US Treasury's Mnuchin: "We do not support breaking up banks"

Gladys Abbott
May 19, 2017

House Ways & Means Committee Chairman Kevin Brady (R-TX) on May 18 said that a border adjustable tax remains a central component of his tax reform plans, even as Treasury Secretary Steven Mnuchin cast fresh doubts on the viability of the "BAT" proposal.

"We never said before that we supported a full separation", Mnuchin said, rejecting the claim that this marked a policy reversal. A call to reinstate the 1933 law was included as part of the official Republican Party platform during the 2016 presidential campaign. He also apologized for the confusion that the phrase, often bandied about by Trump and his aides, happened to match the title of the bill pushed for years by Warren and Republican Senator John McCain, the "21st Century Glass-Steagall Act".

While reviving Glass-Steagall would be a drastic step, lawmakers on both sides of the aisle have argued it might be the best way to prevent banks from becoming so large that they endanger the financial system. But Warren disagrees with the plan.

For background, Glass-Steagall was repealed in 1999, clearing the way for commercial-investment mergers on Wall Street such as combinations of JPMorgan and Chase along with Bank of America and Merrill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.

The administration's exact position on Glass-Steagall's potential return has been unclear.

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Mnuchin has said the cuts would pay for themselves under a dynamic scoring model analysis, which takes into account the effect of tax changes on economic growth and revenue.

President Trump himself has raised the issue, telling Bloomberg News earlier this month that he was considering a breakup of the biggest banks.

"I can assure you the president's objective and my objective is we create a middle income tax cut and we do not raise taxes on the middle income, if anything the opposite", Mnuchin 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.

"There are aspects of Glass-Steagall you support, but not breaking up the banks", she said.

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