Wall Street banks reassure US Treasury amid big market falls

Mnuchin's attempts to calm the markets have opposite effect, leave bank CEOs 'totally baffled'

Mnuchin's attempts to calm the markets have opposite effect, leave bank CEOs 'totally baffled'

"Today I convened individual calls with the CEOs of the nation's six largest banks", Treasury Secretary Steven Mnuchin said on Twitter shortly before financial markets were due to open in Asia. He also called James Gorman of Morgan Stanley, Brian Moynihan of Bank of America and Citi's Michael Corbat. Also, the executives were bewildered by the public Tweets made by Mnuchin.

"This is the type of announcement that raises the question of whether Treasury sees problems that the rest of the market is missing", Cowen & Co. analyst Jaret Seiberg wrote in a note to clients. The Treasury Department on Sunday said the Working Group will discuss "coordination efforts to assure normal market operations".

Last week's turmoil in Washington which included a government shutdown that appears likely to last until at least Thursday and the abrupt resignation of Defense Secretary Jim Mattis has spooked markets worldwide.

Dartmouth Economics professor Danny Blanchflower, who is a Bloomberg TV contributing editor, called for Mnuchin to "resign", saying posting the statement on banks was the "dumbest action" he's ever seen by a Treasury Secretary. "Not only did he consult with the biggest banks, but he is talking to all of the financial regulators on Christmas Eve".

The Treasury said Mnuchin will convene a call on Monday with the president's Working Group on Financial Markets, which includes Washington's main stewards of the US financial system and is sometimes referred to as the 'Plunge Protection Team'.

Mnuchin issued a statement Sunday that served to puzzle many analysts and investors. Trump has told some advisers that he views selecting Powell the worst decision of his entire presidency. Markets plunged after the Trump administration sent out confusing signals about markets and the economy.

Wall Street banks reassure US Treasury amid big market falls
Wall Street banks reassure US Treasury amid big market falls

In recent months, Trump has continued to attack Powell, accusing the former investment banker of trying to undercut him politically by raising interest rates and slowing down the economy.

Yes, although it does not deal exclusively with Wall Street panic.

Trump's Monday morning tweet heightened fears about the economy being destabilized by a president who wants control over the Fed. The trade war helped knock China's stock market into a bear market over the summer. Mnuchin has been working for the past several days to convince Trump that he can not fire his Fed chairman - both from a legal standpoint and to avoid further market turmoil.

His frustrations have risen so high that Trump has asked his team whether he has the legal authority to fire Powell - a move that Mnuchin, among others, has worked hurriedly to prevent.

Incoming White House chief of staff Mick Mulvaney also attempted to calm investors' nerves on Sunday, saying in an interview on ABC that the fundamentals of the U.S. economy are strong despite the recent market slide.




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