Mnuchin: Administration Doesn't Support Reinstating Glass-Steagall Act

Steve Mnuchin U.S. Treasury Secretary speaks during the Milken Institute Global Conference in Beverly Hills

Elizabeth Warren for saying that he supported a "21st-century Glass-Steagall" Act, but opposed breaking up banks' commercial and investment banking functions.

Mnuchin, making his first appearance before the Senate Banking Committee since taking over as treasury secretary, said in a heated exchange with Sen.

Responding to criticism over the department's appointment of a banking-industry lawyer as acting comptroller of the currency, Mnuchin told members of the Senate Banking Committee that Trump's prospective nominee is going through what may be a lengthy vetting process.

But Mnuchin insisted Thursday that his call for a modernized version of that law does not include a strict firewall that would break up some of the biggest names on Wall Street. So, the Republican platform did have Glass-Steagall.

Mnuchin responded that the original concern leading to Glass-Steagall, enacted in 1933, was related to conflicts, not credit risks.

"The fundamental part of Glass-Steagall was separation [of commercial and investment banking functions], Mnuchin said".

The Trump administration has said they are receptive to a "modern" version of Glass-Steagall. But Mnuchin took a different position Thursday. All three have substantial footprints in commercial and investment banking, so their business models would be buffetted.

Mnuchin said during his confirmation hearing that he supported a "21st-century Glass-Steagall", and Trump's top economic adviser, Gary Cohn, reportedly made similar statements. "What do you think Glass-Steagall was if that's not right at the heart of it?"

Warren grilled Mnuchin on the Trump administration's stance on Glass-Steagall after the treasury secretary seemed to contradict himself.

"But we will put procedures in place, and I specifically said this, to make sure that people who should be paying higher taxes do not use pass throughs to arbitrage the system". "This is insane", Warren said to no one in particular at the end of her testy exchange with the Treasury secretary.

WARREN: We are in - we are in favor of a bill that is called breaking up the banks, only don't break up the banks.

Such a list is needed to reveal whether Trump's associates and investors have been in compliance with laws related to bank secrecy, sanctions, money laundering and other regulations, Brown said. "The integration of commercial banking and investment banks has gone on for a long period of time", he said, predicting there would be "enormous" economic impact, particularly on bank liquidity, "if we did go back to a full separation".

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