Mnuchin’s interest in TikTok and a troubled NY bank matches his pre-Trump investment playbook

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NEW YORK (AP) — It sounds like a bizarre mess: A former Trump Cabinet official says he’d like to do it buy tiktok Just days after leading the pumping group $1 billion in a beaten bank, But all this really fits into the complicated career of Steven Mnuchin.

The man who served as former President Donald Trump’s Treasury Secretary is, after all, well-connected in the world of finance. From 1985 to 2002, he worked at Goldman Sachs, one of the most famous and criticized investment banks on Wall Street.

Mnuchin also has a history in media and entertainment. His Hollywood credits include “Mad Max: Fury Road” and “The Lego Movie”, where he was one of the executive producers. Think of these as a big-budget version of TikTok videos.

And Mnuchin certainly has experience taking risks with troubled institutions. He famously stepped in to revive the struggling IndyMac Bank after its failure in the 2008 financial crisis.

But for critics, Mnuchin’s dealmaking also raises concerns about ethics. Robert Weissman, president of the watchdog group Public Citizen, points specifically to TikTok as a place where the US government could force its Chinese owners to sell. He said, imagine something similar happening in some other country, where its former finance minister became a buyer.

FILE - Former Treasury Secretary Steve Mnuchin speaks to reporters outside the White House in Washington on March 29, 2020.  Mnuchin says he's going to form an investor group to buy TikTok, a day after the House of Representatives passed a bill that would ban the popular video app in the US if the China-based owner doesn't sell its stake .  (AP Photo) /Patrick Semansky, File)
FILE - The logo of New York Community Bancorp is displayed above a trading post on the floor of the New York Stock Exchange on January 31, 2024.  New York Community Bancorp's stock fell even more on Wednesday, March 6, 2024, taking it below .  There has been a decline of more than 80% so far this year.  (AP Photo/Richard Drew, File)

“When you’re at the top of the fiscal policymaking hierarchy, you don’t look beyond that to figure out how you can help yourself,” Weissman said.

Other former Treasury secretaries have moved to Wall Street after their terms ended, including Robert Rubin, the Goldman Sachs executive who served under President Clinton. By all accounts, the move appears to cash in on his time in government, Weizmann said.

Mnuchin, who could not be reached for comment at the request of his private-equity firm, has often generated controversy as he has generated cash.

After leaving the Treasury Department in January 2021, he launched his own private-equity fund, Liberty Strategic Capital, which raised $2.5 billion as of September. According to news reports,

Much of that money was from government-controlled investment funds in Saudi Arabia and other Persian Gulf states, where Mnuchin visited frequently as Treasury secretary. He was in the Middle East a few weeks before leaving office and cut the trip short after the Capitol riot on January 6.

His government’s rapid shift from foreign travel to business dealings in those same countries prompted a call from Citizens for Responsibility and Ethics, a watchdog group in Washington. One year ban on senior government officials Doing business abroad after leaving office.

Earlier this month, Mnuchin again made headlines when his PE firm led a nearly $1 billion investment in troubled New York Community Bancorp.

NYCB was looking for a lifeline, and its stock had fallen more than 80% at one point since the beginning of the year. The bank has been grappling with falling values ​​of commercial real estate investments and rising troubles related to some of its past acquisitions.

It all points to a move that may have defined Mnuchin’s career.

In 2009, OneWest Bank Group, where Mnuchin was chairman and CEO, bought troubled IndyMac after federal regulators seized the bank. Other big-name backers included funds linked to George Soros and hedge-fund manager John Paulson.

OneWest purchased all of IndyMac’s deposits and assets at a discount for $4.7 billion following an auction by the Federal Deposit Insurance Corp. The FDIC also agreed to share in losses from certain mortgages involving single-family homes.

Kevin Kaiser, assistant professor of finance at the Wharton School, said such investors can profit by buying at deep discounts when the market is nervous. To make sure the investments pay off, however, investors like Mnuchin have to make tough payments with borrowers at risk of default, he said.

“They’re a little sharp-elbowed,” Kaiser said, referring to distressed property investors as a group. “And that means they don’t shy away from getting into even a little bit of conflict.”

After OneWest, Mnuchin was Trump’s top fundraiser in the 2016 election. When he was nominated for the Treasury post, he came under criticism in Congress after it emerged that OneWest had foreclosed on thousands of homes after the US housing bubble burst.

Lawyers found it particularly difficult to work with banks under government mortgage modification programs. Some of those who lost their homes voted for Trump in 2016 and were Disappointed with Mnuchin’s nomination,

Maxine Waters, the top Democrat on the House Finance Committee, called Mnuchin the “foreclosure king” at the time.

In testimony before the Senate committee considering his nomination, Mnuchin said he has worked to help homeowners stay in their homes and that his company has provided more than 100,000 loan modifications to borrowers.

Mnuchin was Treasury secretary in 2020, when the Trump administration struck a deal in which Oracle and Walmart would take a majority stake in TikTok. That deal ultimately fell through for a variety of reasons, but the popular video app is under pressure again after the House of Representatives passed a bill on Wednesday that would ban it in the US if its China-based owner doesn’t sell its stake.

On Thursday, Mnuchin said in an interview with CNBC that he had talked to “a group of people” about forming an investor group to buy TikTok.

And Mnuchin can’t be done.

Chris Caulfield, who runs a banking practice in West Monroe, a consulting firm, said Mnuchin has plenty of potential for troubled targets given the banking industry’s troubles.

In addition to a history of bringing in new leadership teams at struggling banks, Mnuchin also has experience in the potentially thorny world of regulations.

“He also has access to capital,” Caulfield said of Mnuchin. “Should there be a need for more capital, he is someone who is very adept at putting together consortiums.”


Ragaber reported from Washington.

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