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Your guide to what the 2024 US election means for Washington and the world
The key choices in Donald Trump’s elite are in some ways similar to those of many presidents before him – mostly male, very wealthy and from the financial services industry.
However, Trump’s candidates differ on one important point. They are not common. The list is notably devoid of prominent bankers, breaking with the tradition (even supported by Trump Mk I) that financial picks can often be drawn from the likes of Goldman Sachs.
This is true across the board – from vice president-elect JD Vance, venture capitalist, and Treasury secretary Scott Bessent, hedge fund manager, to UK ambassador Warren Stephens, self-made investment bankerand Turkey’s new ambassador Tom Barrack, a private equity and investment banker.
Many of Trump’s financiers have been significant campaign donors and/or business partners during his tenure as a property magnate.
The “property system” of patronage in US politics – an 18th-century tradition that allowed presidents to bolster loyalty by appointing friends and family to government jobs – was supposed to be abolished by a series of legal reforms that began in the late 19th. a century. The incoming president not only accepted the popular administration of Andrew Jackson, the seventh president of the United States, but he did so in a way that will cause major financial and political conflicts. How the legal restrictions will work to monitor these conflicts is unclear.
The good news of Trump’s nomination so far is that these are the no-nonsense people who will reduce the administration and bring energy to a reform agenda focused on growth. Elon Musk, the joint head of the so-called Department of Government Operations, is at the helm.
The breadth of Musk’s business interests makes it difficult to close all the conflicts when it comes to Tesla, SpaceX or X. Another area to watch is due to Musk’s close relationship with finance – he started as a co-founder of PayPal. X Payments, his fledgling payments platform, has ambitions to become the WeChat of the west and replicate the huge success of China’s “every app”. A strong government and regulatory support can give the platform great power.
A serious thing will still be how the official opinion of the US on cryptocurrencies (one of the Musk’s pet peeves) seems destined to deviate. Under the leadership of Gary Gensler, the Securities and Exchange Commission has taken an openly hostile stance: many cases have been brought against crypto companies for fraud, the so-called “washing business” that increases the number of transactions, crime, and other wrong behavior.
However Gensler is set to be replaced is Paul Atkins, an activist, who is the chairman of the Token Alliance, a crypto lobbying group. Atkins will be bolstered by a number of other appointees in the Trump administration: most prominently Howard Lutnick, who is a spokesperson for crypto. strong links to Tether as a business secretary; and David Sacks, who Musk’s close friend and Paypal classmates, such as the so-called White House AI and crypto czar.
On the investment front, Trump has nominated Stephen Feinberg, co-founder and chief executive of Cerberus Capital Management, as deputy defense secretary — opening up another potential conflict, given Cerberus’ history of investing in security businesses. In the same way in the social security system, choosing Frank Bisignano, director of payment technology, to be the one responsible for generating the source of change and conflict that should be managed.
However, regardless of whether you look at the potential rewards of interference, there is a risk of placing controlled interests in such important areas.
Another twist is that despite the absence of big banks among Trump’s nominees, big banks they can be notable winners. Watering down the so-called Basel III banking rules could save them billions of dollars in capital charges. Overhauling The federal deposit insurance system may benefit them, to the detriment of smaller institutions, as depositors move their money to larger, safer banks. And move any to ending government support for mortgagesby fully privatizing Fannie Mae and Freddie Mac, it could also be a relative win for the bigger banks.
Over time, such revolutionary changes can lead to chaos or disaster. It may be time Trump feels the need for some basic advice on Wall Street.
