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Your guide to what the 2024 US election means for Washington and the world
Donald Trump’s top team’s key nominations are in some ways like many presidents before him — overwhelmingly male, overwhelmingly wealthy and drawn significantly from the financial services industry.
And yet Trump’s nominees differ on one important point. They are not mainstream. Notably, there are no prominent bankers on the list, breaking with the tradition (even upheld by Trump MKI) that financier appointments would normally be drawn from the likes of Goldman Sachs.
That’s true across the board — from Vice-President-elect JD Vance, a venture capitalist, and Treasury Secretary nominee Scott Besant, a hedge fund manager, to incoming UK Ambassador Warren Stephens, a Self-made investment bankerand new Turkish ambassador Tom Barak, a private equity and property investor.
Most of Trump’s financier recruits during his career as a property mogul were significant donors to his campaigns and/or business partners.
The “spoilt system” of patronage in US politics—an 18th-century tradition that allowed presidents to increase loyalty by appointing friends and family to official roles—was supposed to be eliminated by a series of legislative reforms that began in the late 19th century. The incoming president of the century not only adopted the system made famous by the seventh US president, Andrew Jackson, but did so in a way that would create enormous financial as well as political conflicts of interest. It is not clear how effective legal restrictions will be in checking these conflicts.
The encouraging lesson of Trump’s appointments to date is that these are no-nonsense people who will cut through bureaucracy and bring energy to a growth-focused reform agenda. Elon Musk, co-head of the so-called Department of Government Efficiency, is its avatar-in-chief.
The breadth of Musk’s own business interests makes it difficult to pin down all conflicts related to Tesla, SpaceX or X. Another area to look at is Musk’s close affinity with money — he started as a co-founder of PayPal. X Payments, its new payment platform, has ambitions to become the WeChat of the West and the massive success of the Chinese “everything app”. Strong government and regulatory support could give the platform a big boost.
How US officials feel about crypto finance will be deeper (another Musk is a pet) appears to be set to reverse. Under the leadership of Gary Gensler, the Securities and Exchange Commission has taken an openly hostile stance: in multiple cases Crypto companies have been brought against them for fraud, so-called “wash trading” that inflates transaction volume, registration violations and other misconduct.
Yet Gensler is Set to replace Paul Atkins, an ardent regulator, is co-chairman of the Token Alliance, a crypto lobbying group. Atkins will be pressed by other senior Trump administration appointees: most notably Howard Lutnick, a vocal crypto advocate; Tether’s strongest link as Secretary of Commerce; and David Sacks, who A close musk ally and fellow PayPal alumni, as the so-called White House AI and crypto czar.
On investments, Trump has chosen Cerberus Capital Management co-founder and co-chief executive Stephen Feinberg as his undersecretary of defense — setting up another potential conflict given Cerberus’ history of investing in defense businesses. Similarly at the Social Security Administration, the appointment of Frank Bisignano, a payments technology boss, presents both a source of reform and a conflict to manage.
Regardless of how positively you view the potential rewards of disruption, the risks of imposing vested interests in charge of such areas are significant.
A twist is that Trump’s nominees include big banks despite not having big bankers There may be notable winners. Watering down the so-called Basel III banking regulations could save them billions of dollars in capital charges. Overhauling A system of federal deposit insurance may benefit them, harming smaller institutions, as savers move their money to larger, safer banks. And no action End state support for mortgagesBy fully privatizing Fannie Mae and Freddie Mac, there could also be a relative win for the big banks.
Along the way, such revolutionary changes could potentially lead to turmoil or crisis. At that point Trump felt the need for some more mainstream Wall Street advice.
