Posted on 07/20/2016 8:48:11 AM PDT by b4its2late
WASHINGTON — The eleventh-hour move by the Donald Trump campaign to add a plan to reinstate the Glass-Steagall Act to the Republican platform caught GOP lawmakers off guard, with some of them expressing disappointment with the decision.
While the 1930s-era law, which separated commercial and investment banking activities, is strongly supported by progressive Democrats, it is not popular among most Republican policymakers.
"I was completely surprised," Rep. Steve Stivers, R-Ohio, a member of the House Financial Services Committee, said in an interview here hours before Trump's formal nomination Tuesday evening. "It was a late addition. I am not sure how it happened. I was very disappointed that that got included, because frankly I think that will make our banks more vulnerable if we try and put Glass-Steagall back in and make them more likely to fail, because they will be more focused on fewer classifications of assets."
Another panel member, Rep. French Hill, R-Ark., was also taken aback.
"That issue per se was not something that contributed to the financial crisis," Hill said in a separate interview here. "Commercial bank underwriting and distributing of securities is not something that was a major contributor to the financial crisis."
Stivers said the Trump campaign might have been wise to seek more input from the banking industry before including it in the platform.
"I think it was put in there and supported by folks who maybe don't understand how banking works," said Stivers, who was interviewed in a subterranean lounge that resembled the kind of speakeasy that would have existed when Glass-Steagall was written. "If we do that, the other thing is we will never be a magnet for money-center organizations, because the biggest banks in the world will be in Europe and Asia instead of here in the United States. They obviously didn't consult very many folks on the Financial Services Committee or folks that knowledgeable, which is too bad."
Although the move alarmed lawmakers, they nonetheless maintained that Trump would be a better choice for the economy and the country than his rival, former Secretary of State Hillary Clinton, who is expected to be formally nominated at the Democratic convention next week in Philadelphia.
"People are beginning to come together because Hillary is no option. She wants to take your profits, your operating capital and wants to tax everything," Rep. Roger Williams, R-Texas, said in an interview here. "A lot of us have a lot of conservative ideas to get the economy going … that would never happen under President Obama."
Here's why:
Mike Pence
Republican lawmakers see Trump's decision to tap Indiana Gov. Mike Pence as his running mate as a positive sign and believe the former Congressman could be influential when it comes to policymaking.
"Mike Pence is a solid thinker and a conservative leader and I think hopefully he will have real influence on the administration's way they interpret laws and the way they carry out the laws throughout the [federal financial] agencies," said Stivers, who briefly overlapped with Pence in the House. "I am hopeful he will have a major voice."
Hill commended Pence's work in Congress and Indiana and added that he and Trump complement each other.
"You have got Pence, who knows business, but who also knows how policy works at the state and federal level and you have Trump, who is an instinctive entrepreneur. I think that would be a pretty dynamic combination to listen to a 'How to get an economy going faster,' " Hill said.
Appointments
Many Republicans view federal regulators as having too much power and going beyond congressional intent, but the next president will be able to appoint people to key positions at the Federal Reserve Board, Federal Deposit Insurance Corp. and eventually the Consumer Financial Protection Bureau that will shape how financial regulation is carried out.
Democrats have called for fewer bankers to serve as heads of the regulatory agencies and have included language in a draft of the party platform that would prevent executives of financial institutions from serving on the boards of the regional Fed banks.
"I don't understand the negative feelings about having people that understand that industry help work on macro policy solutions," Hill said.
Stivers said having a background in the industry is important "but most importantly it is about demeanor, somebody that will listen and work together with the industry to find solutions that work, that don't take away choice from consumers."
Dodd-Frank
Republicans have been hard-pressed to roll back the 2010 financial reform law that many believe is disproportionately hurting community banks. House Financial Services Committee Chairman Jeb Hensarling has introduced the Financial Choice Act, which would create an alternative regulatory framework for well-rated banks that hold higher amounts of capital.
That plan is strongly embraced by Republicans on the committee — and they hope Trump will support it as well.
"It helps balance [the playing field] because approximately over 6,000 community banks already meet" or almost meet the capital requirements to be eligible for the alternative framework, Hill said.
The bill is highly unlikely to pass this year, but some lawmakers are pushing for a committee vote to show the next president it has support.
"I would love to mark up the bill if there is time this year and go into the new presidency with a concrete direction that the House thinks is the way to go," Hill said.
Stivers also said a new president could take other approaches to reforming Dodd-Frank, including doing a "call for evidence" — a system being implemented by European bank regulators in which they re-evaluate which regulations are working.
Congress "can try and change the laws, but most of the" financial regulations "we are talking about aren't even written into the laws," Stivers said. "They are interpretations of the agencies, so we have to have the administrators on board. We have to make sure the agencies actually work with whoever the next administration is to try and get a call for evidence."
"We"? That's group think. Probably better for everyone to research and come to their own conclusions.
Partially.
The other issue is the Community Reinvestment Act, where the fedgov forced banks to make 'affirmative action loans' (aka subprime mortgages) to people who could not qualify for a standard mortgage.
Funny how no one ever talks about repealing the CRA ...
Fractional Reserve banking is a grift and a con upon the stupid. It is theft and it is embezzlement. This fellow simplifies it enough for Joe Sixpack to get riled:
https://www.youtube.com/watch?v=NeJpQQt_b8c
It’s only on the table. Why get upset (show your hand) when nothing has occurred.
Almost....
The Gramm(R)-Leach(R)-Bliley(R) Act which gave legitimacy to the (then illegal) Citi/Travelers merger is what effectively repealed Glass-Segall. Slick and Treas. Sec Rubin lobbied heavily for its passage. One week after GLB passed, Rubin resigned Treas. and less than a month later was employed at Citi.
Pretty much.
The whining by the larger shops can be discounted — even in the “bad ole days” (from the perspective of the bankers) the big boys were owned at a holding company level and had separate companies underneath the holding co. One would be a depository institution; a completely different company would be an investment banking house/securities broker-dealer.
The point was, that there was a firewall between the geniuses on the investment side and the federally insured money on the bank side. Once you blew that firewall down and mixed in the toxic brew of crap mortgage loans, the securities that bundled them, and added the swaps, repos, and reverse repos into the mix, things got really bad when the market turned sideways.
These guys whining about the US not being a money center anymore is a load of crap.
we agree.
I agree.
Remember after the 2009 meltdown we heard politicians promising to fix the problem with banks that were "too big to fail"?
Well - they never fixed it and in fact, they allowed (helped?) their sugar-daddy financial institutions and supporters get even bigger.
YUP....that also
There were many wheels within wheels turning
Clinton's repeal of Glass-Steagall essentially allowed banks to gamble away people's savings and deposits by investing in high-risk securities, and was one of the principal causes underlying the 2008 financial collapse. Moreover, allowing banks to invest savings in high risk securities makes it more or less necessary for the government to guarantee the loans, meaning that taxpayers are inevitably made responsible for bailing out the banks' losses (hence TARP and "too big to fail").
It was Bill Clinton that got rid of Glass Steagall. Should have never happened.
He WANTED to get rid of it...but it was REPUBLICANS that made it happen.
-PJ
Glass-Steagall was a sensible restriction. If banks want out of Glass-Steagall, then they should also be disqualified from FDIC or bailouts such as we saw under Hank Paulson and his ObaMaoite allies.
Unfortunately, the banks seem to want capitalist profits and socialized losses, and thanks to their lobbying, Glass-Steagall was repealled while Federally guaranteed bailouts remained.
Your proposal makes perfect sense: any bank with Federally guaranteed loans must be subject to Glass-Steagall, and anyone who wants secure deposits can choose to take their business to such a bank. Those banks who want to be exempt from Glass-Steagall will also be exempt from any Federal bailouts if they gamble away their money on high risk securities. Such banks should be required to inform all of their clients that their loans are not Federally guaranteed.
Maybe GOP lawmakers need to be blindsided more often.
Trump is calling this one correctly.
Trump supporters need to get constitutionallly low-information Trump up to speed on the federal government’s constitutionally limited powers.
More specifically, note that the Glass Steagall Act became law the first year that Constituton-ignoring FDR became president, and regardless what FDR’s state sovereignty-ignoring activist justices wanted everybody to think about the scope of Congress’s Commerce Clause powers (1.8.3), please consider the following.
The delegates to the constitutional convention had rejected the idea of giving Congress the constitutional authority to regulate both INTRAstate commerce and intrastate banking, regardless if you define banking as commerce or contracts, and regardless if the parties negotiating a contract are domeciled in different states.
“A proposition was made to them to authorize Congress to open canals, and an amendatory one to empower them to incorporate. But the whole was rejected, and one of the reasons for rejection urged in debate was, that then they would have a power to erect a bank, which would render the great cities, where there were prejudices and jealousies on the subject, adverse to the reception of the Constitution [emphasis added].” —Jefferson’s Opinion on the Constitutionality of a National Bank : 1791.
”State inspection laws, health laws, and laws for regulating the internal commerce of a State, and those which respect turnpike roads, ferries, &c. are not within the power granted to Congress [emphases added].” —Gibbons v. Ogden, 1824.
"4. The issuing of a policy of insurance is not a transaction of commerce within the meaning of the latter of the two clauses, even though the parties be domiciled in different States, but is a simple contract [emphasis added] of indemnity against loss." - Paul v. Virginia, 1869. (The corrupt feds have no Commerce Clause (1.8.3) power to regulate insurance.)
"From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states, or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited [emphasis added]. ...” —United States v. Butler, 1936.
Just as FDR probably should have done on the campaign trail before being elected president, Trump should be promising that he will be working with the states for new amenments to the Constitution that give the feds the specific powers to do the things that will support his vision for making America great again for everybody.
Patriots need to support Trump by also electing a new state sovereignty-respecting Congress that will work within its constitutional Article I, Section 8-limited powers to support Trump’s vision.
Also consider that such a Congress will probably be willing to fire state sovereignty-ignoring activist justices.
Well, from the MSM point of view, 2 of them make it plural, so yeah, the headline is legit.
Btw, that was sarcasm from me as well. I agree with you.
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