Economy

What Steven Mnuchin in Treasury and Wilbur Ross in Commerce Mean in the Trump Economy

Mnuchin also addressed Dodd-Frank by saying that the parts impacting small businesses and the parts of Dodd-Frank that prevent banks from lending would be rolled back. On the Volcker Rule, he thinks it is too complicated and people don’t know how to interpret it. These may not be the exact “kill Dodd-Frank” words you have heard along the way, but like the tax issue we shall have to see what is doable in session rather than what has been and will be said in passing.

Wilbur Ross is, or now was, the chairman and chief strategy officer for private equity firm WL Ross & Co. under Invesco. He holds a MBA from Harvard and his background in private equity has led to post-bankruptcy and distressed investing. He has not shied away from investing in Ireland and Greece during their hard times, and he has even in been involved in steel and coal. Ross’s biography on the Invesco site even indicates that he has assisted in restructuring more than $200 billion in corporate liabilities and that he was a managing director of Rothschild for 24 years.

Ross will also have to make some changes on boards of directors he is on. CNN Money showed that Ross is on the boards of the Bank of Cyprus, Arcelor Mittal (steel), Sun Bancorp (banking) and Exco Resources (natural gas and oil).

Ross once described losing a AAA credit rating in past years better than anyone else ever has, perhaps ever:

Having a Triple-A rating is a lot like virginity. It’s easy lose and very difficult to get back.

On a CNBC interview early on Wednesday, Ross addressed the Carrier Air announcement that they were keeping those jobs in America rather than sending them to Mexico — we have a trade victory before we’ve even come into office. He said on how to view trade and protectionism:

First of all, protectionism is a pejorative term. It’s not really something that’s meaningful. There’s trade, sensible trade, and dumb trade. We’ve been doing a lot of dumb trade. That’s the part that’s going to get fixed.

Ross addressed the Trans Pacific Partnership (TPP) quite clearly on a Fox Business interview (also with Mnuchin):

It’s not going to happen. … It’s a flawed agreement. … Under TPP the trade and tax treaties make it a silly treaty.

Ross went on to say that the United States is the biggest market and those nations should be thinking of themselves as valued suppliers to their main customer. NAFTA also will be addressed, but Ross then reconfirmed on Yahoo! Finance video what he had said earlier in the day: “There are not going to be trade wars … even though Mexico knows it is going to have to make concessions.”

Ross also addressed breaking down some of the regulations as well. He went on to tell CNBC that many smaller banks have grown such that they now have more compliance people than they have lending offices.

What was interesting was that neither Mnuchin nor Ross slammed Janet Yellen as chair of the Federal Reserve. Yellen’s term ends in early 2018. That wasn’t always the case under the campaign trail. Mnuchin told CNBC that Yellen has done a good job. Ross also said he thinks Yellen has done a reasonably good job under tough circumstances. Still, both Mnuchin and Ross declined to address whether Yellen would be reappointed, despite signaling that two vacancies on the Fed’s Board of Governors would need to be filled in short order.

As noted earlier, some people will criticize one or more of these appointments. The Democratic National Committee’s Adam Hodge was not full of praise at all. That might have been expected considering the source, but here is what he said:

So much for draining the swamp. 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. Trump is already heading into office as the most corrupt, conflicted, and unpopular president-elect in history, and now he’s breaking his signature promise to the voters who elected him.

24/7 Wall St. wanted to offer a look at both sides of the coin here on what to expect from the Commerce Department and the Treasury in 2017 and beyond.

Again, all cabinet appointments have to get approval. As for the rest, we shall have to wait and see what really gets done in the first 100 days and then beyond.