Ex-Goldman banker Mnuchin installed as U.S. Treasury secretary

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By David Lawder | WASHINGTON

WASHINGTON President Donald Trump swore in
former Goldman Sachs banker and Hollywood financier Steven
Mnuchin as Treasury secretary on Monday, putting him to work on
tax reform, financial de-regulation and economic diplomacy
efforts.

The U.S. Senate voted to confirm Mnuchin 53-47, with all but
one Democrat opposing him over his handling of thousands of
foreclosures as head of OneWest Bank after the 2007-2009 housing
collapse.

At a White House swearing-in ceremony, Trump said Mnuchin
would be a “great champion” for U.S. citizens.

“He will fight for middle-class tax reductions, financial
reforms that open up lending and create millions of new jobs,
and fiercely defend the American tax dollar and your financial
security,” Trump said. “And he will also defend our
manufacturing jobs from those who cheat and steal and rob us
blind.”

Lawmakers, lobbyists and business groups have been nervously
waiting for Mnuchin to take office and fill in the many blanks
on how he will pursue tax reform and handle delicate economic
cooperation efforts with China, Mexico and other trading
partners worried that Trump’s “America First” strategy will
upend decades-old trade rules and currency practices.

Mnuchin, 54, provided no details of his plans as he was
sworn in.

“I am committed to using the full powers of this office to
create more jobs, to combat terrorist activities and financing,
and to make America great again,” Mnuchin said.

Trump has pledged to roll back the stricter financial
regulation under the Dodd-Frank reform law enacted after the
financial crisis, pursue tougher trade policies on China and
Mexico to reduce U.S. trade deficits, and reduce business tax
rates.

CHALLENGES COMING UP FAST

Mnuchin faces immediate challenges with the March 15
expiration of a U.S. debt ceiling suspension, ushering in the
threat of a new default showdown, and a March 17 meeting of
finance ministers from the Group of 20 major economies, where he
will face tough questions about Trump’s plans to increase trade
protections.

In April, Mnuchin will have to determine whether to declare
China a currency manipulator as part of Treasury’s semi-annual
currency report.

“There is a real open question as to whether this
administration is going to cut itself off from international
monetary cooperation, whether it’s exchange rate policies or
attitudes towards multilateral institutions or international
regulatory policy,” said Edwin Truman, a former Treasury and
Federal Reserve official now with the Peterson Institute for
International Economics

Among Mnuchin’s biggest jobs is managing a sprawling
congressional tax reform effort that seeks to slash business tax
rates and enact a new border tax adjustment system aimed at
boosting U.S. exports.

Mnuchin will quickly need to build a core management team to
handle such challenges.

Treasury and White House representatives did not respond to
requests for comment on Monday on reports that Trump would soon
nominate David Malpass, a former economist at failed Wall Street
bank Bear Stearns, as Treasury undersecretary for international
affairs, the agency’s top economic diplomacy job.

Malpass, a Trump campaign adviser who had been leading
Treasury transition efforts, was seen as a leading candidate for
the job, with experience from international economic posts in
the Ronald Reagan and George H.W. Bush administrations.

Other names that have been floated for senior posts include
Goldman Sachs banker Jim Donovan for deputy Treasury secretary
and Justin Muzinich, a former Morgan Stanley banker, for
undersecretary of domestic finance.

“FORECLOSURE MACHINE”

Mnuchin, a second-generation Goldman Sachs banker who led
the firm’s mortgage bond trading but left the bank in 2002, came
under fire from Democrats over his investor group’s 2009
acquisition of another failed lender, IndyMac Bank, from the
Federal Deposit Insurance Corp.

The bank, rebranded as OneWest, subsequently foreclosed on
more than 36,000 homeowners, drawing charges from housing
advocates that it was a “foreclosure machine.”

Mnuchin grew OneWest into Southern California’s largest
lender and sold it for $3.4 billion in 2015. He has also helped
finance Hollywood blockbusters such as “Avatar,” “American
Sniper” and this past weekend’s box office champion, “The Lego
Batman Movie,” which took in $55.6 million.

The Senate on Monday also unanimously confirmed David
Shulkin as secretary of veterans affairs, putting the only
holdover from the Obama administration in charge of the second
largest federal agency. Shulkin had been in charge of the VA’s
sprawling health system for the past 18 months. (Additional reporting by Emily Stephenson)



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