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Top Trump official calls bankers, will convene 'Plunge Protection Team'

Published 12/23/2018, 06:40 PM
Updated 12/23/2018, 06:40 PM
© Reuters. FILE PHOTO: U.S. Treasury Secretary Mnuchin speaks during his interview with Reuters in Jerusalem

© Reuters. FILE PHOTO: U.S. Treasury Secretary Mnuchin speaks during his interview with Reuters in Jerusalem

By Jason Lange

WASHINGTON (Reuters) - U.S. President Donald Trump's Treasury secretary called top U.S. bankers on Sunday amid an ongoing rout on Wall Street and made plans to convene a group of officials known as the "Plunge Protection Team."

U.S. stocks have fallen sharply in recent weeks on concerns over slowing economic growth, with the S&P 500 index (SPX) on pace for its biggest percentage decline in December since the Great Depression.

"Today I convened individual calls with the CEOs of the nation's six largest banks," Treasury Secretary Steven Mnuchin said on Twitter shortly before financial markets were due to open in Asia.

U.S. equity index futures dropped late on Sunday as electronic trading resumed to kick off a holiday-shortened week. In early trading, the benchmark S&P 500's e-mini futures contract was off by about a quarter of a percent.

The Treasury said in a statement that Mnuchin talked with the chief executives of Bank of America (N:BAC), Citi (N:C), Goldman Sachs (N:GS), JP Morgan Chase (N:JPM), Morgan Stanley (N:MS) and Wells Fargo (N:WFC).

"The CEOs confirmed that they have ample liquidity available for lending," the Treasury said.

Mnuchin "also confirmed that they have not experienced any clearance or margin issues and that the markets continue to function properly," the Treasury said.

Mnuchin's calls to the bankers came amid a partial government shutdown that began on Saturday following an impasse in Congress over Trump's demand for more funds for a wall on the border with Mexico. Financing for about a quarter of federal government programs expired at midnight on Friday and the shutdown could continue to Jan. 3.

The Treasury said Mnuchin will convene a call on Monday with the president's Working Group on Financial Markets, which includes Washington's main stewards of the U.S. financial system and is sometimes referred to as the "Plunge Protection Team."

The group, which was also convened in 2009 during the latter stage of the financial crisis, includes officials from the Federal Reserve as well as the Securities and Exchange Commission.

Wall Street is also closely following reports that Trump has privately discussed the possibility of firing Federal Reserve Chairman Jerome Powell. Mnuchin said on Saturday Trump told him he had "never suggested firing" Powell.

Trump has criticized the U.S. central bank for raising interest rates this year, which could further dampen economic growth. The Fed's independence is seen as a pillar of the U.S. financial system.

Mnuchin's calls come as a range of asset classes have suffered steep losses.

In December alone, the S&P 500 (SPX) is down nearly 12.5 percent, while the Nasdaq Composite (IXIC) has slumped 13.6 percent. The Nasdaq is now in a bear market, having declined nearly 22 percent from its record high in late August, and the S&P is not far off that level.

Corporate credit markets have been under duress as well, and measures of the investment grade corporate bond market are poised for their worst yearly performance since the 2008 financial crisis.

© Reuters. FILE PHOTO: U.S. Treasury Secretary Mnuchin speaks during his interview with Reuters in Jerusalem

The high-yield bond market, where companies with the weakest credit profiles raise capital, has not seen a deal all month. The last time that happened was in November 2008.

Latest comments

The last two days had Mnuchin's fingerprint's all over them. Buying emerged right at 11:00 AM EST on Wednesday and then again at 2:15 PM EST yesterday. I bet Mnuchin loaded up beforehand. This guy looks like a crook.
they needed this 3 months ago, too late now.
Looks like we will see extended banks holliday.
Bet Mnuchin's short positions got filled before he pulled this one.
The interesting thing here is other than Powell, Munchin, Vaporware and the bank Ceos NOBODY else knows what's happening... nice transparent republic we have, looks like China.
so basically we're on the cusp of a financial crisis and the government will now artificially inflate the stock market. got it.
Everything is going to be fine. Do not worry. Yet.
smells like QE in first quarter of 2019...
an grown adult wears chuckie finster glasses
So basically they're saying we're on the verge of total collapse?
This is legitimised in your face market rigging for the benefit of the haves.
hopely not end of protection team being protected. that going be very funny.
Rigging at its finest.
The Bubble Boys
PPT legal manipulation nice. Free Markets be damned.
Right! I was thinking the same thing.
this would be an unprecedented stimulus. but also an ominious sign. ie releasing liquidity like this is a break glass in case of emergency type move
Theres no report of releasing liquidity into the mkt and if they did it wouldnt be unprecedented. They were only discussing the liquidity of the banks to keep credit available. Not saying the stock mkt is healty. Its going down more
Legalization of Marijuana could fix / sponsor the wall!!
why? once it's legal it's just a plant. The profit in the plant was when it was illegal.
quant is crashing us. but it's fine.
Oh they say things are just fine. That means everything must be fine...
Doesn't that aound familiar. Bernanke said the same the day before it all crashed. They know what's coming since they created it and have no way out
It’s fine, everything is going to be just fine!
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