Whatever other failings the Trump administration might have, it has a real talent for perfectly timed ironies. Monday was a prime example. Shortly before 1 p.m., Bloomberg revealed that Trump was “looking at” breaking up big banks – comments that came shortly after Treasury Secretary Steve Mnuchin told financiers assembled at the Milken Conference, “You should all thank me for your bank stocks doing better.” They couldn't have achieved better comic effect if they'd tried.
Bank stocks dutifully swooned as Trump's comments generated a smattering of populist-sounding headlines. But the remark failed to interest one demographic you'd think might be at least slightly attuned to threats against the banking royalty: the people who work there. From the sidelines of the Milken Conference:
"I don't take Trump seriously," said a senior executive at one of the country's six largest banks. "I'm listening less and less." Like most who wanted to share their more candid views privately, the executive spoke on the condition of anonymity to avoid angering the president, his employer or business associates. But his comments were echoed by at least a dozen institutional investors and bank executives who spoke to Reuters.
Wall Street's apparent boredom with Trump was apparent in the way bank stocks moved after the Bloomberg piece hit. It was no surprise that shares tumbled immediately after the comments. Similar plunges occurred with companies like Lockheed Martin and General Motors when they found themselves on the wrong end of Trump's Twitter feed. But in most cases these stocks returned to previous levels within a day or two. Yet after Monday's surprise comments, it was even quickler. For most of the big universal banks, Citi and BofA among them, recouping losses took less than an hour.
What has Trump done to lose credibility on Wall Street? Between his 100-day promises of labeling China a currency manipulator, withdrawing from NAFTA, passing tax reform, and launching an infrastructure program, it's hard to say. So let's ask a different question: What would get Wall Street's attention?
"Until it's signed into law, you can't bank on it," said Aaron Cutler, a regulatory lawyer at Hogan Lovells who lobbies Congress on behalf of banks and hedge funds and was milling about on a sunny terrace. He said his clients are not yet acting on anything the administration says.
Oh yeah, that whole legislation thing. Yeah, that sounds important. How's that going, anyway?
House Republican leaders are on the brink of losing too many GOP votes to pass their health-care bill overturning much of the Affordable Care Act, potentially dashing hopes raised by the White House of a big legislative win this week.
It's also worth noting that Trump mused Glass-Steagally just a day before the House began markups on its Financial CHOICE Act, a bill that would roll back a host of regulations in exchange for higher capital levels from the big boys. The bill has no Glass Steagall elements and it doesn't appear the White House has sought any.
Bottom line: Carry on, Wall Street.