“This Is Crazy”: Elizabeth Warren Mops the Floor with Steve Mnuchin in a Brutal Exchange – Vanity Fair
Few of Donald Trump’s genuinely populist economic proposals from the campaign trail seem to have survived the transition to the White House. In retrospect, it seems foolish to have put any stock whatsoever in his sundry musings about “the government” paying for everyone’s health care, or hedge funds “getting away with murder,” or how the wealthy should “pay more” in taxes, or how he’d like to see a minimum wage “increase of some magnitude.” Each of those proposals was quickly replaced by its opposite, almost as if Trump doesn’t care about the words he says or actually believe in anything at all.
So it should come as no surprise that Donald Trump has vacillated on the possibility of bringing back Glass-Steagall, the Depression-era law that separated commercial and investment banks until 1999 and the repeal of which some people blame for the financial crisis. “I’m looking at that right now,“ Trump told Bloomberg earlier this month. “There’s some people that want to go back to the old system, right? So we’re going to look at that.”
Historically, a sitting president mulling the possibility of breaking up the big banks would have sent shivers down the spines of Wall Street C.E.O.s, with a market reaction to match. Instead, investors barely blinked. Because, by their own admission, no one on Wall Street really takes Trump seriously anymore. At this point, they’re fully aware of the fact that by a quirk of biology, the president’s brain is not connected to his mouth and so the words just tumble out at will. “I don’t take Trump seriously,” a senior executive with “one of the country’s six largest banks” told Reuters earlier this month. “I’m listening less and less.” “Break up the banks? That ain’t going to happen,” Citigroup adviser Rick Hohlt told Bloomberg.
The pronouncements of other Trump minions appear similarly worthless. Lately, some administration officials have taken to using the term “21st-century Glass-Steagall”—a term they claim does not actually involve breaking up banks, which is kind of like when Ivanka Trump said she was “complicit,” if complicit meant “wanting to be a force for good and to make a positive impact.”
Senator Elizabeth Warren is a very smart woman who, like Wall Street, is presumably wise to the fact that one cannot take Trump and Co. literally or seriously. But bringing back Glass-Steagall is something she’s advocated for years, having introduced just such a proposal in 2015. So when Treasury Secretary Steven Mnuchin showed up to testify before the Senate Banking Committee on Thursday, she decided to take the opportunity to force him to admit that when Donald Trump says he’s “looking into” breaking up the banks, he’s actually full of it. The result was an absolutely surreal exchange that must be read in full:
Elizabeth Warren: You said we need a 21st-century Glass-Steagall at your confirmation hearing. And now you’ve just said the opposite. In the past few months, you and the president have had a number of meetings with big-bank C.E.O.s and lobbyists—is that the reason for the reversal on Glass-Stegall?
Steven Mnuchin: Not at all; there actually wasn’t a reversal.
Warren: There wasn’t a reversal?
Mnuchin: Let me explain.
Warren: I’m ready.
Mnuchin: The Republican platform did have Glass-Stegall. . . . The president said we do support a 21st-century Glass-Steagall, that means there are aspects of it that we think may make sense. But we never said before we support a full separation of banks and investment banking.
Warren: Let me just stop you right there, Mr. Secretary—
Mnuchin: You’re not letting me finish—
Warren: Yeah, I’m not, because I really need to understand what you’ve just said. There are aspects of Glass-Steagall that you support, but not breaking up the banks and separating commercial banking from investment banking? What do you think Glass-Stegall was if that’s not right at the heart of it?
Mnuchin: Again, I’m well aware of what Glass-Steagall was, as you may know the original concern of Glass-Steagall was about conflicts not about credit risk, and if we had supported a full Glass-Stegall we would have said at the time we believed in Glass-Stegall, not a 21st-century Glass-Stegall. We were very clear in differentiating it.
Warren: I still haven’t heard the answer to my question; what do you think Glass-Stegall was if not separating commercial banking from investment banking, from ordinary banking?
Mnuchin: Again, the fundamental part of Glass-Stegall was, as you just outlined, it was separation of investment banking from commercial banking because people were concerned about conflicts.
Warren: And how do you separate without breaking up the big banks that have integrated these two things?
Mnuchin: Again, the integration of commercial banking and investment banking has gone on for a long time, that’s not what caused the financial crisis, and if we did go back to a full separation, you would have an enormous impact on liquidity and lending.
Warren: So let me get this straight. You’re saying you’re in favor of Glass-Steagall, which breaks apart the two arms of the banks, except you don’t want to break apart the two parts of banking. This is like something straight out of George Orwell. You’re saying simultaneously you’re in favor of breaking up the banks— that’s what Glass-Steagall is—
Mnuchin: I never said we were in favor of breaking up the banks. If we had been, it would have been very simple .
Warren: Let me try one more time—what does it mean to be in favor of 21st-century Glass-Steagall if it does not mean breaking apart these two functions in banking?
Mnuchin: I’d be more than happy to come see you and follow up—
Warren: Just tell me what it means. Tell me what 21st-century Glass-Steagall means if it doesn’t mean breaking up those two parts. It’s an easy question.
Mnuchin: It’s actually a complicated question—
Warren: I’ll bet.
Mnuchin: There are many aspects of it. The simple answer is we don’t support breaking up commercial and investment banks. We think that would be a huge mistake, but, again, I’m more than happy to listen to your ideas on it, you obviously have strong views.
Warren: This is just bizarre. The idea that you can say we’re in favor of Glass-Steagall but not in breaking up the banks.
Mnuchin: We never said we were in favor of Glass-Steagall, we said we were in favor of a 21st-century Glass-Steagall. We couldn’t be clearer.
Warren: Thank you . . . this is crazy.
Welcome to the Trump administration, ladies and gentlemen. Tune in next week when Vice President Mike Pence says he supports a 21st-century Roe v. Wade that doesn’t allow women to obtain abortions.
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Or should we say . . . President Mike Pence?
Will Donald Trump be impeached? Will Mike Pence become president? As my colleague Abigail Tracey reported today, what was previously regarded to be a “liberal pipe dream” is growing more likely, even if it’s still a long shot. What does Wall Street think of the idea? The short answer: it doesn’t care who’s in office so long as it gets its tax cuts. Per Bloomberg:
As Donald Trump’s ballooning scandals sent stocks tumbling Wednesday, hedge fund managers gathered at the Bellagio in Las Vegas for one of the industry’s most popular conferences. First on the day’s agenda: pedaling exercise bikes, visiting a spa and trying a beauty service called GlamSquad. The mood was relaxed…why weren’t they freaking out over chatter of potential impeachment?
“We all feel comfortable with Mike Pence leading,” said Anna Stone, a marketing and investor relations consultant whose clients include family offices and hedge funds. “Some people would be happier.” The general indifference to Trump’s travails here says much about the financial industry’s view of the young administration. For many on Wall Street, deregulation and tax reform matter more than a border wall or travel ban. Even if Trump succumbs to crisis, the thinking goes, Republicans and Pence can press on.
How could Trump turbo-charge the “Trump Rally”?
By going on TV and announcing that he’s packing his bags and heading back to New York … for good.
“If Donald Trump resigned tomorrow, I think the Dow would go up 1,000 points,” Jeremy Siegel, the Wharton professor who called Dow 20,000, said Wednesday. Although one might think Trump’s ego would prevent him from quitting, in a speech yesterday at the Coast Guard Academy commencement ceremony, the president capped off his rambling remarks about how unfairly he’s been treated by the media by saying, “Enjoy your life,” which sounds about as close to “Screw it, I’m done here” as we’re going to get this week.
Commerce secretary thinks the media should get over this whole Russia thing
“There’s no there, there,” commerce secretary Wilbur Ross, told CNBC on Thursday of the F.B.I.’s investigation into potential links between Trump’s campaign and Russia. “This is all rumor. It’s all innuendo.” Ross, who has his own close ties to Russia and recently described the bombing of Syria as “after-dinner entertainment” for the Mar-a-Lago set, applauded the appointment of former F.B.I. director Bob Mueller as special counsel to oversee the investigation, insofar as he hopes it’ll get the left-wing media to bark up another tree. The hire hopefully “brings the matter to a head,” Ross said, so the media can “go on to something else.”
Get ready for Art of the Deal: NAFTA Edition
When Donald Trump was running for president, he routinely trashed the North American Free Trade Agreement, saying it was the “worst deal” the U.S. had ever signed, and vowed to scrap it as soon as possible. Then, because he has the attention span of a gerbil, he proceeded to change his mind about what to do with NAFTA nearly half a dozen times. After promising for months to burn the deal to the ground, in April reports circulated that, actually, Trump was going to just renegotiate the thing with Mexico and Canada. Then, just a few short weeks later, numerous outlets reported the White House was drafting an executive order with the intention of exiting the deal. Twelve hours after that, Trump announced that the Mexican president and Canadian prime minister had called him up and asked really nicely if they could just renegotiate and, because he’s such an affable guy, he said yes.
Anyway, on Thursday, Team Trump sent Congress a letter announcing its intention to start formal renegotiations in August, so that’s where we are now. But a lot can happen in three months, including a scenario in which Trump blows up at Justin Trudeau and decides to trash the deal instead of negotiating because the White House kitchen is out of maple syrup. So we’ll keep you posted.
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Ex-Barclays C.E.O. Bob Diamond reportedly sold his penthouse at “the world’s most powerful address” for $50 million
Deutsche Bank wants former bosses to share past misconduct costs (Reuters)
The Volatility Buyer Known as “50 Cent” Just Had a Huge Payday (Bloomberg)
Third Point’s Dan Loeb Deploys A.I., Big Data with Half Dozen Quants (Bloomberg)
How the Trump administration is affecting the multi-billion-dollar marijuana industry (CNBC)
Waterbeds, Country Music, and Backscratchers: How Cows Get Coddled (W.S.J.)