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Steven Mnuchin’s Deal Staved Off Catastrophe. Can He Make Another One?



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There have not been many victims of their own success in the Trump administration, but Steven Mnuchin was trying to stake his claim to that distinction. It was a September afternoon, and the Treasury secretary, sitting in the private conference room off his office, was reflecting on his recent inability to steer a coronavirus relief package through Congress and past the president’s desk.

“We’re in a very different situation than we were beforehand, OK?” Mnuchin said, his voice tinged with frustration and resignation. He was comparing the present moment to the state of things six months earlier, when the magnitude of the coronavirus pandemic in the U.S. had just become apparent. “We were in absolute crisis, and we were risking a major, major meltdown of financial conditions, economic conditions and health conditions simultaneously,” he recalled.

The federal government’s response to this crisis, which has left more than 200,000 people dead, could broadly be called a failure. But it did have one bright spot: In late March, Mnuchin had brought together House Democrats, Senate Republicans and his boss, Donald Trump, to enact the $2.2 trillion CARES Act, the largest economic stimulus in American history. Six months later, the stock and bond markets appeared to have recovered, and the unemployment rate was below 10 percent for the first time since March.

“The good news is we’re not in the same emergency that we were in,” Mnuchin said. And this, for Mnuchin, was now a problem. By July, the CARES Act had largely run its course; small businesses had burned through their grants from the Paycheck Protection Program; families had exhausted their $1,200 stimulus checks; and federal payments to unemployed workers were about to expire. The economy was in dire need of another jolt. After trooping up to Capitol Hill again that month, Mnuchin predicted there would be a deal on a second stimulus package in 10 days — before the unemployment benefits expired at the end of July. “There’s a lot of people who are still out of work,” Mnuchin said.

But there was no deal. Absent the crisis mind-set of the spring, congressional Republicans and Democrats and the administration had retreated to their corners and couldn’t get within $2 trillion of an agreement on what the price tag of the new bill should be. For about two weeks, Mnuchin and Mark Meadows, the White House chief of staff, met with the House speaker, Nancy Pelosi, and the Senate minority leader, Chuck Schumer, in increasingly fraught closed-door negotiations. After those talks collapsed, the two sides traded fruitless phone calls and dueling press statements for more than a month.

By the time Mnuchin and I met in mid-September, the prospect of a second stimulus before the November elections had collapsed into mutual recrimination. “Democrats have repeatedly compromised in these negotiations,” Drew Hammill, a spokesman for Pelosi, told me, noting that they had offered to come down $1.2 trillion and were waiting for the White House to meet them in the middle. Mnuchin, meanwhile, complained about the Democrats’ demands beyond the price tag. “My takeaway,” he told me, “is the speaker and Senator Schumer have decided they don’t really want to do a deal right now.”

Mnuchin’s successes and failures amid the pandemic illustrate the balancing act he has tried to strike throughout his tenure as Trump’s Treasury secretary. Despite being presided over by a man whose first book was titled “The Art of the Deal,” the Trump era has been mostly devoid of bargains, big or small; and Mnuchin has been one of the only members of the administration who has displayed any aptitude for getting people to yes. But his ability to do so has often come in spite of the president or because, as in the case of the CARES Act, things had become so dire that the various parties were left with no other choice but to let Mnuchin bring them together to strike a deal. As Mnuchin put it to me, almost wistfully, that September afternoon: “One good thing about emergencies is it gets everybody lined up.”

Over less than four years in office, Trump has churned through four national security advisers, four White House chiefs of staff, two secretaries of defense, two secretaries of state and two attorneys general — not to mention the scores of other officials who have filled cabinet posts and senior administration positions, in both official and acting capacities. So it is a minor miracle that Mnuchin, a 57-year-old former hedge-fund manager and Goldman Sachs executive with no prior government experience, persists as Trump’s one and only Treasury secretary. “It’s pretty amazing when you think about it,” Stephen Moore, a conservative economist and a member of Trump’s economic task force, says. “Mnuchin is sort of the last man standing.”

ImagePresident Trump, with Steven Mnuchin and Vice President Mike Pence, talking to reporters at the Capitol in March after a meeting with Senate Republicans about the coronavirus and the state of the economy.
Credit…Samuel Corum/Getty Images

His longevity seems to stem, in part, from his willingness to suck up to his boss. Lawrence Summers, who served as Treasury secretary under Bill Clinton, has called Mnuchin perhaps “the greatest sycophant in cabinet history.” In public, he has relentlessly and at times preposterously flattered Trump, hailing the “perfect genes” that make him “unbelievably healthy” (despite his lack of exercise and love of fast food) and praising him (on the occasion of his calling Maxine Waters, the congresswoman from Los Angeles, a “very low-IQ individual”) for his knack for coming up with “funny names” for his foes. Privately, according to people who have observed his interactions with Trump, he treats the president with the sort of deference and servility more typical of a staff member than a cabinet member. A Trump economic adviser told me, “I think obsequious is a good term to describe him.”

In spite of this, Mnuchin’s position as a fundamentally normal creature of the financial sector in a fundamentally abnormal administration did occasionally give rise, in the early days of Trump’s presidency, to speculation about the depth of his fealty. In October 2017, BuzzFeed reported that Secretary of State Rex Tillerson, Secretary of Defense James Mattis and Mnuchin had a “suicide pact” whereby all three agreed they would quit the administration if Trump fired one of them; talk in Washington of the “suicide pact” soon grew to include John Kelly, the White House chief of staff. Tillerson, Mattis and Kelly all had been fired or resigned from the administration by early last year and have to varying degrees criticized Trump since then — but not Mnuchin.

“I have no idea whether that pact existed between Kelly and Mattis and Tillerson or not,” he told me in one of several conversations we’ve had over the last four months. “But anybody who thought that my loyalty was to the three of them and not to the president was just the most ridiculous thing I ever heard of.”

We were sitting in Mnuchin’s office suite in the Treasury Department, which, in addition to assorted Alexander Hamilton paraphernalia — a scowling portrait, a set of silverware he once used — is decorated with framed newspaper and magazine clippings scribbled with personal notes from Trump. “Steve M NOT BAD — DO GREAT THINGS” reads one message, written on a 2017 Washington Examiner article about financial deregulation, above Trump’s seismograph-like signature. “Steve — GREAT JOB!” reads another on a New York Times front page from the morning after Trump’s first State of the Union address. And on a Wall Street Journal article about Trump’s selection of Mnuchin in November 2016, headlined “Trump Picks Ex-Banker for Treasury,” the message: “To Steven — Great going — I AM VERY PROUD OF YOU!”

Mnuchin has jet-black hair, wears black-framed glasses and maintains a demeanor of such perpetual awkwardness that he sometimes calls to mind an alien in a science-fiction movie trying to impersonate a human. The third-wealthiest member of the richest presidential cabinet in American history, he flaunts his affluence in a subtle but unmistakable manner, switching out $30,000 wristwatches the way someone of regular means might rotate neckties. In his first months in office, he seemed bent on living out every #Resistance caricature of the new administration. He traveled with his new (and much younger, third) wife, Louise Linton, to the U.S. Bullion Depository at Fort Knox in Kentucky and ordered the vaults opened so that he could heft some of the 27.5-pound gold bars. At the Bureau of Engraving and Printing, he and Linton posed for photographs smiling smugly and holding a sheet of newly minted, uncut dollar bills bearing Mnuchin’s signature. Informed by Fox News’s Chris Wallace that he was being likened to a James Bond villain on the internet, Mnuchin replied, “I guess I should take that as a compliment.”

Credit…Jacquelyn Martin/Associated Press

In the twilight of Trump’s first term, however, even many of Mnuchin’s onetime critics concede that he may be the most effective — and, at times, indispensable — member of the Trump administration. Mark Warner, a Democratic Ub.S. senator from Virginia, says that after working with Mnuchin on the CARES Act, he now regrets voting against his confirmation in 2017. “I think history will treat Secretary Mnuchin well,” Warner told me. Mnuchin is one of the few senior Trump-administration officials who is held in high regard by international organizations and American allies. “He’s a good broker,” Christine Lagarde, who was the managing director of the International Monetary Fund and is now the president of the European Central Bank, says. Bruno Le Maire, the French finance minister, credits Mnuchin with keeping relations between the United States and Europe from being even worse than they currently are. “He’s always trying to find ways out, compromises, agreements,” Le Maire says. His continued presence in Trump’s cabinet is viewed by some as a saving grace. Barney Frank, the former Massachusetts Democratic congressman and chairman of the House Financial Services Committee, says, “Mnuchin can make the ‘Après moi, le déluge’ argument better than anybody in the administration.”

All of which makes Mnuchin one of the most unusual — and paradoxical — figures of the Trump era. An oft-told story of the last four years is that of the men and women of intelligence and principle who, despite their misgivings about Trump, joined his administration with the goal of protecting the country from disaster and then found themselves complicit in policies and actions they abhorred. Mnuchin, by contrast, doesn’t believe the country needs protecting from Trump and wears his complicity on his sleeve. Nonetheless, he has succeeded, at least some of the time, in this country-protecting mission at which so many of the self-anointed bulwarks failed. “Mnuchin does seem to genuinely like Donald Trump, and yet he’s an objectively high-functioning person,” a former senior administration official, who worked closely with Mnuchin, says. “He’s probably the only person in the administration who’s both competent and completely loyal to the president.”

Credit…Uwe Anspach/DPA, via Associated Press

Like Trump, Mnuchin came from New York, and from money. His grandfather Leon was a successful New York lawyer and a founder of the East Hampton Yacht Club. His father, Robert, was a partner at Goldman Sachs and a prominent art collector. Growing up on the Upper East Side, he captained the tennis team at the posh Riverdale Country School and tagged along with his father to Xavier Fourcade’s gallery to inspect the latest paintings from Willem de Kooning. He went to Yale as his father had, majoring in economics and serving as the publisher of The Yale Daily News — part of a “sleek crew in Lacoste shirts” who worked on the newspaper’s business side, according to a 2017 article in the Yale publication The New Journal. During his senior year, he was tapped to join Skull and Bones. Membership in the secret society is supposed, of course, to be secret, but Mnuchin’s classmates could not help noticing the red Porsche with the New York license plates “MNUCH” frequently parked in front of the Skull and Bones clubhouse. (Through a spokeswoman, Mnuchin declined to comment on whether he was a member of Skull and Bones but denies parking in front of the clubhouse, saying he always kept his car in a garage.)

When Mnuchin graduated from Yale in 1985, he joined Goldman Sachs. His father was a voluble and swaggering man and a beloved figure in the firm’s equities division, known as Coach to the floor traders. Steven, quiet and cerebral, was drawn to Goldman’s fixed-income division, where he focused on mortgage-backed securities. He excelled there, making up in numeracy what he lacked in charisma. “Fixed income tends to be very mathematical and complex,” Lloyd Blankfein, the former Goldman Sachs chief executive, says. “Within that constellation, I would say that Steven’s area was probably the most complex and the most analytic.” In 1994, Mnuchin became a partner; five years later, the firm’s chief executive at the time, Hank Paulson, put him on the management committee. Paulson later made him chief information officer.

Goldman Sachs has long fancied itself as the most public-service-oriented bank on Wall Street. Its alums have populated the upper echelons of Democratic and Republican administrations alike, serving as White House chiefs of staff, Office of Management and Budget directors, Federal Reserve Bank presidents and Treasury secretaries, earning the firm the nickname — from both admirers and critics — of “Government Sachs.” Executives are tacitly encouraged, if not expected, to become big-dollar political fund-raisers and think-tank supporters in order to cultivate relationships with politicians, who, in turn, will come to rely on them for policy advice.

But Mnuchin had little interest in policy or politics. “It wasn’t on my radar screen back then,” he says. What most interested him — to an unusual degree, even on Wall Street — was making money. In 2002, he left Goldman Sachs (with, reportedly, $46 million in company stock) for the riskier but even more lucrative world of hedge funds, eventually starting his own. He called it Dune Capital, named after a favorite spot near his Hamptons beach house. Its early investors included George Soros, who contributed $500 million in seed money. In 2006, a Dune affiliate formed a film-financing partnership with 20th Century Fox, making Mnuchin a Hollywood producer — of “Borat” and “Avatar,” among others — but one with no artistic pretenses. “The money was there and there was no [expletive],” Oliver Stone, whose 2010 movie, “Wall Street: Money Never Sleeps,” was financed in part by Dune, recalls. “He was a very courteous man and polite with no strong opinions either way.” Even though the film concerned the subject closest to Mnuchin’s heart, Stone says that Mnuchin never offered notes. When I asked Mnuchin about his Hollywood experience, he simply replied, “The film business was fun when it made money.”

Mnuchin’s masterpiece, the deal that launched him into a new stratum of wealth, came in 2008. The California bank IndyMac, which had been one of the nation’s largest mortgage lenders, collapsed in July of that year, a casualty of the burst housing bubble. The Federal Deposit Insurance Corporation seized IndyMac and sought to sell it, but no buyers were forthcoming. Mnuchin put together a consortium of billionaire investors — including Soros, the software magnate Michael Dell, the private-equity investor Christopher Flowers and the hedge-fund manager John Paulson — which offered the F.D.I.C. $1.6 billion for IndyMac’s 30-some branches and $158 billion mortgage-servicing portfolio; in exchange, the F.D.I.C. required the new owners to modify, rather than foreclose, on as many mortgages as possible and agreed to underwrite most of the losses on the mortgages they covered.

Although he owned by far the smallest share (and had the smallest net worth) of the consortium, Mnuchin took on the job of bank chief executive. He moved his wife at the time and three children from New York to California, buying a 20,000-square-foot mansion in Bel Air. Within a year, OneWest, as he had rebranded IndyMac, was profitable, and it soon grew into one of the largest banks in Southern California. In August 2015, Mnuchin and his partners sold the bank for $3.4 billion. Today, Mnuchin’s net worth is estimated to be $400 million. “You know in diving when they judge dives and there’s the level of difficulty of the dive and how you perform in the dive?” Mnuchin says of his OneWest experience. “It was an extraordinarily difficult deal to pull off.”

Credit…Joshua Rashaad McFadden for The New York Times

It also brought Mnuchin a level of infamy. During his six years as its chief executive, OneWest foreclosed on more than 36,000 families in California. During roughly the same period, one of the bank’s subsidiaries, Financial Freedom, was responsible for 39 percent of all foreclosures on federal reverse mortgages despite serving only an estimated 17 percent of the market. Mnuchin argues that OneWest never originated any of the loans and the foreclosures were regrettable but unavoidable. Prosecutors in the California attorney general’s office felt otherwise; they conducted a yearlong investigation into OneWest’s foreclosure practices and in 2013 wrote a 22-page memo, later obtained by The Intercept, in which they reported that they had “uncovered evidence suggestive of widespread misconduct” and recommended that the attorney general file a civil-enforcement action against the bank, seeking millions of dollars in penalties.

But the attorney general, Kamala Harris, declined to prosecute the case. “We went and we followed the facts and the evidence, and it’s a decision my office made,” Harris later explained. Nathan Barankin, Harris’s chief of staff at the time, says Harris herself was not involved in the decision but that senior lawyers in her office concluded that OneWest had “a nearly bulletproof defense” against state enforcement. In 2016, Mnuchin made a contribution of $2,000 to Harris’s U.S. Senate campaign.

That spring, when Trump was looking for someone to lead the fund-raising for his presidential campaign, he turned to Mnuchin. They had been in touch intermittently since they were introduced by mutual friends in 2003, and Dune had invested in two Trump real estate projects. (Trump, being Trump, sued Dune and other lenders over one project, the Trump International Hotel and Tower in Chicago; the lenders countersued, and the litigation was settled in 2010.) “We needed someone who had stature, integrity and a Wall Street background — and who Trump would actually trust — because that was the weakest part of Trump’s access to fund-raising,” says Tom Barrack, an investor and Trump confidant who advised the campaign.

Mnuchin, who divorced in 2014 and sold his stake in OneWest in 2015, happened to be looking for something to do. In April 2016, he flew from Los Angeles to Indianapolis, where the candidate was holding a campaign event at the Indiana State Fairgrounds. Mnuchin had never attended a political rally. Riding from the airport to the fairgrounds with Trump, he recalls, “was like showing up with Mick Jagger to a rock concert.” Standing backstage, he watched as Trump held forth about his plans to build a border wall and waterboard terror suspects, pausing only to egg on security as they removed protesters. “I knew he was going to be the next president of the United States,” Mnuchin says. “I had just never seen anything like that in my life.” He agreed to join the campaign as finance chairman.

He had no previous political fund-raising experience, but he threw himself into it with the same single-minded focus on making money he had brought to Hollywood and mortgage lending. Mnuchin fought with other campaign officials, including the campaign chairman, Stephen K. Bannon, to put more fund-raisers on Trump’s schedule. And he cajoled Trump to make calls to people who he believed would make substantial contributions if they heard from the candidate himself. When Trump attacked Khizr Khan, the father of a soldier who was killed in Iraq and who denounced Trump during the Democratic convention, Mnuchin told Trump that it was spooking donors. “I saw Steven say to the president, ‘Just stop, this is not productive,’” the former New Jersey governor Chris Christie, who was advising Trump’s campaign, recalls. “Steven was completely focused on winning.”

Trump also put Mnuchin on the campaign’s economic advisory team. This initially alarmed the supply-side warriors on the team, like Larry Kudlow and Stephen Moore, who had no prior history with Mnuchin; Kudlow feared he might even be a Democrat. But at the first team meeting that Mnuchin attended, he immediately allayed their concerns by spouting supply-side dogma.

Kudlow, who’s now the director of Trump’s National Economic Council, came to believe that whether Mnuchin was a Democrat or a Republican was irrelevant. “He’s a Trump guy,” Kudlow says. “He gave himself to Trump.” And that meant that when Trump won in November, the type of top government job that Mnuchin’s old Goldman colleagues spent decades of fund-raising and networking to position themselves for was now, after six months of work, his for the asking. Early in the campaign, he decided the job he wanted was Treasury secretary.

Credit…Mandel Ngan/Agence France-Presse, via Getty Images

When Mnuchin was formally nominated, he reached out to Hank Paulson, his old boss at Goldman Sachs, who served as George W. Bush’s Treasury secretary during the 2007-2008 financial crisis. Paulson was a die-hard Never Trumper, but he thought highly of Mnuchin, and he was pleased, and reassured, by Trump’s selection of him. “I told Steven that Treasury secretary is a very interesting job in the sense that a lot of people think it’s a powerful position,” Paulson recalls. And it was, but only if you remembered one rule: “All the power derives from the president. And the only way for the Treasury secretary to have power is to have the confidence of the president.”

Mnuchin appears to have taken the advice to heart. In August 2017, he was standing behind Trump in the lobby of Trump Tower when the president, responding to a question from a reporter about violence at a white-supremacist rally in Charlottesville, Va., where an anti-racism protester was killed days before, said there were “very fine people on both sides” of the episode. When nearly 300 members of Mnuchin’s Yale class called on him to resign over the remarks, Mnuchin, who is Jewish, stood emphatically by Trump, writing that “the president in no way, shape or form believes that neo-Nazi and other hate groups who endorse violence are equivalent to groups that demonstrate in peaceful and lawful ways.” Even privately, he refused to criticize Trump, according to several friends who spoke with him at the time. “Steven has never indicated to me displeasure with the president on a single thing,” Paulson, who talks to Mnuchin frequently, says. “It speaks to discipline, perhaps to loyalty, and is critically important to his effectiveness.”

Indeed, at times, Mnuchin has used his acquiescence shrewdly. A conventional free trader for most of his career, in office he has mostly embraced Trump’s China hawkishness. But at the G20 summit in Buenos Aires in 2018, Mnuchin also helped persuade Trump to abandon a plan to increase tariffs and instead agree to a trade truce with China, paving the way for a tentative trade agreement in January. Robert Lighthizer, Trump’s U.S. trade representative, himself a China hawk, goes so far as to argue that Mnuchin is one of the three greatest Treasury secretaries in American history. “You’ve obviously got Hamilton,” Lighthizer says, “and you’ve got Gallatin,” referring to Albert Gallatin, who served as Treasury secretary under Thomas Jefferson and James Madison. “Who else do you have?”

But in the course of pleasing his boss, Mnuchin has also crossed lines that past Treasury secretaries have tended to avoid. When the administration proposed a $1.5 trillion tax cut in September 2017, Mnuchin publicly promised that “not only will this tax plan pay for itself, but it will pay down debt.” This was a contentious claim, and Mnuchin pledged that career economists in the department’s Office of Tax Policy were “working around the clock” on a detailed analysis that would support it. At the same time, the department removed from its website a 2012 Office of Tax Policy study that contradicted Mnuchin’s assertion that corporate tax cuts would most benefit workers.

The pressure on Mnuchin to substantiate his claim increased after Congress’s Joint Committee on Taxation concluded in late November that the legislation, while growing the economy somewhat, would still cost about $1 trillion. But, ultimately, the Office of Tax Policy failed to produce the promised detailed report. Instead, the Treasury Department in early December released a one-page analysis of the nearly 500-page bill that suggested the law would be revenue-neutral, assuming the economy grows significantly faster — for reasons unrelated to the legislation — than any independent analysis of the bill had projected.

After the bill passed the House and Senate, the Congressional Budget Office released its analysis of the new law, projecting that it would lead to a $1.9-trillion increase in the deficit by 2028. Mnuchin, however, continued to insist that the tax cuts would pay for themselves, only recently acknowledging at last that they won’t. “Unfortunately,” he told me in July, “we ran into corona.”

As late as mid-March, when Anthony Fauci, the federal government’s top infectious-disease official, was considering calling for a nationwide lockdown, Mnuchin was encouraging Americans to travel on airplanes. “If I weren’t so busy working, I would be going home to Los Angeles, and I would be perfectly comfortable getting on a commercial plane this weekend,” he said on March 13. Nevertheless, around the same time, he began pressing Trump and Republicans in Congress, both of whom were wary of doing anything to spook the stock market, to take significant steps to combat the pandemic’s economic impact.

Trump initially pushed a recovery plan whose centerpiece was a payroll-tax cut. Mnuchin, according to administration officials, prevailed upon Trump to drop the tax cut and go for a giant stimulus package. “If we were going into war, you wouldn’t say, ‘How much is it going to cost to win?’” Mnuchin says. “You’d say, ‘We’re going to win, and we’re going to do whatever it takes.’”

Some Senate Republicans balked at the initial $1 trillion price tag, which would eventually climb to $2.2 trillion. At a Senate Republican lunch, Mnuchin tried to scare them straight by telling them that if Congress didn’t pass the stimulus, unemployment could go as high as 25 percent. “It was just math,” Mnuchin says.

One of Mnuchin’s two most reliable partners in the push for coronavirus relief was Nancy Pelosi, with whom he had successfully negotiated a two-year debt ceiling and budget deal in 2019. “Mnuchin is factual and straightforward and wants to get something done and isn’t partisan or ideological,” says a senior Democratic House aide. In the course of putting together the economic rescue package, Mnuchin and Pelosi would speak on the phone as many as 18 times a day. Mnuchin, meanwhile, set up shop in a Senate office that once belonged to Lyndon Johnson as he hammered out the key provisions that would make up the CARES Act. “He’s very smart and he works hard,” Kudlow says. Senator Mike Crapo, an Idaho Republican, says, “He was the one doing a lot of the negotiating between the House and the Senate and the White House.”

Mnuchin’s other key ally in the economic-relief effort was Jay Powell, the Federal Reserve chairman. Trump nominated Powell in November 2017, largely at Mnuchin’s urging. According to the Trump economic adviser, Mnuchin was most concerned about the Fed post going to Gary Cohn, the head of the National Economic Council at the time and Mnuchin’s constant rival for Trump’s ear, who eventually fell out of contention on account of his criticism of the president’s Charlottesville comments. In office, Powell almost immediately began raising interest rates — a decision Mnuchin agreed with but one that incensed Trump.

For more than a year, according to two people familiar with the situation, Trump would routinely scream obscenities at Mnuchin for saddling him with Powell. (The White House referred questions for this story to the Treasury Department.) “It became a kind of ritual,” a White House official says of the tongue-lashings. During one meeting in early 2019, when Mnuchin tried to raise the matter of two open seats on the Fed’s board of governors, Trump turned to Kudlow and barked, “You pick the next two guys!”

But Powell’s performance during the initial stages of the pandemic appeared to restore Trump’s faith. As the economy began deflating, Powell cut interest rates to zero, and he and Mnuchin worked to stand up the Fed’s lending facilities in order to pump money into the U.S. banking system, making short-term loans available to newly desperate companies. After the CARES Act passed, Mnuchin was in charge of administering $500 billion in recovery funds. For about a month, he phoned in to the meetings of the Coronavirus Task Force, of which he was now a part, rather than attend them in person in the White House Situation Room, for fear of catching the virus. Other administration officials teased Mnuchin for his caution, but he didn’t care. “He was the economy,” a senior Treasury Department official says, “and if he got sick, it was over.”

Trump was, initially at least, happy with the results. In March, shortly after the passage of the CARES Act, he hailed Mnuchin at a White House press briefing as a “great secretary of the Treasury” and a “fantastic guy.” (Privately, he told Mnuchin and White House officials that he was awarding Powell his “most improved player” award.) Others, with more credibility, were even more effusive. Hank Paulson says that in March “I thought we’d have another financial panic. And the CARES Act took that immediately off the table. I’m proud of our government in that instance. There’s very few things today I can say I’m proud of, but I’m proud of that, thank goodness.”

Credit…Toni L. Sandys/Abaca/Sipa USA, via Associated Press

‘Steven is a consensus builder, a conciliator at his core,” Chris Christie told me. He meant it as a compliment, but it is not far off from one of the more pointed critiques of Mnuchin. In his economy-rescuing efforts, critics charge, he has merely done what any rational and competent member of his Wall Street cohort would have done to protect its interests — and only amid the relentless irrationality and incompetence of the Trump administration does that look like extraordinary leadership. “Too much of what Mnuchin says,” a prominent Democratic economic official complains, “sounds like the general consensus after two drinks at an East Hampton barbecue.”

When I recited that line to Mnuchin, it was the first — and only — time I saw him lose his composure. “I 100 percent disagree,” he said. We were having lunch in the private dining room off his office, and he momentarily put aside his chicken Caesar salad to defend himself. Yes, he allowed, he’d spent his life in the cosseted confines of Yale and Park Avenue and Bel Air. But he’d gained an understanding of the needs of small business owners and workers when he traveled the country with Trump during the 2016 campaign, he insisted. “I went to Flint, Mich., with him,” Mnuchin said. “That was a pretty eye-opening experience.”

“I think most of the East Hampton barbecue crowd would not have done most of what we did,” he went on. “The unemployment insurance, the P.P.P., the direct payments — my guess is that crowd would have said, ‘Oh, you don’t need to do all that.’”

Mnuchin and his critics may both be right, in a way. The CARES Act saw to the interests of the investor class so successfully that there has been little interest among Republicans in renewing the provisions that the Hamptons set was indifferent to the first time around. The bill had passed the Senate 96-0 and by a voice vote in the House, but as the economic peril receded, congressional Republicans and the president began to experience buyers’ remorse over its price tag. “I think that the conservative base is tired of spending money we don’t have,” the Kentucky senator Rand Paul said in July.

By midsummer, the White House had grudgingly acceded to the need to pass a new stimulus package. But when Mnuchin was dispatched to the Hill to negotiate with Pelosi and Schumer in late July, the White House chief of staff, Mark Meadows, went with him. Congressional Republicans hoped Meadows, an archconservative former North Carolina congressman, would check Mnuchin’s more profligate tendencies. “They just felt that Steven was this Wall Street Democrat,” a White House official explains, “and they really needed to have a conservative in there.”

According to the official, Meadows was there to hold the ceiling of the package at $1 trillion and to make sure Mnuchin delivered that message to Pelosi. “The thing about the president is, he’s not that crazy about a deal,” the official told me in early September. “The roof isn’t caving in like it was in March, and this deal’s blander and less sexy.”

Meadows proved a disruptive presence at the negotiating table. At one point, Pelosi suspected him of recording the negotiations and leaking quotes to Politico, so she forbid participants to bring cellphones into the speaker’s office. Meadows insisted that he was expecting a call from Trump and refused to turn over his phone. They were at an impasse until Mnuchin stepped in and, as he put it, “negotiated a peace treaty,” offering to have one of his aides take Meadows’s phone and wait outside the office to field the call.

“Pelosi believes Mnuchin wants an agreement,” the senior Democratic House aide told me in September, “and that he is much more eager than Meadows to get something done.” Mnuchin insists that Meadows is not the problem. “At times he was a little bit of the bad cop,” he told me, “and there was a time when I was tough on something.” He noted with pride that, on that occasion, Schumer complained to him: “You’re supposed to be a good influence on Meadows, he’s not supposed to be a bad influence on you.” (Meadows did not respond to requests for comment.)

In late September, after he and Pelosi negotiated a deal to avoid a government shutdown, Mnuchin said he intended to keep talking to the speaker about an economic relief package. It is tempting to see his attempts to secure a second stimulus as the last, greatest test of his ability to balance loyalty and competence in an administration where the two qualities seem doomed to come into conflict. A stimulus deal, after all, would not only help the economy but also Trump’s re-election chances, which is why Pelosi is demanding that any stimulus include her own wish list of priorities. But the president has become so blinkered to the reality of the economy’s perilous state and so intent on punishing his enemies that he has not been able to bring himself to make that deal. Instead, he has sat on the sidelines or, when he has engaged, offered conflicting demands, first telling Mnuchin and Meadows to hold the line on spending, then, in a mid-September tweet, writing: “Go for the much higher numbers, Republicans, it all comes back to the USA anyway (one way or another!).”

When I told Mnuchin that I found Trump’s tweet confusing and asked whether he interpreted it as new instructions to accede to Democratic demands for a bigger stimulus, he refused to answer my question beyond saying that the tweet spoke for itself. With competence and loyalty coming into conflict, he would sacrifice the former for the latter. “One of the reasons I’ve been successful in this job,” he had told me in an earlier conversation, is that “I speak to the president probably pretty much every day, sometimes more than one time a day. And I don’t do anything without making sure he’s on board with what we’re doing.”

The fundamental question for anyone assessing Mnuchin’s tenure will be whether such obeisance ultimately served some nobler purpose — if by doing what he needed to do to stay in his job, he was able to accomplish some good, or at least prevent something worse. “There’s going to be people that will castigate Steven for being one of Trump’s toadies and acolytes,” Anthony Scaramucci, who served briefly as Trump’s White House communications director and is now a vociferous Trump critic, says. “And then there’s going to be a group of people, myself among them, that are going to say, ‘Thank God we had somebody standing there that was a rational person and was making decisions less concerned about their own personal legacy.’”


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The Trump campaign celebrated a growth record that Democrats downplayed.



The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.


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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.



The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.


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Ant Challenged Beijing and Prospered. Now It Toes the Line.



As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.


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