Correcting, revising, and reframing Donald Trump’s often contradictory and incendiary statements is a key part of the job for anyone in his administration, including his treasury secretary, Steven Mnuchin.
Testifying before Congress on Thursday, Mnuchin tried to walk back a major promise made by Trump on the fly. It wasn’t the first time, and it won’t be the last.
In this instance, the former Goldman Sachs banker argued the administration had never suggested a return to the depression-era anti-crisis banking law known as Glass-Steagall, which maintained a strict divide between high-risk investment banks, and deposit-taking commercial banks and whose repeal under Bill Clinton in 1999 is blamed for contributing to the Wall Street largesse that culminated in the 2008 financial crisis.
Mnuchin’s statement went directly against Trump’s suggestion made just nine days earlier, on May 9, that he was considering breaking up the nation’s largest banks, which after the crisis have become commonly referred to as too-big-to-fail because they are sure to require taxpayer bailouts if they go under.
“Some people … want to go back to the old system, right? So we’re going to look at that,” Trump said when asked whether big banks should be broken up.
However, when asked by Senator Elizabeth Warren about the proposal to bring back Glass-Steagall during Congressional testimony on May 18, Mnuchin changed his tune: “We, during the campaign … specifically came out and said we do support a 21st-century Glass-Steagall,” Mnuchin said. “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 banks.”
Warren pressed him on which aspects. Mnuchin did not have an answer: “I’d be happy to discuss with you at another time,” he demurred.
This is only the most recent example of the treasury secretary reversing one of Trump’s economic promises.
Trump repeatedly promised during the campaign that, should he be elected, economic growth would hit 4%, far higher than the growth rate seen in the US in the last several decades. Once candidate Trump became President Trump, however, Mnuchin first quietly downgraded that target to 3%, and then said it will not be achieved for at least another two years.
Another broken vow came up during Mnuchin’s testimony: Trump’s repeated statements that he would label China a “currency manipulator” as soon as he took office. Not only has Trump not done so, Trump and Mnuchin are now saying what their detractors argued during the campaign — China has not tried to artificially depress its currency to boost exports for years.
Given these other reversals, it’s hard to be surprised at today’s reversal on breaking up the banks.
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