TRUMP MULLS BANK BREAK UP
Plans to reinstate law requiring separation of consumer and investment banking
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The 2016 Republican Party platform also backed restoring the legal barrier, which was repealed in 1999 under a financial deregulation signed by then-President Bill Clinton.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.