WASHINGTON — Steven Mnuchin was confirmed 53-47 as Treasury secretary late Monday after two days of debate in which Democrats lambasted the former banker and financier for his handling of delinquent mortgages during the financial crisis and questioned his honesty.
“As the people we represent know, and Mnuchin’s bank proves, when we turn the reins to Wall Street, it's working families who pay the price,” Sen. Sherrod Brown, D-Ohio, said on the Senate floor last week.
Brown helped lead a Democratic effort to boycott a Senate Finance Committee vote on Mnuchin’s nomination after a Columbus Dispatch report said Mnuchin’s former bank, OneWest, engaged in a practice known as robo-signing to expedite foreclosure during the mortgage meltdown. Mnuchin testified that OneWest did not robo-sign mortgage documents.
Democrats' efforts were ultimately unsuccessful, however, as
Sen. Orrin Hatch, R-Utah, who chairs the finance committee, spoke in favor of Mnuchin during the Monday vote.
“He has experience managing large and complicated private-sector enterprises and in negotiating difficult compromises and making tough decisions — and being accountable for those decisions,” Hatch said. “Mr. Mnuchin is clearly qualified to serve as secretary of the United States Treasury."
Mnuchin won the support of only one Democrat, Sen. Joe Manchin of West Virginia.
As Treasury secretary, Mnuchin is expected to spearhead the administration’s efforts on housing finance reform, regulatory relief and rewriting tax law.
“I've said and I believe we need housing reform, so we shouldn't just leave Fannie and Freddie as is for the next four or eight years under government control without a fix,” Mnuchin said during his nomination hearing last month.
Mnuchin will also chair the Financial Stability Oversight Council, which has special powers to designate nonbanks as systemically important and subject them to prudential regulation. But rather than increasing regulatory oversight, Mnuchin may use the council as a platform for regulators to coordinate their oversight responsibilities.
“In my role at FSOC and in working with the different regulators … I would make sure that we did what we could to have proper regulation, but eliminate overlap, as well as make sure that the banks are lending to small and medium-sized businesses, and we don't end up with a world where we only have four big banks in this country,” Mnuchin during the hearing.
Mnuchin’s role at the FSOC has also made Democrats wary of legislation that would change how financial institutions are determined to be systemic. Under the Dodd-Frank Act, banking organizations with more than $50 billion of assets are automatically subject to more stringent standards. But lawmakers have promoted bills that would either raise the threshold or eliminate it entirely by allowing the FSOC to determine which firms are subject to those standards.
“This confirmation goes beyond letting the fox in the henhouse,” Rep. Maxine Waters, D-Calif., said in a press release. “They have given the keys to the Treasury to the Foreclosure King.”
The House passed a bill last year that would give the FSOC leeway to determine which firms are considered systemic in nature. During a floor statement opposing the bill, Waters said, “In order to regulate the banks, the oversight council would have to go through a byzantine and litigious process of designation, which takes two to four years to complete.”
“Even if a potential Treasury Secretary Mnuchin decided to regulate his former employer, by the time he got around to it, the damage would likely already be done,” Waters added.
