Fed Chair Jerome Powell (left), Treasury Secretary Steven Mnuchin (right). Photographer: Al Drago/Bloomberg© 2018 Bloomberg Finance LP
No need to panic.
That was the message Treasury Secretary Steven Mnuchin sought to convey after holding unscheduled Sunday afternoon calls with the heads of the largest banks in America, Jamie Dimon of JPMorgan, Brian Moynihan of
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A decade ago, such calls and terse press releases were routine Sunday events as Treasury officials, the Federal Reserve, and bank heads worked together to stem the worst financial panic since the Great Depression. This time, however, Mnuchin’s unusual efforts come amid a growing economy where credit is flowing freely. Instead of a financial panic, his comments seemed aimed at market concerns coming from political turmoil Washington.
On Monday, Mnuchin will convene a call with the President’s Working Group on financial markets “to discuss coordination efforts to ensure normal market operations,” bringing together the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission, the Commodities Futures Trading Commission, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Commission.
“We continue to see strong economic growth in the U.S. economy with robust activity from consumers and business,” Mnuchin said. He added, “With the Federal government shutdown, Treasury will have critical employees to maintain its core operations at Fiscal Services, IRS, and other critical functions within the department.”
Secretary Mnuchin convened individual calls with the CEOs of the nation’s six largest banks. See attached statement. pic.twitter.com/IEb2kv6dx9
— Treasury Department (@USTreasury) December 23, 2018
U.S. equity markets are closing in on the worst December performance in decades due to mounting concerns over the impact of trade wars on economic growth, turnover in the White House, the Federal Reserve’s hiking of interest rates, and a shutdown of the Federal government.
President Trump’s impasse with legislators over his border wall put the Federal government in a shutdown that may not be resolved by year end. This month, Trump replaced White House chief of staff John Kelly and accepted the resignation of Secretary of Defense James Mattis. His combative relationship with Fed chair Jerome Powell came to head this week when the Federal Reserve Open Market Committee decided to increase short term rates 0.25% despite Trump’s calls for a pause. This weekend, Bloomberg News reported Trump had spoken to multiple staffers about replacing Powell, speculation Mnuchin attempted to downplay using his Twitter account.
(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
With this backdrop, Mnuchin, vacationing with his family in Cabo San Lucas, Mexico, took it upon himself to check in with the chieftains of the big financial intermediaries in the U.S. and felt the communication efforts were worth publicizing. As of Sunday evening, U.S. equity futures were in a narrow, generally flat trading range that don’t point to a panic.