Bulletin
Investor Alert
×
Rex Nutting

Rex Nutting Archives | Email alerts

Sept. 13, 2019, 8:48 a.m. EDT

Trump puts his own financial interests first when he badgers the Fed to cut interest rates to zero

The president is ‘talking his book,’ neglecting to mention that he would save millions of dollars with lower interest rates

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    30-Day U.S. Federal Funds Continuous Contract (FF00)

or Cancel Already have a watchlist? Log In

By Rex Nutting, MarketWatch


Tim Boyle/Bloomberg News
Donald Trump borrowed $69 million to refinance his Chicago hotel. If the Fed slashed interest rates as Trump has decreed, he would save millions on this and other loans.

Wall Street pros have a term for people who recommend whichever actions will make them the most money: Talking their book.

When your broker calls out of the blue to tell you should buy XYZ stock without mentioning that he’s also trying to sell his own shares, he’s talking his book. When a trader goes on TV to bad-mouth PDQ bonds, seeking to drive down the price so she can secretly pick up some more on the cheap, she’s talking her book.

Or when an overleveraged president hounds the Federal Reserve to lower interest rates (even below zero!), without ever coming clean about the fact that lower rates would save him millions of dollars a year, you know what he’s up to.

The American people should not have to wonder if the president or his close advisers have a conflict of interest.

Yes. I know it is shocking, but Donald J. Trump is talking his book when he says the U.S. economy badly needs lower or even negative interest rates. He says he’s doing it for us, but really he’s doing it for the Trump Organization and for Donald J. Trump, which are the same thing.

Public interests first

It’s assumed that everyone on Wall Street always talks their book, but that’s not so in Washington, where public officials are supposed to put the people’s interests first and their own financial interests into a blind trust so they have no idea if their decisions would help or hurt their portfolio.

At least that was the way it was until Trump came to town to drain the swamp. He refused to divest his assets. He denied that it was even possible for a president to have a conflict of interest. Although he claims that he no longer runs the Trump Organization, he still owns it and stands to benefit when the government favors his company, which it does every day (and twice on Sundays).

If you think it is immoral, if not illegal, for the president to earn an emolument when (to give just one example among thousands ) he rents golf carts to the Secret Service agents whose job it is to give up their lives if necessary to protect him on the back nine, then you have a better ethical compass than every Republican politician (now that Justin Amash has left the party, that is).

Low interest-rate guy

It’s largely forgotten now, but Trump has been calling for lower interest rates since early in his term, when the top of the fed funds target range /zigman2/quotes/210002368/delayed FF00 -0.02%  was only 1%. At that time, the economy did not need lower interest rates, but the self-described King of Debt sure did.

Also read: Dear Mr. President, why is it a good thing if a 10-year Treasury note is pays less than a bag of dirt?

During the campaign of 2016, Trump briefly put his political interests ahead of his money, complaining loudly and frequently that the Fed had kept rates unnecessarily low in order to benefit President Barack Obama and Democratic presidential candidate Hillary Clinton.

But as soon as he was in office, Trump’s political and financial interests aligned again. He flip-flopped and argued that low interest rates were good, not bad. “I do like a low-interest-rate policy, I must be honest with you,” Trump told the Wall Street Journal.

Trump’s complaints about interest rates continued even after he replaced Fed Chair Janet Yellen with Jerome Powell, after he appointed more Fed governors, and even after the 2017 tax-cut bill pushed the economy into a temporarily higher orbit.

/zigman2/quotes/210002368/delayed
US : U.S.: CBOT
$ 98.11
-0.02 -0.02%
Volume: 153,416
Sept. 13, 2019 4:00p
loading...
1 2
This Story has 0 Comments
Be the first to comment
More News In
Economy & Politics

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.