While we know better than to trust politician promises, we were surprised to read that today the GOP joined the Democrats in calling for a repeal of Gramm-Leach-Bliley, the Financial Services Modernization Act of 1999 pushed through by none other than Bill Clinton, and will seek a return to Glass-Steagall, the banking law launched in 1933 in the aftermath of the Great Depression meant to prohibit commercial banks from engaging in the investment business, and which according to many was one of the catalysts that led to the Global Financial Crisis.
According to The Hill, Paul Manafort, Donald Trump’s campaign manager, told reporters gathered in Cleveland Monday that the GOP platform would include language advocating for a return of that law, which was repealed under President Bill Clinton, husband of, well you know…
“We also call for a reintroduction of Glass-Steagall, which created barriers between what big banks can do,” he said.
Including that language in the GOP platform comes shortly after Democrats agreed to similar language in their own, calling for an “updated and modernized version” of the law.
However before anyone gets their hopes up, recall that a party platform is not binding but is thought to reflect the values of the party…. until the values change as a result of Wall Street “incentives” because if there is one thing US “commercial banks” can not afford it is a separation of their depository and investment activities.
The GOP platform has not yet been officially released, although the convention is expected to approve it later Monday. Nonetheless, the embrace of Glass-Steagall by both parties is a telling indication of how unpopular Wall Street remains with the public, years after the financial crisis.
Manafort mentioned the return of Glass-Steagall specifically as a counterpoint against Hillary Clinton, arguing it was Democrats that were the ones actually beholden to big banks. “We believe the Obama-Clinton years have passed legislation that has been favorable to the big banks, which is why you see all the Wall Street money going to her,” he said. “We are supporting the small banks and Main Street.”
Maybe: we’ll believe it when we see it. However, we are absolutely convinced that the first promise Hillary will reneg on, if she ever admits making it, is to return to Glass Steagall. After all they didn’t spend all those millions of depositor funds on “speeches” just to allow Hillary to prevent them from accessing the very same funds.
Photo: Bill Clinton signs the Gramm–Leach–Bliley Act, which repealed Glass-Steagall
According to the Hill, the news that Republicans were embracing Glass-Steagall was met with surprised optimism from advocates for tougher rules on the financial industry and resigned sighs from the industry itself (actually what it probably meant is skeptical pessimism).
One bank lobbyist said backing the bill in the GOP platform was a naked attempt by Trump to win over disappointed backers of former Democratic presidential candidate Bernie Sanders, a vocal proponent of the law’s return. Trump has explicitly called on Sanders supporters to join his campaign, although Sanders himself has backed Clinton. We doubt the bank lobbyist had anything to add about Hillary’s own proposal to return to Glass-Steagall aside from laughter of course.
The lobbyist also questioned how thoroughly the campaign examined the policy. “I really am not sure if the Trump team has done any analysis of this,” the lobbyist said.
Dennis Kelleher, president and CEO of the financial reform advocacy group Better Markets, offered cautious optimism for the move. However, he noted that Republicans have a much longer record of pushing to ease rules for the financial sector, rather than tighten them. “It’s potentially great news for financial reform and protecting taxpayers, as long as it’s not another Republican Trojan Horse that looks good, but concealed underneath are killer loopholes and big bank giveaways,” he said.
Sadly, Dennis is right to be skeptical: it is another Trojan Horse, and one which will be promptly scrubbed from the collective memory if Trump were to win.
While not part of her financial regulation plan, Clinton’s campaign did support the Glass-Steagall language in the Democratic platform, as part of a number of compromises made with the Sanders campaign. Keep in mind, it was Hillary’s husband who back in 1999 signed into the law the act that repealed Glass-Steagall.
As The Hill concludes, the bipartisan embrace of the law’s return is particularly striking, given that legislative efforts to do just that have gained zero momentum in Congress. Legislation to reestablish Glass-Steagall has been introduced in both chambers in recent years, but such a bill has never even gotten a hearing, let alone serious consideration by legislators. In the Senate, a bill from Sen. Elizabeth Warren (D-Mass.) has just nine cosponsors, while a companion bill in the House has just eight backers.
The reason why? Simple. It is the banks, not the executive, not the legislative, that decides what happens in America, either directly or through the bank-owned Federal Reserve bank. How much privately-owned? We don’t know, but we remember what Bernanke’s former advisor said just three months ago: “People Would Be Stunned To Know The Extent To Which The Fed Is Privately Owned“.
As such one can’t help but be amused by the amount of energy and passion expended over the most theatrical – and certainly entertaining – presidential race in recent history.
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