House Financial Services chairman won't support Glass-Steagall revival

House Financial Services chairman won't support Glass-Steagall revival
© Moriah Ratner

The chairman of the House Financial Services Committee said Thursday he’s not interested in passing a modern version of a Depression-era banking law the Trump administration has talked of reviving.

The Trump administration has called for a “21st-century” version of the Glass-Steagall Act, a 1930s law creating a legal firewall between investment and consumer banking. President Trump had campaigned on doing so, though he never specified what that would entail.

The pledge was also added to the Republican Party platform in 2016, a surprising move for a party historically opposed to the separation between consumer and investment banking.

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Rep. Jeb Hensarling (R-Texas) said he’s had conversations with the Trump administration about a 21st-century Glass-Steagall, but isn’t clear on what that means to the White House.

“I think you need to continue to question them on what they mean by that,” Hensarling said Thursday in a briefing with reporters.

Treasury Secretary Steven Mnuchin told lawmakers during his January confirmation hearing that he supports a “21st-century Glass-Steagall” without defining what that means. Mnuchin told the Senate Banking Committee last month that it wouldn’t include breaking up banks.

“If we supported a full Glass-Steagall, we would have said it at the time,” Mnuchin said, “I never said we’re in favor of breaking up the banks.”

Trump himself said earlier this month that he supported separating big banks.

“I’m looking at that right now,” Trump told Bloomberg News. “There’s some people that want to go back to the old system, right? So we’re going to look at that."

Hensarling said he wouldn’t support re-implementing the division between consumer and investment banking, but pitched his Financial CHOICE Act as a way to add stability to the banking system. The CHOICE Act would strip and replace much of the Dodd-Frank Wall Street Reform Act and is expected to pass the House today.

“If you’re attempting to ensure a financial system that minimizes that enhance of financial panics,” Hensarling said, “then in many respects, the Financial CHOICE Act can be your 21st-century Glass-Steagall.”