Dems to unload on Mnuchin – Politico
DEMS TO UNLOAD ON MNUCHIN — As expected Donald Trump plans to announce Wednesday morning (at 6:30 a.m.!) that Steve Mnuchin will be his pick for Treasury Secretary (more on him below). Democrats are set to go to war on Mnuchin both for his Wall Street resume and his actions as head of OneWest Financial during the foreclosure crisis. Will it be enough to derail the nomination? Probably not.
But it’s going to make for some uncomfortable hearings and negative headlines for the new administration. And it will play into the emerging Democratic line of attack that Trump campaigned as a champion of blue collar America but will govern as a Wall Street-friendly plutocrat.
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WARREN CALLS MNUCHIN “FORREST GUMP” — Sen. Elizabeth Warren (D-Mass) in a statement late Tuesday: “Steve Mnuchin is the Forrest Gump of the financial crisis — he managed to participate in all the worst practices on Wall Street. He spent two decades at Goldman Sachs helping the bank peddle the same kind of mortgage products that blew up the economy and sucked down billions in taxpayer bailout money before he moved on to run a bank that was infamous for aggressively foreclosing on families.
“His selection as Treasury Secretary should send shivers down the spine of every American who got hit hard by the financial crisis, and is the latest sign that Donald Trump has no intention of draining the swamp and every intention of running Washington to benefit himself and his rich buddies.”
DNC’s Adam Hodge: “So much for draining the swamp. Nominating Steve Mnuchin to be Treasury Secretary — a billionaire hedge fund manager and Goldman Sachs alumnus who preyed on homeowners struggling during the recession — is a slap in the face to voters who hoped he would shake up Washington. Trump is already heading into office as the most corrupt, conflicted, and unpopular president-elect in history, and now he’s breaking his signature promise to the voters who elected him.”
Oppo files on Mnuchin are bulging. Expect to see all of it in the coming weeks.
SENATE FINANCE ranking member Ron Wyden: “Given Mr. Mnuchin’s history of profiting off the victims of predatory lending, I look forward to asking him how his Treasury Department would work for Americans who are still waiting for the economic recovery to show up in their communities. … I hope to learn much more about Mr. Mnuchin’s views as his nomination gets a full and thorough review from the Finance Committee in the coming weeks.”
DISCLOSURE COMING — “[N]ominees are required to provide the following documents for review: tax returns from the previous three years; ethics forms from the Office of Government Ethics (OGE) and the agency relevant to the nomination; an OGE public financial disclosure report; and a standard committee questionnaire”
BANKERS LIKE HIM — FSR’s Tim Pawlenty: “Steve is a seasoned and results-oriented leader who is really smart, deeply interested in public policy, and understands the urgent need to boost economic growth and opportunity for everybody.”
MNUCHIN IS THE MAN AT TREASURY — POLITICO’s Victoria Guida and Ben White: “In a sign that … Trump is turning to Wall Street to help run his incoming government, the president-elect is expected to announce Goldman Sachs alumnus Steven Mnuchin as his pick to head the Treasury Department … If confirmed, the 53-year-old hedge fund CEO and Hollywood film producer would have a key role in shaping policies on taxes, financial regulation and the economy.
“He would be the third former Goldman executive to lead Treasury in recent decades following Henry Paulson and Robert Rubin. Mnuchin would also be the second Goldman alumnus to take a senior place in Trump’s administration. Steve Bannon, the populist provocateur who will serve as one of Trump’s top White House advisers, spent the early part of his career as a Goldman investment banker.
DODD-FRANK VIEW — Mnuchin shares Trump’s skepticism about the sweeping 2010 Dodd-Frank Act, which fundamentally reshaped the way Wall Street works, though he hasn’t gone nearly as far as the president-elect, who has said he wants to dismantle the landmark law. …
The Yale University graduate spent nearly two decades at Goldman Sachs, where he was a partner and pioneer in the bank’s powerful fixed income, currency and commodities trading division. He eventually became chief information officer. He now serves as CEO of New York-based hedge fund Dune Capital.
HOW GOLDMAN SEES HIM — “Goldman executives describe him as smart and well-liked, though perhaps lacking the powerful personalities of both Rubin and Paulson, who served as CEOs of the firm.
“‘I wouldn’t put him in a category of people like Rubin and Paulson in terms of charisma and presence, but there is no question that he is very smart and understands markets,” said one current Goldman partner who declined to be identified by name because he was not authorized to speak publicly about Mnuchin. ‘It’s certainly good for us to have someone who understands how the industry works.’”
BANKERS RELIEVED — CapAlpha’s Ian Katz: “At least initially, this should be a relief to banks that had been concerned about Jeb Hensarling or John Allison in the Treasury post because those two have explicitly said they favor tougher capital requirements and would likely have used the job as a pulpit to influence legislation.
“We know less about Mnuchin’s views on financial regulation. Like Trump, he doesn’t have government experience. … Though it appears he would have enough support to get confirmed by the Senate, we expect he will take a lot of body blows in his confirmation hearing from Democrats and even some Republicans. His Goldman and hedge fund pedigree (his father was a Goldman trader) doesn’t align with Trump’s populist messaging, which included a campaign ad negatively portraying Goldman CEO Lloyd Blankfein”
THE GREAT PRONUNCIATION DEBATE — Everybody MM knows says it’s MinOOCHin. But some contend it’s MinOOshin. What say you? email@example.com
UNEASY MATCH — NYT’s Binya Appelbaum and Maggie Haberman: “[Mnuchin’s] selection fits uneasily with much of Mr. Trump’s campaign rhetoric attacking the financial industry. Mr. Trump, in a campaign ad intended as a closing argument, portrayed the chief executive of Goldman Sachs as the personification of a global elite that the ad said had ‘robbed our working class.’ But Mr. Mnuchin has said that he agrees with Mr. Trump’s priorities, and he was an early supporter of a candidate who clearly prizes loyalty. Read more.
COHN CHATS UP TRUMP — Goldman Sachs President Gary Cohn met with Trump on Tuesday as the Mnuchin decision came down. Sources tell MM the Trump team reached out to Cohn, who is friendly with the president-elect’s influential son-in-law Jared Kushner. Cohn is a Democrat but Bloomberg suggests he could be up for a job at Treasury or the Fed.
ROSS FOR COMMERCE — POLITICO’s Adam Behsudi: “Trump is expected as soon as Wednesday to nominate billionaire private-equity investor Wilbur Ross to be his Commerce secretary. Ross, 78, is the founder of the private equity firm WL Ross & Co., known for restructuring failed companies in distressed sectors like steel, textile and coal. He has been a leading economic adviser to Trump during the campaign.
“Ross would head a department with a wide array of responsibilities, ranging from monitoring the weather to enforcing export rules for goods with military uses. He would also be in charge of implementing U.S. trade laws, on which Trump has advocated a tough line to defend against unfairly priced or subsidized imports from China and other countries.” Read more.
ROMNEY WARMS TO TRUMP — Mitt Romney dined with Trump at Jean Gorges on Tuesday night (steak for Trump, lamb chops for Romney) and the 2012 nominee and potential Secretary of State emerged with nice things to day: “I had a wonderful evening with President-elect Trump. We had another discussion about affairs throughout the world and these discussions I’ve had with him have been enlightening, and interesting, and engaging. I’ve enjoyed them very, very much.
“I was also very impressed by the remarks he made on his victory night. … [H]e continues with a message of inclusion and bringing people together and his vision is something which obviously connected with the American people in a very powerful way. The last few weeks he’s been carrying or a transition effort and I can tell you I’ve been impressed by what I’ve seen in the transition effort”
TRUMP’S INHERITED ECONOMY — Second estimate of Q3 GDP clocked in at 3.2 percent. So Trump will be taking office with record stock prices, record house prices and an economy (for now at least) growing at a pretty decent clip. President Obama, by contrast, came in with a financial crisis, the economy tanking and stocks plunging.
GOOD WEDNESDAY MORNING — So no surprise on Mnuchin if you’ve been following our coverage. Always the favorite, winded up with the gig. Email me on firstname.lastname@example.org and follow me on Twitter @morningmoneyben. Email Andrew Hanna on email@example.com and follow him on Twitter @andrewbhanna.
THIS MORNING ON POLITICO PRO FINANCIAL SERVICES – Lorraine Woellert on the Quicken Loans executive on President-elect Donald Trump’s HUD landing team — and to get Morning Money every day before 6 a.m. — please contact Pro Services at (703) 341-4600 or firstname.lastname@example.org.
DRIVING THE DAY — Official Mnuchin/Ross announcement expected at 6:30 a.m. … Both will be on CNBC’s “Squawk Box” at 7:00 a.m. … ADP Employment report at 8:15 a.m. expected to show a gain of 169K … Personal Income and Spending at 8:30 a.m. expected to rise 0.4 percent and 0.5 percent.
** A message from The Clearing House: The just-released issue of Banking Perspectives, The Clearing House’s quarterly journal, examines the rapidly-evolving world of electronic payments, including TCH’s new Real-Time Payments (RTP) system – the first new payments platform in the U.S. in over 40 years. View the latest issue here: https://goo.gl/IIPFSH **
MNUCHIN REACT ROUNDUP —
Paulina Gonzalez, executive director at the California Reinvestment Coalition: “We expect that the Senate will dig into Mr. Mnuchin’s track record, and we imagine the many families who lost their homes at the hands of OneWest will be watching closely and will also want to share their experiences as part of any confirmation hearings.”
American Bridge: “OneWest was responsible for more than a third of all reverse mortgage foreclosures in the five years following the Mnuchin purchase. Community groups called for an investigation of the outsized role the subsidiary, Financial Freedom, which had an estimated market share of 17 percent, played in the crisis.
“OneWest was found by a New York judge to have engaged in ‘harsh, repugnant, shocking and repulsive’ treatment of debtors and ordered to wipe out over half a million dollars of a couple’s mortgage payments”
MEET MNUCHIN — Bloomberg’s Max Abelson and Zachary Midler from back in August: “The son of a Goldman Sachs partner, he was publisher of the Yale Daily News, was tapped into Skull and Bones, made partner at Goldman, ran a hedge fund, and invested in Hollywood blockbusters. …
“Mnuchin had spent his career atop the elite institutions Trump voters despise, and he lacked any political experience … Mnuchin was born into a level of privilege that makes Trump’s deluxe childhood look ordinary.
“His grandfather, an attorney, co-founded a yacht club in the Hamptons, and his father, Robert, was a top Goldman Sachs trader who later became an art dealer. Mnuchin followed his father to Yale, where he lived in the old Taft Hotel with Eddie Lampert, now a billionaire investor, and Sam Chalabi, whose uncle, Ahmad, later ran the Iraqi National Congress” Read more.
Allied Progress’ Karl Frisch: “With his selection of former Goldman Sachs banker Steven Mnuchin to run Treasury and billionaire businessman Wilbur Ross to run Commerce, President-elect Trump has broken his promise to stop the ‘rigged’ system. He has instead sided with the Wall Street insiders, K Street lobbyists, and corrupt politicians that conspire to help each other rather than the hardworking men and women of this country.
ALSO IN THE NEWS —
TRUMP STRIKES CARRIER DEAL — POLITICO’s Cogan Schneier: “Trump reached a deal with United Technologies to keep ‘close to 1,000’ factory jobs at the Carrier Air Conditioning plant in Indiana, the company tweeted this evening. ‘We are pleased to have reached a deal with President-elect Trump & VP-elect Pence,’ the company said. “More details soon.”
“Carrier, which is owned by United Technologies, announced in February that it would move 1,400 jobs from Indianapolis to Mexico. Acell phone video of the announcement went viral, prompting candidate Trump to threaten to impose steep tariffs on air conditioners imported back to the U.S” Read more.
TREASURY WANTS TRUMP TO HONOR FSOC — POLITICO’s Zachary Warmbrodt: “The Treasury Department is trying to ensure that the Trump administration understands the ‘critical role’ of the Financial Stability Oversight Council, a top official said today, as the panel of top regulators faces major changes under GOP leadership.
“Treasury counselor Antonio Weiss devoted a speech at the University of Pennsylvania to promoting FSOC’s achievements in the context of the presidential transition. Weiss said FSOC was a ‘critical nerve center during episodes of market volatility or stress’ and ‘the one entity that casts a clear eye on the entire financial system.’ He spoke out against ‘calls to dilute the council’s authorities, slow down its decision-making, or dismiss its findings.’” Read more.
NEW TRANSITION NAMES — Via POLITICO: “Trump’s transition effort added an array of new vice chairs, staff and executive committee members, including a number of prominent conservative women.
“Among the additions: Reps. Marsha Blackburn, Cynthia Lummis, Cathy McMorris Rodgers and Tom Reed; Oklahoma Gov. Mary Fallin and Sen. Tim Scott as vice chairs, along with Kathleen Troia “K.T.” McFarland who Trump has appointed as a deputy national security adviser.” Read more.
DATA SECURITY BATTLE DRAGS INTO LAME DUCK — POLITICO’s Zachary Warmbrodt: “A long-running fight over data breach legislation is heating up again in the final days of the congressional session. Yesterday 10 trade groups including the National Retail Federation and National Association of Realtors complained to House leadership about efforts by the Financial Services Roundtable to work out a compromise on a federal data security standard with the retail industry, where some players have pushed back on the prospect of new rules.
“The letter caught the attention of retiring Rep. Randy Neugebauer, who has been trying to advance a data breach bill. He said it ‘continues the troubling trend of disengagement by these associations’ and that the letter didn’t represent ‘the best interests of their millions of customers who trust their personal financial information will remain secure.’”
COMING NEXT WEEK: HOUSING EVENT — On Tues., Dec. 6th at 9:00 a.m., the National Association of Realtors and S&P Global are hosting a forum on “The Future of the U.S. Housing Market” featuring Robert Shiller among others and moderated by CNBC’s Diana Olick and POLITICO’s Lorraine Woellert. RSVP
WELLS PRESSED — Reuters’ Ross Kerber: “Investors, including the state treasurers of Connecticut and Illinois, called on Wells Fargo & Co to require an independent board chair, saying the bank needs stronger oversight in the wake of a scandal over fake customer accounts.
“Although Wells Fargo already has shuffled its leadership structure, Connecticut Treasurer Denise Nappier on Tuesday said the investor group has filed a shareholder resolution for the San Francisco bank’s annual meeting next spring seeking a change in its bylaws.” Read more.
HIGH STAKES NEGOTIATIONS — WSJ’s Benoit Faucon, Georgi Kantchev and Michael Amon: “Iran and Iraq have softened their positions ahead of a crucial OPEC meeting on Wednesday, OPEC officials said, but it may not be enough to satisfy Saudi Arabia’s demands for a broad-based oil-production cut.
“In last-minute negotiations, officials said, Iraq has said it would hold its output steady to secure an agreement to bolster oil prices with the Organization of the Petroleum Exporting Countries, the 14-nation cartel that controls a third of the world’s crude output. Iran has told fellow OPEC members it would be willing to freeze its production in early 2017 after clawing back the market share it lost during years of Western sanctions, the officials said.” Read more.
CUBA’S NEW BENEFACTOR — WSJ’s Nathan Hodge and Josh Chin: “While Moscow’s economic and military role in Cuba is now a shadow of its former self, Beijing has grown to become Cuba’s second-largest trading partner after Venezuela, which is now mired in a deep economic crisis.
“Trade between China and Cuba grew 13 percent to $1.1 billion in the first two quarters of this year, after swelling 59 percent in the previous year to reach $2.2 billion over all of 2015, according to China’s Ministry of Foreign Affairs. Read more.
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