Former head of Goldman Sachs gains power in Trump adminisration

Wall Street winning out over populism as Trump makes Gary Cohn former CEO of Goldman Sachs from 2006 to 2017 more powerful within the Trump administration.

Cohn is a registered Democrat although he has donated money often to the Republican party. Cohn has been able to win over Trump to business-friendly economic policies at the expense of more populist, nationalist, policies of Steve Bannon. Unlike Bannon, Cohn did not even work on Trumps' campaign and has only come to know him since after he was elected last November. His rise within the Trump administration has angered some conservatives.

Trump refers to Cohn who is director of the National Economic Council (NEC) as "one of my geniuses" according to a source close to Cohn. What is certain is that Cohn is now a new denizen of the Washington Swamp and part of the establishment that Trump campaigned against. The Trump administration has many former Wall Street employees and also many retired military officials. The Trump administration is becoming more mainstream right-wing Republican and will put the military-financial-industrial complex first and America second. The protectionist trade views of strategists such as Bannon have receded into the background if not disappeared altogether. Bannon is correct in tagging Cohn as a globalist.

According to White House sources Cohn will take the lead on formulating Trump tax reform, infrastructure, and deregulation policies. Orin Snyder of the law firm Gibson Dunn, a long-time friend of Cohn said: "Gary's singular focus is tax reform and he's working to try and get that done in 2017. He is working to implement the president's twin goals of economic growth and job creation. The tax plan will also include a reduction in the corporate rate, but also tax relief for middle- and low-income Americans."

Some conservatives would like to see more emphasis on focusing on businesses and entrepreneurs, including Adam Brandon, president of Freedomworks who would prefer that Trump went ahead with the plan Trump unveiled last year that was shaped by Stephen Moore of the Heritage Foundation think tank. Conservatives worry that the new plan could be overly complicated as well. Brandon said that Trump should not have scrapped the plan and started over.

Cohn and Trump have apparently developed a close bond. Cohn is loyal, direct, and assertive, characteristics that Trump appreciates. Also, Cohn has the trust of Jared Kushner, Trump's son-in-law and adviser as well as his daughter Ivanka Trump.

John Paulson, a billionaire hedge fund manager, said:"Gary is a huge asset to the Trump administration. He'll be of great help in eliminating unnecessary regulation, stimulating growth and reforming the tax code." Paulson knows Cohn from his Wall street days. It should be clear whose interests Trump's policies will benefit. It will not be the many workers from US rust belts who voted for him.

Kushner was at Goldman Sachs when he first met Cohn. Kushner was instrumental in having Cohn meet the president. During the campaign Trump had frequently described investment banks as modern-day robber barons. This talk is no longer operative once Trump became president. The same is true of NATO being obsolete and many other issues. As some comic said: Trump eats his words three times a day. So now a robber-baron is made head of Trump's NEC. Trump also changed his stance on China as a currency manipulator for now, and also Janet Yellen as Federal Reserve chair.

Cohn and Kushner successfully pushed for Wall Street lawyer Jay Clayton as head of the Securities and Exchange Commission. His name will go to Senate for a vote. Cohn will also play a leading role in developing the promised Trump infrastructure plan to rebuild airports, roads, and bridges. A main problem will be how to finance the cost that Trump estimates at $1 trillion.

As with many other members of the Trump administration, Cohn is hardly poor. Cohn's salary at Goldman Sachs in 2014 was $22 million and $21 million in 2015. His severance package amounted to $285 million. As well, Cohn sold off his stake in the Industrial and Commercial Bank of China worth $16 million.

Cohn is a prominent member of the "Democratic" faction among Trump aides led by Jared Kushner and opposed by the "nationalist" faction led by Steve Bannon. While many supporters of Cohn claim he is competent and efficient, Bannon holds Cohn mainly responsible for the failure of the Trump health care bill while Bannon took much of the blame. Rush Limbaugh the conservative radio commentator calls Cohn " a very ideological liberal Democrat." Former Trump adviser, Sam Nunberg said: “Gary Cohn would be too liberal for the Obama administration. I don’t know what he’s doing in a Republican White House.” He is no doubt drafting policies that will be accepted by the Republican Congress but who knows he may also find Democratic support for some of his policies. Alternatively, he could find himself out of favor as Trump changes his mind again.

Trump gives Wall Street some gifts before Valentine's day

(February 3) This week the U.S. Dow Jones Index of stock prices had begun to show signs of investor unease with Trump's actions as it dropped back below its record 20,000 but now Trump is delivering on deregulation and the index has again moved over 20,000 today.

While Trump is supposed to be anti-establishment he has many prominent former Wall Street figures in his administration. Since he was president-elect U.S. stock markets have been enjoying what has been called the Trump rally. However, the rally faltered earlier this week. Today it continued its journey upward as Trump began to undo regulations that had been put in place to ensure another financial crisis took place. The restrictions also led to less avenues for banks to make profits. According to Bloomberg: "Among the targets are rules that guard against predatory lenders, force brokers to lower fees for retirees and ban proprietary trading — protections that consumer advocates vowed to defend." Instead of protecting those who voted for him and saw him taking on the power of the big banks to protect their interests, Trump is doing the exact opposite. No doubt he will sing a song about a smaller more efficient government and less red tape creating more jobs and a fatter paycheck as the much bigger pie trickles down more crumbs. There will be no warning about future bubbles and financial crashes.

Lloyd Blankfein CEO of Goldman Sachs Group Inc. and Jamie Dimon of JP Morgan and Chase have long been pushing for changes in the 2010 Dodd Frank Act. They have argued that industry is too constrained by the system. Gary Cohn, the director of the White House National Economic Council and a former Goldman Sachs president said in an interview: “We’re going to attack all aspects of Dodd-Frank.” He said the Trump administration could do quite a bit on its own but would need help from Congress to deal with some parts of the law. For all to see you have the banking establishment at work ensuring that anti-establishment Trump meets the needs and demands of the Wall Street establishment. The House Republicans, led by Jeb Hensarling, Financial Services Committee Chair plan to roll out a bill to replace Dodd-Frank in the coming weeks. The rise of the DJI above the record 20,000 mark was led by Financial Stocks. Goldman Sachs rose 4.3 percent and Morgan Stanley 5.6 percent the largest gain since the day after the U.S. election on November 9.

One aspect of the Dodd-Frank Act is the stress testing mechanism that checks whether banks have sufficient capital to weather an economic downturn. The process is complex but Christopher Wheeler, a bank analyst claims the process has ensured that the system has made the U.S. banking system one of the strongest in the world. He wondered if Trump would tamper with this system.

A likely focus will be the Volcker Rule. Investopedia describes the rule as follows:A federal regulation that prohibits banks from conducting certain investment activities with their own accounts, and limits their ownership of and relationship with hedge funds and private equity funds, also called covered funds. The Volcker Rule’s purpose is to prevent banks from making certain types of speculative investments that contributed to the 2008 financial crisis.This rule restricts banks from operating in areas where they formerly made large profits. Just to make sure that no one gets the idea that Trump is interested in protecting consumers, he is expected to sign an executive memorandum that will direct the Department of Labor to review and stall the fiduciary rule. This rule set to come into effect in April was supposed to protect millions of retirees from being led into inappropriate investments that would generate larger profits for brokers but are quite risky, according to the Obama administration.

The Trump moves led to an advance in stocks such as that of Lincoln National Corp. Voya Financial, Prudential Financial, Metlfe Inc. and American International Group. The last three were listed as important non-bank financial institutions that could come under some Dodd-Frank restrictions.

A key critic of Trump's moves will be Democratic Senator Elizabeth Warren who claims that Trump will use his power to benefit wealthy friends: “The Wall Street bankers and lobbyists whose greed and recklessness nearly destroyed this country may be toasting each other with champagne, but the American people have not forgotten the 2008 financial crisis — and they will not forget what happened today.”