Money and Politics
May 01, 2017 - What Wallstreet Thinks of Trump's Breaking Up Big Banks Statement
Wall Street Shrugs Off Trump's 'Active Review' of a Bank Breakup By The Street
Wall Street had heard it before: Donald Trump is considering whether to revive the Depression-era Glass-Steagall Act that separated investment and commercial banks.
That may be why stocks in U.S. banks were largely unfazed by Trump's statements in a Bloomberg News interview Monday that 'there's some people that want to go back to the old system" and "we're going to look at that."
The KBW Bank Index, which tracks 24 financial institutions, climbed 0.9% in Monday trading, while global firms from JPMorgan Chase (JPM) to Goldman Sachs (GS) and Bank of America (BAC) all posted slight gains.
Trump had called on the the campaign trail for a "21st-century version" of Glass-Steagall and a key economic adviser, former Goldman executive Gary Cohn, suggested last month that the country's biggest financial institutions should separate their consumer-lending businesses from their investment banks.
Such a move might have bipartisan support in Congress, though how far it would go is uncertain. The repeal of Glass-Steagall under former President Bill Clinton was harshly criticized during the financial crisis, when critics said it helped fuel outsize speculation on a collapsing mortgage market and eventually forced the U.S. government to shell out billions in bailouts to protect the U.S. financial system.
Earlier this year, Democratic Sen. Elizabeth Warren and three other senators reintroduced a bill seeking to separate commercial lending institutions from investment banks. Support among Trump's team for restoring a firewall between the two businesses, meanwhile, didn't end with the real estate mogul's victory against Clinton in November.
Treasury Secretary Steven Mnuchin, also a Goldman alum, said in his confirmation hearing before the Senate Finance Committee in January that he would support a "21st-century version" of Glass-Steagall but not going back to the original version of the law.
Bankers, meanwhile, have been reserved about the effects of such a move, largely because of the lack of specifics.
"I heard one of my peers say every time he hears about 21st-century Glass-Steagall, he asks everybody around him, 'What the heck does that mean?'" Morgan Stanley CEO James Gorman told analysts in April, speculating that such a proposal might involve "ring-fencing" commercial and investment operations.
"There is and should be zero appetite for reinstituting Glass-Steagall itself, obviously, and I'm happy to see that that seems to be the prevailing view," Gorman added. "But whether we move to this ring-fenced model, I'm pretty confident we can deal with that here at Morgan Stanley."
JPMorgan, faced with questions on the matter from analysts, reiterated its position that the bank's diverse operations were an asset during the crisis.
"There is strength in the way the company operates that can't be discounted," CFO Marianne Lake said on an April earnings call. "I can't give you specific reasons to not continue to monitor the situation, but it doesn't feel consistent with the rest of the objectives of the administration."
Big banks have benefited consumers because their size enables economies of scale that let them offer lower prices while investing in digital platforms like mobile banking, said Richard Bove, an analyst with Rafferty Capital Markets who has five decades of experience.
"Breaking up the big banks runs the risk of increasing the cost of banking products to consumers and slowing the delivery of new products to the market," he said in a note to clients on Monday. "Also, the advocates of shrinking the size of American banks never consider what this means in international markets. It creates a vacuum into which large foreign banks will compete."
While a "profound lack of knowledge" in the U.S. about how banks work means anything can happen, Bove said, "breaking up the banks such a bad idea for Americans" that its success is "hard to imagine."
At Citigroup (C), which drew 43% of first-quarter revenue from consumer banking and more than half from the division that includes trading, CEO Michael Corbat remains convinced his company's so-called universal model is the right one.
"The administration is focused around trying to harmonize regulations, focused around trying to take things away that are either duplicative or don't really add value," he told analysts on an earnings call last month. "And I have yet to have anybody really explain to me what value there is in terms of either a reinstatement of Glass-Steagall, which in itself is strange, or what 21st-century Glass-Steagall is."
April 24, 2017 - Trump's First 100 Days Analysis
Trump's 100 Days: A Rattled Establishment, Some Surprises By Bloomberg
For nearly 100 days, President Donald Trump has rattled Washington and been chastened by its institutions.
He's startled world leaders with his unpredictability and tough talk, but won their praise for a surprise strike on Syria.
He's endured the steady drip of investigations and a seemingly endless churn of public personnel drama.
"It's a different kind of a presidency," Trump said in an Oval Office interview with The Associated Press, an hour-long conversation as he approached Saturday's key presidential benchmark.
Trump, who campaigned on a promise of instant disruption, indirectly acknowledged that change doesn't come quickly to Washington. He showed signs that he feels the weight of the office, discussing the "heart" required to do the job. Although he retained his signature bravado and a salesman's confidence in his upward trajectory, he displayed an understanding that many of his own lofty expectations for his first 100 days in office have not been met.
"It's an artificial barrier. It's not very meaningful," he said.
Trump waffled on whether he should be held accountable for the 100-day plan he outlined with great fanfare in his campaign's closing days, suggesting his "Contract with the American Voter" wasn't really his idea to begin with.
"Somebody put out the concept of a 100-day plan," he said.
One hundred days are just a fraction of a president's tenure, and no president has quite matched the achievements of Franklin D. Roosevelt, who set the standard by which all are now judged.
Still, modern presidents have tried to move swiftly to capitalize upon the potent, and often fleeting, mix of political capital and public goodwill that usually accompanies their arrival in Washington.
Trump has never really had either.
A deeply divisive figure, he lost the popular vote to Democrat Hillary Clinton and had one of the narrower Electoral College victories in history. Since taking office on Jan. 20, his approval rating has hovered around 40 percent in most polls.
Trump's early presidency has been dogged by FBI and congressional investigations into whether his campaign coordinated with Russians to tilt the race in his favor. It's a persistent distraction that Trump would not discuss on the record.
Furthermore, his three months-plus in office have amounted to a swift education in a world wholly unfamiliar to a 70-year-old who spent his career in real estate and reality television.
For example, his two disputed travel ban executive orders are languishing, blocked by federal judges.
On Capitol Hill, majority Republicans muscled through Trump's nominee for the Supreme Court, Judge Neil Gorsuch, but had to blow up long-standing Senate rules to do so. Then there was the legislative debacle when Trump's own party couldn't come together to fulfill its long-sought promise of repealing President Barack Obama's health care law.
H.W. Brands, a history professor at the University of Texas at Austin, said Trump is learning that "the world is the way it is for a whole bunch of complicated reasons. And changing the guy at the top doesn't change the world."
Trump won't concede that point.
But he acknowledged that being commander in chief brings with it a "human responsibility" that he didn't much bother with in business, requiring him to think through the consequences his decisions have on people and not simply the financial implications for his company's bottom line.
"When it came time to, as an example, send out the 59 missiles, the Tomahawks in Syria," Trump said of his decision to strike a Syrian air base in retaliation for a chemical weapons attack. "I'm saying to myself, 'You know, this is more than just like 79 (sic) missiles. This is death that's involved because people could have been killed. This is risk that's involved.'"
"Here, everything, pretty much everything you do in government involves heart, whereas in business most things don't involve heart," he said. "In fact, in business you're actually better off without it."
As for accomplishments, Trump cited "tremendous success" on an undefined strategy for defeating the Islamic State group. He talked at length about saving taxpayers hundreds of millions of dollars on the price of F-35 fighter jets. Trump held meetings during the transition and in the White House with the CEO of Lockheed Martin, which produces the F-35, but the cost-savings were already in the works when he took office.
He promised a tax overhaul plan that would give Americans a tax cut bigger than "any tax cut ever."
A man accustomed to wealth and its trappings, Trump has embraced life in the Executive Mansion, often regaling guests with trivia about the historic decor. With the push of a red button placed on the Resolute Desk that presidents have used for decades, a White House butler soon arrived with a Coke for the president.
It's too soon to say whether the presidency has changed Trump in substantive ways. He's backpedaled on an array of issues in recent weeks, including his critiques of NATO and his threats to label China a currency manipulator. But his self-proclaimed flexibility means he could move back to where he started just as quickly.
Stylistically, Trump remains much the same as during the campaign.
He fires off tweets at odd hours of the morning and night, sending Washington into a stir with just a few words. Trump still litigates the presidential campaign, mentioning multiple times during the interview how difficult it is for a Republican presidential nominee to win the Electoral College.
He is acutely aware of how he's being covered in the media, rattling off the ratings for some of his television appearances. But he says he's surprised even himself with some recent self-discipline: He's stopped watching what he perceives as his negative coverage on CNN and MSNBC, he said.
"I don't watch things, and I never thought I had that ability," he said. "I always thought I'd watch."
For the moment, Trump seems to have clamped down on the infighting and rivalries among his top White House staffers that have spilled into the press and created a sense of paranoia in the West Wing. He praised his national security team in particular and said his political team in the White House doesn't get the credit it deserves for their work in a high-pressure setting.
"This is a very tough environment," he said. "Not caused necessarily by me."
April 07, 2017 - Trump Orders Syria Missile Strike
Donald Trump Did Exactly What Hillary Clinton Said on Syria By The Street
Hours before President Donald Trump ordered missile strikes in Syria, the woman who almost beat him to the White House weighed in on Syria, indicating her approach might not have been different than his.
Former Democratic presidential nominee Hillary Clinton, speaking with New York Times writer Nicholas Kristof at the Women in the World Summit in New York on Thursday, discussed her take on the civil war in Syria, some of which unfolded while she served as secretary of state in the Obama administration. Her reflections came hours before the president ordered a missile strike on Syrian government-controlled air bases in retaliation for chemical attacks carried out by Syrian President Bashar al-Assad.
"I really believe that we should have and still should take out his airfields and prevent him from being able to use them to bomb innocent people and drop sarin gas on them," she said, anticipating the maneuver Trump would make hours later.
Syria is a stain on the Obama administration and in Clinton's legacy, and Kristof asked her whether she believes it was Obama's worst foreign policy mistake as president, or hers.
"When I was secretary of state I teamed up with Dave Petraeus, then director of CIA, Leon Panetta, then secretary of defense, to present a plan for us to move more aggressively to support protesters to try to provide some back up in what was -- I thought -- likely to turn out to be a very one-sided battle," she said. "This was before ISIS came to public awareness for a caliphate and their setting up headquarters in Rocca. I believed that and I've said this repeatedly that we should've done more at that point."
She clarified that such decisions aren't easy.
Clinton promoted and still believes the U.S. should have enacted a no-fly zone and been more willing to confront Assad. She noted that Russia and Iran were slow to get involved in the early days of the conflict.
She called Syria's Assad a "prisoner of his family's expectations," noting that it was his late brother, not him, who was expected to succeed his father in power.
"He is absolutely a prisoner of his family's expectations, his dead father's looming president, and his delusion that I believe he now probably could pass a lie detector about that everybody who opposes him is a terrorist," she said, comparing him to Russian President Vladimir Putin in that line. "That's how Putin thinks. And Putin has basically weighed in, particularly, with air power to support this fight-to-the-death policy that Assad has. I think that we've got to try to change the dynamic."
Russia, an ally to Syria, condemned U.S. airstrikes in Syria on Friday, calling the move an "aggression against a sovereign nation" carried out under an "invented pretext." It suspended a 2015 memorandum of understanding on air operations between Russia and the U.S.
Iran spoke out against the United States' actions as well, saying that they would lead to "the strengthening of failing terrorists" and complicate the situation in the region.
Clinton on Thursday admitted she is no friend of Russia or Putin and spoke at length about Russia's meddling in the U.S. election to stack the deck against her. She invoked her take on Russia and Syria on the campaign trail.
"All through the campaign I would say, 'I'm for a no-fly zone,' and immediately, whether it was in the primary or the general election, people would ask, 'Aren't you afraid of Russians?' It's time the Russians were afraid of us because we were going to stand up for human rights, the dignity and the future of Syrian people, and I actually had a lot of confidence that I could say to Putin and his team, 'Look, whether you're with us or against us with this no-fly zone and here's what we're going to do,'" she said.
Of course, it is now Trump who is on a potential collision course with Putin and will shape the future of Syria policy for the United States.
"I call on all civilized nations to join us in seeking to end the slaughter and bloodshed in Syria, and also to end terrorism of all kinds and all types," Trump said in a statement Thursday evening. "We hope that as long as America stands for justice, then peace and harmony, in the end, will prevail."
"It is in our interest, we've got to start, once again, recognizing norms of behavior in our own country and globally as just as important to keeping peace and preventing atrocities as any law that is written down," Clinton said just hours before him. "People have to know that they will be held accountable as war criminals, as committing crimes against humanity, if they engage in these kinds of aggressive violence acts."
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