US Treasury Secretary Confirmation Hearing by US Finance Committee
Nominee: Steven Mnuchin
Senator: Sherrod Brown of Ohio
Date: Thursday, January 19, 2017
Time: 10:00 AM
Location: 215 Dirksen Senate Office Building
Senator Brown (B): Let’s clear up one thing.. your words…
“Banks are not highly incented to do modifications for their borrowers.“
That’s why we had a systemic breakdown. That’s why so many families lost their homes and banks were forced to pay millions of dollars in fines and remediation. So put that aside… I want to talk about your situation.
You bought the ability to help families stay in their homes. That’s not what you did.
I understand your defensiveness, both in individual meetings – mine and others, and in this committee about what happened at OneWest.
But… let me lay this out, in 2006, businessman Donald Trump responded to a question about the possibility of a real estate crash by saying “I sort of hope that happens because then people like me would go in and buy.”
Now you didn’t just buy properties. You bought the bank. You bought the ability to help families stay in their homes. That’s not what you did.
So my questions are these. You’ve been saying that OneWest is a success. Let’s look at the record, I really want yes or no answers because I have a lot of questions and what I will say is factual in my view. I’d like you to confirm with yes or no.
Is it true that community groups say that OneWest, specifically the California Reinvestment Coalition, foreclosed on 60,000 families nationwide and denied 3/4ths of mortgage modification applications.
Mnuchin (M): I am not aware of that, I know they…
B: Well, they did.
If you know they did, then why are you asking me? I don’t have it in front of me.
M: If you know they did, then why are you asking me?
B: I want to hear it from you. If you don’t know it…
M: I don’t have it in front of me.
B: I’m going to keep interrupting because we don’t have a lot of time. I apologize if you see that as rude.
M: I don’t see that as rude. That’s okay. Thank you.
B: Is it true that OneWest regulators, that’s the OCC (Office of the Comptroller of Currency – US Department of the Treasury), said that you had deficient mortgage practices, closed on 10,000 plus borrowers without proper procedure and at least 23 who were current on their mortgages?
M: So, what I would say is we followed the same procedures that the…
B: Did the OCC say that?
M: …the FDIC (Federal Deposit Insurance Corporation) followed. We inherited the FDIC procedures.
Senator Orrin Hatch: Let him answer the question.
Yes or no?
B: Is it true that OneWest independent audit firm said that it violated the Service Members Civil Relief Act by initiating foreclosures on 54 active duty military families? That’s what the independent audit firm said. Yes or no?
M: Well, you have the document in front of you. I don’t. Ok, so… let me just say..
B: I’m pretty surprised… sorry Mr. Mnuchin that I’m surprised you don’t know these things because you’ve been rather defensive, for probably good reason, about what happened at OneWest.
M: I do want to just comment for the record. We unfortunately did foreclose on certain people in the military. It was quite unfortunate. It was inappropriate. We responded to those people and made them whole. As I said, that every single person had the opportunity to have their mortgage reviewed and we corrected any errors. Our errors were less than anybody else, so it is not that I’m being defensive but I’m proud of our results.
it is not that I’m being defensive
B: I would not be proud of these findings, but…
Is it true that the California Attorney General’s office said that OneWest backdated 96% of the documents they examined and then you aggressively obstructed their investigation? That’s what the Attorney General’s office said. Did they say that?
M: So first let me comment that I sought the leaked memo, as you did. I think it is highly inappropriate that somebody at the Attorney General’s office would leak internal..
B: Was there no truth to backdating…
M: Again, what I would say is the primary regulator was the OCC. They were the one’s who had the obligation to regulate.
B: The OCC said… Mr. Mnuchin, I’m sorry, but OCC said you had these deficient mortgage practices, which you couldn’t remember when I asked you about OCC. Now you are citing OCC in response to California Attorney General.
Is it true…
Is it true that one of the employees who was in charge of the modifications. One of employees accused OneWest of not having any process to help its 3,000 FHA and VA mortgage borrowers avoid foreclosure and that this same employee, who was in charge of modifications, has accused OneWest of not having a proper process in place to help those VA mortgage borrowers avoid foreclosures and submitting false claims.
M: It seems to me, in all due respect, that you just want to shoot questions at me and not let me explain what are complicated issues.
B: I’ll let you explain after I go through the questions because I know one answer will take my whole time, so I’ll let you explain when I’m done.
M: Well, then let’s… at least understand these are complicated questions.
B: They are complicated questions.
Let me explain…
M: Let me at least explain them and otherwise there is no point in shooting them all at me when I don’t have the ability to respond.
B: You don’t, but these are factual things. You can follow-up a response later in more detail.
One example of, you can answer this and take as long as you need, One example of an insider loan that was a Relativity Media deal that the FBI denied a FOIA (Freedom of Information Act) request related to Relativity Media where you were co-chair siting enforcement procedures. Have you been questioned by law enforcement on this? Yes or no?
M: I have not and I saw that you wrote that letter yesterday. I assume that the FBI did a thorough review of my background report. I have no idea why they didn’t approve the FOIA issue. I’ve been told that we have no reason to believe that’s any issue associated with me.
B: Fair enough.
M: That you should direct that to the FBI. When I had the opportunity to meet with you…
Mnuchin purses his lips and twitches his shoulders when appearing frustrated at the questioning.
B: I accept your answer that you are not being investigated, but I find it interesting that you know about the letter I sent yesterday. The letter I sent with all those questions detailing all of the issues that I just asked about with Bank West – West Bank – One West.
M: OneWest
B: OneWest, I apologize.
M: My father forgot the name sometimes as well.
B: But the letter I sent you back in mid-December about this you’ve not even taken the time to answer and it really laid all those… I think the issue is the OneWest purchase went well for the Treasury Secretary designee, but it was a disaster for homeowners, for employees, for investors in Relativity and for taxpayers. We can talk more about taxpayer cost on this whole process and the amount of money that he bought it for and sold it for, but mostly subsidized by taxpayers.
Orrin Hatch: Senator your time is up. Now you take as much time you want to answer.
M: Thank you very much. First of all, Senator. I did enjoy meeting you.
B: Thanks.
I don’t believe we had the opportunity to meet before that time. If I’m confirmed I look forward to spending more time with you.
B: Thank you for saying that.
M: I know that you have some.. although we may not agree on everything, there were certain things we did agree on when we met and I have a lot of respect as you as a Senator to hear your issues. Now I did tell you, I did acknowledge that you sent me the letter. I was advised by the staff that the appropriate thing was for me to come here and answer questions , or meet with all of you independently and answer questions that you have. And if I don’t satisfy that you have the ability to make questions afterwards which I will respond to.
When I came to your office I told you that and I said that I would spend as much time with you as you wanted answering those questions and they were quite significant and, you know, because I knew they were complicated. So I did tell you although I wouldn’t respond to them in writing. At that point that I did understand your questions and I wanted to address them.
I did tell you although I wouldn’t respond to them in writing.
Mnuchin stopped speaking without actually addressing any of the questions. He sat up straight and stared straight ahead. Another Senator started to welcome him to begin their questioning.
End of transcript. (Transcribed by my listening to Hearing with screen grabs on 01/24/2017)
Is this who should be our next Secretary of the Treasury? I vote no and have written to my two state Senators.
Contact your state Senators to let them know what you think about this nominee.
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www.senate.gov US Finance Committee
https://www.finance.senate.gov/library/executive-session-transcripts Official transcript of meeting should show up in Library in a couple of months after session.
Wikipedia: US Senate Finance Committee
Wikipedia: Senator Sherrod Brown (Ohio)
https://en.wikipedia.org/wiki/United_States_Secretary_of_the_Treasury
Office of the Comptroller of the Currency The OCC charters, regulates, and supervises all national banks and federal savings associations as well as federal branches and agencies of foreign banks. The OCC is an independent bureau of the U.S. Department of the Treasury.
The Servicemembers Civil Relief Act (SCRA), formerly known as the Soldiers’ and Sailors’ Civil Relief Act (SSCRA), is a federal law that provides protections for military members as they enter active duty. It covers issues such as rental agreements, security deposits, prepaid rent, eviction, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosure, civil judicial proceedings, automobile leases, life insurance, health insurance and income tax payments.
FBI – Federal Bureau of Investigation The Federal Bureau of Investigation is the domestic intelligence and security service of the United States, which simultaneously serves as the nation’s prime federal law enforcement agency.
The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system by: insuring deposits; examining and supervising financial institutions for safety and soundness and consumer protection; making large and complex financial institutions resolvable; and managing receiverships.
Freedom of Information Act (FOIA) The Freedom of Information Act (FOIA) is a law that gives you the right to access information from the federal government. It is often described as the law that keeps citizens in the know about their government.
FHA Loans – Housing and Urban Development An FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan.
Veteran’s Administration (VA) Loans The VA Loan is a home-mortgage option available to United States Veterans, Service Members, and eligible surviving spouses. VA Loans are issued by qualified lenders and guaranteed by the U.S. Department of Veterans Affairs.