The message for: an image of giant scissors. Musk’s response: an image of a sword.
The person on the other side: Howard Lutnick — Wall Street billionaire, MAGA believer and head of recruiting for , the next American president.
“Me, Elon Musk and Trump are going to work this out,” Lutnick, head of brokerage and investment bank Cantor Fitzgerald, told a podcaster shortly before Trump made his historic comeback on Election Day.
Continues after advertising
By “this,” Lutnick was referring to nothing less than the $2 trillion deficit and the role of the federal government in American life. He and Musk claim to be ready to dismantle federal agencies, dissolve entire departments, and fill the vast bureaucracy with loyalists like themselves to unleash American capitalism.
It’s a remarkable turnaround for Lutnick, a combative billionaire whose name, even now, is barely recognized outside Wall Street circles. Along with other financial market players vying for influence, he is busy lining up candidates for positions of power.
One of the names that many suspect is on Lutnick’s list: his own. Inside Cantor Fitzgerald’s Park Avenue headquarters, employees are jubilant, but even senior bankers and traders are in the dark about what might be in store for their CEO — and what his rise in Trump’s world might mean for them.
Continues after advertising
Where, if anywhere, Lutnick might end up in Washington is anyone’s guess. But if Trump asks, Lutnick is ready to serve, he has said publicly. The Treasury secretary position is a possibility, but others are also vying for that position. Among them are Scott Bessent, a prominent hedge fund manager; Jay Clayton, former chairman of the Securities and Exchange Commission; and Robert Lighthizer, an economic adviser and China hard-line supporter during the first Trump administration. Some of Trump’s top advisers are backing Bessent, the news outlet reported. Bloomberg News on Tuesday, citing sources familiar with the matter. At this point, it’s hard to rule anyone out.
But few on Wall Street have embraced Trump more enthusiastically than Lutnick. He crisscrossed the country on “Trump Force One”; strategized at Mar-a-Lago, Trump’s South Florida residence and private club; grabbed the microphone and raised his fist at noisy rallies; and reveled in the spectacle of Trump’s grievances at Madison Square Garden.
Now, few are in a better position to reap the rewards.
Continues after advertising
“He was a political novice and, through sheer force of personality, he became a player important,” said Charles Myers, a former Wall Street executive and Democratic Party donor who runs the consulting firm Signum Global Advisors.
For months, Lutnick, a major Trump donor, has been hard at work putting together a future administration. As co-chair of the transition team, he set up a war room at Mar-a-Lago with eight TV screens and two iPads. He is personally presenting Trump with the names, photos and biographies of potential candidates, laying out the pros and cons of each, according to a person familiar with the matter. Trump is expected to interview Treasury candidates next week.
A spokesperson for Lutnick declined to comment.
Continues after advertising
“President-elect Trump will begin making decisions about who will serve in his second administration soon,” Trump spokeswoman Karoline Leavitt said in a statement. “These decisions will be announced when they are made.”
Lutnick has embraced Trump’s plan to restart oil drilling in Alaska’s Arctic National Wildlife Refuge and facilitate the extraction of valuable minerals and metals in the lower 48 states. With Musk, he also endorsed the creation of a new federal department, the Office of Government Efficiency, to reduce what the new administration considers waste and inefficiency.
“Two sides”
“There are two sides,” Lutnick explained on the Oct. 28 podcast with cryptocurrency investor Anthony Pompliano. “Cost cutting, which is DOGE,” he continued, referring to the proposed efficiency office. “And there is revenue production, which is me and the economic team.” He mentioned on the podcast his exchange of messages with Musk, the billionaire CEO of Tesla.
Continues after advertising
Like Trump, Lutnick lamented the shift of U.S. manufacturing overseas, criticized “coastal elite nonsense” regarding electric cars and focused on the importance of taming inflation. He also criticized the cancellation of the Keystone XL pipeline extension — a move by President Joe Biden on his first day in office — and said China was attacking American workers by sending fentanyl into the country.
“China is attacking America from the inside out,” Lutnick told Pompliano. “It’s going to go straight to your stomach and try to kill you.”
The fact that Lutnick often placed himself at the center of such discussions only increased speculation within Cantor. Barely 36 hours after Trump won, employees wearing Cantor vests were bustling in the downstairs deli of the company’s Manhattan headquarters. Upstairs, on the negotiation floor, conversations were also going on.
Lutnick is unusual among the top names reported as potential cabinet picks in that he is a billionaire who still runs large private and public companies — which could also benefit from his involvement in government policy. Among Cantor’s ventures is an operation that lends dollars to customers using Bitcoin as collateral — a business that could receive a boost with Trump’s acceptance of cryptocurrencies.
Its group also includes a private investment bank and a fixed income and equities business, as well as securities firm BGC Group and real estate firm Newmark Group. Shares of both companies have risen since the close of trading on Election Day — BGC is up nearly 11% and Newmark is up 5.5%.
Futures controversy
Most politically pertinent is Lutnick’s latest venture, futures exchange FMX, which launched in September and has been embroiled in allegations over its plans to settle U.S. Treasury futures offshore — a controversy likely to evaporate under an administration Trump.
Protests against Lutnick’s plans, particularly from dominant Chicago-based rival CME Group Inc., involved Democratic Senator Dick Durbin of Illinois writing to the Commodity Futures Trading Commission—the main derivatives regulator—and CME CEO Terry Duffy appealing to Treasury Secretary Janet Yellen.
Now there’s a chance that Lutnick could fill Yellen’s role. At the very least, Lutnick’s current job means he is helping oversee the appointment of regulators with oversight over FMX’s plans — and much of the rest of his business empire. (Duffy said he is not concerned about Lutnick’s relationship with Trump, adding that such obvious conflicts would be “a biblical disaster.”)
Any senior government position should make questions about conflicts of interest inevitable and force Lutnick — like anyone with such broad business interests assuming a role in a presidential administration — to divest assets or place them in a blind trust to avoid legal problems. The guidance allows new officers to minimize capital gains taxes as long as they invest the proceeds of any sales in an accepted investment fund, such as a broad-based mutual fund.
But rules set by the Office of Government Ethics may be less strictly enforced under Trump, according to Kate Belinski, a partner at the law firm Ballard Spahr. “There’s really no way to get people to comply with that guidance,” she said by phone — barring, she added, threats from the Justice Department, which would be unlikely to turn on its own government officials under Trump.
While still uncertain, the prospect of Lutnick’s departure leaves his 13,000 employees wondering who, if he moves on, will lead them after his 33 years at the helm.
Even for those who have worked at Cantor for a while, there is no easy answer. While he can be bombastic in public and on television, in business he is known for his discretion and for keeping a very tight circle of loyal and trusted advisers, according to people familiar with his work style.
Main adjuncts
Lutnick has repeatedly said he loves his current job but would accept a position if Trump asked him, leaving the precise fate of his companies — which stretch from Singapore to Tel Aviv and even the Philadelphia suburbs — uncertain. But while the companies grew aggressively during his tenure, they remained largely autonomous entities, likely capable of managing themselves.
His Newmark real estate company is mainly run by CEO Barry Gosin, who is popular with employees. Cantor and BGC — the company that recently launched FMX — have clear heads of their divisions, but it’s unclear how they would be directed without Lutnick’s day-to-day involvement.
At Cantor, Lutnick’s top deputies have all been in their roles for at least six years and pushing their own business agendas. They include Sage Kelly, a former Jefferies Group healthcare banker who quickly expanded the company’s investment banking division; Christian Wall, who joined Credit Suisse and oversees fixed income; and Pascal Bandelier, a former Barclays trading executive who runs the equities business.
One key adviser likely to play a close role in any transition is old ally Stephen Merkel, who joined Cantor in 1993 after a stint as a lawyer at Goldman Sachs’ J. Aron division, and was in an elevator at the World Trade Center when the first plane hit during the Sept. 11, 2001, terrorist attacks. Merkel was nearly consumed by flames for just a few seconds, according to “On Top of the World,” a book by Lutnick’s college friend Tom Barbash, who told the story of Cantor after 9/11, when it lost 658 employees.
© 2024 Bloomberg L.P.
