In a precautionary move, Treasury Secretary Steven Mnuchin spent Sunday on the phone speaking with the chief executives of some of the country’s largest banks to avoid yet another market whiplash when Wall Street opens Monday, according to a person familiar with the matter.
The secretary, who has been visiting his children in Cabo San Lucas, Mexico, tried to get ahead of further market jitters following reports that President Donald Trump was consulting advisers about whether he had the legal authority to fire Federal Reserve Chairman Jay Powell.
“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.”
Wall Street ended a brutal week on Friday on track for the worst month since the 2008 financial crisis, marking the a rout that has threatened to stop the longest-ever bull market.
In his conversations with executives, the person said, Mnuchin sought to convey the strength of the US economy despite recent market turbulence.
“The market volatility is not changing the strong fundamentals of the economy,” said the person. “Systems remain normal.”
It was the second time over the weekend Trump’s top finance chief tried to send a reassuring message to investors over alleged plans to oust Powell.
A day earlier, Mnuchin tweeted that he had spoken with the President, relaying a message from Trump: “I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.”
It’s not clear whether Trump has the authority to fire Powell without cause. But a decision by the President to fire his Fed chairman would likely exacerbate recent market volatility seen over the last several months, and top West Wing economic advisers have warned Trump such a move would only send markets nose-diving.
In recent months, Trump has continued to attack Powell, accusing the former investment banker of trying to undercut him politically by raising interest rates and slowing down the economy. Ahead of the Fed’s final meeting last week, the President warned the Fed not to make “another mistake” to raise rates.
Interest rates have gone up seven times since Trump took office. Four of those increases have been under Powell.
When asked about pressure from the White House, Powell told reporters Wednesday, “we’re going to do our jobs the way we’ve always done them,” stressing the importance of the Fed’s independence from political pressure. “Nothing will cause us to deviate from that.”
Whipsaw markets and a string of steep dives have spawned a pervasive anxiety in the White House, according to senior officials, where for the past two years the strength of the US economy has provided steady reassurance amid even the deepest of political crises.
As Trump faces fresh vulnerability — most aspects of his life are now under investigation just as Democrats are preparing to assume control of the House — the economy no longer offers the same comfort it once did, despite rising wages and the lowest unemployment rate in half a century, according to interviews with multiple White House officials and people close to Trump.
The volatility comes after several disappointments, including General Motors’ decision last month to shutter plants in Ohio and Michigan — a business move that struck deep in the heart of MAGA country, where Trump wooed voters away from Democrats with repeated pledges to bring back lost manufacturing jobs.
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