The post that is often considered the nation’s chief financial officer, Secretary of the Treasury, develops economic policy, manages the federal debt, oversees the minting of coins and the printing of paper money, collects taxes, enforces tax laws, and pays the United States’ bills. Fifth in the line of presidential succession, the post is considered one of the most important in the Cabinet.
The Treasury Department requires an experienced and effective executive who can perform the duties listed above. While Mnuchin will probably perform his duties correctly, he is not an outstanding choice, and his lackluster background and questionable decisions hint at nothing more than mediocrity.
Mnuchin attended a private school in New York City and then attended Yale. After his graduation in 1985, Mnuchin went to work at Goldman Sachs, where his father had been a partner. Less than a decade later, Mnuchin himself became a partner and later moved up to the role of chief information officer (a position that oversees management of information technology and computer systems within a corporation). He also managed government securities and mortgage bonds at Goldman Sachs.
In 2002, Mnuchin left Goldman Sachs and co-founded the hedge fund SFM Capital Management with billionaire and businessman George Soros a year later. Mnuchin had served as SFM’s CEO for a year when he left to form his own hedge fund, Dune Capital Management. In 2009, Mnuchin led a team of investors (which included Soros and Trump economic advisor and billionaire John Paulson) in purchasing the failed bank IndyMac, which went under during the 2008 financial crisis and was seized by the FDIC. Mnuchin then renamed the bank OneWest and served as CEO and chairman. The bank was profitable, becoming the largest bank in southern California and amassing about $27 billion in assets. In 2015, the financial holding company CIT Group purchased OneWest, and Mnuchin became a member of CIT Group’s board of directors, from which he resigned on Dec. 2, 2016 after his nomination as Secretary of the Treasury.
In tandem with his banking career, Mnuchin also led a successful career in media, where he financed the X-Men franchise and Avatar and produced American Sniper, The Lego Movie, Suicide Squad and Life of Pi.
AFFILIATIONS WITH DONALD TRUMP
Mnuchin’s major affiliations with President Trump date back to 2004, when Mnuchin’s hedge fund, Dune Capital, invested in the Trump International Hotel in Honolulu and Trump Tower in Chicago. In 2008, Trump sued Dune Capital over the hedge fund’s failure to extend their loan terms. Eventually, both parties settled out of court. As an early supporter, Mnuchin attended Trump’s victory party after the New York Republican Primary on April 19, 2016. On April 20, Trump elevated Mnuchin to the role of national finance chairman of the Trump campaign, which made Mnuchin the campaign’s main fundraiser.
On Nov. 30, 2016, then President-Elect Donald Trump nominated 53-year-old Steven Mnuchin to be the next Secretary of the Treasury.
CONTROVERSY AND OTHER ISSUES
Connections to George Soros: In 2005, Soros was convicted of insider trading in France by the Court of Appeals, a conviction that was upheld by the Supreme Court of France in 2006. The insider trading had occurred in 1989 when Soros received knowledge of a possible takeover plan of the French bank, Société Générale, and acted independently of the plan to accumulate shares on his own.
Mnuchin twice entered into major business deals with Soros; the first time was in 2003, before Soros’s conviction, when the two founded SFM Capital Management, and the second time was in 2009 when the duo and other investors bought out IndyMac, which occurred after Soros’ conviction for insider trading in France. Mnuchin’s decision to do business with Soros after his conviction is concerning and raises a question over Mnuchin’s judgment as a whole.
Additionally, Soros is a major and frequent donor to the Democratic Party. He and fellow billionaire Peter B. Lewis contributed $40 million to outside Democratic groups in 2004. In 2012, he gave $1 million to the super PAC Priorities USA Action to support Barack Obama. In 2013, he gave $25,000 to Ready for Hillary super PAC, becoming a co-chairman of its national finance committee. During the 2016 election cycle, Soros donated a total of $9,506,693 to Priorities USA Action, which supported Hillary Clinton and became the largest Democratic super PAC.
Failure to Disclose: According to a memo from Democratic staff members of the Senate Finance Committee, Mnuchin failed to disclose $95 million in real estate assets to the Committee upon his nomination as Treasury Secretary. The assets include $15 million worth of real estate in Mexico, a New York City co-op, and residences in Los Angeles and Southampton, New York. The memo states that Mnuchin also omitted his role as a director of Dune Capital International, an investment fund incorporated in the Cayman Islands, a well-known tax haven. When prompted to answer for these allegations of a failure to disclose relevant information, Mnuchin addressed the omissions as an unintentional oversight.
He explained that the purpose of the offshore entity was to allow investment opportunities for pension funds and non-profit organizations, and he admitted to the involvement of foreign investors. According to CNN, Dune Capital International and a few other similar entities with which Mnuchin is involved are worth more than $240 million in assets. Foreign investors hold significant percentages of these entities, and one was reported to be owned entirely by foreign investors.
Relativity Media: Mnuchin served as a non-executive co-chairman of Relativity Media from October 2014 to May 2015. After his departure, Relativity filed for bankruptcy on July 30, 2015. On Feb. 2, 2017, allegations of fraud against Mnuchin and other investors of Relativity surfaced in a lawsuit filed by media company RKA Film Financing LLC. The plaintiffs claimed that Mnuchin hid evidence of fraud. Originally, RKA invested $73.6 million in Relativity for the purpose of movie advertisements. However, RKA claimed that, due to the poor financial state of Relativity, the media company used RKA’s investment for general corporate purposes.
One of these purposes included the repayment of a loan from OneWest Bank, where Mnuchin was CEO and chairman while simultaneously serving as co-chairman of Relativity during its crisis. OneWest had loaned $50 million to Relativity, and the lawsuit’s plaintiffs claim that the day after Mnuchin resigned from Relativity, he arranged for the repayment of the OneWest loan with RKA’s investment. The plaintiffs also asserted that the current CEO and co-chairman, Ryan Kavanaugh, informed Mnuchin of the improper usage of RKA’s investment, which Mnuchin failed to disclose to RKA, thus alleging Mnuchin’s complicity in said usage. RKA further contended that Mnuchin failed to disclose Relativity’s weak financial state in order to misappropriate RKA’s investment toward satisfying OneWest’s loan, thus alleging corruption and intentions to deceive investors.
In conclusion, Steven Mnuchin is, frankly, fundamentally unqualified to be our country’s next Secretary of the Treasury. While his career has not been terrible, his credentials do not measure up to those of some of the previous treasury secretaries (Timothy Geithner had been the president of New York’s Federal Reserve Bank, Lawrence Summers had been Deputy Treasury Secretary, William Miller had been chair of the Federal Reserve, etc.). It can be said that President Trump values loyalty and that he nominated Mnuchin to reward him for his work on the Trump campaign as finance chair. With due respect, his professional record does not include the necessary connections and understanding of domestic and global financial markets and policy to exercise the powers of his office fully and effectively. His past business dealings with Soros, his ongoing involvement in offshore investments, and his failure to disclose said involvement also bring his judgment into question. Furthermore, his alleged wrongdoings at Relativity Media shroud his nomination in skepticism. I would have supported a more seasoned choice, primarily Jamie Dimon, the highly acclaimed and successful chairman, CEO, and president of JPMorgan Chase, which is currently the largest bank in the country in terms of overall assets. Texas congressman and incumbent chair of the House Financial Services Committee Jeb Hensarling would have been qualified, too. Even though Mnuchin is to no degree an ideal choice, it is still very likely that he will be confirmed by the Senate and become the next Secretary of the Treasury. With those odds in mind, I am hopeful that he, like some of Trump’s other controversial and under-qualified Cabinet picks (Rex Tillerson, for example), can rise to the occasion and serve our country well.
— Ethan Pender is a Freshman studying political science. He is a first-time contributor to THE ARCH CONSERVATIVE.
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