Steve Mnuchin opens up his wallet

After Donald Trump finished his time as president, his Treasury secretary Steven Mnuchin followed the usual path taken by former Cabinet members: stepping out of the public eye for a while. Once they start feeling restless and think they're fading into the background, they often begin doing TV interviews, participating in fireside chats, joining corporate boards, and even becoming adjunct professors.

They usually don't make risky moves like throwing a $1 billion Hail Mary to a bank that's struggling, similar to the dog in the famous "this is fine" meme. And it's even more surprising when just a week later, they announce their interest in buying TikTok.

But Mnuchin seems to be making waves once again.

Mnuchin reborn

Nine months after President Joe Biden was inaugurated and Mnuchin left the Treasury Building, Mnuchin formed a new private equity group, Liberty Strategic Capital.

His company specializes in investing in innovative technology companies around the world.

Recently, one of the notable investments his company made was acquiring a minority share in Lionsgate, the renowned production studio responsible for popular shows like “Nurse Jackie” and “Mad Men.”

Mnuchin's side hustle of financing Hollywood productions like "Avatar" and "Batman v. Superman: Dawn of Justice" was in line with his personal brand, even though it differed from his firm's typical investments. Sandwiched between his time in the Trump administration and his $46 million stint at Goldman Sachs, this venture added an interesting twist to his portfolio.

Apart from Mnuchin's Hollywood investments, the firm primarily focused on cybersecurity investments, with a few other investments scattered throughout.

Mnuchin's private equity firm has been very busy since last Wednesday, working on a deal involving New York Community Bank.

Although his firm didn't make the entire $1 billion investment, Liberty contributed $450 million, which was the biggest portion. The rest of the investment came from a mix of other private equity firms and a group of "other institutional investors and certain members" of NYCB, as stated in a recent announcement by the regional lender.

Steven Mnuchin's private equity firm made a $450 million investment in New York Community Bank last week. Mnuchin now sits on the bank's board.

Steven Mnuchin's private equity firm made a $450 million investment in New York Community Bank last week. Mnuchin now sits on the bank's board.

Spencer Platt/Getty Images

Mnuchin didn’t give them (or anyone) the moola out of the goodness of his heart.

It was quite surprising to see his name resurface, but it wasn't really out of character for him to make a move in the banking industry. Mnuchin was part of the group that purchased IndyMac, a struggling subprime lender, for a bargain in 2009. This happened shortly after the Federal Deposit Insurance Corporation took control of the bank due to a surge in deposit withdrawals.

After the acquisition, Mnuchin rebranded IndyMac as OneWest. The bank faced scrutiny from the government for its foreclosure practices and had to pay substantial fines to compensate affected customers. Despite these challenges, Mnuchin managed to sell OneWest to CIT Group for a whopping $3.4 billion in 2014. Surprisingly, he left CIT less than two years later but received a generous severance package of $10.9 million.

The TikTok plot thickens

As if the NYCB deal wasn’t enough to keep him busy, Mnuchin said Thursday he’s assembling a team of investors to make a bid to buy TikTok.

Just one day after the House approved a measure to ban the Chinese-owned social media giant TikTok or require a sale to a US-operated owner, Treasury Secretary Mnuchin announced his plans to purchase the popular platform.

During an interview on CNBC, Mnuchin expressed his interest in acquiring TikTok, stating, "It's a great business and I'm going to put together a group to buy TikTok." The anchors on the show were visibly surprised by his unexpected announcement. Andrew Ross Sorkin, an anchor on CNBC's "Squawk Box," even interrupted to clarify, "You're trying to buy TikTok?"

Mnuchin mentioned that despite TikTok possibly not making a profit, it holds significant value. He also stated that he plans to offer current US investors the opportunity to retain their shares in TikTok, with the condition that no single entity will have more than 10% control. Mnuchin did not disclose any specific names of individuals involved in the team he is assembling.

"There is no chance that a US company would be allowed to own something like this in China," he mentioned. During his time in the administration, he observed that having TikTok on your phone enables it to "gather a large amount of data." (While security experts have expressed worries about TikTok being owned by China, they have not definitively stated that China is actively gathering data from TikTok users. TikTok refutes claims that it shares customer information with China.)

The US House of Representatives is set to vote on legislation that would ban TikTok, a major challenge to one of the world's most popular social media apps used by 170 million Americans, unless it part ways with its Chinese parent company, ByteDance.

The US House of Representatives is planning to vote on a bill that could prohibit TikTok, a widely used social media platform with 170 million American users, unless it cuts ties with its Chinese owner, ByteDance.

However, there is a significant limitation for those interested in acquiring TikTok.

The parent company of TikTok, ByteDance, might not be permitted to be sold to any foreign company due to regulations implemented by the Chinese government in 2020. TikTok is considered a sensitive technology by the Chinese government, and they have made it clear that they would object to any sale that involves transferring ownership to a foreign entity.

Mnuchin mentioned that he is working on a solution for the Chinese government to approve the sale of TikTok without compromising critical technology. However, it is unclear what exactly he meant by that. Both Mnuchin and TikTok have not provided any comments in response to CNN's requests.

The TikTok bill that was passed by the House is now on its way to the Senate. However, it is expected to face challenges in getting approved in the Senate. President Joe Biden has expressed his support for the bill and mentioned that he would sign it into law if it gets passed in the Senate.

In the event that the bill is approved and becomes law, there is a possibility that it may be challenged in court. For example, Montana's attempt to ban the app was halted by a federal judge last year. This indicates that any potential TikTok ban could be subject to legal battles.

If Mnuchin & Co ever end up owning TikTok, the app would still have elements of foreign control, even if China hands over the keys to them.

Mnuchin, the founder and managing partner of Liberty Strategic Capital, received $1 billion in seed money from a Saudi sovereign wealth fund controlled by Crown Prince Mohammed bin Salman. This fund reportedly covers a significant portion of his firm's tab, as reported by the New York Times in 2022.

The Saudi Public Investment Fund, which holds a substantial stake in companies like Meta (TikTok's rival) and various major global brands, does not currently have ownership in ByteDance.

Liberty Strategic Capital didn’t respond to multiple requests for comment.

Editor's P/S:

Steven Mnuchin's recent ventures, including his investments in Lionsgate and New York Community Bank, as well as his interest in acquiring TikTok, have sparked attention. Mnuchin's move into the banking industry with the NYCB deal is not surprising given his past experience with IndyMac and OneWest. However, his interest in TikTok, a social media platform with significant security concerns, raises questions about his motivations.

Mnuchin's potential purchase of TikTok is particularly intriguing, especially considering the Chinese government's regulations and the ongoing debate about TikTok's data privacy practices. It is unclear how Mnuchin plans to navigate these obstacles, including obtaining Chinese approval and addressing security concerns. Additionally, the involvement of a Saudi sovereign wealth fund as a major investor in Mnuchin's firm raises questions about potential foreign influence and the implications for TikTok's future ownership and operations. regulations that prohibit the sale of TikTok to a foreign company.

Mnuchin's plans for TikTok are ambitious, and it remains to be seen whether he will be successful. However, his track record in the business world suggests that he is a formidable opponent. If he is able to acquire TikTok, it would be a major coup for his private equity firm and a significant development in the ongoing battle between the US and China over technology.