The response of the markets to a potential second impeachment of President Trump is impossible to predict now. History shows why this may not be a market moving event. The new Senate under Schumer will decide what to do with Speaker Pelosi’s new articles of impeachment. How and when is not clear.
In the meantime we may want to look back to an 1876 impeachment vote in the House, followed by a trial in the Senate, as an instructive precedent with regard to the time required for such a process and the likely political fallout, given an already badly divided Congress and country.
In the spring of 1876, Congress found itself embroiled in the impeachment of Secretary of War William Belknap. Belknap, a former Civil War general, had held his post for eight years under President Ulysses Grant. He had, however, become rather notorious for the extravagant Washington parties he and his elegantly attired wife threw, and he had come under suspicion of blatant corruption.
The House of Representatives investigated and was poised to send five articles of impeachment to the Senate, on March 2; but just before the House voted, Belknap submitted his resignation to Grant. The House moved ahead and unanimously charged Belknap with “criminally disregarding his duty as Secretary of War and basely prostituting his high office to his lust for private gain.”
The Senate trial convened in April, and the Senate heard more than 40 witnesses, but it wasn’t until August 1 that a majority of the Senate voted against Belknap on all five articles. However, since the votes fell short of the required two-thirds, Belknap was acquitted.
(https://www.senate.gov/artandhistory/history/minute/War_Secretarys_Impeachment_Trial.htm)
Given the urgency for President-elect Biden to implement his agenda, do we really want to see the country even more deeply embroiled in deciding the fate of its erstwhile 45th president? Biden himself doesn’t think so (“Biden calls Trump ‘unfit’ but doesn’t endorse impeachment,” https://www.pbs.org/newshour/politics/biden-calls-trump-unfit-but-doesnt-endorse-impeachment); and clearly, given the fractiousness of the Senate, there will be difficulty obtaining two-thirds vote to convict.
There are already a number of ongoing federal and state investigations of Trump’s activities, both before and during his time in office. Those inquiries will proceed on their proper legal course, and they will doubtless provide plenty of fuel for the fire of civic discourse and possible disintegration. This is a dangerous time for America and for democracy around the world. As investors and as citizens, we must proceed with care. We are witnessing the writing of American political history while separately managing investment strategies. They are often two distinct subjects.
David R. Kotok
Chairman of the Board & Chief Investment Officer
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