Is Trump Serious About Breaking Up Banks?
Up to this point, Donald Trump’s approval ratings have been in the basement, because he has only done things to please his base—and not even all of them. On the campaign trail, he said he spoke for the average person, but his administration is filled with only the “one percent,” including big bankers. He has boldly talked about rolling back protections put in effect in response to the Great Recession—and even the Great Depression.
Now, he’s suddenly talking about breaking up the big banks—something Bernie Sanders and the left have been crying for. Finally, Trump is talking like a populist, instead of his billionaire buddies, according to HotAir.
President Donald Trump said he is actively considering breaking up giant Wall Street banks, giving a push to efforts to revive a Depression-era law separating consumer lending and investment banking.
“I’m looking at that right now,” Trump said Monday in an interview with Bloomberg News in the Oval Office. “There’s some people that want to go back to the old system, right? So we’re going to look at that.”
During the presidential campaign, Trump called for a “21st century” version of the 1933 Glass-Steagall law that required the separation of consumer lending and investment banking. . .
A Rasmussen poll taken in 2013 found 50 percent of American adults in favor of a break-up versus 23 percent opposed; a more recent poll, conducted in 2015 by a left-leaning group, found national support above 55 percent, albeit via some heavily loaded poll questions. Either way, this would be an easy message for Trump to sell to his base and to elements of the left. It’s hard to believe he’d make a serious effort given the volume of Wall Street alums surrounding him in the White House, but former GS president and current top Trump advisor Gary Cohn told a roomful of lawmakers a few weeks ago that he was in favor of Wall Street banks separating their consumer-lending businesses from their investment banks. If Cohn and Steve Bannon, normally nemeses, both want to bring back Glass-Steagall, then maybe Glass-Steagall really is coming back.
Breitbart says it’s not a new idea. The platforms of BOTH parties included a call for increased regulation of big banks.
The idea was included in the Republican party platform and endorsed by then-campaign manager Paul Manafort in July 2016.
“We believe the Obama-Clinton years have passed legislation that has been favorable to the big banks, which is why you see all the Wall Street money going to her,” he said. “We are supporting the small banks and Main Street.”
The Washington Examiner noted that bank stocks took a hit due to Trump’s words. But the stocks quickly recovered, when investors realized that the Republican Congress probably wouldn’t give in to Trump on this.
President Trump entertained the idea of breaking up big banks Monday, sending major Wall Street stocks lower. . . Stocks for diverse megabanks such as Goldman Sachs and Citigroup fell immediately after Trump’s comments were published. . .
Among Republicans, however, the Trump team is relatively isolated in supporting the measure, which has little support among congressional Republicans.
Ironically, and typical of the Trump Administration, the stock fall quickly followed a comment by his own Treasury Secretary.
The decline came after Treasury Secretary Steven Mnuchin took credit for the administration for soaring bank stocks, telling investors to “thank me.”
Business Insider notes that Glass-Steagall, which was instituted to prevent banks from gambling foolishly with our money, was repealed in 1999. Elizabeth Warren has been a leader in the battle to get the law reinstituted, according to Business Insider.
While campaigning, Trump said he supported a 21st century version of the law. The adoption of the idea into the Republican platform came after the financial crisis of 2007 to 2009 sparked renewed calls for the act, mostly from Democrats.
Fortune Magazine notes that it was the Republican Congress that repealed Glass-Steagall in 1999, with a law called, the Gramm-Leach-Bliley bill.
The name of the Senate Banking Committee chair at the time, Phil Gramm, is on the repeal law, and together with his wife Wendy, the couple helped make possible Enron’s infamous use of derivatives that led to the energy company’s spectacular collapse in 2001. After Enron’s demise, although the huge risks in derivatives were known, banks continued to proliferate them, one of the proximate causes for the financial crisis in 2007.
Could it be that Trump is talking about “looking at” a new Glass-Steagall Act just to appear “populist,” while understanding that the GOP Congress would never agree to limit financial speculation? On the other hand, if Trump is serious about breaking up the big banks, it might go a long way toward boosting his approval ratings among those who have not been his fans for a year, already.
Filed in: Politics Tagged in: finance Goldman Sachs megabanks monopoly regulation steve mnuchin treasury trump