Liberal firebrand Sen. Elizabeth Warren (D-MA) forcefully criticized Treasury Secretary Steven Mnuchin during a Senate committee hearing Thursday, for what she said was a contradictory stance on banking regulations – insinuating that Mnuchin changed positions in an Orwellian fashion.
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“This is like something straight out of George Orwell,” Warren said, while spatting with Mnuchin over the true purpose of the Glass-Steagall Act.
Glass-Steagall was a banking regulation implemented in 1933 separating commercial and investment banking. President Bill Clinton signed a bill to repeal the act in the late 1990s and some argue the repeal of the law led to the 2008 financial crisis.
While the Democratic senator from Massachusetts cited Mnuchin’s stated support for a “21st century version” of Glass-Steagall, which was made in January and was not a reference to Sen. Warren’s proposed legislation, she accused him of reversing that position after meeting with CEOs of the nation’s largest banks.
“There actually wasn’t a reversal,” Mnuchin responded. “During the campaign we said we do support a 21st century Glass-Steagall. That means there are aspects of it we think may make sense.”
Warren interrupted, acknowledging “yeah, I’m not [letting you finish],” questioning how Mnuchin could support parts of the law, but not the overall concept of separating commercial banks and investment banks. Earlier in the testimony Thursday, Mnuchin had said that he was not in favor of separating banks from investment banks, which he said would pose a very significant problem to the financial markets, the economy and liquidity.
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“What do you think [Glass-Steagall] was if it wasn’t separating commercial banking from ordinary banking?” Warren asked in exasperation. “How do you separate without breaking up the banks that have integrated these two things?”
Mnuchin said he has never supported breaking up the big banks, and that if he had supported Glass-Steagall in its previous form, he wouldn’t have cited the need for a new and improved version.
“This is just bizarre,” Warren said. “This is crazy.”
After the tense exchange, Mnuchin was given a chance to fully explain his position during a round of questioning from Sen. Thom Tillis (R-NC).
“When we’re talking about breaking up the banks … there are just people who think banks are ‘too big to fail’ and should be broken up into smaller banks … If you’re talking about separating investment banking from commercial banking, that is completely separate from breaking up the big banks,” Mnuchin said.