[Congressional Record Volume 163, Number 24 (Friday, February 10, 2017)]
[Senate]
[Pages S1073-S1076]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                           EXECUTIVE CALENDAR

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will proceed to executive session to resume consideration of the 
following nomination, which the clerk will report.
  The assistant bill clerk read the nomination of Steven T. Mnuchin, of 
California, to be Secretary of the Treasury.
  The ACTING PRESIDENT pro tempore. The Senator from Oregon.
  Mr. WYDEN. Madam President, the Senate is now debating the nomination 
of Steven Mnuchin to be the Secretary of the 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 Geithner was President Obama's first Treasury 
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 
$100 million missing from Mr. Mnuchin's disclosure. He failed to 
disclose several positions in various firms. He misled the public. He 
misled the committee about his bank foreclosure 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 minority's investigation team. The majority, 
however, looked the other way, and the vetting process was ended 
prematurely. So the vote on this nomination is imminent. That is the 
first concern held by Members on this side, and I am 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.
  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, storefronts boarded up, factories shuttered. They

[[Page S1074]]

just feel stuck. Aside from the President himself, nobody in America 
has greater influence over this Nation's economic future than the U.S. 
Treasury Secretary. That is the case whether it is through tax reform 
that fights unfairness, rules that rein in Wall Street abuses, or smart 
infrastructure and trade policies that create good-paying jobs here at 
home. We call them red, white, and blue jobs.
  The person who becomes Treasury Secretary has to be somebody who is 
ready to work on behalf of all Americans, including those Americans 
from the corners of our Nation where optimism has dimmed. If Steven 
Mnuchin's record is any indication, he simply doesn't fit that mold, 
not even close.
  There is a lot to debate as the Senate considers Mr. Mnuchin's 
nomination. Particularly significant, in my judgment as the ranking 
member on the Senate Finance Committee, is the issue of how our Tax 
Code punishes wage-earning Americans. I am going to cover that this 
morning. In my view, though, the debate begins with the story of 
OneWest, Mr. Mnuchin's bank. It begins with a lot of gory details of 
how OneWest industrialized the process of kicking people out of their 
homes and onto 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 IndyMac 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. IndyMac was renamed OneWest Bank and 
it opened up shop the very next day.
  As part of this sweetheart deal, Mr. Mnuchin got what is known as a 
Shared-Loss Agreement from the Federal Deposit Insurance Corporation. 
Under the deal with OneWest, the Federal Deposit Insurance Corporation 
made nearly $900 billion in payments to OneWest for IndyMac loans. 
Total payments from the Federal Deposit Insurance Corporation to 
OneWest, including payments for loans made to OneWest subsidiaries 
First Federal, La Jolla, and Financial Freedom, were $1.22 billion.
  It didn't take long after Mr. Mnuchin rolled out the newly branded 
OneWest for the bank to be investigated by State attorneys general 
around the country. Already they had big concerns about OneWest's 
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 OneWest vice president who worked 
under Mr. Mnuchin, Erica Johnson-Seck, 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 is a violation of the law. When 
asked how much time she spent executing each foreclosure document, Ms. 
Johnson-Seck replied: ``I changed my signature considerably. It's just 
an E now. So not more than 30 seconds.''
  It was not just Ms. Johnson-Seck. She was part of an entire team 
operating at this pace. In her deposition, Ms. Johnson-Seck stated 
there were about 1,100 documents signed by her office each day, or 
roughly 6,000 a week.
  So amid an 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 
percent or more of the bank's losses. He had at least one team in place 
that could sign 6,000 foreclosure documents a week--6,000 individuals 
and families a week thrown into this nightmare of potentially losing 
their homes. Mr. Mnuchin and OneWest were churning out foreclosures 
with ruthless efficiency. That doesn't sound to me like somebody who is 
going to be the kind of person who is 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 foreclosure. One of those was Dee Roberson, 
who in 2010 shared her story with the Orlando Sentinel. Ms. Roberson 
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 
Ms. Roberson was trying to help her parents get to the finish line, but 
instead of the usual mortgage payment of $600, OneWest demanded over 
$1,000 a month. OneWest said the home was in foreclosure and wanted 
$4,000 in attorneys' fees, but the Robersons had never received a 
foreclosure notice. When Ms. Roberson called OneWest to sort things 
out, it was just one big runaround.
  Gerald Lembach is an Army retiree who needed cash to finish an 
addition on his modest ranch-style home in Pasadena, MD. He and his 
wife had owned their home for 23 years. According to a story in the 
Baltimore Sun, Mr. Lembach discovered the monthly cost for the new loan 
was much higher than what he expected. Instead of the $3,200 monthly 
bill he anticipated, it was almost $4,300. OneWest, which took over the 
servicing of Mr. Lembach's loan 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 noticed 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 of false signatures, it 
didn't bring about the speedy modification that Mr. Lembach was hoping 
for.
  Rose Gudiel and her family bought a small house in 2005, making 
payments on the mortgage until her brother was murdered in 2009 and the 
family lost his income. The next mortgage payment was 2 weeks late. 
OneWest said it wouldn't accept it, and Ms. Gudiel 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 2 years, unable to modify the loan and at the same time had to 
fight eviction.
  Out of options, Ms. Gudiel and a group of protestors 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 Ms. Gudiel, 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 Gin are another case Mr. Mnuchin may have heard about. 
The Gins sued OneWest in San Mateo Superior Court, and they won.
  I will just describe a little bit from the San Francisco Chronicle 
how their case played out. While the Gins were making dozens of calls 
and submitting reams of paperwork to get a loan modification from 
OneWest, another department of the bank proceeded to foreclose on their 
home. This is especially important because this is a phenomenon known 
as dual tracking.
  OneWest strung the Gins along for months before telling them just to 
send in their loan modification application. They said the Gins would 
have an 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. 
Gin was 8 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 2 years. The costs were so substantial 
that even a victory in court could not save their home.
  Those are all examples of typical mortgages--everyday homeowners 
caught up in OneWest's exceptional and ruthless foreclosure practices.
  But it wasn't just your typical mortgage that OneWest foreclosed 
upon; the bank had a big reverse mortgage operation called Financial 
Freedom, and the foreclosure 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 the equity in their homes to help cover the 
bills. Unfortunately, it doesn't always go smoothly.

[[Page S1075]]

In OneWest's reverse mortgage division, it often went terribly wrong.
  A lot of older couples of modest incomes who got reverse mortgages 
put them under only one name, often the husband's. But here is 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 foreclosure process once again kicks in.
  So you have a family where first they lose their loved one, then they 
lose their home, and they are caught up in this nightmare scenario of a 
reverse mortgage. A common name for this practice--it almost hurts to 
say it--is ``widow foreclosure.'' Widow foreclosure.
  According to documents reviewed by the California Reinvestment 
Coalition, during the first 6 years Mr. Mnuchin ran OneWest, the bank 
accounted for nearly 40 percent of all federally insured reverse 
mortgage foreclosures. They led the Nation in widow foreclosures.
  You know, if you think about what you can lead the Nation in and you 
are thinking about trying to help hard-hit families, the kinds of 
families I just described, I would 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 does this bank do? They lead the Nation in widow foreclosures.
  In one case, OneWest and its predecessor tried to foreclose on an 
elderly Florida woman. That was twice. The first time, Mr. Mnuchin's 
bank tried to foreclose on her home and filed paperwork saying she 
didn't live there. When they finally discovered she, in fact, did live 
in the home, they backed off. Two years later, OneWest's new parent 
company, CIT, where Mr. Mnuchin was a board member, tried to foreclose 
again. This time it was over an unpaid bill of 27 cents.
  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 an allegation that this story was 
``fake news'' because the elderly woman never actually lost her home. 
The ordeal that OneWest's foreclosure machine put her through certainly 
was not fake news to her and others who were up against this activity.
  While OneWest 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, OneWest 
led a group of financial institutions that established a revolving 
credit facility for Relativity Media of hundreds of millions of 
dollars. Relativity was a movie studio led by a flamboyant executive 
named Ryan Kavanaugh.
  Press accounts also claim that Mr. Mnuchin and Mr. Kavanaugh became 
good friends. In fact, even though Mr. Kavanaugh 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 
festivals around the world. They were even investing in real estate 
together. They put millions into a shell company, HMBAC LLC, which 
owned property in Southern California.
  In October of 2014, Mr. Mnuchin decided to buy into Mr. Kavanaugh's 
movie studio himself. He purchased a stake. He was appointed cochairman 
of Relativity.
  So while he was pulling double duty on the boards of OneWest and 
Relativity, OneWest had to report the size of the insider loans the 
bank was making to Relativity. As a share of bank capital, OneWest's 
insider loans exceeded 94 of the country's 100 biggest 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 OneWest 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 OneWest from several 
Relativity operating accounts. One of those accounts was earmarked to 
pay guild 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 of putting OneWest 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, OneWest was purchased by an even 
bigger group, the CIT Group, at a massive profit. Mr. Mnuchin and his 
investors originally bought the bank in 2009 for less than $1.6 
billion. In 2015, CIT 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 OneWest 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 OneWest's foreclosure process, and I am just going to 
outline a few of the findings. These are the findings of the Office of 
Thrift Supervision, which is in the business of monitoring and 
examining these institutions.
  They found, for example, that OneWest 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.
  OneWest employees filed documents in State and Federal courts that 
had not been signed or affirmed in the presence of a notary.
  OneWest 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.
  OneWest failed to devote sufficient resources to the administration 
of its foreclosure and loan modifications procedures.
  OneWest management failed to enact adequate internal oversight and 
controls to its foreclosure processes.
  Finally, OneWest failed to adequately oversee the outside lawyers 
handling foreclosure-related services.
  The Office of Thrift Supervision also demanded that OneWest take 
corrective action, and it issued what is known as a consent order. 
Basically in English, this OneWest consent order was an agreement to 
clean up its act. The order was signed personally by Mr. Mnuchin and 
the OneWest board of directors. They had been running OneWest for 2 
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 that 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 Servicemembers Civil Relief Act, 
which protects members of our armed services from losing their homes 
while they are serving our country.
  So just think about that one. Here is the bank having to pay 
borrowers $3 million for violations of the Servicemembers Civil Relief 
Act. This is what protects the courageous people who serve our country. 
It is a law that protects these people from losing their homes while 
they put themselves at great risk, may 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 the courageous men and 
women who wear the uniform of the United States.
  At the heart of these investigations was the issue of robo-signing, 
the practice I have spoken about earlier in the context of the OneWest 
team churning out 6,000 foreclosure documents a week. Senator Casey and 
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

[[Page S1076]]

who lost their homes to foreclosures by Mr. Mnuchin's bank.
  So Senator Casey put the question to Mr. Mnuchin in writing after Mr. 
Mnuchin had his Finance Committee hearing. Senator Casey asked pretty 
simply: Did OneWest robo-sign documents?
  This was 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 robo-sign documents.''
  Years of documented proof say that is false. So the committee gave 
Mr. Mnuchin an opportunity to amend his response. Once again, Mr. 
Mnuchin denied--denied--the truth. First he said, ``The concept of 
`robo-signing' generally referred to two distinct but related issues: 
(a) a signer of a foreclosure affidavit attested to facts that were not 
verified to be accurate; or (b) a signer of a foreclosure affidavit 
represented himself or herself to be someone else.''
  So that is a fancy way to explain. When we gave him an opportunity to 
amend his answer, Mr. Mnuchin again denied the truth on this question 
of OneWest robo-signing documents.
  And he went on to say, ``OneWest did not do these things.''
  There is just no way of getting around it--none. That statement is 
flat wrong.
  The language Mr. Mnuchin used to redefine robo-signing is nearly 
identical to the language used by the Office of Thrift Supervision in 
the findings of its investigation. Given the watchdogs report, 
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.

  Senators Casey and Brown represent States where a lot of families 
were 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.
  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. So 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. Mnuchin was pretty much like a 
painful time at the dentist, pulling teeth. Here is an example. The 
Finance Committee requested nominees ``list all positions held as an 
officer, director, trustee, partner, proprietor, agent, representative, 
or consultant of any corporation, company, firm, partnership, other 
business enterprise, or 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, SEC filings indicated that Mr. Mnuchin was 
director of Dune Capital International, 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 CEO of the OneWest 
Foundation, an entity that is alleged to have made generous donations 
to groups that publicly endorsed OneWest's controversial purchase by 
CIT Group. He even failed to report that he had been chairman of IMB 
HoldCo, the holding company that he used to purchase IndyMac, the bank 
that he turned into OneWest. All told, after questions were raised by 
the Finance Committee's staff, Mr. Mnuchin disclosed that he held 
positions in an additional 14 entities that were not listed on his 
initial paperwork.
  Here is 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 in excess of $1,000.'' That is pretty 
straightforward. ``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 that Mr. Mnuchin listed membership in a vacation 
resort in Mexico, but he didn't disclose any related property. 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 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.
  Again, I am convinced that none of what I have described, these 
undisclosed assets--these substantial and undisclosed assets--would 
ever have been brought to light if it wasn't for the work of the 
committee's minority staff investigators. 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 that 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 who should lead the Treasury Department.
  Because we will have further discussion on this, I simply close 
speaking about the kind of person I want to see head the Treasury 
Department. I note that I have supported a number of Republicans for 
this particular position in my time on the Finance Committee. I want 
the kind of person who is going to give everybody in America the 
opportunity to get ahead. We are 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 or in Oregon, your taxes are 
compulsory. Once or twice a month your taxes are just lifted out of 
your paycheck because you are a working person. That is the way it 
works in West Virginia. That is 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. For this position 
I want somebody 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 suffering folks. I know there are a number of 
people like that in the State of the Acting President pro tempore of 
the Senate, and there sure are a lot of them in my home State of 
Oregon. A lot of those rural communities just feel like they have been 
hit by a wrecking ball. That is the kind of Treasury Secretary I want--
a Treasury Secretary who gives everybody in America the opportunity to 
get ahead.
  Thus far, I just don't see Mr. Mnuchin fitting that mold. We will go 
on to talk about other issues next week, particularly, his view with 
respect to taxes. We will have further discussion on it next week.
  I urge my colleagues to oppose this nomination.
  I yield the floor.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. SULLIVAN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.