If you read the 58-page draft of the Republican Party’s official party platform you’ll come across a surprising one-liner: “We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment.”
But before Republican big-bank haters get excited, everyone should know that’s not presidential candidate Donald Trump’s one-liner.
In fact, it just might turn out to be a joke.
Based on who Mr. Trump is reportedly considering for Treasury Secretary in his would-be cabinet, it’s highly unlikely, Republican platform rhetoric aside, a Trump Administration would be even remotely interested in resurrecting Glass-Steagall.
Frighteningly, but not surprisingly, there’s a huge Goldman Sachs nexus connecting the end of Glass-Steagall to the future prospect of reviving it, with Donald Trump squarely in the middle.
Here’s how a former Goldman Sachs operative murdered Glass-Steagall for $125 million, why another former Goldman Sachs Treasury Secretary would keep it buried, and what Donald Trump, if elected, should do about it.
The Ugly Truth About The Repeal of Glass-Steagall
To date, the anointed Republican presidential candidate hasn’t laid out his position on big banks or reinstating the old Glass-Steagall Act.
The Glass-Steagall Act, signed into law in 1933, made it illegal for deposit-taking commercial banks to own investment banks or insurance companies. It was finally overturned by Democrat-led efforts with the Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act of 1999, and signed into law by President Clinton.
What’s too often forgotten is that former Goldman Sachs co-Chairman and co-Senior Partner Robert Rubin was Bill Clinton’s Treasury Secretary at the time. Rubin personally helped lobby for and usher through the Financial Services Modernization Act.
Rubin left the Treasury after his government service was done to join Citigroup, which was created a year prior to the enactment of the Financial Services Modernization Act by an illegal merger of Citibank, a giant commercial bank, and Travelers Insurance, a giant insurance company.
You read that right. The merger of the two in 1998 was illegal under Glass-Steagall, which was overturned in 1999 to make the merger legal.
Rubin reportedly made over $125 million at Citigroup, the original “Too Big to Fail” post-Gramm-Leach-Bliley megabank, between 1999 and 2009, even while it had to be rescued by the Federal government in 2008.
Why’s that history important? Because Donald Trump’s rumored top pick for Treasury Secretary is another former Goldman Sachs insider…
The Vampire Squid Spreads Its Tentacles
According to hedge fund honcho Anthony Scaramucci, himself a big Trump supporter, Trump’s Treasury Secretary choice is Steve Mnuchin.
Mnuchin spent 17 years at Goldman and left a multimillionaire. But he didn’t leave his Goldman connections far behind when he left.
The would-be Treasury Secretary left Goldman Sachs to work for his former Yale roommate, investment fund honcho Eddie Lampert, who himself had worked at Goldman Sachs directly under Robert Rubin.
Mnuchin later founded Rat-Pac Dune Entertainment, with connections – including to billionaire entertainment mogul David Geffen – he made through Lampert.
But banking kept calling Mnuchin.
In 2009 Dune, in a hedge-fund backed deal, bought the assets of failed housing lender IndyMac from the FDIC, and in the process formed OneWest Bank with about $1.3 billion.
OneWest was sold to CIT Group (which not surprisingly was itself rescued and run by another former Goldman Sachs president and co-chief operating officer, John Thain) for a reported $3.4 billion.
The Goldman Sachs nexus throughout the Federal government – and more importantly throughout the Treasury and Federal Reserve – should be a red flag for anyone hoping for an objective, economy-minded Treasury Secretary, and not a dyed-in-the-wool multibillionaire wannabe who knows how to use his connections.
Of course, Donald Trump knows all this. After all he is a New York billionaire businessman who knows many of the Goldman – or Government Sachs, as they are called – operatives swimming in the pool The Donald is intimately familiar with.
If Donald Trump hews to the Republican platform and openly advocates for the resurrection of Glass-Steagall, which I hope he does, he better find another Treasury Secretary, one who’s not a Goldman Sachs government infiltrator and traitor to the “free economy.”
Democrat William Jennings Bryan said in his keynote speech at the 1896 Democratic convention in Chicago, “the banks should go out of the governing business.”
If Donald Trump wants a free market to break the economy out of the shackles big banks put it in, he needs to close the door on Goldman’s undue influence.