US President Donald Trump said he is actively considering a break-up 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 is open to increasing the US gasoline 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 gasoline 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 US highways.
During last year’s presidential campaign, Trump called for a “21st century” version of the 1933 Glass-Steagall Act that required the separation of consumer and investment banking.
The Republican party platform also backed restoring the legal barrier, which was repealed in 1999 under a financial deregulation signed by then-US president Bill Clinton.
A handful of lawmakers blame the repeal for contributing to the 2008 financial crisis, an argument that Wall Street flatly rejects.
Trump could not unilaterally restore the law — US Congress would have to pass a new version.
Trump officials, including US Secretary of the Treasury Steven Mnuchin and National Economic Council Director Gary Cohn, have offered support for bringing back some version of Glass-Steagall, though they have offered scant details on an updated approach.
Both Mnuchin and Cohn are former bankers who worked for Goldman Sachs Group Inc.
The KBW Bank Index of 24 major US lenders had climbed as much as 1.2 percent before Trump’s comment, before dropping about 1 percentage point.
The index soon recovered most of that and was up 0.9 percent as of 1:07pm in New York on Monday.
Firms including JPMorgan Chase & Co and Bank of America Corp, the nation’s two largest banks, were among the companies that swooned.
The Glass-Steagall Act essentially split banking into two categories — deposit-taking companies backed by taxpayers that primarily made loans to businesses and consumers, and investment banks and insurers that trade and underwrite securities, and create or focus on other complex instruments.
Severing those businesses would prevent Americans’ nest eggs from flowing into more volatile capital markets, US Congress reasoned at the time.
Trump said the tax cuts he is seeking would, along with renegotiated trade agreements, serve as badly needed stimulus for the economy.
The president called first-quarter economic growth, which the US Department of Commerce said declined to a 0.7 percent annual rate, “really bad.”
Although he has taken credit for monthly job growth figures and stock market gains since entering office on Jan. 20, Trump said he is not responsible for the GDP number.
“That’s really a leftover from — in all fairness, I just got here,” Trump said. “So you’re growing at 1 percent or less, so we need a stimulus.”
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