WASHINGTON ― President Donald Trump’s choice to lead a key bank regulation agency spent the first half of this decade running a bank that illegally foreclosed on hundreds of thousands of Americans, often using forged and fraudulent documents.
In 2013, halfway through Joseph Otting’s time running OneWest Bank, Otting purchased a Las Vegas “resort lifestyle home” with a “heated pool,” “double doors forged of wrought iron and glass,” “professional-grade theater,” and “far-reaching views of both the golf course and the mountains” for more than $2 million. Today, as he awaits confirmation to lead the Office of the Comptroller of the Currency, the house stands as a monument to the money he made from pushing people out of their homes.
During his tenure, Otting and OneWest Chairman Steve Mnuchin, who is now the Treasury secretary, signed a legal agreement in 2011 with a federal oversight body now under the control of the Office of the Comptroller of the Currency declaring that, under their leadership, OneWest used “robosigning” practices that led to inaccurate documents being used to push hundreds of thousands of American homeowners into foreclosure and out of their homes. As Otting and Mnuchin have both stated, they did not agree with or acknowledge the findings of that legal agreement when they signed it.
In March, a subsidiary of OneWest agreed to an $89 million settlement with the Department of Justice for defrauding the government out of insurance payments from the Federal Housing Administration. The bank, which is now owned by CIT Group, is also accused of racial discrimination in a complaint to the Department of Housing and Urban Development and remains under investigation by the attorney general of New York.
In the years after the 2009 financial crisis, nearly every major bank in the U.S. was found to have engaged in illegal practices as they foreclosed on millions of American families. But “OneWest stood out,” among all of the banks defrauding their customers, journalist David Dayen wrote in his 2016 book Chain of Title, which details the foreclosure fraud scandal.
OneWest itself was a product of the collapse: When the housing bubble burst in 2009, Mnuchin purchased the failed lender IndyMac, changed the name to OneWest and sought to turn a big profit. At the time, this was all but assured thanks to Federal Deposit Insurance Corp. guarantees on the failed bank’s home loan defaults. Homeowners with loans from OneWest were at the mercy of the bank, as it could decide to offer them loan modifications or foreclose on them.
OneWest routinely pushed homeowners into foreclosure instead of pursuing modifications. It did so sometimes with fraudulent documents and implemented robosigning practices whereby those charged with reviewing the foreclosures did not actually review them prior to approval. Activist groups supporting those kicked out of their homes by OneWest labeled the bank a “foreclosure machine.”
Otting defended himself during a July 27 confirmation hearing before the Senate banking committee by calling his bank’s history a “false narrative.” He defended the bank by stating that it followed all the necessary legal processes and that there were only “errors from time to time.”
A 2011 consent order Otting signed with the Office of Thrift Supervision, however, stated that OneWest approved foreclosure documents without reviewing them or without reviewing them properly. Otting claimed during the hearing, “We did not confirm or deny the accusations.” A former OneWest vice president additionally said in a 2009 sworn deposition that the arm of the bank reviewing documents approved 6,000 foreclosures per week without following the proper legal review process to guarantee the documents were accurate.
By claiming that OneWest followed all proper legal procedures in his testimony, Otting is lying under oath, Dayen argued in The Nation. “So Otting just out-and-out lied to Congress, as revealed by what a vice president of the bank he ran said eight years ago,” Dayen wrote.
As the head of the Office of the Comptroller of the Currency, Otting would be in charge of regulating the nation’s approximately 1,000 banks and bank subsidiaries. The office already has a history of lax enforcement standards and was chided for failing to step in during the foreclosure crisis to prevent the kinds of abuses engaged in by banks like OneWest.
“Under Mr. Otting’s management, OneWest robosigned thousands of documents while foreclosing on families in Ohio alone,” Sen. Sherrod Brown (D-Ohio), the ranking Democrat on the Senate banking committee, said in a statement. “Mr. Otting and his Wall Street allies in Washington support an agenda that weakens or eliminates important safeguards that protect families across the country. I am concerned that if he is confirmed as the Comptroller of the Currency protecting families won’t be his top priority.”
The Treasury Department did not immediately respond to a request for comment.
Otting, who would be the first former bank executive to lead the office in nearly a century, hinted in his confirmation hearing that he would lean toward more deregulation of banking and insurance if confirmed.