Plans to re­in­state law re­quir­ing sep­a­ra­tion of con­sumer and in­vest­ment bank­ing

New Straits Times - - Business -

PRES­I­DENT Don­ald Trump said he is ac­tively con­sid­er­ing a breakup of gi­ant Wall Street banks, giv­ing a push to ef­forts to re­vive a De­pres­sion-era law sep­a­rat­ing con­sumer and in­vest­ment bank­ing.

“I’m look­ing at that right now,” said Trump of break­ing up banks in an Oval Of­fice in­ter­view.

Trump also said he’s open to in­creas­ing the United States gas tax to fund in­fra­struc­ture devel­op­ment, in a fur­ther sign that poli­cies un­pop­u­lar with the Repub­li­can es­tab­lish­ment are un­der con­sid­er­a­tion in the White House.

He de­scribed higher gas taxes as ac­cept­able to truck­ers as long as the pro­ceeds are ded­i­cated to im­prov­ing US high­ways.

Dur­ing the pres­i­den­tial cam­paign, Trump called for a “21st cen­tury” ver­sion of the 1933 Glass-Stea­gall law that re­quired the sep­a­ra­tion of con­sumer and in­vest­ment bank­ing.

The 2016 Repub­li­can Party plat­form also backed restor­ing the le­gal bar­rier, which was re­pealed in 1999 un­der a fi­nan­cial dereg­u­la­tion signed by then-Pres­i­dent Bill Clin­ton.

A hand­ful of law­mak­ers blame the re­peal for con­tribut­ing to the 2008 fi­nan­cial cri­sis, an ar­gu­ment that Wall Street flatly re­jects. Trump couldn’t uni­lat­er­ally re­store the law; Congress would have to pass a new ver­sion.

Wall Street has re­peat­edly shrugged off politi­cians’ calls for bank breakups in re­cent years.

The KBW Bank In­dex of 24 ma­jor US lenders was up about 1.2 per cent on Mon­day be­fore Trump’s com­ment sent it tum­bling about a per­cent­age point. It soon re­cov­ered most of that, and was up 0.9 per cent as trad­ing closed. in New York.

Large banks see little in­ter­est in Congress for re­viv­ing the pro­hi­bi­tion be­tween com­mer­cial and in­vest­ment bank­ing, es­pe­cially since law­mak­ers are cur­rently bogged down with more press­ing is­sues like re­peal­ing Oba­macare and pass­ing a tax over­haul.

Pro­mot­ing the tax over­haul out­line his ad­min­is­tra­tion re­leased last week, Trump said the tax cuts he’s seek­ing would serve as badly needed stim­u­lus for the econ­omy.

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