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Mnuchin calls banks amid market turmoil; Trump 'never suggested' firing Powell

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Mnuchin calls banks amid market turmoil; Trump 'never suggested' firing Powell

Treasury Secretary Steven Mnuchin's statements on Federal Reserve Chairman Jerome Powell and the availability of liquidity at top U.S. banks are garnering a lot of media attention.

After equity markets witnessed heavy losses last week, Mnuchin tweeted over the weekend that he held individual calls with the CEOs of Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Wells Fargo & Co. to discuss market stability and liquidity. The heads of the top banks confirmed that they have more than sufficient credit to extend to consumers and businesses. On Monday, Mnuchin will hold a call with the President's Working Group on financial markets, which he chairs.

Mnuchin also tweeted about reports on the possibility of President Donald Trump firing Federal Reserve Chairman Jerome Powell. According to the Treasury Secretary, Trump said: "I totally disagree with Fed policy. I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute terrible thing to do at this time ... especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so."

White House advisers, including Mick Mulvaney, the president's incoming chief of staff, have sought to dismiss growing speculation around the potential firing of Powell, The Wall Street Journal reported. Mulvaney said on ABC's "This Week" that Trump "now realizes" he cannot take such an action.

Five federal regulatory agencies have proposed excluding certain community banks from the restrictions of the Volcker Rule. The proposal would remove restrictions on community banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5% or less of total consolidated assets from engaging in proprietary trading and from owning or sponsoring hedge funds or private equity funds.

Corporate and investment banks in London are subject to relatively higher taxes than those operating in other global financial centers like Frankfurt, New York, Dubai and Singapore, a new study commissioned by industry body U.K. Finance showed.

The U.S. Securities and Exchange Commission has for the first time set its sights on robo-advisers. The securities regulator ordered Wealthfront Advisers LLC and Hedgeable Inc. to pay $250,000 and $80,000, respectively, for allegedly making false statements and misleading advertisements about investment products.

A loan loss accounting that method that will soon become effective in the banking industry will not impact the Federal Reserve's existing framework for modeling loan allowances in the big-bank stress tests it conducts through 2021. The 2019, 2020 and 2021 cycles of stress tests known as the Comprehensive Capital Analysis and Review will not be modified, the Fed said.

UBS AG agreed to pay $68 million as part of a settlement with 39 U.S. states and the District of Columbia, joining the growing list of banks that entered into multistate settlement over alleged manipulation of the London interbank offered rate, or Libor. Citigroup, Barclays and Deutsche Bank, have also reached similar settlements.

In other parts of the world

Asia-Pacific: China dismisses US hacking charges; SoftBank telecom unit flops on trading debut

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng decreased 0.40% to 25,651.38, while the Nikkei 225 decreased 1.11% to 20,166.19.

In Europe, around midday, the FTSE 100 decreased 0.60% to 6,680.60, and the Euronext 100 decreased 1.08% to 899.85.

On the macro front

The Chicago Fed national activity index is due out today.

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