During his testimony at Thursday’s Senate Banking Committee’s hearing on Domestic and International Policy Update, Treasury Secretary Steve Mnuchin insisted the Trump administration never intended to break up big banks, despite its prior messaging. That didn’t sit well with Sen. Elizabeth Warren (D-MA), a long-time critic of Wall Street’s “rigged” game.
“The president and this administration have said repeatedly that they support a 21st century Glass-Steagall. It was in the Republican Party platform; Donald Trump said it, specifically, a few weeks before the election; you said [it] at your confirmation hearing and now you’ve just said exactly the opposite,” Warren began.
“In the past few months, you and the president have had a number of meetings with big bank CEOs and lobbyists, is that the reason for the reversal on Glass-Steagall?” she asked Mnuchin, once dubbed the “foreclosure king” of the financial crisis.
Glass-Steagall, a Depression-era bank regulation that effectively separated commercial and investment banking, was dismantled in 1999. It’s repeal has been cited as a key cause of the 2008 financial crisis. But as The New Yorker explained in April, Trump’s support of its restoration was always to be heeded with caution.
“We during the campaign… specifically came out and said we do support a 21st Century Glass-Steagall,” Mnuchin told Warren. “That means there are aspects of it that we think may make sense, but we never said before that supported a full separation of banks and investment banks.”
“There are aspects of Glass-Steagall that you support, but not breaking up the banks and separating commercial banking from investment banking?” Warren asked, baffled. “What do you think Glass-Steagall was if that’s not right at the heart of it?”
Mnuchin explained that the banking reform act was “actually about conflict, not about credit risk.”
“If we had supported a full Glass-Steagall, we would have said [that] at the time,” he mumbled.
Warren, creator of the Consumer Financial Protection Bureau under President Obama, pressed on.
“Let me get this straight, you’re saying you are in favor of Glass-Steagall, which breaks apart the two arms of banking. Except you don’t want to break apart the two parts of banking,” she summed up. “This is like something out of George Orwell.”