Cohn’s surprise Wall St. ‘divorce’ talk

White House economic adviser Gary Cohn said during a private meeting with lawmakers that he supports a policy that could radically reshape Wall Street’s biggest firms by separating their consumer-lending businesses from their investment banks, sources said Thursday.

Cohn, the ex-Goldman Sachs executive who is now advising President Trump, said he generally favors banking going back to how it was when firms like Goldman focused on trading and underwriting securities, and companies such as Citigroup primarily issued loans, according to the sources.

The remarks surprised some senators and congressional aides who attended the Wednesday meeting, as they didn’t expect a former top Wall Street executive to speak favorably of proposals that would force banks to rethink how they do business.

Yet Cohn’s comments echo what Trump and Republican lawmakers have said about wanting to bring back some version of the Glass-Steagall Act, the Depression-era law that kept bricksand-mortar lending separate from investment banking.

In the years after Glass-Steagall’s 1999 repeal, banks such as Citigroup, Bank of America and JPMorgan Chase gobbled up rivals and pushed into all sorts of new businesses, becoming one-stop-shopping financial behemoths.

Nuveen strategist Bob Doll said separating banks’ business lines now makes little sense, because regulation has increased substantially since the 2008 financial crisis.

Many banking executives believed that Cohn would temper major changes such as a Glass-Steagall return. But his latest remarks suggest that he could be a wild card should Congress get serious about reinstating the law.