With stocks down sharply and the S&P 500 index reportedly on pace for its biggest percentage drop in December since the Great Depression, Treasury Secretary Steven Mnuchin called the heads of the six top U.S. banks and released a statement saying that there was “ample liquidity for investing” despite the government shutdown.
According to the statement, Mnuchin talked with the chief executives of Citi, Bank of America, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo, as he joined with President Trump in trying to ease concerns on Wall Street amid all the doomsayers, the Daily Mail reported.
Today I convened individual calls with the CEOs of the nation’s six largest banks. See attached statement. pic.twitter.com/YzuSamMyeT
— Steven Mnuchin (@stevenmnuchin1) December 23, 2018
The Treasury also revealed plans to convene a group called the “Plunge Protection Team,” which was also convened during the 2009 financial crisis — included in the group are officials from the Federal Reserve and the Securities and Exchange Commission, according to the Daily Mail.
The group is part of the president’s Working Group on Financial Markets, which will come together Monday on a call with Mnuchin.
Amid reports that Trump was considering firing Federal Reserve Chairman Jerome Powell, after a decision Wednesday to increase interest rates, Mnuchin went online to quell these rumors and to say that he disagreed with the increase, “especially in light of my major trade negotiations which are ongoing.”
(1/2) I have spoken with the President @realDonaldTrump and he said “I totally disagree with Fed policy. I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute terrible thing to do at this time,…
— Steven Mnuchin (@stevenmnuchin1) December 22, 2018
(2/2) especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.”
— Steven Mnuchin (@stevenmnuchin1) December 22, 2018
The partial government shutdown is not helping matters, and the increase in interest rates, which the president has been critical of, could slow economic growth.
While the market’s open on Monday may prove to be interesting, one thing is certain, the statement from Mnuchin has prompted a sea of questions from those who follow the market.
Here’s a sampling from Twitter:
I’m confused. In mid-Oct. Mnuchin said the drop in stocks was a “natural correction.” Today, on a Sunday, he held calls with the CEO’s of the six biggest banks to ask about their businesses. Does Mr. Mnuchin still think this is simple correction or is he worried about more?
— Scott Wapner (@ScottWapnerCNBC) December 23, 2018
Did I miss the part where liquidity concerns re: the six largest U.S. banks were a well known thing?
— Phil Mattingly (@Phil_Mattingly) December 23, 2018
I can’t tell if Mnuchin just went for a scary non-sequitur or raised a very real fear to the fore https://t.co/nl9wm0q14H
— Ben Brody (@BenBrodyDC) December 23, 2018
So I get that, OK this is Mnuchin’s first time at the helm, and yeah, his boss.
Mnuchin does have aides, right? Was anyone consulted? Did the Fed or SEC or OCC or FDIC push back? The big bank CEOs?
— Steve Goldstein (@MKTWgoldstein) December 23, 2018
And there were plenty of skeptics suggesting that it may be time to run for the hills:
Is this what you do when the sh*t hits the fan?
— MRSBaubles (@mrsbaubles) December 24, 2018
Welp, if I wasn’t stressed about a potential economic collapse before, this statement certainly did it! ?
— Leah Catherine (@MsLeahCatherine) December 24, 2018
When someone tells you not to worry about that thing you weren’t worried about, it’s time to start worrying.
— John McLaughlin (@je_mclaughlin) December 24, 2018
If this statement was intended to reassure investors and stabilize markets it is unlikely to succeed…especially as it comes amidst the govt shutdown, the Syria and Mattis decisions, and reports @realDonaldTrump wanted to fire the Fed chairman.
— Richard N. Haass (@RichardHaass) December 24, 2018
Let’s say you were trying to start a financial crisis. A good strategy would be to threaten to fire the Fed chair and then announce that banks aren’t worried about liquidity.
NO PROBLEMS HERE. PLENTY OF MONEY IN THE VAULTS.
— Binyamin Appelbaum (@BCAppelbaum) December 23, 2018
Via BPR
