President Donald Trump has worried Wall Street by promising to bring back a Depression-era law that separated investment banking from consumer lending, but he hasn't offered details on what his modern version might look like. Now a key regulator may be filling the void.
U.S. financial firms should partition their investment banking activity, putting it into a separate "intermediate holding company" with its own board, management and capital, Federal Deposit Insurance Corp. vice chairman Thomas Hoenig said Monday. The companies could even have a special class of stock, he said.
Hoenig's plan, which would require new legislation, wouldn't exactly recycle the Glass-Steagall Act, he told reporters after his speech at the Institute of International Bankers conference in Washington. But it could meet the Trump administration's goal of enacting a modern take on the law that divided banking functions for more than six decades, he said. Glass-Steagall's repeal in 1999 opened the door to the creation of modern megabanks.
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