of the Treasury isn't an elected official, his words do hold
considerable weight -- and he is, after all, fifth in the line of succession
for the presidency. The value, insights, and credibility of the Treasury
Department impact economies, markets, investors, and confidence the world
over.
Simply Swampy
Call it lying, misleading, flip-flopping, or the invocation of the "rights"
of privilege, but Mnuchin has already amassed quite a catalogue of
questionable statements in his brief career in public office and, while he's
been at it, he's even made extra money along the way: at least $15 million
and possibly as much as $53 million, reports Fortune, from "entertainment
and real estate interests that he sold to comply with federal conflict of
interest rules."
For him, as for his boss, whatever anyone says, the bottom line and their
allegiance remains simple and clear: it's not to the middle class; it's to
their class, the half-billion and up folks.
Alexander Hamilton was no stranger to wealth either, but he understood that
the nation's wealth should be shared more evenly. He attempted to use his
office as a national unifier and a place to coordinate efforts to pay off
debts from the Revolutionary War. Mnuchin's doctrine is one of returning to
a world of fewer rules for Wall Street and fewer taxes on corporations and
the wealthy, which, in translation, means greater risks and costs for the
rest of us and for the country as a whole. While President Trump isn't
exactly the cannot-tell-a-lie inheritor of the Washingtonian tradition, his
Treasury Secretary, the foreclosure king of America, is distinctly no
Alexander Hamilton.
Nomi Prins, a TomDispatch regular, is the author of six books. Her most
recent is All the Presidents' Bankers: The Hidden Alliances That Drive
American Power (Nation Books). She is a former Wall Street executive.
Special thanks go to researcher Craig Wilson for his superb work on this
piece.
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