Saturday , October 23 2021

Mnuchin calls CEOs of US bank amid a Wall Street escape



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US Treasury Secretary Steven Mnuchin speaks to the media after giving a television interview at the White House in Washington, D.C., on December 3, 2018.

LEAH MILLIS / Reuters

US Treasury Secretary Donald Trump telephoned the top US bankers Sunday amid a Wall Street defeat and made plans to rally a group of officials known as the "Plunge Protection Team."

US stocks have fallen sharply in recent weeks on concerns about slowing economic growth, with the S & P 500 index accelerating its biggest percentage decline in December since the Great Depression.

"I've convened individual calls today with the CEOs of the six largest banks in the country," Treasury Secretary Steven Mnuchin said on Twitter shortly before the opening of financial markets in Asia.

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US stock index futures fell late Sunday, with resumption of electronic trading to the start of a shorter week. At the beginning of the trading session, the S & P 500 benchmark e-mini futures contract was at about a quarter of a percent.

Treasury said in a statement that Mr. Mnuchin spoke with top executives at Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo.

"The CEOs have confirmed that they have ample liquidity available for lending," the Treasury said.

Mnuchin "also confirmed that they had no problems of release or margin and that markets continue to function properly," said the Treasury.

Mnuchin's ties to the bankers came amid a partial state shutdown that began on Saturday after a congressional standoff over Trump's demand for more funds for a wall on the Mexican border. Funding for about a quarter of federal government programs expired at midnight on Friday and the shutdown could continue until Jan. 3.

The Treasury said Mnuchin will call a call on Monday with the President's Financial Markets Working Group, which includes the top managers of the US financial system and is sometimes called the "Plunge Protection Team."

The group, which was also convened in 2009 during the last phase of the financial crisis, includes Federal Reserve officials as well as the Securities and Exchange Commission.

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Wall Street is also following closely reports that Trump discussed in particular the possibility of firing Federal Reserve chairman Jerome Powell. Mnuchin said on Saturday that Trump told him he "never suggested firing" Powell.

Trump criticized the US central bank for raising interest rates this year, which could further hamper economic growth. The independence of the Fed is seen as a pillar of the US financial system.

Mnuchin's calls come as a range of asset classes that suffered heavy losses.

In December alone, the S & P 500 fell nearly 12.5%, while the Nasdaq Composite fell 13.6%. Nasdaq is now in a bear market, having declined nearly 22 percent from its record at the end of August, and the S & P is not far from that level.

Corporate credit markets have also been tightened, and investment grade corporate bond market measures are poised for their worst annual performance since the 2008 financial crisis.

The high yield bond market, where companies with the weakest credit profiles raise capital, has not seen an agreement every month. The last time this happened was in November 2008.

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