Bernie Sanders wants to know why a 21st Century Glass-Steagall act didn’t make it into the Treasury Departments 150-page financial regulations report.
“Can you tell me where I could find the establishment of a 21st Century Glass-Steagall Act, which would separate commercial banking from risky investment banking, something the president campaigned on?” the Vermont Senator facetiously asked Treasury Secretary Steven Mnuchin at a Senate Budget Committee hearing on Tuesday. “What page might I find it on?”
Sanders, of course, knew the answer to the question he asked: a modern version of the Depression-era banking legislation is nowhere to be found in the Treasury report, because President Donald Trump, despite his campaign rhetoric, doesn’t back it.
Trump on the campaign trail called for a 21st Century Glass-Steagall, and both Mnuchin and top economic adviser Gary Cohn have in recent months said they are open to reviving the legislation as well. Bringing back Glass-Steagall was part of the 2016 Republican Party platform.
Enacted in 1933, Glass-Steagall in its original form separates commercial and investment banking. It was repealed under President Bill Clinton in 1999.
The Trump administration has never specified what exactly it means by “21st Century Glass-Steagall,” though the GOP platform explicitly mentions reinstating the law that “prohibits commercial banks from engaging in high-risk investment.” Despite what might seem a logical assumption that it would seek to break up the banks, Mnuchin says that’s not the case.
“Let me get this straight,” Sanders said at one point, interrupting. “What you’re saying is that the language Trump put into the Republican platform is not really the language that he believed in.”
“Let me be clear, the president did not put everything into the Republican platform. There was the Republican platform and there was the Trump position, which I was very involved in,” Mnuchin said. “The president did not support breaking up the big banks.”
That Trump’s position on Glass-Steagall is not what it seems is not new information. Mnuchin made the same assertion in a May hearing in front of the Senate Banking Committee, confounding Senator Elizabeth Warren, who has put forth 21st Century Glass-Steagall legislation of her own.
“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,” she said at the time, slamming the administration’s position as bizarre.
Mnuchin told her the White House’s policies “couldn’t be clearer.”
The former Goldman Sachs (GS) executive on Tuesday brought up his back-and-forth with Warren and said he met with her to explain “the difference between what we had thought of as a 21st Century Version of Glass-Steagall and Glass-Steagall.”
He said he made it “very clear” in previous testimony that the president does not want to break up the banks, because they think it would hurt the economy and ruin liquidity in the market. “What we are focused on is safe and prudent regulation for the large banks so we don’t have taxpayer risk,” he said.
As for Warren’s bill and the Trump administration both invoking the phrase 21st Century Glass-Steagall, he said it’s “an unfortunate coincidence.”
Mnuchin testified before the Senate Budget Committee, of which Senator Sanders is ranking member, on Tuesday morning to discuss the White House budget proposal and tax reform.
“We made very difficult decisions to fund the military to protect Americans,” Mnuchin told Sanders at the outset of the hearing.
“You made difficult decisions to give tax breaks to multi-billionaires and to cut programs for working families,” Sanders said. “I don’t think those are difficult decisions, I think those are immoral decisions.”