White House economic adviser Gary Cohn said he backed bringing back the Glass-Steagall Act, a Depression-era law that would revamp Wall Street banks by splitting their consumer-lending businesses from their investment arms.
The National Economic Council director, also a former Goldman Sachs
Big banks have strongly opposed such a move that would fundamentally overhaul their business. Reinstating the law, which was repealed in 1999, has not attracted significant attention in Congress, but advocates in the White House and both parties now argue it would provide critical safeguards to prevent another financial crisis.
Critics of that approach say it lacks nuance and would not have prevented the last financial meltdown.
The fact Cohn, widely viewed as one of Wall Street’s own, was willing to push that position spooked big banks’ representatives in Washington.
The White House confirmed Cohn’s remarks in a private meeting with lawmakers on Wednesday. A spokesperson said he was “simply discussing the President’s previously stated position” in favor of a “21st century Glass-Steagall.”
Cohn’s remarks were first reported by Bloomberg.
The Trump administration has indicated support for a return to Glass-Steagall. The White House has stuck by the idea since it was included in the Republican Party platform during the presidential campaign, and Treasury Secretary Steven Mnuchin expressed interest in a modernized version of the law.
When asked on Thursday when large financial institutions should begin to worry about Glass-Steagall becoming a reality, one industry representative said, “Right now.”
However, any legislation establishing such a firewall faces long odds in the current Congress. The heads of the House and Senate banking committees have indicated support for alternative approaches, and efforts to move Glass-Steagall legislation in prior years have garnered little support.
“A new Glass-Steagall would require legislation, and it simply isn’t a priority issue in Congress,” wrote Ian Katz, a financial policy analyst for the research firm Capital Alpha Partners, in a note to clients.
In the meeting which was arranged by Senate Banking Committee Chairman Mike Crapo, Cohn was asked by Senator Elizabeth Warren about Glass-Steagall. Cohn responded favorably, noting that the Republican Party platform supports the idea, according to sources familiar with the meeting. The meeting included lawmakers from both parties and their staff.
Bringing back Glass Steagall would likely have a significant impact on banks like JPMorgan Chase & Co , Bank of America Corp and Citigroup that have large highly intertwined commercial lending and investment banking operations, say analysts.
It would impact Goldman Sachs Group Inc and Morgan Stanley to a lesser degree although, they would likely have to revert to being standalone investment banks and shed their deposit funding.
(Reporting by Pete Schroeder, Sarah N. Lynch and Olivia Oran; Editing by Chizu Nomiyama and Andrew Hay)
Louisiana Democrat re-elected governor — despite Trump’s rallies for the Republican candidate
The Associated Press has called the Lousiana's governor's race for incumbent Democrat John Bel Edwards.
Edwards triumphed over Republican businessman Eddie Rispone, who called to concede.
The outcome is another major political loss for President Donald Trump, who had held multiple campaign rallies for Rispone.
During his most recent rally, Trump begged the crowd to give him a "big win" in the election.
Eddie Rispone has conceded the #lagov race to Gov. John Bel Edwards, giving the Democrat four more years in ruby red Louisiana despite Trump’s best efforts to flip the seat. Edwards camp says Rispone called minutes ago to concede. #lagov #lalege
Press secretary says it is ‘dangerous for the country’ to question whether she is putting out honest info
Press secretary Stephanie Grisham on Saturday argued it was "dangerous for the country" for anyone to challenge the veracity of her claims.
Grisham made her argument after President Donald Trump went to Walter Reed Hospital for an unannounced doctor's visit, resulting in a great deal of speculation.
Following the visit, Grisham claimed Trump was "healthy" and "without complaints" -- a claim many found unlikely as the president has spent a good deal of time as president airing his many grievances.
Sondland used WhatsApp to communicate with Ukraine — and won’t turn over the messages: report
Ambassador Gordon Sondland used WhatsApp to send encrypted messages to a top Ukranian official, The Washington Post reported Saturday.
The communication occurred with Andriy Yermak, a top aide to President Volodymr Zelensky, when Sondland was in Kyiv, the newspaper reported.
"Sondland was also texting back and forth on WhatsApp with Yermak throughout the trip, and had been communicating with other Ukrainian officials over the messaging app in the preceding and subsequent months, according to people familiar with his interactions," The Post reported.