President Trump said Monday he’s considering breaking up major Wall Street banks and could support bringing back a Depression-era law separating consumer and investment banking.
“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.”
Stocks initially tanked on the news before quickly rebounding.
Trump, Treasury Secretary Steven Mnuchin and National Economic Council director Gary Cohn have all called for a “21st century” version of the Glass-Steagall Act, a 1930s law banning consumer and investment banks from combining. Most of Glass-Steagall was repealed in 1999.
White House press secretary Sean Spicer said Monday afternoon that Trump was merely restating past support for a "modernized" Glass-Steagall and that the White House wouldn't be proposing anything soon.
“We’re not at a point where we’re ready to roll out details of that yet,” Spicer said. “He is actively looking at options and considering things. We’re not in a position to make any announcements on this at this time.”
Mnuchin and Cohn are both alumni of Goldman Sachs, an investment bank that would do better under such a law than most major consumer-focused operations.
The Republican Party platform was also amended to support a Glass-Steagall-like policy at last year’s GOP convention. It was a surprising move, given the party’s historic support for deregulation
The Trump administration has not specified what a modern Glass-Steagall should include, and the idea fell flat among Republican lawmakers.
Trump’s comments to Bloomberg come as both the White House and House Republicans take aim at the Dodd-Frank Act, the massive financial regulations passed after the Great Recession. Trump has signed several executive orders directing Mnuchin to research which parts of Dodd-Frank should be amended or eliminated.
The House Financial Services Committee on Tuesday will also mark up Chairman Jeb Hensarling’s (R-Texas) CHOICE Act, which draws back major portions of Dodd-Frank.
Democrats are expected to draw out the hearing with dozens of amendments protecting major parts of the post-recession law loathed by Republicans. The CHOICE Act doesn’t include a separation between consumer and investment banking.
Mnuchin said last week he welcomed the CHOICE Act, but didn’t explicitly endorse it. He told Bloomberg on Monday that the administration is looking beyond legislation to reform Dodd-Frank.
“There are certain things that can be done at regulatory agencies, there are certain things that can be done via executive order, and there are certain things that need to be done with legislation,” Mnuchin said. “But there’s a lot of things we can do without just looking at rewriting legislation.”
Updated at 2:36 p.m.