CLEVELAND — Both major political parties are now calling for an overhaul of the financial industry through the return of Glass-Steagall, a Depression-era banking law.
Paul Manafort, presumptive Republican presidential nominee Donald TrumpDonald TrumpTrump defends indicted GOP congressman House to vote Thursday on holding Bannon in contempt Youngkin calls for investigation into Loudoun County School Board amid sexual assault allegations MORE's campaign manager, told reporters gathered in Cleveland Monday that the GOP platform would include language advocating for a return of that law, which was repealed under President Bill ClintonWilliam (Bill) Jefferson ClintonThe Memo: Powell ended up on losing side of GOP fight A pandemic of hyper-hypocrisy is infecting American politics Is Wall Street serving its own interests by supporting China's? MORE.
“We also call for a reintroduction of Glass-Steagall, which created barriers between what big banks can do,” he said.
Including that language in the GOP platform comes shortly after Democrats agreed to similar language in their own, calling for an “updated and modernized version” of the law.
A party platform is not binding but is thought to reflect the values of the party. And the GOP platform has not yet been officially released, although the convention is expected to approve it later Monday.
Nonetheless, the embrace of Glass-Steagall by both parties is a telling indication of how unpopular Wall Street remains with the public, years after the financial crisis.
Manafort mentioned the return of Glass-Steagall specifically as a cudgel against Hillary ClintonHillary Diane Rodham ClintonTrump defends indicted GOP congressman GOP lawmaker says he expects to be indicted over FBI investigation Why it's time for conservatives to accept the 2020 election results and move on MORE, the presumptive Democratic nominee, arguing it was Democrats that were the ones actually beholden to big banks.
“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.”
News that Republicans were embracing Glass-Steagall was met with surprised optimism from advocates for tougher rules on the financial industry and resigned sighs from the industry itself.
One bank lobbyist said backing the bill in the GOP platform was a naked attempt by Trump to win over disappointed backers of former Democratic presidential candidate Bernie SandersBernie SandersWhite House: Window for finalizing sweeping budget package 'closing' Jayapal says tuition-free community college 'probably won't' be in spending plan Progressives see budget deal getting close after Biden meeting MORE, a vocal proponent of the law’s return. Trump has explicitly called on Sanders supporters to join his campaign, although Sanders himself has backed Clinton.
The lobbyist also questioned how thoroughly the campaign examined the policy.
“I really am not sure if the Trump team has done any analysis of this,” the lobbyist said.
Dennis Kelleher, president and CEO of the financial reform advocacy group Better Markets, offered cautious optimism for the move. However, he noted that Republicans have a much longer record of pushing to ease rules for the financial sector, rather than tighten them.
“It’s potentially great news for financial reform and protecting taxpayers, as long as it’s not another Republican Trojan Horse that looks good, but concealed underneath are killer loopholes and big bank giveaways,” he said.
Manafort did add that the platform also calls for revisiting some of the “mistakes” in the Dodd-Frank financial reform law but did not get into specifics. Trump has previously called for the effective dismantling of that law, but he has yet to release his own financial regulation plan.
Clinton’s original plan for Wall Street did not include reestablishing that law, but instead a more targeted approach that would heighten rules on more lightly regulated parts of the industry.
By comparison, Glass-Steagall is a sledgehammer approach. The law created a barrier between traditional banking and riskier investment banking practices. But over the years, Congress gradually weakened the law, until it was repealed outright in the late 1990s.
But the 2008 financial crisis led to increased support for the law’s return, particularly on the left. A return of the law would lead to a dramatic shake-up for some of the biggest names in finance, as they would be forced to split up or sell off huge chunks of business.
While not part of her financial regulation plan, Clinton’s campaign did support the Glass-Steagall language in the Democratic platform, as part of a number of compromises made with the Sanders campaign.
The bipartisan embrace of the law’s return is particularly striking, given that legislative efforts to do just that have gained zero momentum in Congress. Legislation to reestablish Glass-Steagall has been introduced in both chambers in recent years, but such a bill has never even gotten a hearing, let alone serious consideration by legislators.
In the Senate, a bill from Sen. Elizabeth WarrenElizabeth WarrenDemocrats narrow scope of IRS proposal amid GOP attacks Overnight Health Care — Presented by Carequest — FDA moves to sell hearing aids over-the-counter FDA proposes rule to offer over-the-counter hearing aids MORE (D-Mass.) has just nine cosponsors, while a companion bill in the House has just eight backers.