President Donald Trump expressed confidence on Tuesday in Treasury Secretary Steven Mnuchin, who is struggling to contain his first real crisis but has failed to assuage investors unnerved by turmoil in Washington.
Trump told reporters at the White House on Tuesday morning that Mnuchin is a “very talented guy, very smart person.” He complained again about the Federal Reserve and its chairman Jerome Powell, saying that “they’re raising interest rates too fast.”
After weeks of sliding stock prices, Mnuchin convened an emergency meeting with top U.S. financial regulators on Monday, following a call with executives from six major banks the previous day. The Treasury Department issued a statement Sunday saying banks have adequate liquidity for lending, surprising investors who didn’t know that might be an issue.
The moves intensified concerns about the Trump administration’s economic policies, in the wake of a Bloomberg News report that the president had discussed firing Powell. Asked Tuesday whether he also had confidence in Powell, Trump said the Fed is raising rates “because they think the economy is so good.”
Even so, Trump’s frustration with Powell over the market’s performance — expressed in tweets and interviews — may turn to his Treasury chief, who recommended Powell’s nomination. Before Tuesday’s comments, one person familiar with the president’s thinking said that Trump had weighed dismissing Mnuchin, while another said that Mnuchin’s tenure may depend in part on how much markets continue to drop.
Since taking office, Trump has looked to the stock market as a benchmark for his presidency. Yet much of the gains in equities since his election have been been erased by months of turmoil, as investors grow increasingly concerned about the impact of the administration’s trade battles with China and Europe.
After Mnuchin’s call on Monday — which produced no public statement — stocks continued their slide, ending the day with the benchmark S&P 500 down 2.7 percent, hitting its lowest level in 20 months. The president has acknowledged that he can’t fire Powell, raising speculation he may target Mnuchin.
“There are plenty of people inside the White House who are not fans of Mnuchin who are happy to throw him under the bus,” said Stephen Myrow, managing partner at Beacon Policy Advisors in Washington and a former Treasury official. “Up ‘til now, he’s been protected by the fact that Trump liked him and he’s been a loyalist.”
A Treasury Department spokesman referred a request for comment to the White House, which didn’t respond.
In a sign Trump may have lost some faith in Mnuchin, the president has asked whether one or more of his advisers could meet with Powell, according to a person familiar with the matter. That would be seen as undermining the authority of the Treasury chief, who sees Powell for lunch once a week and is normally the official designated to deliver the administration’s views.
Investors have many reasons to worry. Trump’s trade war with China is creating uncertainty for businesses. U.S. government debt approaches $22 trillion. A partial government shutdown is raising concerns about Washington’s ability to find bipartisan solutions to pressing problems. The president’s musings about firing Powell and the abrupt departure of Defense Secretary James Mattis add to the sense of turbulence.
Representative Maxine Waters, a California Democrat and the incoming chairwoman of the House Financial Services Committee, said in a statement on Monday night, “The financial markets need certainty, and a Federal Reserve that can independently set monetary policy. The recent actions of the president and the Treasury secretary, however, have been erratic and are creating uncertainty and instability in the markets.”
While Trump regularly took credit for the stock market’s rise, he has consistently pointed elsewhere to explain its decline.
Unlike others Trump has cut loose, the president goes way back with Mnuchin, 56, a former Goldman Sachs Group Inc. partner and movie financier who served as Trump’s chief campaign fund-raiser.
But Mnuchin’s standing with Trump may be undermined by moves that risk his reputation on Wall Street, a Treasury secretary’s stock in trade.