Treasury Secretary, Steven Mnuchin sat before the Senate Banking Committee on Thursday and tried laying out the Trump administration’s position on various economic policies and this also includes large banks regulation.
Mnuchin said the administration supports a “21st Century Glass-Steagall,” referring to the Depression-era bill requiring commercial and investment banks to remain separate.
“We do think about potential things to look at around regulation, but do not support the investment banks and banks separation,” said Mnuchin.
A flabbergasted Senator, Elizabeth Warren, pointed out to Glass-Steagall , “There are aspects that you support, but not breaking up the banks and separating commercial banking from investment banking?”. “What do you think Glass-Steagall was if that’s not right at the heart of it?” asked Warren.
The Trump administration is doing its best to make people believe it is bringing back the Wall Street regulation by delivering a Republican campaign promise, though all that it is doing is using the old law’s name.
The background reveals that Glass-Steagall was repealed in 1999, aiming to clear the way for commercial-investment mergers on Wall Street with the combinations of JPMorgan and Chase along with Bank of America and Merrill Lynch. The intermingling of these two banking sides has been blamed by critics – including Warren – stating to cause the financial crisis (though this point is up for debate among many economists and academics).
When President Donald Trump was campaigning railed against Wall Street firms such as Goldman Sachs, attacked Hillary Clinton for ties to big banks, and pitted himself as a populist who will fight Wall Street during his campaign.
Even after taking office Trump said he will break up the banks and economic advisers like Mnuchin and Gary Cohn for supporting “21st Century Glass-Steagall.”