White House may Support Restoring Glass-Steagall

According to a recent article in the American Banker, there's disagreement among observers as to what the White House hopes to achieve in its ongoing support for the restoration of the Glass-Steagall act, the Depression era law that required the separation of investment and commercial banking.

Speculation was re-ignited recently when National Economic Council Chairman Gary Cohn expressed support for bringing back the law during a closed door meeting with members of the Senate Banking Committee. Although other members of the administration, and the President himself, have previously supported the measure, up until this point Cohn had not taken a position.

According to the article, some see this incongruent with the Administration's goal of substantially rolling back Dodd-Frank. This perception led one bank consultant interviewed by the American Banker to point out that it may be a matter of political expediency, saying "you can maintain something that is consistently populist, but also doesn't bind you to anything because there is no path forward, it is a simple calculus."

However, others have interpreted the move to be part of a larger strategy around financial regulatory reform. According to Brian Gardner and Michael Michaud, analysts at KBW, "many Democrats would support reinstating Glass-Steagall, but in return we think they would need to accept significant changes to Dodd-Frank." The analysts offer "elimination of the Consumer Financial Protection Bureau" as an example of a concession Democrats may be asked to accept.

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