Donald Trump wants to crack down on Wall Street.
At Trump’s urging, the GOP formally endorsed breaking up America’s big banks Monday. It’s almost like the Republicans were taking a page from liberal senators Bernie Sanders and Elizabeth Warren who have advocated for exactly that to ensure no bank is “too big too fail.”
The official Republican platform for 2016 calls for bringing back Glass-Steagall Act, a law put in place during the Great Depression to restrict banks from serving both Wall Street and Main Street. President Bill Clinton repealed the law in 1999.
Trump’s campaign manager Paul Manafort told reporters that Trump put his distinctive stamp on the GOP platform this year by advocating for bringing back Glass-Steagall and repealing Dodd-Frank, the Obama-era law to curb bad banking practices after the financial crisis.
“These are all things that Mr. Trump has spoken about on the campaign trail: the importance of breaking the gridlock, breaking up the rigged system, the rigged banking system, the rigged economic system, the rigged political system,” Manafort said.
This kind of talk has really confused Wall Street over what Trump really wants. Big banks don’t like the idea of Glass-Steagall returning because companies like JPMorgan Chase and Bank of America would likely have to break up business units into different companies and get smaller.
But Trump also wants to get rid of Dodd-Frank, a stance that most banks, large and small, support. The GOP platform calls Dodd-Frank “the Democrats’ legislative Godzilla” that is “crushing small and community banks.” Bank CEOs blame the law for raising their costs dramatically.
Wall Street and the GOP are usually friendly with bankers giving a lot of money to Republican candidates, but not this year. So far, Wall Street has given little to Trump, and hardly any bankers are attending the Republican convention in Cleveland.
Reinstating the Glass-Steagall Act is now in both the Republican and Democratic platforms. The Democrats call for an “updated” version of the law since Hillary Clinton has repeatedly stressed that Wall Street today is more than just banks.
Sanders made bringing back Glass-Steagall a key part of his platform for president. He often accused Clinton of not supporting it because of the millions of dollars in speaking fees she has received from Wall Street banks. Trump will likely try to pick up where Sanders left off.
While there’s a clear anti-Wall Street push in Election 2016, Greg Valliere, chief strategist at Horizon Investments, says Wall Street isn’t too worried about Glass-Steagall actually coming back.
“I think the chances of this happening are pretty slim. I can’t see it getting through the senate,” Valliere says.
