Despite many conservatives who desperately want to see the banks broken up under the new administration of Donald Trump, repealing parts of the Dodd-Frank banking reform act is only a small part in undoing legislation that had allowed banks and bankers to continue in the same risky speculations that led to the 2008 financial crisis.
In fact, to protect the economy and the taxpayer from future bailouts, President Trump will need to go back to the 1990’s during the Clinton administration and reinstate the Glass-Steagall act which ensured separation between the commercial and investment sides of the banking system.
And on March 9 according to White House Spokesperson Sean Spicer, that reinstitution is still front and center in President Trump’s agenda.
Q All right, thank you. Going back to the meeting and to your opening statement about the banks, in the last campaign, candidate Trump campaigned hard on restoring the Glass-Steagall Act, which would put a barrier between commercial and major investment banks. It, of course, was repealed in 1999 — the repeal signed by President Clinton. Senator Sanders campaigned on this as well, noted that it was in the Republican platform in Cleveland, and said in December he’d be happy to work with the Trump administration on restoring Glass-Steagall. Is there any plans for the President to meet with Senator Sanders? And is repeal of Glass-Steagall on his agenda?
MR. SPICER: There’s no current schedule to meet with him. I’m sure that, as he has done with several other members of Congress from both sides of the aisle, that at some point, that will be scheduled. But we don’t have anything on the books for now.
But look, he’s shown — and I think today was another — or yesterday was another example, today another example of his willingness to reach across the aisle, his willingness to look into both chambers and not just business but labor unions and other industries where we can find common ground. And I think if Senator Sanders and others want to work with the White House on areas of ways that we can improve the financial industry, we’re going to do that.
Q Are you still committed to restoring Glass-Steagall?
MR. SPICER: Yes. – White House.gov
The removal of the Depression era law of Glass-Steagall was one of the primary causes for the 2008 financial crises, the explosion of the quadrillion dollar derivatives bubble, and the introduction of rehypothication of client funds for bank use and speculation. And it also was key in creating the ‘too big to fail’ banks that former Attorney General Eric Holder specified were thus ‘too big to jail’.
Without a reinstitution of Glass-Steagall in its primary form, there is no chance at all of reforming both the banks and Wall Street, and protecting the American financial system from another collapse birthed over the last 20 years of their greed and speculation. And hopefully this is something that all of Washington can agree upon doing since the last administration not only worked on the side of the banks versus the American people, but brought in Wall Street lawyers to the DOJ that ensured no criminal indictments would ever be placed upon those who committed the egregious fraud and thefts that have proliferated Wall Street long after the 2008 crisis.
Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.com, Roguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.