Warren demands details on Mnuchin's December calls to bank CEOs

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WASHINGTON — Sen. Elizabeth Warren, D-Mass., is asking Treasury Secretary Steven Mnuchin why he called chief executives of the six largest U.S. banks to confirm they had adequate liquidity in the midst of market turmoil in December.

“The public announcement of these calls was a rare step for a Treasury Secretary to take,” Warren said in her letter to Mnuchin dated Jan. 18. “Moreover, your calls sought to assuage a concern — the liquidity of banks — that neither banking regulators nor executives had publicly indicated was a problem.”

The Treasury Department announced the calls on Dec. 23 during a series of sizable declines in market indexes, stating that the CEOs had “confirmed that they have ample liquidity available for lending to consumer, business markets, and all other market operations.”

But revelations of those calls seemed to raise more questions about the state of the financial system. Following Treasury's announcement, the S&P 500 declined by 2.7%. Mnuchin's calls also came amid reports that President Trump was weighing whether he could fire Federal Reserve Board Chair Jerome Powell, and at the beginning of the partial government shutdown.

Warren separately wrote to the chief executives of Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo and Bank of America asking for more details about their discussions with Mnuchin and who else participated in the calls.

In her letter to Mnuchin, Warren asked about what risks to the banking system triggered his concerns and prompted his statement; a summary of the conversation with each bank executive, why he called a meeting with the working group on financial markets and a summary of those discussions; and if the Treasury Department has information that financial institutions are facing liquidity risks, clearance or margin risks, or other risks to market operations that could negatively impact the U.S. economy.

Warren is asking the bank executives for a summary of the calls and any notes or analysis produced in conjunction with them, a list of all persons participating in the calls, and any actions taken by the banks in response to the calls.

“Given the outsized role of liquidity problems in the 2008 financial crisis, we would like to better understand the nature of the call you had with Secretary Mnuchin regarding risks to the U.S. banking system,” Warren said.

Warren is also asking the banks how the events of the week leading up to the calls affected their liquidity and if they have any information indicating that financial institutions are facing liquidity and other risks.

“The S&P 500 had dropped 7.1 percent the previous week; the Nasdaq Composite Index had entered into a bear market; parts of the federal government were in the midst of shutting down; and President Trump was reportedly considering firing Federal Reserve Chairman Jerome Powell over the Fed's recent interest-rate hike and months of stock market losses,” Warren said.

Warren has asked Mnuchin and the bank executives to respond to her inquiries by Jan. 28.

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