A few members of the Republican Party, most notably John McCain, have pushed for a modern day Glass-Stegall Act for years and it seems the Republican Party has finally come around to the idea. This may have to do with the rise of Donald Trump, it might also be an attempt to shift with the wind and appeal to the growing number of Americans disillusioned with the financial sector. Regardless, the Republicans have tacked out a position on banking regulation the left of Hillary Clinton and have actually adopted her opponent, Bernie Sanders, financial regulation plan.
Banking and financial regulation were a hot button issue during the Democratic primary and both Bernie Sanders and Hillary Clinton brought ideas to the table. Bernie Sanders suggested reinstating a “21st century Glass-Stegall Act” which would separate savings accounts from investment banking, giving banks less capital to work with and ultimately reducing their size. Sanders claimed this would prevent banks from becoming too big and powerful, but more importantly it would prevent them from risking people’s 401Ks and savings accounts with bad investments. The Clinton plan claims to accomplish similar goals, but in a very different way.
As opposed to separating the two institutions entirely the Clinton campaign has focused most of their attention on the so called “shadow banking industry.” This approach focuses mostly on hedge fund managers and financial institutions of the like that focus on market manipulation and patters as opposed to selling financial products. Specifically the Clinton plan would focus on closing loopholes that allow banks to use taxpayer money on risky investments and “making sure no financial firm is ever too big or too risky to be managed effectively.”
These are nice goals and very much in line with the goals Bernie Sanders attempted to accomplish when he began pushing for a modern day Glass-Stegall act. Hillary Clinton’s goals are rhetorically in line with that, but the reforms she has proposed are vague and it’s not at all clear they will go far enough towards actually preventing the financial meltdown her policy paper discusses so frequently. Her plan might work, it might not, which is essentially the Bernie Sanders criticism for incremental steps towards financial regulation. Surprisingly it’s also the argument being made by the 2016 Republican Party Platform.
Leading up to the Republican National Convention in Cleveland Ohio the party was busy drafting their proposed platform. For years the Republicans have bashed the Obama administrations “Dodd-Frank” financial regulation bill and claimed it was one more example of government overreach impeding on industry. The problem was the party never really offered a meaningful solution to combat the reforms offered by the Democrats, until now anyway. Now the Republican Party has embraced the FDR era Glass-Stegall Act and at least in spirit have moved to the same position as Bernie Sanders when it comes to financial regulation. This might be a product of the Donald Trump phenomena, but there have been voices within the Republican Party calling for the reform for years, most notably John McCain.
Whether a product of the Donald Trump restructuring of the Republican Party, or old guard voices finally being listened to, the move to pass a 21st century Glass-Stegall Act is something progressives and conservatives alike can band together to accomplish. Hopefully the Democrats and more centrist politicians adopt the policy as well, but that remains to be seen.