Courtesy of Pam Martens.
Treasury Secretary Steven Mnuchin Testifies at a Senate Banking Hearing, May 18, 2017
At a time of growing loss of confidence in the credibility of President Donald Trump, his Treasury Secretary, Steven Mnuchin, declared today that the Trump administration never had any intention of restoring the Glass-Steagall Act and separating the taxpayer-backstopped insured commercial banks from the high risk Wall Street investment banks.
Under intense questioning from Senator Elizabeth Warren at a Senate Banking hearing today, Mnuchin effectively said that his idea of supporting a 21st Century Glass-Steagall Act meant doing the opposite of what Glass-Steagall did: he would leave the commercial banks and investment banks under the same roof.
The Glass-Steagall legislation enacted in 1933 did only two key things: it enacted Federal insurance on bank deposits to restore confidence in the country’s deposit-taking banks at a time of unprecedented defaults tied to Wall Street gambles and it barred those insured commercial banks from combining with Wall Street investment banks going forward. That legislation protected the U.S. banking system for 66 years until its repeal in 1999. Nine years later, Wall Street crashed again in epic fashion, blowing up large insured banks like Citigroup, Wachovia and Washington Mutual, along with century old investment banks like Lehman Brothers.
Senator Warren at one point called Mnuchin’s remarks “crazy” and “like something straight out of George Orwell.” Indeed they were. (See video below.)
Senator Elizabeth Warren Grills Treasury Secretary Steven Mnuchin on His Flip Flop on Reinstating the Glass-Steagall Act
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