Övünç Kutlu
01 May 2017•Update: 02 May 2017
By Ovunc Kutlu
NEW YORK
President Donald Trump said Monday that he is weighing a break-up of major American banks to divide investment banking from consumer lending activities.
"I’m looking at that right now," Trump told Bloomberg News in an interview at the Oval Office.
"There’s some people that want to go back to the old system, right? So we’re going to look at that," he said.
The plan floated by the president aims to create a version of the 1933 Glass-Steagall legislation that separated commercial and investment banking in the aftermath of the 1929 Great Depression.
The law, however, was repealed in 1999 by then-President Bill Clinton, a measure that according to some economists paved the way for the 2008 Great Recession.
During his campaign, Trump said he would introduce more deregulation in the financial sector.
His most recent remarks, which deviate from this promise, came after his Monday meeting with the Independent Community Bankers of America -- a group that represents small- and medium-sized community banks in the U.S.
After Trump's comments, Financial Select Sector SPDR Fund, or XLF index -- which includes banks -- declined 0.7 percent.
Major U.S. banks, such as Goldman Sachs, Bank of America, Citigroup and Wells Fargo, saw their Wall Street stock price decline briefly before recovering in about an hour.
