Calling his comments and attempted explanations both “bizarre” and “crazy,” Sen. Elizabeth Warren (D-Mass.) slammed Treasury Secretary Steven Mnuchin during a hearing on Thursday for backtracking on repeated promises by the Trump administration that it would support breaking up the big banks by reinstating a new version of the Glass-Steagall Act.
The tense exchange came as Mnuchin, a former executive at Goldman Sachs and OneWest before being picked by President Donald Trump to lead the Treasury, explained to the Senate Banking Committee the administration policy does not favor breaking up too-big-to-fail banks or separating their commercial banking side from their riskier investment banking operations.
“The president and this administration have said repeatedly that they support a 21st century Glass-Steagall,” pointed out an incredulous Warren, who introduced a bill by that name in 2013, in 2015, and again this year, highlighting the administration’s position. “It was in the Republican Party platform. Donald Trump said it specifically a few weeks before the election,” she said.
At the time, observers speculated that the call was made to drive a wedge between the alleged “populist outsider” Trump and Democratic nominee Hillary Clinton, who did not support reinstating the law that her husband, former President Bill Clinton, had repealed in 1999.
“You said, ‘We need a 21st century Glass-Steagall’ at your confirmation hearing,” Warren said to Mnuchin, “and now you’ve said exactly the opposite. In the past few months you and the president have had a number of meetings with big bank CEOs and lobbyists. Is that the reason for the reversal on Glass-Steagall?”
Mnuchin countered that it “wasn’t a reversal,” because the Trump campaign “specifically came out and said we do support a 21st century Glass-Steagall. That means there are aspects of it that we think may make sense but we never said before that we supported a full separation of banks and investment banking.”
The exchange follows:
WARREN: [Cutting him off] Aspects? Let me just stop you right there, Mr. Secretary.
MNUCHIN: You’re not letting me finish.
WARREN: Yeah, I’m not, because I really have to understand what you’ve just said. There are aspects of Glass-Steagall that you support, but not breaking up the banks and separating commercial banking from investment banking. What do you think Glass-Steagall was if that’s not right at the heart of it?
MNUCHIN: I’m well aware of what Glass-Steagall was… If we had supported a full Glass-Steagall we would have said at the time that we believed in Glass-Steagall, not a 21st century Glass-Steagall. We were very clear in differentiating it. I had not realized that your bill was named the 21st Century Glass-Steagall.
WARREN: Yes, and has been for 3 years now.
“Let me get this straight, you are saying that you are in favor of Glass-Steagall, which breaks apart the two arms of banking… except you don’t want to break apart the two arms,” Warren continued. “This is like something straight out of George Orwell.”
When asked repeatedly “what does it mean to be in favor of 21st century Glass-Steagall if it doesn’t mean breaking apart” banks, Mnuchin responded that it’s “actually a complicated question” and said he’s “happy to follow up and discuss” with Warren at a later date.
“This is just bizarre,” Warren responded, adding to herself, “this is crazy.”