US president Trump said earlier this month that he intends to give US bank regulations 'a haircut'. This week the Republicans introduced a bill – drafted by House Financial Services Committee Chairman Jeb Hensarling – to reform the Dodd–Frank Wall Street Reform and Consumer Protection Act. Some of the measures in the reform bill – dubbed the Financial Choice Act – will:

• repeal the Volcker Rule, which restricts lenders from making speculative bets unless they use clients’ money; and
• reduce the frequency of burdensome exams that determine whether banks can pay shareholder dividends.

Breaking up is hard to do

Bloomberg reports that the bill will be taken by the Democrats as an opportunity to push the agenda of breaking up Wall Street's biggest banks: “some Democrats have started strategizing on ways to leverage Hensarling’s bill to force Republicans to take a stand on controversial issues. That includes bringing back some version of the Glass-Steagall Act, the Depression era-law kept investment banking and consumer lending separate for more than six decades until it was scrapped in 1999. A handful of lawmakers blame the repeal for contributing to the 2008 meltdown, an argument that Wall Street flatly rejects.”

Mike Capuano, a Massachusetts Democrat who is considering proposing a Glass-Steagall amendment to the Dodd-Frank bill, is quoted by Bloomberg as saying: “A total breakup of the banks is my goal, but I’m not averse to making compromises. Any progress we can make toward the concept of separation is better than what we have.”

Next steps for Financial Choice Act

The House Financial Services Committee held a hearing on the 'Financial Choice Act' bill yesterday and next week there is a planned panel vote that will give Democrats a chance to make amendments.

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CTMfile take: Jokes about haircuts aside, it will be interesting to see how this plays out. Trump won the vote partly because of his anti-establishment and anti-Wall Street election campaign rhetoric. And the White House's economic advisor Gary Cohn, a former top executive at Goldman Sachs, recently said he would support the re-introduction of some form of Glass-Steagall.