Magazine article American Banker

Trump Is Unlikely to Bring Back Glass-Steagall

Magazine article American Banker

Trump Is Unlikely to Bring Back Glass-Steagall

Article excerpt

WASHINGTON -- There are growing doubts that President-elect Donald Trump was ever serious about his surprise call in July to reinstate the 1930s-era Glass-Steagall Act, which separated commercial and investment banking.

Trump's then campaign manager, Paul Manafort, went so far as to insist the idea be included as part of the official GOP platform.

But the candidate himself never discussed the idea, and the transition team has not resurrected it.

"It came from Trump's political people, not his policy people," said Mark Calabria, the director of financial regulation studies at the Cato Institute and a former top Republican Senate Banking aide. "It was mostly a wedge to go after Clinton and hammer the point about her being tied to Wall Street."

Big banks are widely opposed to restoring Glass-Steagall, while many small banks favor the idea. In the days since Trump's victory, however, the campaign has been decidedly more big-bank-friendly than it was during the campaign, going so far as to float JPMorgan Chase CEO Jamie Dimon as a potential Treasury secretary. On Thursday, the campaign said it wants to "dismantle" the Dodd-Frank Act, but made no mention of Glass-Steagall.

"It would be a gigantic error if he even brought up the subject of reinstituting Glass-Steagall," said Peter J. Wallison, co-director of the American Enterprise Institute's program on financial policy studies. "He ought to forget the idea."

Still, some observers say a Glass-Steagall 2.0 might still be an option, particularly as it could draw support from progressive Democrats to back a financial de-regulation bill. …

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