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Senator Warren Questions Sec. Mnuchin about Reversing Stance on Glass-Steagall - YouTube
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Thank you. So I want to go back
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your remarks about Glass-Steagall. As you know,
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the original Glass-Steagall was put
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in place to divide commercial banks and
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investment banks. The law was repealed in 1999,
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which created the too-big-to-fail banks
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like Citigroup and JP Morgan Chase
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that got so large.
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And since then, there have been many proposals,
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including my own bipartisan bill with
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Senators McCain, Cantwell, and King for a
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21st Century Glass-Steagall that would
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break up the banks and modernize the
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wall between commercial banking and investment banking.
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Now I want to look at history of this.
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The President and this administration have said repeatedly
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that they support a 21st Century Glass-Steagall.
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It was in the Republican Party platform.
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Donald Trump said it specifically a few weeks before the election.
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You said, quote, "We need a 21st Century Glass-Steagall"
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at your confirmation hearing.
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And now you've just said exactly the opposite.
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You know, in the past few months, you and the President
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have had a number of meetings with big
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bank CEOs and lobbyists.
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Is that the reason for the reversal on Glass-Steagall?
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Mnuchin: No, not not not at all.
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There actually wasn't a reversal, so...
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Warren: Wasn't a reversal?
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Mnuchin: No, let just explain, so
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The Republican platform did have Glass-Steagall.
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We, during the campaign,
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and I had the opportunity to work with
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the President on this specifically,
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came out and said we do support a 21st Century Glass-Steagall.
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Warren: Yes.
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Mnuchin: Which is that means that there are aspects of it, okay,
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that we think may make sense.
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But we never said before that we supported a
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full separation of banks and investment banks...
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Warren: I'm sorry, aspects of -- let me just stop you right there, Mr. Secretary,
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Mnuchin:You're not letting me finish.
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Warren: Yeah, I know I'm not. Because I really have to
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understand what you've just said.
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There are aspects of Glass-Steagall that you support,
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but not breaking up the banks
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and separating commercial banking from investment banking?
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What do you think Glass-Steagall was if that's not right at the heart of it?
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Mnuchin: Again, I'm well aware of what Glass-Steagall was,
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and as you may know,
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the original concern about Glass-Steagall
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was actually about conflicts, not about credit risk.
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And if we had supported a
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full Glass-Steagall we would have said
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at the time and have we believed in
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Glass-Steagall, not a 21st Century Glass-Steagall.
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We were very clear in differentiating it.
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Now I now realize that I had not realized that
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your bill was named the 21st Century Glass-Steagall...
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Warren: Yes, and had been for three years now.
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Mnuchin: I apologize that I was not aware of that, so.
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Warren: I still haven't heard the answer to my question.
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What do you think Glass-Steagall was if it wasn't
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separating commercial banking from investment banking, from um ordinary banking?
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Mnuchin: Again the fundamental part
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of Glass-Steagall was, as you've just outlined,
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in the separation of Investment banking
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from commercial banking because
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people were concerned about conflict.
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Warren: And how do you separate without breaking up the
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big banks that have integrated these two things?
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Mnuchin: Again the the integration of
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commercial banking and investment banks
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has gone on for a long period time.
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That is not what caused the problems during
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the financial crisis, and if we did go
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back to a full separation you would have
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an enormous impact on liquidity
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and lending to small and medium sized businesses...
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Warren: So let me get this straight. Let me get this straight.
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You're saying that you are in favor of Glass-Steagall,
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which breaks apart the two arms of banking,
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regular banking and commercial banking.
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Except you don't want to break apart the
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two parts of banking.
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This is like something straight out of George Orwell.
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You're saying simultaneously you're in
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favor of breaking up the banks -- that's what Glass-Steagall is.
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Mnuchin: I've never said we're in favor of breaking up the banks
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in separating. If we had, it would have been very simple.
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Warren: Ok, let me try it one more time.
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We're going to run out of time here.
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But I have to try this one more time.
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What does it mean to be in favor of
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21st Century Glass-Steagall if it does not
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mean breaking apart these two functions in banking?
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Mnuchin: You know what?
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I'd be more than happy to come see you and follow up and talk about this.
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Warren: No, I, just tell me what it means.
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Mnuchin: Had we -- we never came out and said
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Warren: Just tell me what it means to -- tell me what 21st Century Glass-Steagall means
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if it doesn't mean breaking apart those
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two functions? It's an easy question.
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Or an impossible question.
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Mnuchin: It's actually a complicated question...
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Warren: I'll bet.
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There's many aspects of it, ok?
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The simple answer which that don't support is breaking up banks from
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investment banks. We think that would be a huge mistake.
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But again, I'm more than happy to listen
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to your ideas on it. You obviously have
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strong views, and I'd be happy to follow up and listen you.
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Warren: This is just bizarre.
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The idea that you can say we are in
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favor of Glass-Steagall but not breaking up the big banks..
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Mnuchin: We never said we are in favor of Glass-Steagall,
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we said we were in favor of a 21st century Glass-Steagall.
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It couldn't be clearer.
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Warren: We are in favor of a bill that is called
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breaking up the banks, only don't break up the banks.
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Thank you, Mr. Chairman. This is crazy.
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