Republicans adopted a significant, if largely symbolic, populist plank in the party platform on Monday, calling for a reinstatement of Glass-Steagall, a Depression-era law designed to protect taxpayers from Wall Street’s excesses.
That’s a surprise. The position, long championed by Vermont Sen. Bernie Sanders, is usually associated with the liberal Democratic base. The Republicans’ decision to include it in its official platform marks a break from the position of the business-side Republican establishment, which has long called for more incremental reforms on the banking sector, and moves the party toward a more populist stance on financial reform.
“We also call for a reintroduction of Glass-Steagall, which created barriers between what big banks can do,” Paul Manafort, the campaign manager for presumptive nominee Donald Trump, told reporters on Monday.
The Democrats recently included language in their own party platform calling for a “modernized version” of Glass-Steagall.
The law, which was first passed in 1933, was repealed during the Clinton Administration in 1999. It draws a bright regulatory line between investment banks and their less flamboyant, commercial counterparts. Advocates say Glass-Steagall would protect federal institutions, like the Federal Deposit Insurance Corporation, from being forced to bail out banks engaged in risky, speculative and proprietary trading.
Neither party’s platform is formally binding, although their positions are also seen as a litmus test of where the party is headed. The GOP platform will likely be made public Monday.
In talking with reporters Monday, Manafort explained the Republicans’ embrace of Glass-Steagall in political terms. In running against Democratic presumptive nominee Hillary Clinton, who has historically enjoyed a very close relationship to Wall Street power brokers, Manafort seemed to suggest that Trump was the more natural heir to the populist, anti-Wall Street mantle.
“We believe the Obama-Clinton years have passed legislation that has been favorable to the big banks, which is why you see all the Wall Street money going to her,” he said. “We are supporting the small banks and Main Street.”
Since Sanders bowed out of the Democratic race last week, Trump has repeatedly called on Sanders supporters to join his campaign.
Establishment and libertarian Republicans have long been skeptical of the utility of reinstating Glass-Steagall on the grounds that, in the event of a financial crisis, the federal government would likely to have to bail out large banks, regardless of their status under Glass-Steagall, to protect the broader financial sector.