Steven Mnuchin, the Secretary of the Treasury, apparently figured that with the Treasury Department not having to pay almost a million federal workers while the government is shut down, he’d fly down to Cabo San Lucas for a nice Mexican vacation:
“Treasury [Sec.] Mnuchin, his wife Louise, and his teen daughter are vacationing at the ultra exclusive private estate resort, El Dorado, in Cabo San Lucas, Mexico, according to two people with first hand knowledge,” tweeted MSNBC’s Jesse Rodriguez.
This trip is likely costing taxpayers a decent amount of money, like past trips Steven Mnuchin has taken:
Seven trips by Treasury Secretary Steven Mnuchin on government planes cost a total of $811,800, according to a report released Thursday by the Treasury Department’s inspector general.
And the likelihood that Steven Mnuchin is billing a decent portion of this trip to taxpayers was increased by the fact that Steven Mnuchin decided to issue a strange press release from Cabo, in what appears to have been a transparent attempt to make it look like he is actually working instead of vacationing on the taxpayer dime:
Secretary Mnuchin convened individual calls with the CEOs of the nation's six largest banks. See attached statement. pic.twitter.com/IEb2kv6dx9
— Treasury Department (@USTreasury) December 23, 2018
In the press release, Mnuchin relayed how he had spoken to leaders of the country’s six largest banks about whether or not they had sufficient liquidity to perform basic banking operations.
This kind of conversation and press release would make sense…if the year was 2008. Ten years ago, there was a financial crisis that had enveloped the banking industry due to what had been way too loose and unregulated lending and a housing market that was in free fall. The stock market crashes of 2008 and 2009 were often precipitated by frightening news of the financial situation of a large bank or other financial services firm like Bear Stears, Lehman Brothers, Merrill Lynch, Washington Mutual, Countrywide Mortgage, etc.. So, it would not have been unusual for a Treasury Secretary to discuss banking liquidity and issue a press release during that time.
But, it isn’t 2008 anymore. It’s 2018.
There is no financial crisis happening. There are no large banks or financial services firms on the verge of collapse. There is no reason to reassure the country that the six largest banks have sufficient liquidity to perform basic banking operations. This conversation and press release from the Treasury Secretary makes no sense at all.
Besides not making sense, the other problem with sending out this press release is that it might suggest that there is an issue with the banks that people just don’t know about yet. Because why else would the Treasury Secretary have decided to make this call? In a stock market that is already jittery due to Trump’s trade war and government shutdown, and is heading for the worst December since the Great Depression, it is awfully irresponsible of the Secretary of the Treasury to potentially introduce another worry into the market, a worry about the banking system.
New York Times Columnist Paul Krugman was flummoxed by the press release for that very reason:
This is amazing. It's as if Mnuchin was trying to create a panic over something nobody was worried about until this release 1/ https://t.co/YJsGnEyOQD
— Paul Krugman (@paulkrugman) December 23, 2018
Wall Street analysts echoed Paul Krugman’s concern:
“Panic feeds panic and this looks like panic in the administration,” said Diane Swonk, chief economist at Grant Thornton. “Suggesting you might know something that no one else is worried about creates more unease.”
“It’s going to raise the question of whether Treasury and Mnuchin know something the markets don’t,” said Brian Gardner, Washington research director at Keefe, Bruyette & Woods. “Without clarifying further, it’s going to weigh on the markets.”
The likely truth about this phone call between Steven Mnuchin and the heads of the nation’s six largest banks, and resulting press release, is that its real purpose was to make it appear that the Treasury Secretary was actually working, not using taxpayer dollars to vacation in Mexico while almost a million federal workers are set to go unpaid over the holidays.
In the process, though, Steven Mnuchin has, at the least made it appear like he has no idea what he is doing by asking the heads of the six largest banks about a non-existent problem, or at the worst added another worry to an already jittery stock market.