Upon hearing the news that Donald Trump has chosen Steven Mnuchin as his national finance chair, California Reinvestment Coalition Executive Director Paulina Gonzalez released the following statement:
The California Reinvestment Coalition is an advocacy organization that advocates for banks to reinvest in California’s low income communities and communities of color. While much of the focus thus far has been on Mnuchin’s role at Goldman Sachs, we want to share eight points about Steve Mnuchin’s role as chair of the former OneWest Bank, and as a current director on CIT Group’s board.
1) HUD Subpoenas: In CIT Group’s most recent annual report, the bank disclosed that it had received multiple subpoenas in 2015 from the Office of Inspector General at the Dept. of Housing and Urban Development (HUD) related to the servicing of reverse mortgages by OneWest’s subsidiary, Financial Freedom. Thus far, CRC’s efforts to learn more about this investigation and the subpoenas have been rebuffed by HUD.
2) OneWest Bank is a “leader” in foreclosing on seniors: Using a FOIA request, CRC determined that OneWest’s reverse mortgage servicing subsidiary, Financial Freedom, was responsible for 39% of the HECM reverse mortgage foreclosures since April 2009 (when Mnuchin and his group of investors bought the failed IndyMac). However, CRC estimates that Financial Freedom only services 17% of the reverse mortgage market. In other words, Financial Freedom is foreclosing on reverse mortgages at about twice the rate that one would expect, given their share of the HECM reverse mortgage market. See Fact Sheet Here.
3) California communities are still waiting for reinvestment plans: In Oct 2014, CIT Group announced its plans to acquire OneWest Bank. In July 2015, the Office of the Comptroller of the Currency conditionally approved this merger, specifically conditioning its approval on CIT Group improving its draft CRA plan the banks had earlier proposed. As part of the merger, Mnuchin, who was board chair at OneWest, received a board position at CIT Group. Nearly two years after the merger was first announced, California communities are still waiting to hear about CIT Group’s reinvestment plan.
4) Conflicted roles at OneWest Bank and Relativity Media: Multiple media outlets have highlighted that Steve Mnuchin played what some might consider “conflicted roles” in serving as board chair of OneWest Bank, and serving as co-chair at Relativity Media, a Hollywood studio that recently declared bankruptcy. According to Variety (Relativity Co-Chairman Steven Mnuchin Quietly Exited Just Before Big Losses, Aug. 5, 2015), as part of the bankruptcy, other creditors questioned how OneWest was able to “drain” $50 million from Relativity Media right before the bankruptcy.
5) Approving a golden parachute for John Thain: After the conditional merger approval of CIT Group with OneWest Bank, Steve Mnuchin was given a seat on CIT Group’s board. CIT’s board approved a policy change to CIT Group’s retirement plan that Reuters estimates could be worth an extra $13 million for John Thain, the former CEO of CIT Group, who is also well-known for his purchase of a $35,000 commode at Merrill Lynch. This policy change was approved despite the Wall Street Journal reporting that the board of CIT Group only awarded John Thain 2 points out of a possible 20 in its evaluation of Thain’s integration of OneWest Bank.
6) OneWest Bank’s outsized role in foreclosing on communities of color: CRC and the Urban Strategies Council conducted an analysis of the 35,877 foreclosures OneWest Bank conducted on California households from April 2009 to April 2015. Of those foreclosures, 68% occurred in zip codes where the non-white population was 50% or greater. Over 7,900 of these foreclosures occurred in Los Angeles County. You can see more maps here.
7) Corporate welfare for billionaires: OneWest Bank is the name given to the failed IndyMac Bank after it was purchased by Steven Mnuchin and a group of other billionaires, including Michael Dell, George Soros, Christopher Flowers and John Paulson. As part of their purchase of OneWest Bank, they obtained a “shared loss” agreement (what most people would consider corporate welfare) from the FDIC which reimbursed these billionaires for their costs for foreclosing on people unlucky enough to have mortgages from IndyMac. When CRC asked, the bank executives refused to disclose how much money they had received from the FDIC. Through a FOIA request, CRC later determined that the FDIC estimated it would eventually pay out $2.4 billion to the billionaire owners of OneWest Bank for their costs associated with foreclosing on families.
8) CIT Group never paid back $2.3 billion loan from taxpayers: CIT Group is no stranger to corporate welfare, having pocketed $2.3 billion from the US taxpayers through a TARP bailout the bank never paid back (thanks to its 2009 bankruptcy).