Adviser backs splitting bank operations

WASHINGTON — White House economic adviser Gary Cohn said Friday that separating Wall Street’s investment and retail banking operations would increase lending by eliminating the need for burdensome regulations.

Cohn, a former Goldman Sachs Group Inc. executive, said he supports President Donald Trump’s call for a new version of the Depression-era Glass-Steagall Act, which separated lending banks from investment banking.

“If we come up with a 21st-century, modern Glass-Steagall, we may be able to tailor regulation for different aspects of the financial markets and different aspects of the financial institutions and that would allow banks to get lending more aggressively to small- and medium-sized companies,” Cohn said in an interview with Bloomberg Television on Friday.

Cohn didn’t provide specifics of what an updated version of Glass-Steagall would look like. He said it’s consistent with the administration’s efforts to decrease banking regulation and spur economic growth. Cohn’s comments came after he told lawmakers in a private meeting Wednesday that he backed the separation of banks’ business lines.

A group of senators Thursday proposed legislation that would separate consumer and investment banking. Similar bills haven’t gained traction in previous years.