Treasury Secretary Steven Mnuchin issued a statement a few minutes ago to say he had a conference call with the heads of the six biggest banks and assured investors that there was “ample liquidity for investing” despite the government shutdown:
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
Mnuchin made calls to “Bank of America; Citi; Goldman Sachs; JP Morgan Chase, Morgan Stanley; and Wells Fargo”:
According to @USTreasury, @stevenmnuchin1 got assurances of "ample liquidity" from CEOs at Bank of America; Citi; Goldman Sachs; JP Morgan Chase, Morgan Stanley; and Wells Fargo.
— Mark Knoller (@markknoller) December 23, 2018
Except nobody seems to be worried about liquidity issues in the market right now:
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
Should we be worried about liquidity issues?!?
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
Mnuchin’s recent past statements on the stock market drop don’t exactly match up with what he just released:
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
Monday morning should be fun:
I haven’t had this “well let’s see what sort of chaos happens when the markets open” feeling in ten years.
Flashbacks.
— Lizzie O'Leary (@lizzieohreally) December 23, 2018
The question is, “Did Mnuchin’s statement help or hurt?”
Does going public with such calls instill confidence in the system or lead to more questions as to why the calls were even made in the first place?
— Scott Wapner (@ScottWapnerCNBC) December 23, 2018
Every CEO on those calls has an obligation now to publicly reveal what was specifically discussed with @stevenmnuchin1 and what the context was.
— Scott Wapner (@ScottWapnerCNBC) December 23, 2018
“Preparing for the worst” is a scary thought:
Prepping for the worst? Sec. Mnuchin spent Sunday making sure the big banks are liquid as Trump stews over the tumbling stock market. pic.twitter.com/9obpqNIYWN
— Alan Rappeport (@arappeport) December 23, 2018
Some experts think this has more to do with the president’s recent comments on the Fed chairman than liquidity issues:
Mnuchin statement already getting so misreported. The issue isn’t that it’s unusual, it’s they know this *isn’t* the issue for banks and they chose to echo crisis-era language in releasing it anyway, instead of just shutting their man child boss up about firing the Fed chairman.
— Megan Murphy (@meganmurp) December 23, 2018
But many others are saying the “statement brings back memories of 2008”:
That Treasury statement brings back memories of 2008, and not in a good way
— Steve Goldstein (@MKTWgoldstein) 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
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
And it’s not just liberal critics calling out Mnuchin for this:
Not just me 3/ pic.twitter.com/ITCoOOoALZ
— Paul Krugman (@paulkrugman) December 23, 2018
A source told CNN the statement was “pre-emptive”:
"It's being pre-emptive," a person familiar with the matter told CNN. "It's sending the proper message to the market so they can calculate the real picture into their Monday opening.”
via @donnaborak https://t.co/ZV9UP0aWIM— Phil Mattingly (@Phil_Mattingly) December 23, 2018
On the other hand, “if it was a real crisis, Mnuchin wouldn’t tell the public of these steps”:
I remember in 2007 when there was plans to create a fund to buy bad assets, not really any explanation.. this kind of seems like the same. This is probably the first tip of the crisis iceberg. If everything was fine why have these meetings so close to Christmas?
— flemming (@flemmingha) December 23, 2018
Because equity markets are weak, bond markets have thin liquidity over the holidays and the federal govt is shut down. If it was a real crisis he wouldn't tell the public of these steps.
— Cate Long (@cate_long) December 23, 2018
It could be that Mnuchin just signaled to the banks to make sure they’re staffed tomorrow just in case:
This was the playbook in 2008. Why would we need reassurance now if the banks are better behaved and the stress testing, tarp, and other reassurance and remediation procedures have been in place?
— lawrence serewicz (@lldzne) December 23, 2018
Because 98% of trading desks would normally be empty tomorrow. And likely only GS would make markets and they are so gluttonous they'll walk the market down. Mnuchin's call was an alert that bank dealers need to man their desks tomorrow and support markets.
— Cate Long (@cate_long) December 23, 2018
Mnuchin will also hold a call with White House advisers on Monday:
Treasury Secy Mnuchin "will convene a call w/the President's Working Group on financial markets" Monday, to "discuss coordination efforts to assure normal market operations."
— Judy Woodruff (@JudyWoodruff) December 23, 2018
But he’ll be leading the meeting from Mexcio where he’s on vacation with his family:
So ironic Mnuchin is in Cabo during a shutdown over a border wall with Mexico. #mnuchin #BorderWall #TrumpShutDown https://t.co/iWa9KrYalp
— Jeff Strater (@jeffstrater) December 23, 2018
Hopefully he’s getting money for the wall while he’s there…
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