Treasury Secretary Steven Mnuchin got personally rich during his 17 years at Goldman Sachs, specializing in the kind of private-label mortgage securities that would end up nearly wrecking the global economy in 2008.
He got richer by capitalizing on the carnage to buy a failing, scandal-stained bank on the cheap and carry out 36,000 foreclosures (many involving high-risk reverse mortgages marketed to elderly homeowners) while collecting federal subsidies intended to help keep people in their homes.
In 2015 and 2016, Mnuchin led the fundraising effort for candidate Donald Trump, raising $169 million.
A day after being nominated for the job, Mnuchin declared the watering-down of Dodd-Frank bank rules his “top priority.”
As head of the Financial Stability Oversight Council and leader of the agency overseeing the IRS, Mnuchin has been the administration’s point man in efforts to weaken bank regulations, obscure scrutiny of financial activities, and provide favorable tax rulings for wealthy individuals and businesses—an expanse of territory filled with opportunities for him to bestow favors on industry cronies.
In 2017, Mnuchin’s office released recommendations for tax regulations that were almost entirely lifted from a memo put out by the U.S. Chamber of Commerce.
Mnuchin overruled IRS lawyers to block disclosure of Trump tax returns.
After attending a conference hosted by convicted securities crook Michael Milken, Mnuchin intervened in rule-writing deliberations, making it easier for Milken to qualify for the “Opportunity Zone” tax break. Milken later secured a presidential pardon with Mnuchin’s further assistance.
In other decisions involving Opportunity Zones, Mnuchin’s team failed to insist on eligibility guidelines ensuring that low-income areas and residents benefit, as the law stipulates. “At every step, the Treasury Department has made it easier for wealthy investors to reap a taxpayer windfall” from Opportunity Zones, says Senator Ron Wyden, an Oregon Democrat who has introduced legislation that would force investors to disclose more information about their spending and its effects.
Others in a position to benefit from Treasury’s Opportunity Zone decisions include the family of Donald Trump’s son-in-law Jared Kushner; former Governor Chris Christie of New Jersey; Richard LeFrak, a New York real-estate magnate and longtime Trump associate; and former White House aide Anthony Scaramucci.
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Mnuchin is a former hedge fund manager and bank CEO—the fifth of the last eight Treasury secretaries with a Wall Street background, and the third with Goldman Sachs on his résumé.
His bank, OneWest, evicted a 103-year-old woman for missing a single payment on her homeowner’s insurance; foreclosed on a 92-year-old over a mortgage check written for 27 cents less than the correct amount; and changed the locks on a Minnesota family in the middle of a blizzard.
OneWest was implicated in the use of cooked or robo-signed backup documents, among other practices that a New York judge characterized as “harsh, repugnant, shocking and repulsive.”
After committing himself to the divestment of his share in a movie company, Mnuchin “sold” it to his fiancée (now wife) Louise Linton.
In his first six months as Treasury Secretary, Mnuchin spent $1 million flying on government jets. He would have used one for his honeymoon if department lawyers hadn’t warned against it.
Incorporated and unincorporated businesses and America’s richest families received huge benefits from the 2017 tax cut bill. To make those benefits seem more reasonable and affordable, the Trump administration and congressional Republicans claimed to be closing loopholes at the same time. Since the law’s enactment, the Treasury Department has taken steps to significantly reopen two key loopholes.
That rule-writing process was overseen by a top Mnuchin deputy, Chip Harter, who spent years at the accounting and consulting firm PricewaterhouseCoopers and the law firm Baker McKenzie helping companies take advantage of such tax-avoidance techniques.
With the assistance of lobbyists from Harter’s former firms, a group of foreign-owned multinational corporations—including the Swiss food giant Nestlé and the Dutch chemical manufacturer LyondellBasell—won a concession that will re-legitimize a complex currency-accounting ploy as a way to reduce their U.S. taxes.
In similar fashion, a group of foreign-owned banks—including Credit Suisse and Barclays—succeeded in exempting a large class of bank transactions from the supposed crackdown. Many tax experts, including some at Treasury itself, insisted that the law did not give the department the authority to grant such an exemption. Harter dismissed their arguments. Erika Nijenhuis of the law firm Cleary Gottlieb was one of the lobbyists who made the banks’ case in private meetings with top Treasury officials; in September 2019, Nijenhuis joined the department’s Office of Tax Policy, which continues to work on these rules. As a result of Treasury’s decisions, the foreign banks stand to gain as much as $50 billion, and the loophole-closing measure is likely to collect only a small fraction of the $150 billion in new revenues originally projected by Congress.
Altogether, federal tax collection efforts are running tens of billions of dollars behind Congress’s original projections, significantly inflating the cost of the 2017 tax bill. In 2018, the United States had the sharpest decline in tax revenues of any of the 36 OECD nations.
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