President Donald Trump 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 the 30-minute Oval Office interview. “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.
During the presidential campaign, Trump called for a “21st century” version of the 1933 Glass-Steagall law that required the separation of consumer and investment banking. The 2016 Republican party platform also backed restoring the legal barrier, which was repealed in 1999 under a financial deregulation signed by then-President Bill Clinton.
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A handful of lawmakers blame the repeal for contributing to the 2008 financial crisis, an argument that Wall Street flatly rejects. Trump couldn’t unilaterally restore the law; Congress would have to pass a new version.
Trump officials, including Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn, have offered support for bringing back some version of Glass-Steagall, though they’ve offered scant details on an updated approach. Both Mnuchin and Cohn are former bankers who worked for Goldman Sachs Group Inc.
The Glass-Steagall law 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, Congress reasoned at the time.
Trump said the tax cuts he’s seeking would, along with renegotiated trade agreements, serve as badly needed stimulus for the economy.
The president called first-quarter economic growth, which the Commerce Department said declined to a 0.7 percent annual rate, “really bad.”
Although he's taken credit for monthly job growth figures and stock market gains since entering office on Jan. 20, Trump said he’s not responsible for the GDP number.
“That’s really a leftover from – in all fairness, I just got here,” he said. “So you’re growing at 1 percent or less, so we need a stimulus.”