(Bloomberg) — A man, in Donald Trump's eyes, is a “money machine.” The other is a guy named “Scott”.
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Each of them, if the November election goes the former president's way, could be the next U.S. Treasury secretary.
The “money machine” is John Paulson, who made $15 billion betting against subprime mortgages. He is the only person Trump has floated publicly for Treasury, and privately he has said that both of them, both born in Queens, both familiar with messy divorces and legal battles, both with homes in Palm Beach, Florida, are philosophical lined up
But it's “Scott”—it's Scott Bessent, former chief investment officer of Soros Fund Management and current head of macro hedge fund Key Square Capital Management—who is increasingly attracting the attention of Trump's inner circle, and recently even the former president himself after several meetings this year at Mar-a-Lago.
Trump came close to name-checking Bessent at a rally in New Jersey on Saturday, referring to a letter the money manager wrote to clients saying he was betting on a “Trump rally” in stocks, one that say it would continue as long as investors believed. that the former president would win the general election.
“The only thing that's doing well is the stock market, you know why it's doing well, because I'm leading in every poll,” Trump said. “And Scott wrote about . . .”
He paused.
“… some of the great people, are writing it.”
Four days later, in a post on his Truth Social, Trump acknowledged Bessent in full.
“Thanks to Scott Bessent, one of Wall Street's great prognosticators!” He wrote There was no mention of the Treasury.
Huge responsibility
While Ken Griffin and other megadonors focus on Trump's vice presidential pick, for those on Wall Street seeking a place in a second Trump administration, following in Alexander Hamilton's footsteps is an attractive public service job.
Treasury secretaries have enormous responsibility over the global economy. They wade through political thickets in Washington, spearhead international economic diplomacy, and bring Wall Street knowledge to crisis situations that force them into the plumbing of the financial system. At the same time, they must imbue predictability and stability, sometimes through their own personal gravity, that keeps investors at ease.
The role, fifth in the line of presidential succession, also means a private jet, meeting with world leaders and entering secure facilities to deal with national security issues. Any day may require focusing on economic sanctions, the Internal Revenue Service, financial regulation, or whose face should be on the US currency. The head of the Treasury is also traditionally the liaison between the White House and the Federal Reserve.
Both Paulson, 68, and Bessent, 61, have demurred when asked if they want the job, calling it premature. Both declined to comment for this story. And it is not true that they are the only potential candidates.
“When President Trump wins in November, President Trump will be the one to announce the nominee,” said campaign spokesman Brian Hughes.
Both men, however, have shown signs that they are interested.
Paulson's game has come mostly through his checkbook. A member of Trump's economic advisory council in 2016, he has personally donated $817,900 to support Trump and helped raise more than $50 million at a gathering at his Palm Beach home. Raising twice what President Joe Biden had a week earlier was seen as a turning point for Trump's fundraising and the first sign that Wall Street was rallying behind the former president.
Another fundraiser in New York this week hosted by Howard Lutnick brought together a core group of Trump's financial backers, including Paulson, Woody Johnson and Omeed Malik, and raised more than $10 million, according to a person familiar with the matter. 'subject. Vice presidential hopefuls Tim Scott and Marco Rubio were also in the room.
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Bessent is a relatively new Trump backer. He decided last year that only Trump could win the nomination, according to people who have spoken to him. He held a fundraiser in Greenville, South Carolina, in February and has raised about $1.3 million in total.
Read more: Wall Street titans look for signs Trump can win, Bessent says
He has also caught Trump's attention, these people say, thanks to a turbocharged media circuit that includes Fox News and interviews with Steve Bannon, Charlie Kirk and even Donald Trump Jr. Some of their anger has been directed at Fed Chairman Jerome Powell and the current Treasury Secretary. Janet Yellen, like Trump, says they are looking to drain the economy and get Biden re-elected.
All along, Bessent has been talking regularly with Trump's informal economic advisers, according to people in the former president's orbit. He has been identified as an unofficial surrogate for Trump, and his television and radio interviews are published on Truth Social.
And he's won over some of those informal advisers, including Art Laffer.
In an interview, Laffer said Bessent was a competent, non-ideological team player, adding that he knew supply-side economics, monetary policy and financial markets.
Laffer said quietly campaigning for the job was positive.
“You have to want the job, otherwise you're going to be a crappy Treasury secretary,” he said.
Similarities, differences
Still, for Trump, who values loyalty above all else, Paulson has a lot going for him.
There are previous deals: Trump bought the Doral Golf Resort & Spa from Paulson and other investors in early 2012, spending $150 million for the property. There's also the billionaire's willingness to support many of the former president's views.
Paulson has said there were legitimate concerns about the integrity of the 2020 election and that the legal cases against Trump are politically motivated. He has said that the January 6 attack on the US Capitol was not an insurrection but rather a “demonstration that got away from us”. (Trump views Jan. 6 as one of a series of loyalty tests for potential administration officials.)
Read more: Paulson talks to Trump before hosting $814,600-a-head fundraiser
On the other hand, Paulson may not be willing to take the Treasury job because of the number of investments he would likely have to sell. He has a personal net worth of $5.8 billion, according to the Bloomberg Billionaires Index. (Trump is worth $8.6 billion.)
Bessent, who moved a few years ago with her husband to Charleston, South Carolina, would have a relatively easier time relaxing. It would have to close its hedge fund, which had assets, including leverage, of about $600 million, according to the Greenwich, Connecticut-based firm's latest regulatory filing.
But more importantly, people close to Trump say, Bessent has a long history of assessing geopolitical and macroeconomic risks spanning more than three decades. That kind of experience, even if it started with GOP bogeyman George Soros, could be crucial as Russia's war with Ukraine rages on Oct. 7 Hamas attack on Israel and retaliation later
His prudence came after the Wall Street Journal reported that Trump allies were exploring fringe ideas to dismantle the Fed's independence. Although he was not endorsed by most of Trump's informal advisers, it was Bessent who was cited through the publications as a de facto spokesperson: “President Trump and his economic team understand that the only fundamental medium and long-term rates is the credibility of the Fed.”
Despite all the changes in Trump's cabinet during his first term, Steven Mnuchin remained the head of the Treasury for four years. He has said he would consider serving again if asked.
Mnuchin and Powell are widely credited with acting quickly during the start of the pandemic to stabilize markets with unprecedented emergency support, although some argue that the stimulus led to the high inflation that the Fed now is working to remove the system.
“It's my current approach to developing this business,” Mnuchin said on March 7, referring to New York Community Bancorp.
Less than two weeks later, Bessent, when asked if he was raising his hand, gave an almost identical answer: “I'm focused on my business,” he told Bloomberg TV's “Wall Street Week.”
Although, using a golf analogy, one that Trump, an avid golfer, might enjoy, he added: “There's a lot of green in between.”
–With the assistance of Saleha Mohsin.
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