Mnuchin Nears Senate Showdown With Democrats Who Can’t Block

A day before Donald Trump’s inauguration, Treasury secretary pick Steven Mnuchin will go before a Senate panel for a televised hearing that promises to be the most contentious of the president-elect’s nominees.

The former Goldman Sachs Group Inc. partner can almost certainly rely on a Republican Senate majority for confirmation, but the Finance Committee hearing on Thursday will provide Democrats with an opportunity to puncture Trump’s populist appeal by drawing out how Mnuchin profited from the housing crisis.

Democrats are frustrated by the Republican decision on the hearing’s timing, because it raises the odds their cross-examination of Mnuchin will get overshadowed by Trump’s inauguration on Friday. It also effectively blocks the possibility he could face more than a day of testimony.

Mnuchin will still have trouble getting confirmed before February, unless the Senate Finance Committee ignores its rule that panel votes must be scheduled seven days in advance. Democrats are certain to demand much or all of the 30 hours of debate they’re allowed on the Senate floor, even though they can’t block his confirmation on their own.

The hearing will be a chance for Democrats to probe Mnuchin both on policy issues and potential conflicts of interest from his significant wealth.

Like many of Trump’s wealthy cabinet picks, Mnuchin negotiated a complicated agreement with the Office of Government Ethics. He agreed to divest from investments worth at least $75 million to resolve conflicts required to take a job that pays $207,800 a year. Democrats fear that Republicans will rush the vetting process to get Trump’s picks in place.

The 54-year-old, who was known as “Mnuch” (pronounced “ma-nooch”) during his Goldman days, will deliver prepared testimony to the 26-member Finance Committee before taking questions. Senators from both sides will use the opportunity to get clarity on his views, since his record on economic sanctions, financial regulations and housing finance is almost entirely unknown. They can also submit written questions after the hearing that traditionally must be answered before a confirmation vote.

Mnuchin has a colorful past. After spending almost two decades on Wall Street, he went to California, where he financed Hollywood movies, partied with the likes of actor George Clooney and even made a cameo in the 2016 film “Rules Don’t Apply.”

Democrats are especially critical of what they say are Mnuchin’s shoddy foreclosure practices as head of a California lender and will also seek to extract more details about his past business dealings.

See here for what happens if Mnuchin’s start date is delayed

In particular, Mnuchin faces criticism for profiting from the 2007-08 housing market crash, when he and a group of investors bought a failed mortgage lender that was later renamed OneWest Bank. It’s being investigated over allegations of unfair lending practices.

Last week, 25 Democratic senators called on Orrin Hatch, the Utah Republican who chairs the Finance panel, to include witnesses who can speak about the impact of OneWest’s business practices to testify at the hearing.

“Mnuchin’s tenure at OneWest -- and his bank’s treatment of thousands of working families struggling to recover from the financial crisis -- bear directly on his qualifications and suitability to serve as Secretary of the Treasury,” the senators, led by Bob Menendez of New Jersey, wrote in the letter. “Before deciding whether Mr. Mnuchin should serve as the country’s top economic official, the committee should hear from some of these families and other Americans who have had first-hand experience with Mr. Mnuchin or the businesses he has led.”

Mnuchin faced strong public criticism back when the foreclosure accusations became public. In 2011, his $26 million Bel Air family home was picketed by 100 protesters waving signs reading “Make banks pay.” A police helicopter arrived on the scene and cops pushed the protesters to the curb. He became careful about his private details after the incident: In a 2012 interview with Bloomberg, he requested that his home address not be published.

Mnuchin is proud of his work with OneWest, saying that when he purchased the bank it had one of the worst mortgage portfolios known, with 30 percent loans delinquent.

Another central question he’ll face at the hearing is whether he profited in late November when his comments moved Fannie Mae and Freddie Mac shares. Mnuchin’s remarks that as Treasury chief he would restructure the mortgage-finance giants sent their shares soaring. His financial disclosures, released last week, show that he has invested as much as $2 million in Paulson Advantage LP, which holds a stake in Fannie and Freddie.

Read more: Mnuchin’s Hollywood ties

While he has been painted as a villain, Mnuchin’s approach with regulators in 2009 when he purchased OneWest suggested a thorough, detailed person who wanted to play by the rules and deal fairly, according to a person with knowledge of his interactions with the Federal Deposit Insurance Corp.

Republicans have rallied around Mnuchin, who has also reached out to chief executives on Wall Street for support. He met with JP Morgan Chase & Co. CEO Jamie Dimon, who later praised him, according to someone familiar with the matter.

Mnuchin’s “wealth of private sector experience will serve him well in this new role,” Hatch said Friday. “He understands that advancing meaningful policies to reform the tax code, promote investment and spur job creation are essential to growing our economy and ensuring middle-class families get to keep more of their paychecks.”