Trump Spokesman Reaffirms Support for Glass-Steagall Bank Separation

The fear is growing in and around Wall Street that President Trump will support the legislation to restore Glass-Steagall banking separation, which has been recently re-introduced in the U.S. Congress. The House bill (H.R. 790) now has 38 sponsors, six of them on March 8 alone, while the next day, Glass-Steagall was a topic again at the White House press briefing. And once again, the President’s press secretary affirmed Trump’s support for it.

John Gizzy, a reporter from Trump-friendly Newsmax, asked Sean Spicer if the President would reach across the aisle to Senator Bernie Sanders, who supported restoring Glass-Steagall during his campaign, to collaborate to get it passed. Sean Spicer replied that he would work with Sanders, “where we can find common ground”, to “improve the financial industry.”

Gizzy then asked, “Are you still committed to restoring Glass Steagall?”, to which Spicer replied, “Yes.”

Some media blamed the sharp drop of the stock market that day on that exchange, as the stock bubble has been pumped up by the huge volume of money issued at low interest rates, which is then loaned by the large banks to “blue chip” corporate clients, who buy their own stock – a common practice in the deregulated banking system set up as Glass-Steagall was repealed. If the corrupt relationship between the Federal Reserve and the mega-banks is effectively ended, it might pop the stock market bubble, along with the much larger derivatives bubble, bringing about a financial collapse bigger than 2008.

Stoking those fears was a “listening session” held by Trump with CEOs of small and regional banks, in which he said he would follow up his initial steps against the Dodd-Frank financial reform pushed through by Barack Obama, to free them from that regulatory nightmare. Under Dodd-Frank, the TBTF banks have grown by over 40%, as nothing was done to halt or even slow down the rampant speculation which had led to the crash seven years ago.  At the same time, the community banks, which Trump correctly identified as playing “a vital role in helping create jobs”, in particular because they provide about half of all loans to small businesses, have been cut off from access to liquidity, which flows almost entirely to the TBTF banks.

If Trump wishes to make good on his promise to create an industrial revival in America, he will have to have Glass-Steagall re-enacted and ensure issuance of productive credit. That is why those banks are intent on driving him out  of office.

Read also: Glass-Steagall Legislation Introduced into United States Congress