May 1, 2017
By Jennifer Jacobs and Margaret Talev
President Donald Trump (click here) said he’s actively considering a breakup of giant Wall Street banks, giving a push to efforts to revive a Depression-era law separating consumer and investment banking.
“I’m looking at that right now,” Trump said of breaking up banks in a 30-minute Oval Office interview with Bloomberg News. “There’s some people that want to go back to the old system, right? So we’re going to look at that.”
Trump also said he’s open to increasing the U.S. gas tax to fund infrastructure development, in a further sign that policies unpopular with the Republican establishment are under consideration in the White House. He described higher gas taxes as acceptable to truckers -- “I have one friend who’s a big trucker,” he said -- as long as the proceeds are dedicated to improving U.S. highways....
There is a lot to consider when reflecting on 2008, if that is what President Trump is doing. Reviving Glass-Steagall is a strong cornerstone of reform, but, there has been a great deal of mischief that created a perfect storm in 2008.
There is no super computer built today that can perform a complete overview of the 2008 crash. Call it what you want, but, 2008 was a collapse. It was a Great Recession in regard to labor, but, President Obama carried out a large funding as his first act when taking office in 2009. It turned the failing labor numbers around.
At the time Paul Krugman, a Nobel Prize winner (click here) stated, the funding wasn't enough to fill in the hole left by the collapse. He was right. The funding bill was short by about half a trillion. It worked out, but, it took a little longer and required more legislation and funding for the Small Business Administration.
April 21, 2017
By William D. Cohan
Among the many silly ideas (click here) floating around Washington these days about how to re-regulate Wall Street is that old chestnut about separating investment banking from commercial banking.
It’s getting a fresh look after Gary Cohn, the powerful head of President Trump’s National Economic Council, supposedly told a private gathering of the Senate Banking Committee recently that the Trump administration would be open to the idea. The president has yet to confirm publicly that he would support such legislation.
The concept is nothing new, of course. After the stock market crash of 1929, the so-called Glass-Steagall Act of 1933 gave banks a year to choose between commercial banking and investment banking. For the next 66 years, the law more or less stood until Congress repealed it, making de facto what had long been de jure. (Many banks had been violating it for years without consequences.)
Then in 2013, a bipartisan group of United States senators — led by Senator Elizabeth Warren, Democrat of Massachusetts, and Senator John McCain, Republican of Arizona — proposed what they called the 21st-Century Glass-Steagall Act with the goal of breaking up banks with assets greater than $50 billion. They argued — incorrectly — that what caused the 2008 financial crisis was big banks again using their customers’ deposits to take big risks....