Steve Mnuchin, Who Played Key Role in Foreclosure Crisis, Confirmed As Treasury Secretary
Former financial regulator Bill Black says that a Mnuchin-owned bank made hundreds of billions of dollars of fraudulent mortgage loans that caused a financial catastrophe
The following transcript has not been proofread. The proofread version will be published as soon as it becomes available.
KIM BROWN: Welcome to The Real News Network, in Baltimore. I’m Kim Brown. Trump Cabinet picks are on a roll with last week’s confirmation of Betsy Devos, Jeff Sessions and Tom Price, all being sworn in as heads of their respective agencies. And on Monday night it seems likely that Trump’s pick to run the Treasury Department will also be confirmed by the Senate. Steve Mnuchin the Goldman Sacks banker and Hollywood Producer was thoroughly grilled by Senate Democrats, who even boycotted the Committee vote to send his nomination to the full Senate. However, it wasn’t enough. But given that Wall Street veterans have occupied this chair before under both Democrat and Republican administrations, it’s kind of interesting to see what Steve Mnuchin will bring to the table. And joining us from Kansas City to discuss this is Bill Black. Bill Black is an associate professor of economics and law at the University of Missouri at Kansas City. He’s also a white collar criminologist and a former financial regulator, author of the book titled, “The Best Way to Rob a Bank is to Own One,” and he’s a regular contributor to the Real News. Bill, it’s good to speak with you again.
BILL BLACK: It’s good to be back. By the way, I’m in Bloomington, Minnesota today.
KIM BROWN: Oh, okay. Well, still in the mid-west, still representing.
BILL BLACK: That’s right.
KIM BROWN: Well, Bill, talking about “The Best way to Rob a Bank is to Own One”, Steve Mnuchin was also the former Chairman and CEO of One West Bank and during his confirmation hearings in front of the Senate Finance Committee, he was thoroughly questioned by a number of Democratic Senators. And he was also accused of making false statements because during this confirmation process Mnuchin claims that during his tenure as CEO of One West Bank that the bank did not participate in the practice called robo-signing, which is the informal term which is used when a mortgage company employee signs hundreds of foreclosures. Saying that they had been scrutinized but in fact they have not been scrutinized and a lot of people, as a result, lost their homes. So, what kind of role here did Steve Mnuchin and the practices of his bank play in the foreclosure mortgage crisis of 2007, 2008? And should that disqualify him from being Treasury Secretary?
BILL BLACK: Well, the last question is easy — yes. Will it disqualify him — no, not even close. The Republicans aren’t in even in the least bit embarrassed. So, Mnuchin is the second generation Goldman Sacks, his dad as well; aptly described as the vampire squid by Matt Tiaibi(?) and in Washington DC known as government Sacks because of its domination of government and in particular, the position of Treasury Secretary. As you say, this is something that both the Republicans and the Democrats are guilty of. Think Bob Reuben, in the case of the Democrats, who again, used to in that case actually run Goldman Sacks just like Poulson, Bush II’s Treasury Secretary near the disastrous end, used to run Goldman Sacks. So, a little bit of context before you get to the foreclosure crisis. Indie Mack(?) which is the renamed bank that Mnuchin acquired and then ran was infamous. It specialized in making fraudulent liars’ loans. The industry’s own experts said that 90% of liars’ loans in the sample they looked at were fraudulent. The industry and I mean the lending industry as a whole chose Indie Mack as its spokesperson in response to criticism about these fraudulent loans — as a spokesperson for the whole industry saying, “No, no, no, don’t shut down these loans. We love them.” So, when you hear your weird uncle say, “The government made them do it, and it’s the Community Re-investment Act and being told they had to loan to minorities.” No, no, no. It’s very much the opposite in all these things. So, that’s the backdrop and Indie Mack had made hundreds of billions of dollars of fraudulent mortgage loans and they helped cause a catastrophe, particularly by the way, to college educated households where the head of the household was Latino or blacks. Latinos in that category lost on average roughly 60% of their wealth during the crisis and blacks in that category had a household with at least a university degree, lost right around 50% of their total wealth. So, it’s been a financial catastrophe from minorities and Indie Mack was one of the worst. Alright, Mnuchin ran, created a vulture fund to look, just like the name implies, for dead things where he could get paid by the Federal government to run them. And that’s the sweetheart deal that he got and as you talked about in your introduction. By the time he gets it, Indie Mack, of course, has failed and because it’s made all these fraudulent loans, it has enormous defaults and they engage not in what you would do, if your borrower was say, Donald Trump, and do trouble debt restructurings which is what was done for Donald Trump all the time. No, no, no, they go to foreclosure. But the old Indie Mack now renamed has the problem that many of these other failures have, and that is it had, among other things, absolutely terrible record keeping. And when you foreclose you have to file in most of these states, an affidavit under penalty of perjury which is to say, it makes it typically a felony to deliberately lie on these things. And in this affidavit you have to say, it depends on the particular state, but typically, that you’ve checked about eight things that are critical that (a) the person really is in default; (b) they’ve used up their opportunities to cure it; and (c) you have a legal right to foreclose under it. And robo-signing doesn’t mean that there was some mechanical pen. It means that real live humans working for the banks, like Mnuchin’s people, routinely falsified every aspect of those affidavits. This was not discovered by the government. This was discovered by first, victims of these foreclosures. I’ve mentioned that there’s a book “Chain of Title” by David Diane(?) that is focused on some of these regular people who chased this down and then they had the aid eventually of tiny law firms. And they documented, and again you can see of these things on the net, videos of the deposition, in which the person who signed thousands of these things, misrepresented the other people who did the same thing, admit, “Yes, on that document, I had, you know, each of those eight things that I swore that I had done — I did zero of those eight things.” And they would admit that was policy. That was characteristic that that’s how they always did it. Now, that was a dream prosecution for the Department of Justice under President Obama, by the way. And the Justice Department refused to prosecute; instead they cut a deal. So, Mnuchin in his confirmation testified that, you know, his firm had nothing to do with it; did none of those things. Democrats dug up evidence that, in fact, it had been common; presented that to evidence, as you said, vigorously questioned and none of it matters. And you know, just again to put this into context this is the Trump Cabinet of billionaires. Right? So, it was a pretty famous book about Lincoln having a group of people, his cabinet of rivals, in other words, he went and got many of his toughest foes, the best people as he viewed them and he put them in his cabinet to get the best advice. Trump wants a cabinet of sleazy billionaires and the Republicans are more than happy to give them. They are not pushing back on this at all. It just came out that Wilbur Ross who runs the other big business cabinet slot, Mnuchin will have Treasury, which is Wall Street. Wilbur Ross runs Commerce which is essentially Main Street. And Wilbur Ross, again one of these hedge fund billionaires who runs massive vulture funds in Ireland, for example, has been doing significant foreclosures there, of the Irish people, has just announced that he’s not going to divest himself of his most problematic investments, the offshore ones, where the policies he and the Trump cabinet make directly affect the value of his ownership position. He’s just going to refuse to divest himself, refuse to disqualify himself. He’s going to just have conflicts of interest because government was made to make money for these guys, in their view. They have, you know, they don’t see a separation between government and their business. They think that the government operates on behalf of rich corporations and now they control the government, so it’ll operate on behalf of their rich corporations.
KIM BROWN: We’re going to take a quick break. When we come back we’ll be joined again by Bill Black, a law and economics professor from the University of Missouri at Kansas City. We are discussing the expected confirmation of Steve Mnuchin as Treasury Secretary after a very cantankerous confirmation session. It is expected that the Senate will vote to confirm him in that position on Monday night. Stick around. You’re watching the Real News Network.