Treasury Secretary Steven Mnuchin mounted an awkward defense of President Trump’s conduct in a July call with Ukrainian President Volodymyr Zelensky.
He dismissed as “speculation” reporting by The Washington Post and the Wall Street Journal that Trump pressed his counterpart to investigate former vice president Joe Biden. The president later confirmed he raised the subject of the former vice president and Trump challenger in the call. (“The conversation I had was largely congratulatory, was largely corruption, all of the corruption taking place, was largely the fact that we don’t want our people, like Vice President Biden and his son, creating to the corruption already in the Ukraine,” Trump told reporters.)
And Mnuchin said it was “inappropriate” that Biden’s son, Hunter, “did very significant business dealings in Ukraine” while his father was in office, laying out a standard that the Trump family is currently violating, as CNN's “State of the Union” host Jake Tapper pointed out during their interview.
Mnuchin’s advocacy for the president on controversies of all stripes carries real financial risk. He can move markets with his words: The dollar tanked last year when the secretary made some offhand comments that a weak dollar would benefit trade. In the event of an economic crisis, Mnuchin could be called on to reassure the public. His ability to do so would rest on his credibility.
This isn't the first time Mnuchin has advanced controversial arguments in defense of his boss. He was notably outspoken, for example, amid the furor over Trump’s “both sides” comments after the violence in Charlottesville two years ago. At the time, Mnuchin waved off a pressure campaign urging him to resign, including 300 members of his Yale college class. The performance earned him a stinging rebuke from one of his predecessors:
Steven Mnuchin may be the greatest sycophant in Cabinet history.— Lawrence H. Summers (@LHSummers) September 24, 2017
That unblinking loyalty — Mnuchin once said Trump has “perfect genes” — helps explain the Treasury secretary's relative longevity in the Trump administration. Of 16 Cabinet-level positions, only seven officials, including Mnuchin, survive from the president’s original lineup. One of the alums from that roster, former defense secretary Jim Mattis, demonstrated a path easier taken by ex-officials. “This is not something I have background on,” Mattis told ABC’s Martha Raddatz on “This Week,” declining to discuss the matter. Or he could acknowledge the obvious: It would be wrong for the president to pressure a foreign leader to probe a domestic political opponent.
Mnuchin, on the other hand, offered a more aggressive defense of the president than some other Trump surrogates. Whereas Secretary of State Mike Pompeo, also appearing on ABC, suggested “it wouldn’t be appropriate” for the White House to release the transcript of Trump’s conversation with Zelensky, the Treasury secretary went further. He said it would “set a terrible precedent” because “conversations between world leaders are meant to be confidential.” And if the administration hands it over to Congress, it probably would leak, Mnuchin said.
Trump later in the day told reporters he was considering whether to do so.
— German economy edges toward recession. WSJ's Paul Hannon: "Germany’s economy is on the brink of recession, according to a survey of purchasing managers that recorded the sharpest fall in business activity in almost seven years during September, reflecting the deepening hit to factories from the U.S.’s trade war with China and uncertainty around the U.K.’s departure from the European Union.
"The downturn in Europe’s largest economy has been led by its manufacturing sector, which is heavily dependent on exports and has been hit by weakening demand from the U.K., China, Turkey and elsewhere over the past year. But in September the sector experienced an even sharper contraction, as its Purchasing Managers Index slumped to 41.4 from 43.5 in August, hitting its lowest level in more than a decade. A reading below 50.0 points to a decline in activity."
— Trump's Fed tweets move markets. Bloomberg's Simon Kennedy: "Trump’s Twitter attacks on the Federal Reserve are prompting investors to bet the central bank will bow to political pressure and lower interest rates, according to a new study. Trump has frequently used social media to criticize the Fed and Chairman Jerome Powell for running rates higher than he thinks they should be. A review of such tweets and the market response by economists from Duke University and the London Business School found they have a “statistically significant and negative effect” on markets. The broadsides knocked a combined 10 basis points off the expected fed funds futures contract, the equivalent to about 0.30 basis points per Tweet, the study found."
— Chinese negotiators cut trip short. CNBC's Yun Li: "Chinese trade negotiators had a sudden change of plans Friday, canceling a visit to meet U.S. farmers after they wrapped up trade talks in Washington this week. The Chinese delegation has changed its travel schedule and is headed back to China earlier than planned, according to Nicole Rolf, the Montana Farm Bureau Federation’s director of national affairs. There was no explanation as to why they were cutting their trip short, Rolf said.
"Nebraska department of agriculture also said the Chinese officials called off a visit to farms in Nebraska. U.S. Secretary of Agriculture Sonny Perdue confirmed just Thursday the meetings were in the works as a way for China to build goodwill with American farmers."
— Trump names China hawk as deputy national security advisor. WSJ's Vivian Salama: "Trump has chosen one of his leading policy counselors on China and North Korea as his new deputy national security adviser, according to an administration official. Matt Pottinger, who served in the Marines and worked earlier in his career as a China-based correspondent for The Wall Street Journal, will be the No. 2 to Robert O’Brien, who was named as Mr. Trump’s fourth national security adviser earlier this week. The administration official said that Vice President Mike Pence had been advocating for Mr. Pottinger in recent days given his work on some of the biggest policy challenges facing the Trump administration."
DOJ warns about Chinese IP theft. CNBC's Nancy Hungerford: "The Department of Justice has a warning for companies: Bolster your defenses. 'More cases are being opened that implicate trade secret theft' — and more of them point to China, said U.S. Deputy Assistant Attorney General Adam Hickey. Since 2012, more than 80% of economic espionage cases brought by the department’s National Security Division have implicated China. The frequency of cases has been rising in recent years, according to Hickey."
— Adelson reportedly warns Trump about trade war: “[Trump’s] sudden escalation of the trade war with China last month triggered a telephone call from billionaire casino owner Sheldon Adelson, who warned the president about the conflict’s impact on the U.S. economy and Mr. Trump’s re-election prospects, according to people familiar with the call,” the Wall Street Journal’s Alex Leary, William Mauldin and Kate O’Keeffe report.
“During his call with Mr. Trump, Mr. Adelson focused on the broader implications of the U.S.-China trade war and their potential political consequences for Mr. Trump, according to one of the people, and not on his own company’s situation. Representatives for Mr. Adelson, a major donor to the Republican Party, have also spoken with members of Mr. Trump’s re-election campaign, according to this person.”
— One company has filed more than 10,000 tariff waivers: “U.S. companies have filed more than 16,000 requests for exemptions from the $200 billion tranche of tariffs on Chinese goods that the Trump administration imposed one year ago. Of those appeals, over 10,000 have come from just one company: Arrowhead Engineered Products Inc. of Blaine, Minn.,” WSJ’s Josh Zumbrun, Anthony DeBarros and Chad Day report.
“Companies have taken different approaches to the exclusion process. Some have filed only for a few key items. Others have filed single applications that cover many products, especially if those items all fall under the same 10-digit code in the tariff schedule. Trade attorneys and experts have said it isn’t clear which tack is more effective.”
— Pressure mounts on WeWork’s CEO: “ The knives are out for WeWork CEO Adam Neumann,” Bloomberg News’s Gillian Tan, Sarah McBride, and Michelle Davis report.
“With the drama of a palace coup, some directors are considering a plan to encourage the brash co-founder of the once high-flying real estate startup to step down as chief executive, according to people familiar with the situation. Among them: Masayoshi Son, the founder of SoftBank Group Corp., WeWork’s biggest investor, a person said.”
- A board meeting is scheduled for this morning: “ … In what would be a remarkable showdown between the 40-year-old Neumann and his billionaire backer. The directors are said to be considering asking him to become non-executive chairman.”
— Big companies set emissions goals before U.N. summit: “We Mean Business,” a coalition of advocacy groups, said dozens of companies had joined the initiative in the two months leading up to a United Nations summit taking place ... which aims to spur faster action on climate change,” Reuters’s Matthew Green reports. “We Mean Business said 87 companies are now involved, with total market capitalization of more than $2.3 trillion.”
“Some companies in the coalition have agreed to slash their carbon emissions to net zero by 2050, including Swiss food company Nestle, French building materials company Saint-Gobain, and French cosmetics maker L’Oreal. This group includes Finnish telecoms company Nokia, French food group Danone and British drug maker AstraZeneca Plc, We Mean Business said.”
— Big week ahead for Fannie, Freddie: “Mortgage-finance companies Fannie Mae and Freddie Mac are expected to start keeping their earnings as early as this week, pausing a yearslong arrangement in which they handed nearly all of their profits to the Treasury Department,” WSJ’s Andrew Ackerman reports.
“The move, in an expected agreement between the Trump administration and their federal regulator, would be an initial major step in allowing the companies to build up capital so they can operate as private companies again. Under the forthcoming agreement, the companies would be allowed to retain about a year’s worth of profits, or about $20 billion, Mark Calabria, the Federal Housing Finance Agency chief, said in an interview after touring a senior center financed in part by the Federal Home Loan Bank of Indianapolis.”
It’s also a key week for the future of Boeing’s 737 Max: “With a crucial summit for the Boeing Co. 737 Max looming this week, regulators are downplaying the threat of a rupture to a decades-old working relationship between U.S. and European aviation authorities,” Bloomberg News’s Julie Johnsson and Alan Levin report.
“On the eve of a gathering of about 50 airworthiness experts in Montreal, the top European regulator, Patrick Ky, suggested that the Max could return to the air in the U.S. and Europe at almost the same time. And officials privately have been discussing whether a critical disagreement over the jet’s architecture could be resolved after it resumes commercial flight, according to people familiar with the talks.”
— 2020 Dems jostle for labor support. NYT's Stephanie Saul: "The Democratic presidential candidates have been chasing labor support all summer, appearing at small union halls and large conferences, and tweeting support for workers at companies like Amazon and Walmart. But now, as the United Automobile Workers, one of the nation’s largest unions, stages a strike that has even drawn words of support from President Trump, Democrats are seizing the moment to align themselves with workers in public and dramatic ways.
"Senator Elizabeth Warren of Massachusetts walked the picket line Sunday alongside striking General Motors workers at an assembly plant in Detroit. Not to be outdone, former Vice President Joseph R. Biden Jr. appeared at another G.M. assembly plant in Kansas City, Kan."
— Post-Madoff SEC targets Ponzi schemes. NYT's Angela Wang: "The S.E.C. brought 50 percent more Ponzi prosecutions in the decade after Mr. Madoff’s arrest than in the 10 years before, according to a New York Times analysis of the agency’s enforcement announcements. Whether the increase is the result of enhanced enforcement or a proliferation of scammers, records show that Ponzi victims lost $31 billion in the decade beginning 2009, more than three times the amount lost in non-Madoff schemes in the previous decade."
- The Brookings Institution hosts an event on gender and racial diversity of the federal governments economists, featuring former Fed Chair Janet Yellen.
- The House Financial Services Committee holds a hearing on oversight of the SEC on Tuesday, chairman Jay Clayton and all four commissioners are scheduled to appear.
- Nike, Nio, CarMax, AutoZone, Cintas and Chewy are among the notable companies reporting their earnings on Tuesday, per Kiplinger.
- The Financial Services Subcommittee on Diversity and Inclusion holds a hearing on the racial wealth gap on Tuesday.
- The Commerce Department releases data on new home sales for August on Wednesday.
- KB Home is among the notable companies reporting its earnings on Wednesday, per Kiplinger.
- The Senate Banking Committee holds a hearing on “facilitating faster payments” on Wednesday.
- Accenture, Conagra and Carnival are among the notable companies reporting their earnings on Thursday, per Kiplinger.
- The Financial Services Committee holds a hearing on abusive debt collection practices on Thursday.
- The Financial Services’ Task Force on Technology holds a hearing on real-time payments on Thursday.
- The Chief Economist of the American Farm Bureau Federation speaks at the National Economist Club on Thursday.
From The Post's Tom Toles: