Cohn backs modern version of Glass-Steagall: report
White House economic adviser Gary Cohn told senators he supports forcing banks to separate their consumer and investment businesses through a modern version of the Glass-Steagall Act, Bloomberg reported Thursday.
Cohn, director of President Trump’s National Economic Council, reportedly told Senate Banking Committee members in a private Wednesday meeting that he supports making banks stick to consumer banking and lending, while investment firms focus on trading and securities.
Cohn, the former Goldman Sachs COO, is the latest Trump aide to offer a surprising embrace of Glass-Steagall.
{mosads}Big banks have strongly opposed reinstating the Depression-era law separating consumer and investment banking, which was repealed in 1999. Republicans have also generally opposed bringing back Glass-Steagall, but the party surprisingly added it to its platform at the 2016 GOP convention after Trump voiced support for it during his campaign.
Treasury Secretary Steven Mnuchin, a former Goldman Sachs partner, said he supported a “21st-century” version of Glass-Steagall during his confirmation hearings but didn’t elaborate. Trump’s chief strategist, Steve Bannon, another Goldman Sachs alum, has previously supported separating consumer and investment banking.
Cohn’s support for Glass-Steagall is seen as surprising from a Wall Street veteran. But investment firms like Goldman Sachs would likely fare better under the law than banking giants such as Citigroup and JPMorgan Chase with deep, complex connections between their consumer and investment practices.
The growing administration support for Glass-Steagall comes as Trump and GOP lawmakers aim to drastically reform banking regulations. Trump promised to “dismantle” the Dodd-Frank financial reform law, and House Republicans are aiming to start moving on bills to reform the law in May.
Reimposing a consumer-investment separation will likely win support from progressive lawmakers but win over few Republican allies.
Sens. Elizabeth Warren (D-Mass.), John McCain (R-Ariz.), Angus King (I-Maine) and Maria Cantwell reintroduced the 21st Century Glass-Steagall Act on Thursday, which would reimpose key parts of the law.