CEI’s John Berlau Warns Trump Against Return to Glass-Steagall Banking Restrictions
President Trump said on Monday in a Bloomberg News interview that he was considering breaking up America’s biggest banks. “I’m looking at that right now,” he said. “There’s some people that want to go back to the old system, right? So we’re going to look at that.” It was the latest rumbling from this administration about government action against banks. Trump’s chief economic adviser, Gary D. Cohn, has previously talked about bringing back the Glass-Steagall Act, a Depression-era law that separated investment and commercial banks but was partially repealed in 1999 by the Gramm-Leach-Bliley Act. CEI financial policy expert John Berlau warns against a return to Glass-Steagall:
Whatever you think about ‘breaking up the big banks’, that’s not what bringing back Glass-Steagall would do. Re-imposing Glass-Steagall restrictions would just prevent banks of any size from dealing in securities through an affiliate, hurting their bottom line and denying consumer choice. Regional and community banks couldn’t supplement their income with other financial services, which is especially important during hard times, and consumers couldn’t receive brokerage and insurance services from their community banks. Bringing back Glass-Steagall would be destructive but for small banks more so than big ones.