CLEVELAND | Smoot and Hawley are back in, and Glass and Steagall may be next in line for rehabilitation if Donald Trump carries out the financial agenda in the platform approved by the Republican delegates here Monday.
The all-but-certain GOP presidential nominee has made no secret during the campaign of his willingness to employ high tariffs to protect U.S. firms, especially manufacturers, from what he says are unfair trading practices by rivals abroad.
Economists say a Trump administration could be the most skeptical of open trade since 1930, when President Herbert Hoover signed a tariff act sponsored by Sen. Reed Smoot of California and Rep. Willis Hawley of Oregon — all three of them Republicans — that sharply raised import duties on some 20,000 goods.
And in a move that took some banking analysts by surprise, Trump campaign manager Paul Manafort let slip casually Monday morning that the 2016 GOP platform would also call for the reinstatement of the 1933 Glass-Steagall Act.
That Depression-era law set a strict ban on federally insured commercial banks expanding into new business lines such as real estate, securities trading and insurance brokerage. It was also the reverse of Smoot-Hawley in being the work of three Democrats — signed by President Franklin D. Roosevelt and co-sponsored by Sen. Carter Glass of Virginia and Rep. Henry Steagall of Alabama.
“We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment,” the platform text says.
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The platform also calls for the repeal of President Obama’s signature piece of financial regulation, calling the 2010 Dodd-Frank law a “legislative Godzilla that is crushing small and community banks and other lenders.” Mr. Manafort told reporters Mr. Trump strongly believes the Obama administration’s agenda has benefited the nation’s largest banks at the expense of smaller lenders who served Main Street.
Although President Bill Clinton signed the Glass-Steagall repeal law in 1999, the Democratic platform for presumptive nominee Hillary Clinton also casts a skeptical eye on the law, calling for the current draft for the law to be “updated and modernized.” Both Sen. Bernard Sanders, the Vermont independent who fiercely challenged Mrs. Clinton in the primaries, and Sen. Elizabeth Warren, a leader of the Democratic left who is expected to be one of Mrs. Clinton’s top campaign surrogates, are harsh critics of Glass-Steagall repeal.
Banking analyst Brian Gardner of the investment firm KBW Inc. wrote in a note to clients that it was unusual for both major parties to be taking a position to reinstate at least a part of the Depression-era banking law.
“There could be a unique political coalition forming to make changes to Dodd-Frank while at the same time reinstating the old separation between commercial and investment banking,” Mr. Gardner said in the note, first reported by The Wall Street Journal.
The trade provisions in the platform represent a clear compromise between Mr. Trump’s sharp criticisms of past trade deals such as NAFTA and the traditional GOP support for free trade. According to the platform language, Republicans support good trade deals that do not disadvantage American companies but are willing to drop the hammer if trading partners such as Mexico and China balk.
“Republicans understand that you can succeed in a negotiation only if you are willing to walk away from it. A Republican president will insist on parity in trade and stand ready to implement countervailing duties if other countries refuse to cooperate,” the document says.
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