Washington, (IANS) - US President Donald Trump said on May 1 that he was looking at breaking up the huge Wall Street banks, separating their commercial and investment banking businesses.
"I'm looking at that right now. There's some people that want to go back to the old system, right? So we're going to look at that," EFE news quoted Trump as saying in an interview with Bloomberg News. The former real estate developer said during the presidential campaign that he was open to enacting a "21st century" version of the Glass-Steagall Act, a 1933 law that separated banks' consumer and investment banking businesses.
Glass-Steagall was repealed by legislation signed in 1999 by President Bill Clinton, who cited the need to reduce financial industry regulation. Many critics blamed Glass-Steagall's repeal for the financial crisis that crippled the global economy in 2008 following the bursting of the real estate bubble in the US.
Trump, however, did not provide additional details about his plans for a new version of Glass-Steagall. The President's comments about breaking up big banks come as he moves to scrap many of the banking industry regulations imposed by former President Barack Obama in the wake of the financial crisis.
Trump has argued that excessive regulation cuts off the flow of loans to consumers and businesses. The President's remarks about Glass-Steagall led to a sell-off on Wall Street, especially in shares of large banks, such as Citigroup and Bank of America, but share prices later rebounded.
Some analysts contend that the big financial institutions created following Glass-Steagall's repeal might be worth more in a break-up than in their current form.