OneWest Bank, which Donald Trump’s treasury secretary nominee Steven Mnuchin ran from 2009 to 2015, repeatedly broke California’s foreclosure laws during that period, according to a previously undisclosed 2013 memo from top prosecutors in the state attorney general’s office.
That does not sound great for a guy who is about to start chatting with the Senate about becoming the most powerful bank regulator in the land. In fact, it's downright shitty when one considers that Mnuchin's nomination was born on less-than-solid ground and his resume is the stuff of nightmares for any politician even pretending to be a fake populist.
And in case you're thinking that we might be overreacting to this leaked memo due to our blood loyalty to another way better and heaven-anointed potential Treasury candidate, we invite you to peruse the basics of what's in the memo:
The memo obtained by The Intercept alleges that OneWest rushed delinquent homeowners out of their homes by violating notice and waiting period statutes, illegally backdated key documents, and effectively gamed foreclosure auctions.
In the memo, the leaders of the state attorney general’s Consumer Law Section said they had “uncovered evidence suggestive of widespread misconduct” in a yearlong investigation. In a detailed 22-page request, they identified over a thousand legal violations in the small subsection of OneWest loans they were able to examine, and they recommended that Attorney General Kamala Harris file a civil enforcement action against the Pasadena-based bank. They even wrote up a sample legal complaint, seeking injunctive relief and millions of dollars in penalties.
Oh, that's not all:
Mnuchin, the former CEO of OneWest, was already facing challenges in his upcoming Senate confirmation hearings on account of his bank’s ruthless foreclosure practices, ranging from locking out one homeowner during a Minneapolis blizzard to foreclosing on another over a 27-cent payment shortfall.
There's also this:
According to the memo, OneWest also obstructed the investigation by ordering third parties to refuse to comply with state subpoenas.
Because of federal preemption rules, state prosecutors cannot subpoena national banks for information about their core functions prior to filing a lawsuit. But the California attorney general’s office was nevertheless able to review over 204,000 publicly available foreclosure documents filed with county recording offices throughout the state, along with other documents purchased from a website called Foreclosure Radar that tracks foreclosure activity.
Working through the county records, the attorneys immediately uncovered a startling finding: 86 OneWest documents changing the designation of third-party trustees (SOTs) bore a date prior to March 19, 2009, the date OneWest opened for business. Some dated back to 2008.
“Because it would have been impossible for OneWest to sign the instruments before it became an operational bank,” four deputy attorneys general from the Consumer Law Section wrote in the memo, “we deduced that the instruments were backdated.”
Investigators surmised that OneWest listed trustees on notices of default before formally executing the SOTs, then backdated the SOTs to make it look like those trustees were already in place at the time the notice of default was issued.
Had OneWest put the correct date on the SOTs, they would have had to file new notices of default, restarting the 90-day clock and delaying the foreclosure.
Mnuchin's reputation for being perhaps something of a financial crisis profiteer has followed him around for years, but these details are the kind of thing that could really torpedo his nomination...or perhaps not what with political logic on an extended vacation from this reality. However Mnuchin seems to be moving swiftly to cauterize the bleeding from this revelation by saying...absolutely fucking nothing.
Treasury Secretary nominee Steven Mnuchin has declined to answer questions from a Democratic senator about his views on financial regulations, sanctions and his time as head of a bank accused of unfair foreclosure practices.
Senator Sherrod Brown of Ohio, the top Democrat on the banking committee, sent a letter on Dec. 21 asking Mnuchin to detail his position by Jan. 6 on issues that are under the committee’s purview, including fair lending laws and foreclosure-prevention programs. Mnuchin doesn’t plan to respond to the senator in writing, though several weeks ago he requested a meeting with Brown, who hasn’t yet accepted, according to Mnuchin’s spokeswoman Tara Bradshaw.
Hey, this "Naughty but silent" routine has worked for Steve so far, but he hasn't yet faced the stark reality of a Senate committee hearing in which Dianne Feinstein is baying directly for his blood.
But spekaing of Senate Democrats from California, this memo is also bad news for freshly-sworn in US Senator Kamala Harris who happens to have been the Attorney General that declined to pursue this case and will now be voting on Mnuchin's fitness to run Treasury.
While the memo leaves a lot of questions out there for Mnuchin going forward into confirmation season, one thing is now clearer than ever: The #DraftDimon movement still lives.
(How did you think this was going to end?)