Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

Continue Reading

Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

Continue Reading

Banks

Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

Continue Reading

Currencies

China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

Continue Reading

Financial

Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

Continue Reading

Categorized | Capital Markets

Mnuchin expected to be Trump’s Treasury secretary


Posted on November 30, 2016

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post.

Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr Trump. He publicly supported Mr Trump during the Republican primary and was appointed as his campaign’s national finance director in April.

Contacted by the Financial Times on Tuesday, Mr Mnuchin declined to comment.

Mr Mnuchin is expected to be announced as Mr Trump’s pick within hours, while Wilbur Ross, a billionaire investor known by Wall Street, as the “king of bankruptcy” is expected to be confirmed as Mr Trump’s choice for commerce secretary — an appointment that was expected since late last week.

The twin appointments suggest that the president-elect is filling his cabinet with loyalists who stood by him for the majority of his general election campaign — a rarity in Republican establishment circles.

Mr Ross, like Mr Mnuchin, was a vocal supporter of Mr Trump throughout the general election, and took an official role on Mr Trump’s campaign as one of its senior advisers.

Steve Bannon, Reince Priebus and Michael Flynn, who respectively have been named Mr Trump’s chief strategist, chief of staff and national security adviser, also publicly stood by Mr Trump during the ups and downs of his controversial campaign.

The president-elect’s willingness to entertain appointments from Wall Street was also in evidence as he summoned Gary Cohn, Goldman’s president and chief operating officer, for a 4pm meeting at Trump Tower on Tuesday afternoon, according to a person familiar with Mr Cohn’s movements.

Mr Cohn, who has been seen as the heir apparent to Lloyd Blankfein, the bank’s chairman and chief executive, was not offered any specific role, during a meeting that lasted for an hour and a half. Mr Cohn has been a prolific political donor. Most of his giving in recent years has been to the Republicans, according to opensecrets.org, including contributions to Marco Rubio, one of Mr Trump’s rivals for the party’s nomination for president.

However, Mr Trump has also met with Mitt Romney, the 2012 Republican presidential nominee and one of his most vocal critics during the campaign, over a potential secretary of state appointment. On Tuesday evening, Mr Trump and Mr Romney were dining in midtown Manhattan, with their wives, to discuss for a second time Mr Romney’s possible appointment.

On Wall Street Mr Mnuchin has a much lower profile than the previous two Treasury Secretaries drawn from Goldman Sachs: Robert Rubin and Hank Paulson. Mr Rubin, who served under Bill Clinton from 1995 to 1999, was a former co-chairman of the bank. Mr Paulson was chief executive of Goldman between 1998 and 2006 before a three-year stint in government, which spanned the depths of the financial crisis.

Mr Mnuchin became a Goldman partner but left in 2002, having risen to the top of the pile in trading government bonds and mortgage bonds, and in recent years has focused on west coast business opportunities, particularly in Hollywood, where he in credited as an executive producer on big budget films such as Batman v Superman: Dawn of Justice, Mad Max: Fury Road, and American Sniper.

On Wall Street, Mr Mnuchin was best known for snapping up IndyMac, the collapsed mortgage lender, in 2009. He brought in equity investors such as John Paulson, Chris Flowers, George Soros and Michael Dell, arranged the financing through Merrill Lynch, and took the chief executive role himself. The bank — renamed OneWest — was sold to CIT Group for $3.4bn last year.

“He did a tremendous job of orchestrating the job from beginning to end,” said Thomas Vartanian, a partner at Dechert in Washington who advised on the IndyMac deal. “He was just unflappable.”

Mr Mnuchin and Mr Ross will need to be confirmed by the US Senate, where some members have already warned Mr Trump against drawing too heavily from the ranks of a finance industry he promised to crack down on once in office.

“So much for draining the swamp,” said Adam Hodge, the Democratic National Committee’s communications director on Tuesday. “Nominating Steve Mnuchin to be Treasury Secretary — a billionaire hedge fund manager and Goldman Sachs alumnus who preyed on homeowners struggling during the recession — is a slap in the face to voters who hoped he would shake up Washington.”

In an open letter sent to Mr Trump last week, Sen Tammy Baldwin, a Democrat from Wisconsin, warned the president-elect not to fill his administration with Wall Street bankers, a move she said was akin to appointing “foxes to guard the hen house”.

Mr Mnuchin’s support for Mr Trump’s infrastructure plans could mean a boost to the Government’s already sizeable outstanding debt. That in turn could see the introduction of longer-bond maturities to the $13.8tn market, which currently only issues up to 30 years, making it an outlier among global government bond markets.

Fears of increased debt issuance reviving the battle over the debt ceiling have become less pronounced, however, thanks to Republican dominance of both houses of Congress, which the election that should make it easier to get any new deal through.

Mr Mnuchin has donated to both Republicans and Democrats, including Hillary Clinton, according to Federal Election Commission records​.