Trump blasts Fed as economys only problem
“The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders,” Trump said in a tweet Monday. “The Fed is like a powerful golfer who can’t score because he has no touch — he can’t putt!”
Treasury Secretary Steven Mnuchin sought to reassure financial markets over the weekend that Powell’s job is safe.
Mnuchin said in a pair of tweets Saturday evening that he’d spoken with the president about the matter, and he quoted Trump saying he didn’t believe he had the authority to remove the central bank chief.
Mick Mulvaney, the incoming White House chief of staff, said Sunday he’d spoken to Mnuchin and that Trump “now realizes he does not have the ability” to fire a Fed chairman. Prolific tweeter Trump hasn’t directly addressed the issue himself.
Trump’s latest attack on the Fed follows a report by Bloomberg News on Friday that Trump had consulted advisers many times in the prior few days over the possibility of firing Powell, a move some of those people warned could badly backfire.
Top U.S. financial regulators assured Mnuchin during a hastily organized call Monday that they are seeing nothing out of the ordinary in markets despite the recent stock slump, according to a person familiar with the discussion.
Mnuchin spoke with officials from the Federal Reserve, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency. The regulators briefed Mnuchin on their plans for monitoring markets during the government shutdown, and the state of markets, said the person.
Trump’s dissatisfaction with Powell and the Fed, which he’s expressed numerous times in the past few months on Twitter and in interviews, appears to have boiled over after Wednesday’s interest rate hike and one of the worst single-week U.S. stock market losses in a decade.
Ahead of the central bank’s two-day meeting, Trump again attempted to jawbone the independent policymakers in a tweet that warned against “yet another mistake.”
Republic Metals, the South Florida-based gold refiner that is one of the nation’s largest, has filed for bankruptcy, a further sign of trouble for the U.S. precious metals industry, which has been targeted by federal prosecutors investigating “blood gold” for more than two years.
Republic — a family-owned company with a 38-year history in South Florida — buys raw gold and silver from the United States, Canada and Latin America, processes the metal and then sells it to corporate giants, including Tiffany & Co., Apple and General Motors.
Because of its proximity to Latin America, which is rich both in gold deposits and drug traffickers seeking to launder money, Miami has become a major hub for the U.S. gold industry.
Republic’s financial problems were uncovered in April, when the company said an internal inventory could not account for a large amount of precious metal at its plant in Opa-locka. That shortfall, coupled with serious bank debt, led Republic to try to sell itself to a major Swiss gold refiner. The deal failed, leading the company to file for Chapter 11 bankruptcy in federal court in New York on Nov. 2.
The bankruptcy filing comes at a time of upheaval for the industry. The U.S. Attorney’s Office in Miami is investigating domestic gold refineries for buying illegally mined and smuggled metal from Latin America. So-called blood gold is extracted from delicate rainforest ecosystems at great cost to the environment and local workers — and manufactured into jewelry, bullion and electronics for U.S. consumers. Drug-trafficking organizations and criminal gangs are said to be financing a significant portion of the region’s gold trade. The metal is difficult to trace to its source and easy to smuggle, making it attractive to money launderers.
Prosecutors have already brought down a major Miami-based competitor of Republic, NTR Metals, charging three of its gold traders in a $3.6 billion money-laundering scheme. But they are continuing to investigate the industry.
There is no connection between that investigation and Republic’s bankruptcy, according to a source close to the company who was not authorized to talk on the record. Large-scale inventory shortfalls have happened at other gold refineries because of accounting errors and other mishaps.
In January, the Miami Herald published an investigative series, “Dirty Gold, Clean Cash,” showing how U.S. reliance on Latin American gold drives widespread environmental destruction, human-rights abuses and mercury poisoning. On a visit to a ravaged Peruvian mining town this year, Pope Francis condemned illegal gold as a “false god that demands human sacrifice.”
Republic’s past dealings have caught the attention of authorities: In 2012, Republic bought a large volume of gold from a Peruvian metals dealer who is suspected by U.S. prosecutors of having links to drug traffickers. The gold dealer, Pedro Pérez Miranda, was charged this year in Miami federal court with money laundering. He’s in jail in Peru.
Between May and November of 2012, Republic bought at least 3,200 kilos of gold, worth more than $174 million, from Business Investments, one of Pérez Miranda’s companies, according to Peruvian police documents obtained by the Miami Herald.
U.S. prosecutors have zeroed in on Pérez Miranda, who was tried and acquitted of narcotics money laundering in Peru in the 1990s. His sales to NTR Metals formed the basis of the $3.6 billion money-laundering case filed last year. Pérez Miranda, known in Peru by the alias “Peter Ferrari,” maintains his innocence and is awaiting extradition.
The three NTR gold traders pleaded guilty and went to prison. NTR’s parent company, Dallas-based Elemetal, paid a $15 million fine, agreed not to trade gold internationally for five years, and shut down its refinery in rural Ohio, costing hundreds of jobs.
Meanwhile, other Miami-based gold companies, including Republic, continue to face scrutiny from prosecutors, according to sources familiar with the investigation. Those sources said Republic is in negotiations with prosecutors, although the nature of those discussions isn’t clear.
Republic CEO Jason Rubin declined an interview request this week. So did the company’s attorney, Roy Altman. A spokeswoman for the U.S. Attorney’s Office in Miami also declined to comment.
Republic employs about 200 people, mostly at its main plant in Opa-locka.
Gold has a wide variety of industrial uses, from components of smartphones to car parts, as well as more traditional products like necklaces and rings. A Tiffany subsidiary is one of Republic’s biggest creditors and is seeking $17 million paid for a “trade debt,” according to a bankruptcy court filing.
Republic says it owes $86 million to its raw metal suppliers — including mines in Mexico, Canada and Peru — and its gold-and-silver buying customers, who range in size from Tiffany to small shops in downtown Miami’s jewelry district. Republic also owes $177 million to eight banks that provide financing for gold transactions — the all-important cash that keeps the trade flowing internationally. In total, Republic declared liabilities of $265 million, greatly exceeding assets of $175 million, which mostly consist of precious metals, according to the bankruptcy filing.
