senate-banking-committee

youtube

Senator Elizabeth Warren asks financial regulators why they have not criminally prosecuted senior executives at Wall Street banks that have broken the law, at a Senate Banking Committee hearing on September 9, 2014.

The Trump administration's plans to crack down on Wall Street are being called into question

(Mike Segar/Reuters)

Treasury Secretary Steven Mnuchin sat in front of the Senate banking committee on Thursday and attempted to explain the Trump administration’s position on various economic policies, including the regulation of large banks.

Mnuchin continually said the administration supported a “21st-century Glass-Steagall” — except for the Depression-era law’s defining aspect.

“We do think there are potential things we could look at around regulation, but we do not support separation of banks and investment banks,” Mnuchin said.

A flabbergasted Sen. Elizabeth Warren, who sits on the committee, pointed out that Glass-Steagall was best known for the separation of commercial and investment banks.

“There are aspects of Glass-Steagall that you support, but not breaking up the banks and separating commercial banking from investment banking?” Warren asked. “What do you think Glass-Steagall was if that’s not right at the heart of it?”

What Warren is getting at is this: The Trump administration is doing its best to make everyone think it is bringing back the Wall Street regulation — to deliver on a Republican campaign promise — when all it’s really doing is using the old law’s name.

For background, Glass-Steagall was repealed in 1999, clearing the way for commercial-investment mergers on Wall Street, such as combinations of JPMorgan and Chase along with Bank of America and Merrill Lynch. This intermingling of the two sides of banking has been blamed by critics — including Warren — for helping to cause the financial crisis (though this point is up for debate among many economists and academics).

Reinstating the law has since become a favorite talking point of the anti-Wall Street movement in Washington.

Anti-Wall Street campaign

(Mark Wilson/Getty Images)

As a presidential candidate, Donald Trump railed against Wall Street firms like Goldman Sachs, attacked Hillary Clinton for her ties to big banks, and pitted himself as a populist who would stand up to Wall Street. In fact, the official Republican platform included, for the first time, a call to reinstate Glass-Steagall.

Even after taking office, Trump said he would consider breaking up the banks, and economic advisers like Mnuchin and Gary Cohn reiterated support for a “21st-century Glass-Steagall.”

Mnuchin’s statements, however, appear to have nothing to do with the core of Glass-Steagall (or at least its most looming legacy) and appear to simply be an attempt to slap a tough name on another deregulation measure.

The White House press secretary, Sean Spicer, maintained that the president was “consistent” in his support of reinstituting Glass-Steagall in February and March, but the so-called 21st-century Glass-Steagall sounded a bit different when Spicer discussed it May 1.

(The White House press secretary, Sean Spicer, holding a briefing at the White House on March 20.REUTERS/Kevin Lamarque)

“The president’s pro-growth agenda, including instituting what he has called a 21st-century Glass-Steagall, will allow [small] banks to spend less time complying with unnecessary requirements, many of which were designed to police much larger entities, and more time infusing their communities and local small businesses with capital,” Spicer said.

This, instead of sounding as if it would regulate larger banks, appears to be a deregulation effort for community financial firms.

Tim Pawlenty, the former governor of Minnesota who now leads the Financial Services Roundtable, told Bloomberg’s Max Abelson that the new bill from the administration wouldn’t really focus on large banks with both investment and commercial arms at all.

“Following the president’s remarks on the topic, Gary Cohn clarified the administration’s view of a modern-day Glass-Steagall is a two-tiered approach to regulation in which smaller banks would receive some regulatory relief,” Pawlenty said.

Basically, Abelson reported, bank executives expect the new Glass-Steagall to be a deregulation effort for smaller banks, with little involving larger banks, that is sold under the guise of a bill for which anti-Wall Street groups have been clamoring.

As Warren pointed out during the testimony, the Trump administration is even cribbing the 21st-century-Glass-Steagall language from a bill partially written by Warren that would, in fact, break up large banks if adopted.

NOW WATCH: This animated map shows how religion spread across the world



More From Business Insider
The Trump administration is trying to trick people into thinking it's cracking down on Wall Street

(Mike Segar/Reuters)
Treasury Secretary Steven Mnuchin sat in front of the Senate Banking Committee on Thursday and attempted to explain the Trump administration’s position on various economic policies, including the regulation of large banks.

Mnuchin continually said that the administration supports a “21st Century Glass-Steagall,” referring to the Depression-era bill that required commercial and investment banks to remain separate — except for the law's defining aspect.

“We do think there are potential things we could look at around regulation, but we do not support separation of banks and investment banks,” Mnuchin said.

A flabbergasted Sen. Elizabeth Warren, who sits on the committee, pointed out that Glass-Steagall is best known for the separation of the two types of banks.

“There are aspects of Glass-Steagall that you support, but not breaking up the banks and separating commercial banking from investment banking?” Warren asked. “What do you think Glass-Steagall was if that’s not right at the heart of it?”

What Warren is getting at is this: The Trump administration is doing its best to make everyone think it is bringing back the Wall Street regulation — to deliver on a Republican campaign promise — when all it’s really doing is using the old law’s name. 

For background, Glass-Steagall was repealed in 1999, clearing the way for commercial-investment mergers on Wall Street, such as combinations of JPMorgan and Chase along with Bank of America and Merrill Lynch. This intermingling of the two sides of banking has been blamed by critics — including Warren — for helping to cause the financial crisis (though this point is up for debate among many economists and academics).

Reinstating the law has since become a favorite talking point of the anti-Wall Street movement in Washington.

Anti Wall Street campaign

(Mark Wilson/Getty Images)
As a presidential candidate, Donald Trump railed against Wall Street firms like Goldman Sachs, attacked Hillary Clinton for ties to big banks, and pitted himself as a populist who would stand up to Wall Street. In fact, the official Republican platform included, for the first time, a call to re-institute Glass-Steagall.

Even after taking office Trump said he would consider breaking up the banks and economic advisers like Mnuchin and Gary Cohn reiterated support for a “21st Century Glass-Steagall.”

Mnuchin’s statements, however, appear to have nothing to do wth the core of Glass-Steagall (or at least its most looming legacy) and appears to simply be an attempt to slap a tough name on another deregulation measure.

White House Press Secretary Sean Spicer maintained that the president was “consistent” in his support of reinstituting Glass-Steagall in February and March, but the new “21st Century Glass-Steagall” sounded a bit different when Spicer discussed it on May 1.

“The President’s pro-growth agenda, including instituting what he has called a 21st century Glass-Steagall, will allow [small] banks to spend less time complying with unnecessary requirements, many of which were designed to police much larger entities, and more time, infusing their communities and local small businesses with capital,” Spicer said.

This, instead of sounding like it would regulate larger banks, appears to be a deregulation effort for community financial firms.

Tim Pawlenty, the former governor of Minnesota and current head of the Financial Services Roundtable, told Bloomberg’s Max Abelson that the new bill from the administration wouldn’t really focus on large banks with both investment and commercial arms at all.

“Following the president’s remarks on the topic, Gary Cohn clarified the administration’s view of a modern-day Glass-Steagall is a two-tiered approach to regulation in which smaller banks would receive some regulatory relief,” Pawlenty said.

Basically, Abelson reported, bank executives expect the new Glass-Steagall to be a deregulation effort for smaller banks, with little involving larger banks, that is sold under the guise of a bill that anti-Wall Street groups have been clamoring for.

As Warren pointed out during the testimony, the Trump administration is even cribbing the “21st Century Glass-Steagall” language from a bill partially written by Warren that would, in fact, break up large banks if it was adopted.

NOW WATCH: The Marine Corps is testing a machine gun-wielding robot controlled with just a tablet and a joystick



More From Business Insider
The Trump administration just handed Wall Street some great news

(President Donald Trump and Treasury Secretary Steven Mnuchin.Alex Wong/Getty Images)
Treasury Secretary Steven Mnuchin just said the words that will lead to a sigh of relief on Wall Street.

During his testimony to the Senate banking committee on Thursday, the Treasury secretary said the Trump administration did not support the separation of investment banks and commercial banks.

“We think that would have a very significant problem on financial markets, on the economy, on liquidity,” he said. “We do think there are potential things we could look at around regulation, but we do not support separation of banks and investment banks.”

Sen. Elizabeth Warren quickly pointed out that this conflicted with previous statements by President Donald Trump, Mnuchin, and economic adviser Gary Cohn, who all said the White House was considering a new form of Glass-Steagall, the law that once mandated the separation.

Trump told Bloomberg in an interview on May 1 that he was “looking at that right now” when asked about breaking up the big banks, and the idea was in the Republican Party’s platform.

Glass-Steagall was passed during the Great Depression to keep the kind of risk Wall Street firms take with trading out of the commercial banking system. Its repeal in 1999 led to a wave of combinations and is considered a factor in the 2008 financial crisis.

Warren took Mnuchin to task on this apparent reversal, saying the original Glass-Steagall was designed to separate commercial and investment banks.

(Thomson Reuters)
“There are aspects of Glass-Steagall that you support, but not breaking up the banks and separating commercial banking from investment banking?” Warren said. “What do you think Glass-Steagall was if that’s not right at the heart of it?”

Mnuchin said Trump and the administration hadn’t changed their position.

“We, during the campaign … specifically came out and said we do support a 21st-century Glass-Steagall,” Mnuchin said. “That means there are aspects of it that we think may make sense, but we never said before that supported a full separation of banks and investment banks.”

Warren said Mnuchin’s support for Glass-Steagall and rejection of the main aspect of the original law made little sense.

“Let me get this straight: You’re saying you are in favor of Glass-Steagall, which breaks apart the two arms of banking, except you don’t want to break apart the two parts of banking. This is like something out of George Orwell,” Warren said, alluding to the concept of doublespeak from Orwell’s dystopian novel, “1984.”

Mnuchin reiterated that the administration favored a “21st-century Glass-Steagall,” not the original Glass-Steagall.

NOW WATCH: This man spent 6 weeks working undercover in an iPhone factory in China — here’s what it was like



More From Business Insider
When Senator-elect Elizabeth Warren gave her victory speech on election night at a party where loudspeakers blared “Ain’t No Stoppin’ Us Now,” she pledged to “hold the big guys accountable.” Now, some bankers, their lobbyists and their Republican allies on the Senate banking committee reportedly would like nothing better than to keep Ms. Warren off the powerful bank panel — where she could do the most harm to the status quo, and the most good for the country.
Elizabeth Warren Wins Senate Banking Committee Seat

Okay, some things are just meant to be and this is one of them! Great news!!

Nearly two years after Wall Street waged a successful campaign to keep consumer advocate Elizabeth Warren from running the Consumer Financial Protection Bureau, the incoming senator will be tapped to serve on the Banking Committee, according to four sources familiar with the situation. It’s a victory for progressives who battled to win her a seat on the panel that oversees the implementation of Dodd-Frank and other banking regulations.

huffingtonpost.com
Elizabeth Warren Wins Senate Banking Committee Seat

Nearly two years after Wall Street waged a successful campaign to keep consumer advocate Elizabeth Warren from running the Consumer Financial Protection Bureau, the incoming senator will be tapped to serve on the Banking Committee, according to four sources familiar with the situation. It’s a victory for progressives who battled to win her a seat on the panel that oversees the implementation of Dodd-Frank and other banking regulations.

Warren knocked out Republican Sen. Scott Brown of Massachusetts in the most expensive Senate contest of 2012, with Wall Street spending heavily to beat Warren, a former Harvard law professor.

Sources also told HuffPost that Sen. Joe Manchin (D-W.Va.) will be named to the panel.

The federal government until recently shielded big banks from criminal prosecution out of concern that convictions may damage the financial system, a top Federal Reserve official said Friday, explicitly acknowledging a policy long denied by the Obama administration.
 
The admission came during a tense exchange between William Dudley, president of the Federal Reserve Bank of New York, and Sen. Sherrod Brown (D-Ohio) at a Senate Banking Committee hearing meant to explore the cozy relations between federal regulators and the banks they supervise.
act.credoaction.com
Tell the Federal Reserve Board of Governors: Retire Scott Alvarez


In a Senate Banking Committee hearing this week, Senator Warren blasted General Counsel Scott Alvarez for criticizing Wall Street reform. Alvarez has so much influence, in an organization ruled by a board of seven governors, he is referred to as the “Eighth Governor.” In fact, while we were fighting to block the White House from making Larry Summers chair of the Federal Reserve, the New York Times suggested that as long as Alvarez was general counsel it might make little difference who got the top job.

I just took action to stand with Elizabeth Warren and stop the Fed’s top lawyer from undermining Wall Street reform. I think you should, too. Click HERE to sign the petition.

If you’re caught with an ounce of cocaine, the chances are good that you’re going to go to jail. If it happens repeatedly, you may go to jail for the rest of your life. But evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night. Every single individual associated with this. I just think that’s fundamentally wrong.
—  Elizabeth Warren, Senate Banking Committee Hearing- Bank Money Laundering (beginning at 7:05) http://www.youtube.com/watch?v=7cKTBy7_S_I&feature=youtu.be
The Democratic senator from Massachusetts had a straightforward question for them: When was the last time you took a Wall Street bank to trial? It was a harder question than it seemed. “We do not have to bring people to trial,” Thomas Curry, head of the Office of the Comptroller of the Currency, assured Warren, declaring that his agency had secured a large number of “consent orders,” or settlements. “I appreciate that you say you don’t have to bring them to trial. My question is, when did you bring them to trial?” she responded. “We have not had to do it as a practical matter to achieve our supervisory goals,” Curry offered. Warren turned to Elisse Walter, chair of the Securities and Exchange Commission, who said that the agency weighs how much it can extract from a bank without taking it to court against the cost of going to trial. “I appreciate that. That’s what everybody does,” said Warren, a former Harvard law professor. “Can you identify the last time when you took the Wall Street banks to trial?”
— 

Elizabeth Warren Embarrasses Hapless Bank Regulators At First Hearing: Huffington Post. Video at the link.

This is quite nice.