by Michael Krieger, Liberty Blitzkrieg:
While I’m not a Dodd-Frank fan, it’s not because it was too harsh, but because it didn’t really do much of anything. It was the typical neoliberal bait and switch, designed to look tough for public consumption, while merely making tweaks around the edges of a financial system that requires systemic, paradigm level change.
Trump’s support of repealing Dodd-Frank tells you all you need to know. A Trump Presidency will see Wall Street felons who should be in prison, running as wild and free as ever.
He will be the same thing to distressed working class whites that Obama was to the black community. A fake messiah and a shyster.
– From May’s post: Donald Trump’s True Colors Emerge as He Snuggles up to Wall Street
The fact that Steve Mnuchin was a Goldman Sachs partner is the least of my concerns when it comes to the man. Indeed, if someone wanted to create a playing card deck of sleazy Wall Street financial crisis opportunists, it’d be hard not to include Steve Mnuchin.
What exactly am I talking about? Specifically, I’m referring to the collapse of IndyMac (renamed One West), and the generous helping of government welfare Mnuchin and his partners received upon purchasing the failed banking institution. This is a financial crisis saga that is unknown to most, despite having received some extensive coverage over the past year. One of the best articles on the topic was written by David Dayen in his piece, Donald Trump’s Finance Chair Is the Anti-Populist From Hell. Here are a few excerpts:
Donald Trump’s first major staff selection since securing the Republican nomination, national finance chairman Steven Mnuchin, co-founded and manages the hedge fund Dune Capital. Not only did he make partner at Goldman Sachs, so did his father in the 1960s. With over 30 years of experience at the top levels of finance, Mnuchin was present for every recent major banking innovation, including those that brought the country to the brink of economic collapse.
Mnuchin’s presence in the campaign reveals how the qualities Trump loyalists projected on their hero don’t measure up to the truth. They have venerated him throughout the Republican primary for rejecting the dirty business of pay-to-play politics, and for populist vows to protect the ordinary worker. But in selecting Mnuchin, not only has Trump submitted to the realities of presidential campaign finance; he’s chosen one of the most notorious bankers in America to carry it out.
When I heard Mnuchin’s name last week, I immediately remembered the front lawn of his mansion. Back in 2011, local housing activists and the Occupy movement in Los Angeles camped out on that lawn to save the home of Rose Mary Gudiel, a La Puente, California, resident who faced eviction after being just two weeks late on one mortgage payment. The activists threatened to move all of Gudiel’s furniture into Mnuchin’s $26 million Bel Air estate if the eviction wasn’t stopped. Twenty police officers and a helicopter met the protesters.
Why was Mnuchin’s front lawn the focal point for the protest? Because years after forming Dune Capital in 2004, Mnuchin’s hedge fund purchased the failed lender IndyMac, one of America’s largest home lenders and a leading distributor of Alt-A mortgages, a subprime hybrid which did not require borrowers to accurately state their incomes. After IndyMac failed, Dune led the investment group that purchased it from the Federal Deposit Insurance Corporation (FDIC) in 2009, renaming it OneWest Bank. Mnuchin became OneWest’s principal owner and chairman.
OneWest accomplished these foreclosures through fraud. Erica Johnson-Seck, a vice president of foreclosure and bankruptcy for OneWest, explained in a July 2009 deposition that she “robo-signed” 6,000 foreclosure-related documents per week, spending just 30 seconds on each sworn affidavit that attested to the veracity of all relevant information in the case. Johnson-Seck admitted to not reading the documents before signing them, to not knowing how the records were generated, and to not signing in the presence of a notary, all of which made the affidavits she signed false evidence in court.
The OneWest subsidiary Financial Freedom executed 39 percent of all foreclosures on reverse mortgages between 2009 and 2015, despite servicing only 17 percent of the market, according to data from the Department of Housing and Urban Development (HUD) obtained by the California Reinvestment Coalition. OneWest disclosed in its most recent annual report that it’s under investigation for this disproportionate share of “widow foreclosures” by HUD’s Inspector General. The victims include 103 year-old Myrtle Lewis of North Texas, who OneWest put into foreclosure after her insurance coverage lapsed; Karen Hunziker, who got a foreclosure notice from OneWest ten days after her husband passed away in 2014; and a host of others.
Trump’s loyal fans aren’t likely to scrutinize Mnuchin’s record, but they should. You can measure political candidates in part by who they associate with. The foreclosure history in Mnuchin’s past reflects an extreme mentality of profit at all costs, and hardly a viewpoint of standing up for the little guy. Trump as populist was always something of a pose, covering for a deep nationalism and antipathy to immigrants. The Mnuchin pick just brings that into sharper relief.
Trump’s main money-chaser has profited off the suffering of ordinary Americans for years. There’s no reason to believe Trump will offer a better deal to the working class.
Moreover, an article published in The Nation covered some details of the sweetheart deal the government gave Mnuchin and team for the privilege of turning around to abuse average Americans. Here’s an excerpt from, The Worst of Wall Street: Meet Donald Trump’s Finance Chairman.
The Mnuchin group paid FDIC $1.5 billion for the bank, far less than the value of IndyMac’s assets. The FDIC was so desperate to unload IndyMac that Mnuchin and his colleagues were able to obtain, as part of the purchase deal, a so-called “shared loss” agreement from the FDIC which reimbursed these billionaires for much of their costs for foreclosing on people unlucky enough to have mortgages from IndyMac.
Within a year, the group that the Los Angeles Times called a “billionaires’ club of private financiers” had paid themselves dividends of $1.57 billion. In other words, the FDIC took much of the risk by subsidizing the bank’s troubled assets, while Mnuchin and his colleagues pocketed the profits.
The California Reinvestment Coalition—a nonprofit organization that pushes banks to reinvest in low income communities and communities of color—determined from Freedom of Information Requests that the FDIC had already paid out over $1 billion to reimburse OneWest for the cost of over 35,000 foreclosures in California and an unknown number in other states. CRC also estimated that the FDIC will eventually pay out another $1.4 billion for the costs associated with even more foreclosures in the future.
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