President Donald Trump is considering breaking up the nation’s biggest banks, a vow he had made during the presidential campaign then seemed to put on the back burner.
Trump said he is “looking at that right now,” in an interview with Bloomberg News.
Major averages slipped as the news broke, then rebounded, while government bond yields hit their highs of the day.
The breakup would come with the revival of a Glass-Steagall-type law, which separated commercial and investment banks but was repealed in 1999.
Stocks fell on the news, though bank shares remained higher overall. The SPDR S&P Bank exchange-traded fund was up about 0.4 percent in the aftermath of Trump’s remarks, thought it was off its highs for the day.
Bank stocks had been one of the biggest winners of the Trump trade, rallying strongly after his victory in the November presidential election. The sector rallied more than 25 percent in the immediate aftermath, but the bank ETF is down about 1.3 percent in 2017.
The Glass-Steagall law is sometimes blamed for the financial crisis that peaked in 2008. However, many of the big institutions at the center of the crisis were not banking behemoths but rather investment banks or, in the case of American International Group, an insurer.
via CNBC
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Alfonso Esparza
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
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