Wall Street probably wasn’t expecting to find a friend in President Trump, the populist candidate who vowed the industry would no longer “get away with murder.”
On the campaign trail, Trump slammed Wall Street for causing “tremendous problems” and promised to “drain the swamp” in part by breaking up the biggest banks. Trump knocked Hillary Clinton’s paid speeches to Wall Street and villainized Goldman Sachs in his closing campaign ad.
Yet Wall Street is enjoying an incredible reversal of fortunes in Washington now that Trump has replaced former President Obama, who famously called bank CEOs “fat cats.”
Consider the optics of Trump’s executive order last Friday that kicked off the process of rolling back the Dodd-Frank financial reform law. Seated next to the president was Wall Street mega billionaire Stephen Schwarzman, the man who had cobbled together the “world-class group” of CEOs that were at the meeting.
Also at the table was Wall Street’s best-known CEO: Jamie Dimon of JPMorgan Chase.
“There’s nobody better to tell me about Dodd-Frank than Jamie,” Trump pointed out.
Trump also lavished praised on Larry Fink, the BlackRock boss, for making him richer. “Larry did a great job for me. He managed a lot of my money. I have to tell you, he got me great returns,” Trump said.
And the face of the Trump administration’s financial deregulation: Gary Cohn, who was Goldman Sachs’ No. 2 executive until December. Cohn was named Trump’s top economic adviser and walked away from Goldman with a $285 million haul that is raising conflict of interest concerns.
On Friday, Cohn appeared on TV channels and granted interviews to explain the planned changes, telling Bloomberg, “We’re going to attack all aspects of Dodd-Frank.”
Cohn also stood behind Trump in the Oval Office, looming over the president as he signed the executive order.
Trump’s critics pounced, claiming the new president is essentially letting the fox guard the henhouse.
“This guy is a fraud,” Senator Bernie Sanders told CNN’s Jake Tapper on “State of the Union” on Sunday, pointing to Trump’s campaign promises to take on Wall Street.
“It is hard not to laugh to see President Trump alongside these Wall Street guys…I think he is going to sell out the middle class, the working class, of this country,” Sanders said.
Trump defended his willingness to lean on Wall Street CEOs for advice, explaining he’s focused on creating jobs.
“When I campaigned for office I promised the American people that I’d ask for our country’s best and brightest,” Trump said on Friday.
This newfound friendship between Wall Street and Washington is an about-face from life under Obama.
Bank CEOs never forgave Obama for calling them “fat cats” in the opening weeks of his administration amid a public uproar over golden parachutes for execs who contributed to the financial crisis.
Now big bank stocks are enjoying a big post-election surge, which continued last week as Trump promised to “do a big number” on the shackles placed on Wall Street following the 2008 meltdown that wrecked the economy.
Goldman Sachs stock alone surged nearly 5% on Friday, up an incredible 33% since Trump’s victory. Goldman, like other big banks, is benefiting from Trump’s bashing of the laws put in place to prevent another Wall Street meltdown. Bank stocks are climbing on hopes that Trump will usher in faster growth in part by slashing taxes.
It can’t hurt that Trump has hired numerous ex-Goldman Sachs guys to help him run the country. Treasury secretary nominee Steven Mnuchin was a Goldman Sachs partner, Trump’s chief strategist Steve Bannon also worked there, and Trump picked Jay Clayton, a former Goldman lawyer, to lead the SEC.
