Political News

Mnuchin speaks with US bank executives to reassure investors after Wall Street whiplash

Posted December 23, 2018 1:29 p.m. EST

— Treasury Secretary Steven Mnuchin spent Sunday speaking with chief executives of large US banks in a bid to reassure investors that it's business as usual on Monday.

While visiting his children in Cabo San Lucas, Mexico, for the Christmas holiday, the secretary was "very engaged" on potentially market-moving issues as he spoke with top executives who have witnessed a recent whiplash on Wall Street, conveying the message that the economy remains strong and the sky isn't falling, a person familiar with the matter told CNN.

The secretary's phone conversations follow reports over the weekend that President Donald Trump has begun consulting advisers about whether he has the legal authority to fire Federal Reserve Chairman Jay Powell after last week's decision to hike rates for the fourth time this year and months of market volatility.

"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. They don't have to wait until something happens to be reassured."

"Systems remain normal," the person added. "The market volatility is not changing the strong fundamentals of the economy."

The President -- who has staked his presidency on the stock market -- has been rattled by months of market volatility, a fact he has blamed the Fed for.

Trump has both described the Fed as his "biggest threat" for undercutting his economic agenda in recent months, while suggesting he might even consider firing Powell, whom Trump himself appointed last year. It's not clear whether Trump has the authority to fire Powell without cause.

On Saturday night, Mnuchin tweeted that he had spoken with Trump, relaying a message from the President that he never "suggested firing Chairman Jay Powell, nor do I believe I have the right to do so."

Top West Wing economic advisers have warned Trump that firing Powell would only exacerbate the problem the President is ostensibly trying to solve: nose-diving markets. The unprecedented move would likely cause more turmoil.