Arthur J. Villasanta – Fourth Estate Contributor
Washington, DC, United States (4E) – An antsy president Donald Trump sought to distance himself from the bloody rout on Wall Street over the past two months by shifting the focus to the same six biggest U.S. banks that were deeply involved in the Great Recession of 2008.
Acting on Trump’s orders, Treasury Secretary Steven Mnuchin tweeted the administration’s intent to convene a group of America’s six largest banks also called the “Plunge Protection Team.” This group consists of Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo.
It was convened in 2009 during the Great Recession, and also includes officials from the Federal Reserve and the Securities and Exchange Commission.
“Today I convened individual calls with the CEOs of the nation’s six largest banks,” tweeted Mnuchin shortly before financial markets opened in Asia today. “The CEOs confirmed that they have ample liquidity available for lending,” the Treasury said.
Mnuchin also also claims the Plunge Protection Team as saying they’ve not experienced any clearance or margin issues and that the markets continue to function properly.
Mnuchin’s calls to the bankers follow Trump’s partial government shutdown that began Saturday following an impasse in Congress over Trump’s demand for more funds for his border wall with Mexico. Financing for about a quarter of federal government programs expired at midnight on Friday. Odds are the shutdown will continue until Jan. 3.
Mnuchin has good reason to create the perception of good news. U.S. stocks plummeted alarmingly in recent weeks on fears over slowing economic growth. The S&P 500 remains on track for its biggest percentage decline in December since the Great Depression.
In December alone, the S&P 500 is down 12.5 percent. The NASDAQ Composite has plummeted 13.6 percent. The NASDAQ is now in a bear market, having dropped nearly 22 percent from its record high in late August. The S&P is fast approaching bear market territory.
Corporate credit markets have also been under intense pressure, as well. Measures of the investment grade corporate bond market are poised for their worst yearly performance since the Great Recession.
The high-yield bond market, where companies with the weakest credit profiles raise capital, hasn’t had a deal all month. The last time that happened was in November 2008 during the Great Recession.
More bad news for Trump. U.S. equity index futures dropped late Sunday as electronic trading resumed to start a holiday-shortened week. In early trading, the benchmark S&P 500’s e-mini futures contract ESv1 was off by about a quarter of a percent.
Wall Street is also upset at news Trump will fire Federal Reserve Chairman Jerome Powell. Mnuchin, however, claims Trump told him he had “never suggested firing” Powell.
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