(Vanity Fair) In the midst of the heavy-duty negotiations between the Trump administration and Congress over the unprecedented $2 trillion stimulus bill that passed the U.S. Senate late Wednesday night, an unlikely hero has emerged for the Wall Street crowd: Steve Mnuchin, the much-ignored, and oft-disdained, Treasury secretary.
What’s additionally surprising is that Mnuchin is winning plaudits from bankers whose political affiliations span both sides of the aisle and who are united in their disdain for President Trump. “Steve’s doing a fantastic job,” says one Republican former senior executive of a Wall Street firm. He has been particularly impressed by Mnuchin’s ability to work closely with Nancy Pelosi, the Democratic Speaker of the House. He says they genuinely seem to like each other. And they seem to have developed a positive working relationship—unlike almost any other member of the Trump administration—and that relationship will likely pay off later this week when the House of Representatives votes on the Senate’s stimulus bill.
A big-time Republican sharing his support for the Treasury secretary in a Republican administration during a percolating financial crisis is hardly newsworthy. But much to my astonishment, Wall Street Democrats have also been praising Mnuchin’s performance in this difficult time. “Steven Mnuchin is doing an excellent job,” one Wall Street executive, who is a Democrat, tells me. “I mean, an excellent job. And it’s not just by the way that he’s been aggressive on working with the Fed. I think [Jerome] Powell and Randy Quarles”—the Fed chairman and vice chair for supervision, respectively—“are doing an excellent job. But Mnuchin has really got a relationship with Nancy Pelosi that’s helped here. And that comes from other stuff, but that’s meaningful.”
Another Wall Street chief executive, also a Democrat, is equally impressed with what Mnuchin has been doing lately. “Pleasantly surprised, to tell you the truth,” he says. “He’s showing a level of smarts and sophistication and practicality. They have the right kind of bill. My concern, obviously, is does he have the ability to actually execute it? Are there enough people?”
This is quite a turnaround for Mnuchin, even though he is a product of Wall Street and the scion of Goldman Sachs royalty. His father, Robert, was a longtime Goldman partner, a member of the management committee, and the head of institutional equity trading. (He now owns a prominent art gallery on Manhattan’s Upper East Side.) His brother, Alan, also worked at Goldman and then at Bear Stearns before opening his own Wall Street advisory boutique. Mnuchin joined Goldman out of Yale, along with his Yale roommate, the hedge fund manager Eddie Lampert, who later ran Sears into the ground. (Mnuchin was a Sears board member prior to becoming Treasury secretary.)
Mnuchin spent 17 years at Goldman, in a variety of different jobs, and became a Goldman partner in 1994, when some 40 partners left the firm in the midst of Goldman suffering huge trading losses. When Goldman went public in May 1999, Mnuchin made his first fortune—said to be around $100 million—from the Goldman IPO. He left Goldman three years later. He worked briefly for Lampert before starting his own private-equity and investment firm, Dune Capital Management, with financial backing from George Soros. He invested in Hollywood films alongside Brett Ratner, whose bad behavior was later exposed in the #MeToo movement, and James Packer, the Australian billionaire. They had a mixed record in Hollywood. Mnuchin also built a real estate business at Dune, which invested in two Trump projects: the Trump International Hotel Waikiki and the Trump International Hotel & Tower in Chicago. In November 2008, a day before a $330 million payment was due on the $640 million Chicago-tower construction loan, Trump sued his lenders, including Dune Capital.
Mnuchin’s biggest financial windfall came as a result of the 2008 financial crisis, when he, Soros, hedge fund billionaire John Paulson, and computer billionaire Michael Dell bought IndyMac, a failed California bank, for $1.55 billion after the Federal Deposit Insurance Corporation agreed to cover a portion of any loan losses. They renamed the bank OneWest. In 2014, CIT, a large financial institution, bought OneWest from Mnuchin and his partners for $3.4 billion in cash and CIT stock. Mnuchin’s stock take was at one time worth around $100 million. His net worth is reportedly around $400 million these days.
Until now, Mnuchin’s track record as Treasury secretary has been marred by a series of self-inflicted wounds. He and his third wife, the actor Louise Linton, have been photographed flying around on private jets. He and Linton were photographed holding a huge sheet of dollar bills at the Bureau of Engraving and Printing, and the embarrassing picture went viral. Mnuchin and his wife stepped in it again in August 2017, when they flew to Fort Knox at taxpayer expense and then watched the solar eclipse from the building’s lawn. More important, it seemed that Gary Cohn, another Goldman alum who was Trump’s National Economic Council director, was busy stealing the spotlight from Mnuchin when it came to getting the January 2018 tax bill through Congress. (In an interview with me in the summer of 2017, Mnuchin disputed the characterization that he had a minimal role in getting the tax cut through Congress. “That couldn’t be farther from the truth, okay?” he told me. “The facts are: I worked on a tax plan with the president for the last year. I started coming in, in January [2017], and meeting with the House and the Senate and speaking to the leadership on tax reform, so we’ve been working on this since January [2017].”)
Regardless, Mnuchin is in the driver’s seat now. Cohn is long gone. Wilbur Ross, the 82-year-old commerce secretary, hasn’t really been heard from in months. It was Mnuchin who was on the podium last night, behind Trump, at the daily coronavirus briefing, presumably as a reward to him for his work on getting the stimulus bill negotiated with Pelosi and the Senate leaders. And that’s what has the Wall Street Democrats nervous for him. “I worry about his boss,” says the second Wall Street executive I spoke with. “He's always trying to please his boss, right? Can he actually have the backbone he needs to implement the plan? It’s one thing to announce the plan. It’s another thing to figure out how to spend it, invest it, and get it done and have the ability to do it with a boss that I just think is going to be really hard to work with. They have nobody. They have no resources [yet dedicated to distributing the funds being provided].”
The other Wall Street executive has a different concern: that somehow Mnuchin’s recent success will steal the spotlight from the Dear Leader. He tells me how he was not a big fan of George W. Bush during his presidency until the 2008 financial crisis. But he came to respect him greatly for how he handled that crisis. “One of the things you really saw in the [2008] financial crisis,” he says about Bush, “[was] he had very good people under him. He was statesman-like. But he got out of their way and let them execute. Right? This president doesn’t have an ability to stay out of it. He’s got to inject. He’s got to meddle. He’s got so little confidence. I think that’s an issue. It’s a big issue.”
