Under Trump, U.S. Banks Could Get a British Makeover - ABI

Just what banking regulation will be like under President Donald Trump remains unclear. But recent comments by Treasury Secretary nominee Steven Mnuchin suggest he might be looking across the Atlantic to the U.K. for inspiration, the Wall Street Journal reported today. In his Senate testimony last week and in written responses to senators this week, Mnuchin repeatedly raised the specter of some kind of “21st Century Glass-Steagall,” without giving any details. Mnuchin clearly doesn’t favor a simple return to the Great Depression-era law. In his written comments, Mnuchin said that “a bright line between commercial and investment banking…may inhibit the necessary lending and capital markets activities to support a robust economy.” Under this system, U.K. banks like Barclays and HSBC must establish separate subsidiaries that contain their local U.K. operations serving individuals and small businesses, funded by government-guaranteed deposits. Their global investment-banking businesses stand outside this ringfence with their own capital, allowing them in theory to be wound down if they run into trouble without endangering the retail bank or necessitating a government bailout.

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