An ambitious bid to replace Republicans’ Dodd-Frank repeal proposal with legislation restoring Glass-Steagall was defeated on Tuesday.
The House Rules Committee voted down the bipartisan Glass-Steagall restoration bill before advancing the push to washout financial reforms passed after last decade’s massive banking collapse.
The move, which wasn’t unexpected, means that the lower chamber will likely go ahead this week with considering conservatives’ Dodd-Frank replacement.
While Democrats on the committee asked for a roll call vote after the Dodd-Frank repeal advanced along party lines, they did not ask for votes to be recorded after the Glass-Steagall motion failed, signifying that the party did not want to attempt to embarrass those who voted against the proposal.
Glass-Steagall refers to Great Depression-era legislation, which segregated retail and investment banking. It was fully repealed by Congress and the Clinton administration in 1999.
Dodd-Frank refers to the 2010 law that created new mechanisms to oversee the banking sector. Republicans’ repeal bill, called the CHOICE Act, would take independence away from the Consumer Financial Protection Bureau and entirely rebrand the watchdog as the “Consumer Law Enforcement Agency.
The CHOICE Act would also nullify provisions of Dodd-Frank that allow regulators to break up failing banks without bailing them out. It would also exempt banks from many Dodd-Frank rules on prudence, if they can satisfy certain requirements on equity injections from investors.
The Glass-Steagall restoration provision was introduced by Reps. Walter Jones (R-N.C.) and Marcy Kaptur (D-Ohio), and it was put forth on the Rules Committee by panel member Jim McGovern (D-Mass.).
“Of all the bills that I have voted for in 22 years, the two that I regret the most were: first, the unnecessary war in Iraq, and second, the repeal of Glass-Steagall,” Rep. Jones said.
The Glass-Steagall repeal, Jones said, “created chaos,” and led to the massive rescue package Congress offered Wall Street after last decade’s financial collapse.
“We bailed out dishonesty and greed,” he added.
Rep. Kaptur characterized the American economy now as less functional that it was between the passage and repeal of Glass-Steagall.
“That era has been described as golden, as wolves were not allowed to prey on the people’s hard-earned depository savings,” she said.
Kaptur pointed out that Wall Street institutions have only grown larger since last decade’s collapse, “to add insult to injury.” She also noted that six banks currently own almost two-thirds of all financial sector assets.
“And I’ll say their names,” Kaptur added, before singling out JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley.
“The answer to economic growth rests on separating risky speculation from prudent banking,” she also noted.
Donald Trump supported Glass-Steagall during last year’s presidential campaign, but has done an about-face on his promise to restore the law.
“We do not support a separation of banks and investment banks,” Treasury Secretary Steve Mnuchin said last month.
