(C) Common Dreams
This story was originally published by Common Dreams and is unaltered.
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Donald Trump’s Finance Chair Is the Anti-Populist From Hell [1]
['David Dayen']
Date: 2016-05-09
Why was Mnuchin’s front lawn the focal point for the protest? Because years after forming Dune Capital in 2004, Mnuchin’s hedge fund purchased the failed lender IndyMac, one of America’s largest home lenders and a leading distributor of Alt-A mortgages, a subprime hybrid which did not require borrowers to accurately state their incomes. After IndyMac failed, Dune led the investment group that purchased it from the Federal Deposit Insurance Corporation (FDIC) in 2009, renaming it OneWest Bank. Mnuchin became OneWest’s principal owner and chairman.
The purchase—which happened, remember, during the height of the financial crisis—was kind of a can’t-lose proposition for Mnuchin and his investors. The FDIC, as part of a standard deal they made on transactions for failed banks during the financial crisis, agreed to cover all losses above the first 20 percent on loan defaults. That limited the downside risk of foreclosures, and OneWest could easily recoup its other losses with various fees. Protected by a federal backstop, OneWest turned $3 billion in profits from 2009 to 2014, off an initial investment of $1.65 billion. They spun $1.86 billion of that out to investors in dividend payments. Meanwhile, the FDIC wound up losing $13 billion on the IndyMac failure, and will pay an estimated $2.4 billion to OneWest for its foreclosure costs.
As the servicer for many of the old IndyMac mortgages that were sold to investors, OneWest made decisions on whether to offer troubled homeowners loan modifications, or to foreclose on them. It routinely chose the latter. “During Mnuchin’s tenure, OneWest foreclosed on tens of thousands of families, with California’s communities of color shouldering a disproportionate share,” says Kevin Stein of the California Reinvestment Coalition, a housing advocacy organization. Maps provided by his organization show that, of the 36,382 OneWest foreclosures in California between 2009 and 2015, 68 percent of the foreclosures occurred in zip codes with a majority non-white population. While foreclosures hurt non-white families more than their white counterparts overall, these numbers are extreme.
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[1] Url:
https://newrepublic.com/article/133368/donald-trumps-finance-chair-anti-populist-hell
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