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Treasury-secretary nominee Steven Mnuchin came to the Senate Finance Committee hearing room prepared to fight a war about foreclosures issued by OneWest Bank when he served as CEO. His only weapons were half-truths and outright lies. But you go to war with what you have.
A funny thing happened on his way to the hearing room, however. Democrats got distracted by information uncovered by their staff that Mnuchin left off his financial disclosure, that he was director of investment funds incorporated in tax havens like the Cayman Islands and Anguilla. Mnuchin called it an oversight, and that the forms are hard work. To quote Cristina Clifford, a OneWest homeowner subject to wrongful foreclosure, “Paperwork can be hard. It’s really hard when someone like Steve Mnuchin is foreclosing on your home. OneWest repeatedly lost my paperwork, and they foreclosed on me anyway.”
But instead of taking up this line of argument, Democratic committee members pummeled him over the tax haven, asking again and again about why he would have to incorporate the fund overseas and whether he personally benefited from tax evasion.
Mnuchin’s answer on this was a little weak. He admitted that he didn’t have an office, employees, or customers in these tax havens, but he seemingly argued that he incorporated in the Caymans only to benefit other groups like nonprofits and pension funds, as if that makes it all better. But it got bogged down into an arcane discussion of hedge-fund rules and tax law, when there were literally thousands of human stories, of people who lost everything they had at the hands of Steve Mnuchin’s bank, waiting to be discussed. Too few Democrats took the opportunity. And this is a familiar pattern, because of the troubling failures of the Obama administration to deal with foreclosures. Yesterday’s unofficial forum with foreclosure victims was the first appearance of homeowners on the Hill in years.
Part of this is a jurisdictional problem. Mnuchin gave testimony to the Finance Committee, the main tax-writing body in the Senate. These senators are simply more comfortable with discussing taxes. But the more damning part of Mnuchin’s record concerns how he treated customers in foreclosure. The Banking Committee would have been much more comfortable discussing these issues. But that’s not a good excuse to blow up the hearing strategy in the last 24 hours.
However diminished, the OneWest line of questioning clearly got the most under Mnuchin’s skin. Let’s first point out that Mnuchin’s alibi is deeply misleading. He claimed that OneWest issued over 100,000 loan modifications. Later, he couldn’t identify how many foreclosures OneWest committed, so his recall isn’t all that great, but he was definitive here. The number appears to come from this Treasury Department report from July 2013, but the 100,000 number refers only to “trial plan offers extended” under the Home Affordable Modification Program, or HAMP. That does not mean that this trial plans were approved by OneWest. At the time only about 36,000 were active modifications, and that doesn’t count loans that later re-defaulted because the modifications weren’t any good. So for every modification Mnuchin touted, two-thirds of them didn’t go through. Senator Bob Casey pinned Mnuchin down on this. “Modifications extended is not a permanent one,” Casey said.