Treasury Secretary Steven Mnuchin called top executives from the six largest U.S. banks over the weekend, he said Sunday on Twitter, an action that followed heavy losses in the stock market last week.
“The CEOs confirmed that they have ample liquidity available for lending to consumer, business markets, and all other market operations,” the Treasury said in a statement.
On Monday, Mnuchin will convene a call with the President’s Working Group on financial markets, which he chairs. The group includes representatives from the Fed, the SEC and the CFTC.
https://www.bloomberg.com/news/articles/2018-12-23/trump-s-two-year-stock-honeymoon-ends-with-hunt-for-a-betrayer
The U.S. Treasury Department raised eyebrows and jogged worrying memories of the financial crisis Sunday with a statement that Secretary Steve Mnuchin convened calls with the CEOs of six leading banks to confirm they had ample liquidity, in hopes of averting another Wall Street selloff Monday.
But left unsaid: If he’s that worried, shouldn’t investors be as well?
The unusual and unprompted attempt at reassurance came after the Dow Jones Industrial Average DJIA, -1.81% posted its worst week since 2008 — the height of the financial crisis. It was the Nasdaq Composite’s COMP, -2.99% worst week since 2008 as well, as it dipped into bear-market territory. It was the worst week for the S&P 500 SPX, -2.06% since 2011.
On Sunday, the Treasury Department tweeted that Mnuchin “conducted a series of calls today with the CEOs of the nation’s six largest banks” — Bank of America BAC, -3.07% , Citi C, -3.88% , Goldman Sachs GS, -4.96% , JPMorgan Chase JPM, -2.36% , Morgan Stanley MS, -3.16% and Wells Fargo WFC, -2.00% . “The CEOs confirmed that they have ample liquidity available for lending to consumers, business markets, and all other market operations. He also confirmed that they have not experience any clearance or margin issues and that the markets continue to function properly.”
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
The statement added that Mnuchin, who is on vacation in Cabo San Lucas, Mexico, will hold a call Monday with the President’s Working Group on financial markets “to discuss coordination efforts to assure normal market operations.”
While apparently intended to as a pre-emptive reassurance to investors, the tweet may have done just the opposite, stoking fears that the government is bracing for the worst:
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
Insane. Mnuchin is acting as though it is 2008-09 or 1987. This makes it much harder to buy a gap lower in an hour.
— James Carroll (@jpctrader1) December 23, 2018
Why TF would he make this public? Is he trying to INDUCE panic? Smh. https://t.co/26eL1BvkGq
— Ivan the K™ (@IvanTheK) December 23, 2018
"Hello, JP Morgan Chase, how can I help you?"
"Hey! Steve Mnuchin here. There's no need to panic."
"…Sorry?"
"Don't panic. Everything's fine. With the…you know…America stuff. Money."
"You're freaking me out."
"Nah, it's all good. I'm in Cabo. It's niiiice here. Ok, later." https://t.co/mIpp1o74gi
— Ken Tremendous (@KenTremendous) December 23, 2018
Despite the stock slump, U.S. economic data remains fairly strong. Last month, Fed Chairman Jerome Powell said in a speech that the financial system was stable.
In a tweet Saturday, Mnuchin denied that President Donald Trump has talked about firing Powell, who had drawn the president’s wrath for continuing to raise interest rates, saying that Trump said he “never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.”
https://www.marketwatch.com/story/treasury-departments-odd-attempt-to-reassure-investors-may-have-just-backfired-2018-12-23