tv Senator Wyden on Treasury Secretary Nomination CSPAN February 11, 2017 3:41am-4:18am EST
nomination of steven mnuchin to be the secretary of treasury. and this is yet another nomination on which the majority has walked away, unfortunately, from a 20-year bipartisan approach when it comes to the vetting process. in 2009 when tim guide near was -- guide ner was president obama's nominee, a vetting issue came up and both sides of the finance committee carried the investigation out to its conclusion. but the situation has turned out quite differently this time. there were several properties in the united states and abroad worth a hundred million dollars missing from mr. mnuchin's disclosure. he failed to disclose several positions in various firms. he misled the public.
he misled the committee's about his bank's forecloser tactics and he appears to have hidden key data requested by members of this body. frankly, i don't believe these investigations would have been uncovered at all if not for the work of the minorities' investigations team. the majority, however, looked the other way and the vetting process was ended prematurely. so the vote on this nomination is imminent. that's the first concern held by members on this side, and i'm going to speak more about that today and as this debate continues. this morning, though, i want to focus on the substance of our concerns. madam president, the single biggest challenge is what to do to reconnect working americans with this country's economic engine. there are communities across the
land including many in my home state of oregon where folks are just waiting for economic recovery to show up. they see their homes foreclosed, store fronts boarded up, factories shuttered. it just feels stuck. aside from the president himself, nobody in america has greater influence over this nation's economic future than the united states treasury secretary. that's the case whether it's through tax reform that fight unfairness, rules that rein in wall street abuses, or smart infrastructure and trade policies that create good-paying jobs here at home. i call them red, white and blue jobs. the person who becomes treasury secretary has to be somebody who's ready to work on behalf of all americans, including those
americans from the corners of our nation where optimism hasidimed. if steven mnuchin's record is any indication, he simply doesn't fit that mold, not even close. there's a lot to debate as the senate considers mr. mnuchin's nomination, particularly significant in my judgment is the ranking member on the senate finance committee, is the issue of how our tax code punishes the wage-earning american. i'm going to cover that this morning. in my view, though, the debate begins with a story of one west, mr. mnuchin's bank. it begins with a lot of gory details of how one west industrialized the process of kicking people out of their homes and on to the streets, and it begins with the details of how mr. mnuchin enriched himself at the same time his foreclosure
machine was running. as i described the financial crisis was a personal setback from which a lot of americans still have not recovered, but for mr. mnuchin, it wasn't exactly a setback at all. in fact, it was the deal of a lifetime. in march 2009, mr. mnuchin led a group of investors who bought independent yay mac bank, one of several banks that had been engulfed in crisis the year before. mr. mnuchin and his group got an unusually sweet deal from the federal deposit insurance corporation buying $23.5 billion worth of assets for less than $1.6 billion. indy mac was renamed one west bank and it opened up shop the very next day. as part of this sweetheart deal, mr. mnuchin got what's known as a shared loss agreement from the
federal deposit insurance corporationt inrance corporation. under the deal with one west, the federal deposit insuranc fee corporation made nearly $900 billion in payments to one west for indy mac loans. total payments from the federal deposit insurance corps from one west included payments for loans made one west subsid dears, and financial freedom came to $1.22 billion. it didn't take long after mr. mnuchin rolled out the newly branded one west for the bank to be investigated by states attorney general around the country. already they had big concerns about one west foreclosure practices. and this in my view is where you see the guts of the foreclosure machine beginning to show itself. as part of this investigation, a
one west president that worked under mr. mnuchin admitted under oath to the practice known as robo signing. this witness said she signed more than 750 foreclosure documents a week without reading them and with no notary present during the process. that's a violation of the law. when asked how much time she spent executing each foreclosure document, miss johnson replied and i quote here, i changed my signature considerably. it's just an "e" now so no more than 30 seconds and it wasn't just miss johnson. she was part of an entire team operating at this pace n. her deposition miss johnson sec stated there were 1100 documents signed by her office each day or roughly 6,000 a week.
so here you have a mid and economic meltdown. our nation shedding hundreds of thousands of jobs. families facing an uncertain future. mr. mnuchin found a way to profit. he bought a bank from the federal deposit insurance corporation at an extreme discount. he struck a deal with the federal deposit insurance corporation so he could be reimbursed for 80% or more of the bank's losses. he held at least one team in place that could sign 6,000 foreclosure documents a week, 6,000 individuals and families thrown into this nightmare of potentially losing their homes. mr. mnuchin and onewest were churning out foreclosures with worthless efficiency. doesn't sound to me like that's somebody who's going to be the kind of person who's going to
look out for the interests of working families. i want to talk a little bit about some who were victimized by onewest's industrialized foreclosures. one of those was dee robertson who in 2010 shared her story with the orlando sentinel. she told them her parents were struggling to pay off the balance of their mortgage with onewest. the mortgage had a balance of just $3,000 and miss robertson was trying to help her parents get to the finish line. but instead of the usual mortgage payment of $600, onewest demanded over a thousand dollars a month. onewest said the home was in foreclosure and wanted $4,000 in attorney's fees but the robertsons had never received a foreclosure notice. when miss robertson called onewest to sort things out, it was just one big run around.
gerald limbback is an army retiree who needed cash to finish an addition on a modest ranch-style home in pasadena, maryland. he and his wife had owned the home for 23 years. according to a story in "the baltimore sun," mr. limbback discovered the monthly cost for the new loan was much higher than what he expected. instead of the $3200 monthly bill he anticipated, it was almost $4300. onewest which took over the servicing of mr. limback's lone in 2009 denied his request for a modification in october 2010, a month after it had started foreclosure proceedings. he struggled with the process and he hired an attorney who noted something that struck him as very odd. signatures on the foreclosure documents were fakes. in fact, various foreclosure
processors around the state of maryland had been signing under the same lawyer's name. but even with this discovery, madam president, of false signatures, it didn't bring about the speedy modification that mr. limback was hoping for. rose gadile and her family bought a house in 2005 making payments on the mortgage until her brother was murdered in 2009 and the family lost her income. the next mortgage payment was two weeks late. onewest said it wouldn't accept. she had to apply for a loan modification instead. but onewest didn't actually own the mortgage. they were only servicing it. they didn't even have the authority to grant a modification. so this citizen was caught in limbo for two years unable to modify the loan and at the same
time had to fight eviction. out of options, there was a group of protesters who went to mr. mnuchin's home protesting outside and demanding answers. shortly thereafter despite onewest's claim that there was nothing they could do to help miss gadile, they relented. she was allowed to keep her home, but it took essentially a four-alarm public relations calamity to make that happen. mark and jenny jenner, another case mr. mnuchin may have heard about. the jenner's sued onewest in superior court and they won. i'll just describe a little bit from the san francisco chronicle how their case place out. while the ginns were making calls and smith paperworks to get a loan mosques from one wesn
modification from one west, another bank proceeded to foreclose on their home. this is a phenomenon known as dual tracking. one west strung them along for months before telling them to send in their loan modification. they said the couple would have their answer in 30 to 60 days but instead of a modification they got an eviction notice. they were forced out of their home while ms. ginn was eight months pregnant and grappling with a breast cancer diagnosis. they were left with no choice but to take onewest to court. their legal battle stretched more than two years. the costs were so substantial that even a victory in court could not save their home. now these are all examples of typical mortgages, everyday homeowners caught up in one west's exception and ruthless
foreclose practices. but it wasn't just your typical mortgage that one west foreclosed on. the bank had a big reverse mortgage operation called financial freedom, and the foreclose machine was running and running and running over there too. the goal of a reverse mortgage is to give older people, 62 or older, the opportunity to use equity in their homes to help cover the bills. unfortunately, it doesn't always go smoothly. in one west's reverse mortgage division, it often went terribly wrong. a lot of older couples with modest incomes who got reverse mortgages put them under only one name, often the husband's. but here's the catch. if the person whose name appeared on the documents passed away, the terms of the reverse mortgage required the loan to be paid back in full. if it wasn't, then the
foreclose process once again kicks in. so you have a family where first they lose their loved one. then they lose their home, and they're caught up in this nightmare scenario of a the common name for this practice, madam president, almost hurts to say it, is widow foreclosure. widow foreclosure. the documents reviewed by the california reinvestment coalition during the first six years mr. mnuchin ran one west the bank accounted for nearly 40% of federally insured reverse mortgage foreclosures. they led the nation in widow foreclosures. you think about what you can lead the nation in. you're thinking about trying to help hard-hit families, the kinds of families i just described. i'd like to lead the nation in
terms of reaching out and finding imaginative ways to help them, to really go to bat for them, take them through the process, create something that is fair and commonsense. what did this bank do? they lead the nation in widow foreclosures. in one case one west and its predecessor tried to foreclose on an older florida woman. that was twice. the first time mr. mnuchin's tried to file on her home, they filed paperwork saying she didn't live there. when they finally discovered that she in fact did live in the home, they backed off. two years later one west's new parent company, c.i.t., where mr. mnuchin was a board member, tried to foreclose again. this time it was over an unpaid bill of 27 cents. now this involved a woman who was 90. a woman who was 90 was involved
in a foreclosure with an unpaid bill of 27 cents. she had to fight to keep her home twice because she was bombarded with petty and inaccurate allegations from mr. mnuchin's bank. the president recently tweeted out analogies that this story was fake -- tweeted out analogies that this story was fake news because the woman never lost her home. the ordeal that the one west foreclosure put her through certainly was not fake news to her and others who were up against this activity. while one west was putting thousands of homeowners through the nightmare of foreclosure, mr. mnuchin used the bank's money to make some pretty flashy investments in hollywood. in september 2012, one west led a group of financial
institutions that established a revolving credit facility for relativity media of hundreds of thousands of dollars. relativity was a movie studio led by a flamboyant executive named ryan cavanaugh. press accounts also claim that mr. mnuchin and mr. cavanaugh became good friends. in fact, though mr. cavanaugh was a client who owed his bank hundreds of millions of dollars, he and mr. mnuchin bought a private jet together and then traveled to various kinds of film if he is values around the -- festivals around the world. they were even investigating in real estate together. they put millions into a shell company, hmbacllc which owned property in southern california. in socket -- in october of 2014 mr. mnuchin decided to buy
mr. mr. cavanaugh's movie studio. he purchased a stake, was appointed cochairman of relativity. so while he was pulling double duty on the boards of one west and relativity, one west had to report the size of the insider loans the bank was making to relativity. as a share of bank capital, one west's insider loans exceeded 94 of the country's biggest 100 financial institutions. unfortunately mr. mnuchin's time with relativity didn't go so hot. each year from 2012 to 2014 the studio suffered eight or nine-figure losses. finally in 2015 relativity's problems came to a head but it owed one west and mr. mnuchin a huge sum of money. on may 29, 2015, mr. mnuchin quit the board. a few days later funds totaling $50 million in cash were swept
back to one west. one account was earmarked to pay gild expenses, salaries for everyday contractors and production tradespeople. that put the nail in relativity's coffin and the studio declared bankruptcy. mr. mnuchin's adventure putting one west money into relativity might have been a big mess, but it sure didn't do much damage to the bank's bottom line. around the time relativity crumbled, one west was purchased by an even bigger group, the c.i.t. group, at a massive profit. mr. mnuchin and his investors originally bought the bank in 2009 for less than $1.6 million. in 2015, c.i.t. group bought it from mr. mnuchin and his partners for $3.4 billion. in between, while tens of thousands of americans were
going through this daily nightmare of losing their homes, the bank had paid out more than $1 billion in dividends to mr. mnuchin and its other owners. buying one west was literally the deal of a lifetime for mr. mnuchin. but the bank's conduct caught the attention of federal watchdogs more than once. in 2011 the office of thrift supervision conducted an examination of the one west foreclosure process. i'm just going to outline a few of the findings. these are the findings done by the office of thrift supervision that's in the business of monitoring and examining these institutions. they found, for example, one west employees filed affidavits in state and federal courts falsely stating that they had conducted a review and had
personal knowledge regarding the details of a disputed mortgage, including principal and interest due or other fees and expenses when no such reviews had taken place. one west employees filed documents in state and federal courts that had not been signed or affirmed in the presence of a notary. one west litigated foreclosure and bankruptcy proceedings without ensuring that the promissory notes were properly endorsed or assigned and in possession of the appropriate party at the appropriate time. one west failed to devote sufficient resources to the administration of its foreclosure and loan modification procedures. and one west management failed to enact adequate internal oversight and controls to its another closure processes. and finally one west failed to adequately oversee the outside lawyers handling the foreclosure services. the office of thrift supervision
demanded that onewest take corrective action and issued what's known as a consent order. basically in english this onewest consent order was an agreement to clean up its act. the order was spined personally about -- was signed by mr. mnuchin and the onewest board of directors. they had been running onewest for two years at this point and the company was rife with problems. in 2014, another watchdog stepped in. this time it was the office of the comptroller of the currency. their audit found more than 10,000 onewest borrowers were due $8.5 million for improper foreclosure practices. according to the same report, onewest paid nearly $3 million to 54 borrowers for violations of the service members civil relief act which protects members of our armed services from losing their homes while they are serving our country.
just think about that one. here's the bank having to pay borrowers $ 3 million for violations of the service members civil relief act. this is what protects the courageous people who serve our country. it's a law that protects these people from losing their homes while they put themselves at great risk, they make the ultimate sacrifice and every day their families at home are worrying about them and often worrying about their finances. according to this report, onewest paid nearly $3 million to 54 borrowers who violated this law that protects courageous men and women who wear the uniform of the united states. at the heart of these
investigations was the issue of robosigning, the practice i've spoken about earlier in the context of the onewest team churning out 6,000 foreclosure documents a week. senator casey, senator brown on our committee really zeroed in on this issue, and it was particularly concerning in this context to senator casey who represents a lot of people who lost their homes to foreclosures by mr. mnuchin's bank. so, senator casey put the question to mr. mnuchin untiling writing after mr. mnuchin had his finance committee hearing. senator casey asked, pretty simple: did onewest robosign documents? this is a straightforward question, and based on the public record, the answer should have been a straightforward yes. instead mr. mnuchin replied,
onewest bank did not robosign documents. now, madam president, years of documented proof says that is false. so the committee gave mr. mnuchin an opportunity to amend his response. once again mr. mnuchin denied the truth. first he said the concept of robosigning generally referred to distinct but related issues, a sign of a foreclosure affidavit attested to facts that were not verified to be accurate. or a siren of a foreclosure -- a signer of a foreclosure affidavit represented himself or herself to be someone else. this is a fancy way to explain when we gave him an opportunity to amend his answer, mr. mnuchin again denying the truth on this question of onewest signing robodocuments.
and he went on to say onewest did not do these things. now there's just no way of getting around it. none. that statement is flat wrong. the language mr. mnuchin used to redefine -- define robosigning is nearly identical to the language used by the office of thrift supervision in the findings of its investigation. given the watchdog's reports, testimony from onewest employees and the public record, mr. mnuchin cannot possibly in good faith claim that onewest did not robo sign. in fact mr. mnuchin's signature is on one of the documents that proves otherwise, the office of thrift supervision consent order. he ran the bank. surely he had to read the document before signing it.
so mr. mnuchin misled the finance committee and the american people on robo signing, directly contradicting a mountain of evidence. so senators casey and brown who represent states where a lot of families got hammered through foreclosures pursued by mr. mnuchin's bank, senator casey and senator brown decided to do some more digging into the information. senator casey sought onewest national foreclosure figures. senator brown asked for a state-by-state breakdown. this information was never provided. now, at first mr. mnuchin said he just couldn't get the data. then senator heller made a similar request. it seems mr. mnuchin answered sufficiently to satisfy senator heller whose state had a large number of onewest foreclosures. in my mind that raises a
question about why a republican senator could get his inquiry answered but a pair of democrats could not. getting other basic facts from mr. miewsh was -- mr. mnuchin was pretty much like painful time at the dentist pulling teeth. here's an example. the finance committee requested all nominees list all positions held as an officer, director, trustee, partner, proprietor, act, representative or consultant of any corporation, company, firm, part nearship, other business -- partnership, other business enterprise, educational or other institution. when mr. mnuchin filed his paperwork with the committee, he signed them attesting that the document was true, accurate, and complete. however, it became apparent to committee staff that key information was missing. in particular, s.e.c. filings indicated that mr. mnuchin was
director of dune capital. that's an entity located in the cayman islands. it was nowhere to be found in mr. mnuchin's paperwork. he also failed to disclose his role as chairman and c.e.o. of the onewest foundation, an end that is alleged to have made generous donations to groups that publicly endorsed onewest's controversial purchase by c.i.t. group. he failed to report that he had been chairman of the i.m.b. holding company, the holding company that he used to purchase indymac, the bank he turned into onewest. all told after questions were raised by the finance committee staff, mr. mnuchin disclosed that he held positions in an additional 14 entities that were not listed on his initial paperwork. here's an example of mr. mnuchin's failure to fully disclose his various
investments. the finance committee requests that all nominees list the identity and value of all assets held directly or indirectly with a value of $1,000. that's pretty straightforward, madam president. the entity -- the identity and value of all assets held directly or indirectly with a value in excess of $1,000 was to be disclosed. mr. mnuchin failed to do this as well. on his initial paperwork, committee staff noted mr. mnuchin listed membership in a vacation resort in mexico, but he didn't disclose any related property. and that was the only -- that was only the first case of missing mnuchin real estate. after questioning by committee staff, mr. mnuchin disclosed still more missing mnuchin real estate, an additional $95 million in real estate holdings
that have not been listed -- had not been listed on his initial paperwork. the fact is the committee had to take the time and ask the questions to track down these multimillion dollar properties, mr. mnuchin's unreported businesses and his undisclosed business relationships. and i will say again, madam president, i am convinced that none of what i have described is undisclosed assets, substantially undisclosed assets would have ever been brought to light if it wasn't for the work of the committee's minority staff investigators. and yet despite these efforts, mr. mnuchin still has never produced the information requested by two members of the finance committee, senators casey and brown, concerning the onewest foreclosures. my view is, madam president,
this is another nominee who has the ethics alarm bell sounding. he has already misled the public. he appears to be concealing information requested by members of this body, and his claim to fame is the cold and staggering efficiency with which his bank booted predatory lending victims out of their home. i just don't think this is the type of person when should lead owe poe who should lead the -- type of person who should lead the treasury secretary. i'll close because we'll have further discussion on this, madam president, about the kind of person i want to see head the treasury department. i want to note i supported a number of republicans for this particular position in my time on the finance committee. i want the kind of person who's going to give everybody in america the opportunity to get
ahead. we're going to have more discussion about taxes and particularly important in this role will be the treasury secretary's view of taxes. we have a tax code that is really a tale of two systems. if you are a cop or a nurse in west virginia, madam president, or in oregon, your taxes are compulsory. once or twice a month your taxes are just lifted out of your paycheck because you're a working person. that's the way it works in west virginia. that's the way it works in oregon. but if you have a battery of financial experts, it doesn't work that way. you can use that battery of financial experts to pay what you want when you want to and maybe not much at all.
i want somebody for this position who feels passionately about giving everybody in america the opportunity to get ahead, who really understands what a priority it is to work to bring economic recovery to those communities dimmed by hardship and folks suffering. i know there are a fair number of people like that in the president of the senate's state and there sure are a lot of them in my home state in oregon. a lot of those rural communities just feel like they've been hit by a wrecking ball. so that's the kind of treasury secretary i want, a treasury secretary who gives everybody in america the opportunity to get ahead. and thus far i just don't see mr. mnuchin fitting that mold. we'll go on to talk about other issues next week, particularly