Market rejects Glass-Steagall’s return

Author: John Crabb | Published: 28 Mar 2017

President Trump’s suggestion to re-instate Glass-Steagall has been dismissed by many market participants, and appears to contradict his executive order’s mission to rollback financial regulation.

The Glass-Steagall Act was introduced by Franklin D Roosevelt in 1933 and then repealed by Bill Clinton in 1999 with the establishment of the Gramm-Leach-Blilearley Act. Glass-Steagall created a barrier between commercial and investment banks and prevented big banks from gambling with customers’ deposits. 

Trump’s Treasury Secretary, Steven Mnuchin, said during his confirmation hearing that he backed a '21st century version’ of Glass-Steagall. And earlier this month, Thomas Hoenig, vice-chairman of the Federal Deposit Insurance Corporation said that universal banks should set up standalone holding companies if they wanted to carry out non-traditional bank activities.

Is he bringing it back?However, Trump’s executive order clearly laid out a pledge to rollback regulation wherever possible, and his actions so far as President seem...