Mnuchin, a 53-year-old former Goldman Sachs banker turned Hollywood financier, parlayed a six-month stint as Donald Trump’s campaign finance chairman into the president-elect’s pick to be Treasury secretary.
Mnuchin’s Wall Street pedigree presents a stark contrast with the populist themes Trump struck in his campaign, railing against big banks and vowing to close tax loopholes that benefit hedge funds. Trump also repeatedly attacked his rivals in the primary and general elections for their Wall Street ties, especially those connected to Goldman Sachs.
Mnuchin’s links to the world of high finance, in particular to Goldman, go back to before he was born. His father, Robert Mnuchin, started at Goldman in 1957 and spent his entire Wall Street career at the firm. The elder Mnuchin was among those who pioneered block trading, the buying or selling of large numbers of shares at once. Steven’s brother, Alan, also worked at Goldman. “He’s a person of great integrity,” the elder Mnuchin said of his son. “[We] expect he will do a good job in this very exciting and demanding position.”
If confirmed by the Senate as Treasury secretary, Mnuchin will join a list of prominent bankers who made similar moves from Wall Street to Washington, including two of his former bosses at Goldman, Henry Paulson and Robert Rubin, who were both top Goldman executives before running Treasury.
Despite his successful Wall Street career, Mnuchin has no experience running a massive organiaation—the Treasury Department has 86,000 employees—or in economic or financial policy making. The biggest entity Mnuchin has run was the technology division of Goldman, which had over 5,000 employees.
Mnuchin’s acquaintances describe him as smart, with several people calling him “nerdy.” He regularly attends New York philanthropic galas. He has long held high-profile positions on charity boards and is a former director of the Whitney Museum of American Art. At an event for New York charity City Harvest in 2006, Mnuchin and his ex-wife were photographed with Trump. Mnuchin is now engaged to Scottish actress Louise Linton.
Mnuchin joined Goldman in 1985. He worked in the fixed-income department, eventually overseeing trading in mortgages, US government, money market and municipal bonds. He made partner in 1994. Mnuchin later became the firm’s chief information officer.
When Goldman converted into a publicly traded company in 1999, Mnuchin, like other partners, made millions. He later bought a 6,500-square-foot apartment in 740 Park Avenue, a storied Manhattan co-op built by Jackie Kennedy’s grandfather that is known as the “billionaires’ building.”
At a recent conference, Goldman CEO Lloyd Blankfein called Mnuchin a “highflier, a partner at a young age. He did very well. He is a smart, smart guy.”
In 2002, Mnuchin left Goldman and later was hired to run a credit fund set up by billionaire George Soros.
In 2004, Mnuchin and two former Goldman colleagues founded hedge fund Dune Capital Management with financial backing from Soros. Dune soon expanded into the entertainment business, striking up a film-financing deal with a unit of 21st Century Fox. Among the films Dune financed was “Avatar,” one of the all-time box office hits.
21st Century Fox and News Corp, parent company of The Wall Street Journal, share common ownership.
In 2008, IndyMac Bank in Pasadena, Calif., collapsed in one of the largest bank failures in US history. Mnuchin led a group of investors, including funds run by Soros and other hedge fund and private equity titans, who bought it from the government for about $ 1.5 billion. The Federal Deposit Insurance Corporation agreed to cover a portion of any future loan losses, a lucrative arrangement for Mnuchin and his partners. Regulators who negotiated with Mnuchin found him to be the kind of detail-oriented person who would “know the cost of every pencil,” according to a person familiar with their thinking.
Mnuchin, who became chairman of the renamed OneWest Bank and CEO of its parent company, relocated to Los Angeles and bought a mansion in the Bel Air neighborhood.
The deal soon became controversial. In 2011, community activists descended on Mnuchin’s Bel Air home to protest over the possible eviction of a homeowner who was behind on her mortgage payments to OneWest.
In 2014, OneWest was sold to CIT Group, earning Mnuchin and Dune hundreds of millions of dollars in profits, according to a person familiar with the matter. He later pocketed $ 10.9 million in severance payouts when he left the company.
Despite the huge profits, OneWest’s legacy continues to trail Mnuchin, who now sits on CIT’s board and owns more than 1% of its shares.
A portion of OneWest’s mortgage business is under investigation by the Department of Housing and Urban Development. Last July, CIT said it was forced to take a $ 230 million charge as it cleaned up accounting problems at OneWest. And two California housing groups this month accused OneWest of discriminating against minorities by not putting branches in their communities.
Meanwhile, 14 years after leaving Goldman, Mnuchin remains in the firm’s orbit, showing up at alumni events and involving other ex-Goldman executives in his finance deals.
He has continued to work those angles as Trump’s finance chairman, a post he assumed in May. Mnuchin negotiated a joint fundraising agreement with the Republican National Committee, easing the way for major donors to give both to the party and to Trump. The committee’s chairman, Lewis Eisenberg, is a Goldman veteran and contemporary of Mnuchin’s father.
This article was first published by The Wall Street Journal