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EghtesadOnline: Former Goldman Sachs Group Inc. partner Steven Mnuchin has been recommended by Donald Trump’s transition team to serve as Treasury secretary, according to two people familiar with the process, and the choice is awaiting the president-elect’s final decision.

Mnuchin, the campaign’s national finance chairman, has been considered the leading candidate for the job. Trump has displayed a pattern of loyalty to his closest campaign allies in early administration selections, and Mnuchin, 53, had signed on at a time when many from Wall Street stayed away, Bloomberg reported.

Before joining Trump, Mnuchin rose through the kind of elite institutions the president-elect spent his campaign vilifying. Mnuchin was tapped into Yale’s Skull and Bones secret society, became a Goldman Sachs partner like his father before him, ran a hedge fund, worked with George Soros, funded Hollywood blockbusters and bought a failed bank, IndyMac, with billionaires including John Paulson. They renamed it OneWest, drew protests for foreclosing on U.S. borrowers, and ultimately generated considerable profits, selling the business last year to CIT Group Inc. for $3.4 billion.

Mnuchin, who co-founded hedge fund Dune Capital Management LP, was seen at Trump Tower on Monday. Asked by reporters why he was there, he said, “I’m here just helping with the transition this week. A lot of work to do.” He had no immediate comment when reached about the Treasury post.

The transition team also was said to be considering investor Wilbur Ross Jr., Representative Jeb Hensarling of Texas and JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon. Ross didn’t respond to requests for comment. Hensarling said last week he would “certainly have the discussion” if Trump’s administration called, but that he isn’t pursuing the post. A JPMorgan spokesman declined to comment.

Trump hasn’t yet made a final decision.

Mnuchin would become the third former Goldman Sachs executive to head the Treasury since the mid-1990s. Robert Rubin and Hank Paulson both ran the Wall Street firm before becoming Treasury chiefs under presidents Bill Clinton and George W. Bush, respectively.

It’s a longstanding pattern that has earned Goldman the nickname “Government Sachs,” and it currently extends to the Federal Reserve and abroad. New York Fed President William Dudley is the firm’s former chief U.S. economist. Bank of England Governor Mark Carney was a managing director at the firm. European Central Bank President Mario Draghi was vice chairman of its international arm.

‘Smart Guy’

On Sunday, Trump named another Goldman alumnus, the former Breitbart News chief Steve Bannon, to one of his top posts in his White House, chief strategist and senior counselor.

Goldman Sachs CEO Lloyd Blankfein praised Mnuchin at a conference in New York last week as a “very smart guy,” who rose quickly within the firm. “I have followed his career, and I know what he has done, but I haven’t engaged with him much since then,” Blankfein said.

The company’s stock has climbed 15 percent since the Nov. 8 election.

The next Treasury chief’s challenges will include a budget deficit that’s forecast to widen and require increased debt issuance; an economy that’s been stuck in a period of slow growth and exacerbated income inequality; and international partners wary about the new president’s approach to trade. During the campaign, the real estate mogul indicated that among his first moves will be a Treasury designation naming China a currency manipulator.

Joining the campaign this year, Mnuchin was charged with a seemingly insurmountable task: Go up against the Hillary Clinton money machine that was out-organizing and out-raising Trump. The campaign had no organized fundraising operation because Trump relied mostly on his own money to get through the primaries.

So Mnuchin essentially outsourced much of the work to others. He relied heavily on the Republican National Committee’s digital and direct-mail expertise to amass small-dollar donations. And a group of former RNC bigwigs helped form the core of a new Trump network to gather big checks at dinners where seats could cost $50,000 or more.

Ultimately, Mnuchin’s role was less rainmaker and more chief financial officer: He weighed in on schedules and venues, proofread fundraising e-mails, rearranged chairs at dinners, and even helped set up the process that Trump Tower campaign staff used to open the mail.

Tax Breaks

He also took particular interest in tax policy. He argued that Trump’s tax plan should cut the top marginal rate to 33 percent, prevailing over other Trump advisers who had advocated for even lower figures, he said in an interview in August. 

“He made the case this would be politically problematic,” said Stephen Moore, another Trump policy adviser, in a separate August interview. “That Trump would get skewered if it were perceived as a big tax cut for the rich.”

By cutting the top rate from 39.6 percent, the Urban-Brookings Tax Policy Center estimates that almost half of the benefits of the Trump tax cut would fall to the top 1 percent of U.S. earners.

If Mnuchin is confirmed for the Treasury role, it could save him millions in taxes. A 1989 rule allows him to sell stock tax-free if he reinvests the proceeds in Treasuries or in government-approved funds. The loophole was designed for executives who need to sell shares to comply with conflict-of-interest rules.

Paulson’s Savings

Mnuchin owns $97 million of CIT Group, according to a February ownership filing, the latest available. Because he received most of those shares when CIT purchased OneWest Bank in 2015, the exact cost basis that would be used to calculate his taxes isn’t immediately clear.

Previous Treasury secretaries have taken advantage of the rule. Hank Paulson was eligible to save about $48 million on roughly $495 million of Goldman Sachs shares when he was nominated to run the department in 2006, the New York Times reported at the time.

Trump’s transition team signaled last week that it wants to dismantle key parts of the Dodd-Frank Act, the sweeping overhaul of U.S. financial regulation aimed at preventing future crises. Asked about the 2010 law before the election, Mnuchin said there are good and bad things about it, without elaborating.

Goldman Experience

Mnuchin started his career in the early 1980s as a trainee at Salomon Brothers. He went on to spend 17 years at Goldman Sachs, where a mentor showed him how the firm could profit from the savings-and-loan crisis of the 1980s, buying up assets cheap. Mnuchin oversaw mortgage-backed-bond trading at Goldman before becoming the investment bank’s chief information officer in 1999. He left in 2002 and two years later founded Dune Capital, named for a spot near his house in the Hamptons.

The 2008 financial crisis lured Mnuchin back into banking. That summer, he was in his New York office when he saw a TV news shot of customers lined up outside a branch of IndyMac, a California lender, trying to pull out their money.

“This bank is going to end up failing, and we need to figure out how to buy it,” he told a colleague, recalling the lessons of the savings and loan crisis. “I’ve seen this game before.”

The bank collapsed that July, just months before Lehman Brothers Holdings Inc.’s failure set off a global emergency. At one of the murkiest moments of the crisis, Mnuchin gathered investors for a $1.6 billion bid to buy IndyMac. He got an agreement that guaranteed the Federal Deposit Insurance Corp. would absorb almost all the loan losses after a certain threshold. He renamed the bank OneWest. Within a year, it was profitable.

‘Foreclosure Machine’

In October 2011 about 100 protesters marched on his Los Angeles mansion, angry about foreclosures. “Steve Mnuchin,” one sign read, “Stop taking our homes.” He and his partners completed the bank’s sale in August 2015.

California Reinvestment Coalition deputy director Kevin Stein, whose group has accused OneWest of particularly aggressive foreclosure practices, criticized Mnuchin’s legacy on Monday.

“Mr. Mnuchin oversaw a foreclosure machine,” Stein said in an e-mail. Taking the brunt were “working-class families, communities of color and seniors.”

Donald Trump Goldman Sachs Steven Mnuchin Treasury secretary