Goldman Sachs poised for return to power in Trump White House
NEW YORK — Government Sachs is returning to Washington.
After a decade in the wilderness, Wall Street’s most powerful firm, Goldman Sachs, is dominating the early days of the incoming Trump administration. The newly picked Treasury Secretary, Steven Mnuchin, spent 17 years at Goldman. Trump’s top incoming White House adviser, Steve Bannon, spent his early career at the bank. So did Anthony Scaramucci, one of Trump’s top transition advisers.
Goldman’s president, Gary Cohn, spent an hour schmoozing with President-elect Donald Trump on Tuesday and could be up for an administration job, possibly as director of the Office of Management and Budget, people close to Cohn and the transition said. Cohn, a long-time commodities trader, is friendly with Trump’s powerful son-in-law, Jared Kushner.
It’s a stunning reversal of fortune for Goldman, a long-time Washington power that fell out of favor following the financial crisis. CEO Lloyd Blankfein got hauled before Congress along with other Wall Street executives to account for their behavior. And Trump, who ran as a populist and bashed Wall Street on the campaign trail, featured Blankfein as a shady and dangerous character in his final campaign ad.
Rolling Stone’s Matt Taibbi famously labeled Goldman the “great Vampire Squid” on the face of America.
Had Hillary Clinton won the White House, Goldman faced a virtual lock-out from Washington with Sens. Elizabeth Warren and Bernie Sanders poised to block and major picks from the bank or any other firm on Wall Street.
Now Goldman, whose proximity to the levers of power dates to the early 20th Century and the creation of the Federal Reserve, stands to return to a level of influence unmatched by any other company in America. And Warren and her allies are left throwing darts from the sidelines.
“We are talking about a massive change in tone in literally just three weeks,” said William Cohan a former banker and author of “Money and Power: How Goldman Sachs Came to Run the World. “If this had gone as the cognoscenti thought it was going to go we would be hearing Elizabeth Warren with her megaphone saying no one with a Wall Street background is getting anywhere near a Washington job.”
The rise of Goldman is also filled with ironies for Trump, even beyond his recent bashing of Blankfein.
Like many Wall Street banks, Goldman stopped doing business with the real estate mogul years ago, scared off by his bankruptcy filings. Many of the firm’s top executives made it clear they preferred Clinton for president.
Now Mnuchin, whose father was also a powerful Goldman banker, will be Trump’s top economic adviser, and he is already promising an agenda that thrills Wall Street and terrifies many Democrats.
“Our number one priority will be tax reform. This will be the largest tax change since Reagan,” Mnuchin said on CNBC’s “Squawk Box” on Wednesday, flanked by Wilbur Ross, the billionaire investor tapped by Trump to serve as Commerce secretary. “We’re going to cut corporate taxes … we’re going to get to 15 percent,” said Mnuchin, who also argued for changing parts of the Dodd-Frank financial reform law that curtailed many of Wall Street’s swashbuckling ways.
“The number one problem with Dodd-Frank is it’s way too complicated and it cuts back on lending,” Mnuchin said. “So we want to strip back parts of Dodd-Frank that prevent banks from lending. And that will be the number one priority on the regulatory side.”
Those kinds of comments and the rise of Goldman and Wall Street influence in Trump’s Washington is sending progressive Democrats into a panic. Liberals fear an agenda that will slash tax rates for the wealthy and corporations and gut regulations while allowing Wall Street to go back to the kind of trading practices that helped fuel the financial crisis.
Even many reform-minded conservatives wanted Trump to pick a different Treasury Secretary, someone like House Financial Services Chairman Jeb Hensarling or former BB&T CEO John Allison for the job. Both have strong views on increasing bank capital requirements and fighting so-called “Too Big to Fail” institutions. It’s much less clear that Mnuchin will do anything to make life difficult for large banks.
Warren came out firing against Mnuchin on Tuesday night. And Democrats plan to hammer the Treasury nominee’s record as head of OneWest, a California bank derided as a “foreclosure machine” during the depths of the crisis.
“Steve Mnuchin is the Forrest Gump of the financial crisis — he managed to participate in all the worst practices on Wall Street,” Warren said in a statement on Tuesday night. “He spent two decades at Goldman Sachs helping the bank peddle the same kind of mortgage products that blew up the economy and sucked down billions in taxpayer bailout money before he moved on to run a bank that was infamous for aggressively foreclosing on families.”
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