WASHINGTON ― Do words and history mean anything?
That question was the subject of debate on Thursday when Treasury Secretary Steven Mnuchin testified before the Senate Banking Committee.
The Trump administration showed its now-routine sense for the absurd when Mnuchin said it supports a 21st-century Glass-Steagall Act ― referring to an updated version of the the Depression-era regulation that separated commercial and investment banks ― but also opposes any bill separating commercial and investment banks.
Sen. Elizabeth Warren (D-Mass.), the lead sponsor of the bipartisan 21st Century Glass-Steagall Act of 2017, grilled Mnuchin on his statements.
“The Republican platform did have Glass-Steagall,” Mnuchin said in response to a question from Warren asking if he was reversing the administration’s previous position. “We, during the campaign ... had the opportunity to work with on this specifically, came out and said we do support a 21st-century Glass-Steagall. Which is ... there are aspects of it, OK, that we think may make sense. But we never said before that we supported a full separation of banks and investment banks.”
Warren, incredulous, responded, “There are aspects of Glass-Steagall that you support, but not breaking up the banks and separating commercial banking from investment banking? What do you think Glass-Steagall was if that’s not right at the heart of it?”
Even though the 2016 Republican Party platform very specifically stated, “We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment.”
Mnuchin maintained on Thursday that when he says he supports a 21st-century Glass-Steagall that does not mean he supports the Glass-Steagall’s separation of commercial and investment banking, adding that the administration also didn’t want to bring back the law.
“This is like something straight out of George Orwell.”
- Sen. Elizabeth Warren
But in October, during the campaign trail then-candidate Donald Trump did say, “It’s time for 21st century Glass-Steagall.” But he did not elaborate on what this would look like.
In the recent months, both Trump and his top economic adviser Gary Cohn, a former Goldman Sachs banker, said the administration was open to reviving the Glass-Steagall Act.
And Mnuchin himself said in January, “We need a 21st-century Glass-Steagall.”
Despite Warren’s interrogation, Mnuchin refused to explain the 21st-century Glass-Steagall Act that he said the administration did support.
“Let me get this straight,” Warren said. “You’re saying that you are in favor of Glass-Steagall, which breaks apart the two arms of banking, regular banking and commercial banking. Except you don’t want to break apart the two parts of banking. This is like something straight out of George Orwell.”
“This is just bizarre,” she added later. Mnuchin insisted on responding that the Trump administration policies “couldn’t be clearer.”
Glass-Steagall was repealed in 1999 by a Republican Congress and former President Bill Clinton.
After it was repealed, the 1998 merger between commercial bank Citigroup and investment bank Travelers was retroactively approved, the investment bank JPMorgan merged with the commercial bank Chase in 2000, and much of the industry followed suit. Most of the country’s largest, too-big-to-fail banks now have both commercial banks that do things like take deposits and make loans, and investment banks that trade and underwrite securities.
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