US treasury secretary calls on heads of country’s largest banks

US Treasury Secretary Steven Mnuchin has made calls to the heads of the country’s six largest banks, in an unusual move aimed at reassuring investors after big falls in US stocks.

Last week, US stocks suffered one of the worst weekly falls in a decade, as an interest rate rise and US-China trade tensions rattled markets.

Mnuchin said banks confirmed they had “ample liquidity” for operations.

It also comes amid a partial government shutdown over spending plans.

“The [bank’s chief executives] confirmed that they have ample liquidity available for lending to consumer, business markets, and all other market operations,” the Treasury said in a statement attached to a tweet from Mnuchin.

“[Mnuchin] also confirmed that they have not experienced any clearance or margin issues and that the markets continue to function properly,” the Treasury’s statement said.

Analysts warned the unexpected statement could end up worrying rather than reassuring investors.

Mnuchin also tried to dismiss reports that President Donald Trump had discussed the possibility of firing Federal Reserve chairman Jerome Powell after the US central bank raised interest rates last week.

The US Treasury secretary tweeted that he had spoken to the president, who insisted he “never suggested firing” Powell and did not believe he had the right to do so.

All three US indexes closed lower last week, with the technology-focused Nasdaq down 20% since its peak, placing it in so-called “bear market” territory.

US investors are worried about a range of factors including slowing economic growth at home and internationally.

In addition, a partial US government shutdown began at midnight on Friday after opposition Democrats resisted President Donald Trump’s demand for $5bn (£4bn) for his Mexico border wall.

The shutdown over budget spending could continue right up to the opening of the next Congress on 3 January.

Mnuchin is now set to meet with the President’s Working Group on Monday, the Treasury statement said.

The group includes market regulators and Federal Reserve governors, among others. They will discuss “coordination efforts to assure normal market operations”, the statement said.

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here