The enemy of my enemy is my friend, and perhaps banking may be the industry that brings Republicans and Democrats to work together across the aisle. As The New York Times noted recently, both parties have put language in their respective platforms unveiled at their conventions that would bring back the Glass-Steagall Act. And that legislation, which separated investment banking and commercial banking, is enjoying a bit of resurged popularity.
The Act, of course, means that banking and investment stayed separate and that is clearly something that figured in party politics this election season. Glass-Steagall was shattered in 1999 with the advent of the Gramm-Leach-Bliley Act, which undid some of those separations and let big firms such as Citigroup form “financial supermarkets” that indeed offered up, and still offer up, a range of investment and traditional banking options.
In this political season, which has been anything but staid, the standard bearers of both parties are likely to tune into the sentiments put forth by Bernie Sanders, who has fought for a plank in the Democrat platform that would bring Glass-Steagall back, despite the fact that Hillary Clinton has appeared to be disinclined to bring it to real prominence in her campaign. Clinton has opted instead to want to address “shadow” financial activities conducted by hedge funds and other financial entities. And Donald Trump supports the return of the legislation and separation of operations within finance. In fact, he has said he would roll back much of the freedom big banks have had to create their cross-pollination of services.
What does this all mean? In one analysis quoted by The Times, Brookings Institution senior fellow Elaine C. Kamarck stated that “In terms of political significance, the presence of the same plank in both party platforms means that the one thing we can bet on seeing in 2017 is a tougher attitude toward the financial industry. To date there hasn’t been much interest in this in Congress. But if the establishment heard one thing loud and clear in the 2016 primaries, it was that millions of Americans think that they were the victims of Wall Street and that the next president had better pay attention.”
Even if Glass-Steagall does not come back in its whole form, public agitation against the big banks means that there will be some lag on hiring or even layoffs in the works, said The Times.