Trump’s Treasury pick boosted an investment with TV talk

WASHINGTON – President-elect Donald Trump’s choice to become Treasury secretary, Steven Mnuchin, will sell 43 assets to avoid conflicts of interest in office, according to new filings made public Wednesday by the U.S. Office of Government Ethics. Statements Mnuchin made in a November television interview may already have boosted the value of one of them.

Mnuchin, an investment banker and financier with a disclosed net worth of at least $166 million, holds investments of between $1 million and $2 million in the Paulson Advantage Fund, a hedge fund managed by fellow Trump supporter John Paulson. Among the fund’s most prominent bets is the common stock of Fannie Mae and Freddie Mac, government-backed housing guarantors that were effectively nationalized as part of a $187 billion bailout during the financial crisis. Speculators such as Paulson have bet heavily that the mortgage giants will be reprivatized.

Mnuchin’s exposure to the companies is small in the broader context of his net worth. But Mnuchin — who as Treasury secretary would play a large role in any such privatization process — sparked a rally in the stocks’ price when he told Fox Business News on Nov. 30 that privatizing the companies would be a priority for the Trump administration.

“It’s right up there in the top 10 list of things we’re going to get done,” he said.

The companies’ respective stock prices rose more than 40 per cent each that day. A Bloomberg article credited the companies’ stocks for a 9 per cent monthly gain in the value of Paulson’s holdings.

The Associated Press asked Mnuchin spokesman Barney Keller whether Mnuchin had anticipated the effect of his comments on Fannie and Freddie stock. In response, Keller sent a link to Mnuchin’s ethics agreement outlining his intended divestitures.

Mnuchin pledged to sell a lengthy list of assets, including Paulson’s fund, within 90 days. He also submitted a declaration that he will not participate in any matter that would have “a direct and predictable effect” on the value of his holdings.

Aside from the Paulson funds, Mnuchin’s holdings reflect his time in investment banking, the entertainment business and private equity. His single largest holding — worth at least $50 million — is stock in CIT Group, which bought out OneWest Bank, a company he once led. Other investments include between $25 million and $50 million in a Goldman Sachs Treasury bond fund, an agreement with Warner Bros. worth at least $1 million and a stake in a Willem de Kooning oil painting worth between $5 million and $25 million.

Despite Mnuchin’s substantial fortune, he would be neither the richest Treasury secretary in recent history nor the wealthiest member of Trump’s Cabinet. George W. Bush’s choice, former Goldman Sachs chief executive Hank Paulson, sold more than $500 million in Goldman stock following his confirmation. Trump’s choices for the Education and Commerce departments, Betsy DeVos and Wilbur Ross, are each worth billions.

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Associated Press writer Chad Day contributed to this report.