Via Zero Hedge:
FBR (Edward Mills)
- Mnuchin’s Wall Street, banking background sends “strong signal” he’ll pursue “much less aggressive” regulatory, policy agendas, though little is known of specific policy positions
- Likely “net positive” for financials as shows Trump’s willingness to pick individuals from industry who may change current financial policy; may foreshadow painting DoddFrank as drag on the economy, economic growth
- Has “significant powers” related to FNMA, FMCC conservatorship; tenure as head of mortgage bond trading at GS, role at OneWest demonstrate “significant background” in mortgage industry
COWEN (Jaret Seiberg)
- Positive for regional banks; cautious about influence on biggest banks, GSEs, as Trump adviser Steve Bannon (mega- bank critic, self-described “economic nationalist”) may play bigger role on bank policy from White House
- Nomination isn’t GS ‘‘revival”; cites Mnuchin’s ‘‘second career’’ distancing him from GS, including creating OneWest from IndyMac’s remains, selling it to CIT, which suggests he understands regional banks’ challenges; GS ‘‘lineage” might force him to be tough on mega banks
- Notes Trump on campaign trail “ripped” Wall Street, vowed not to let Wall Street control the country, yet picked former GS partner as Treasury secretary, met Nov. 29 with top GS official, is expected to name another GS alumnus/SkyBridge’s Anthony Scaramucci as top Treasury deputy
- Says Scaramucci “best known as the former Obama supporter” who once asked president when he’d stop bashing Wall Street
- Cowen still worried about push to leverage capital from risk-based capital (supported by conservatives); watching for Trump nomination of Fed vice chairman for supervision; may give job to conservative to build goodwill with party; doesn’t see “quick deal” for FNMA, FMCC
KBW (Brian Gardner)
- “Unorthodox” pick creates uncertainty about future policy as Mnuchin is “blank slate,” with broad experience in finance, who seems to have said or written little on financial regulation, tax policy
- Too early to know whether selection will be positive or negative for financial services
- Notes any Dodd-Frank changes will have to pass Senate, possible Senate Democrats filibuster; Mnuchin political skill in achieving compromise “remains to be seen”
HEIGHT SECURITIES (Edwin Groshans)
- Mnuchin’s comments positive for GSE pfd, common shareholders
- At the same time, est. FNMA would need to raise at least $190b of capital, FMCC would need $119b in order to meet minimum risk-based capital requirements — which means no capital would flow to shareholders for a decade or longer
- April 20, If Fannie, Freddie Holders Win, Need ‘a Lot’ of Capital: Height
BEACON ADVISORS
- Trump expected to direct Mnuchin early in his term to designate China as currency manipulator; Mnuchin will be “heavily involved” in shaping tax reform package congressional Republicans will shepherd through legislative process next year
- Reported choice of Scaramucci as deputy means neither of Treasury’s top 2 people will have had prior government experience
COMPASS POINT (Isaac Boltansky)
- Mnuchin may be “comparatively moderate voice” on financial regulations vs other potential candidates like Rep. Jeb Hensarling or John Allison, who may have advocated for “far more draconian” Dodd-Frank rollback
- Sees populist anti-big bank rhetoric reemerging as Mnuchin will join fellow Goldman alum, at least 2 billionaires in Trump’s inner circle; Trump may face pressure to renew populist “bona fides”
