WASHINGTON — The door may still be open for Republicans to seek some type of return of the Glass-Steagall Act.
In an interview Wednesday, Sen. John Kennedy, R-La., said he would like to flesh out that idea as policymakers move forward with regulatory reform.
“I think it is a subject … that the Senate needs to talk about quite frankly,” Kennedy said. "It seems clear to me that in America today we still have financial institutions … that could substantially hurt the economy, maybe even tank it if they were to get in trouble.”
Kennedy, who joined the Senate in January and is a member of the Senate Banking Committee , asked Treasury Secretary Steven Mnuchin during a hearing last month if he supported the return of Glass-Steagall.
Mnuchin said he was interested in a modernized version of the 1930s law, but added that the administration does "not support a separation of banks from investment banks," the primary component of the law. Mnuchin did not elaborate on what a new version would look like.
Kennedy said he wasn't sure if separating commercial and investment banking made sense anymore, but he would like to learn more about how the Depression-era law would affect the current banking system.
“I haven’t made up my mind on the issue. I am interested in hearing about the advantages and disadvantages,” he said. He added that the Senate could have those discussions “through hearings or some other informal process.”
But Kennedy stressed that the priority for the banking panel will be providing regulatory relief to financial institutions.
“If we accomplish nothing else this year, I want to see us to get our community banks and credit unions out from under Dodd-Frank,” he said.
The Louisiana Republican has introduced a bill that would exempt banks and credit unions with less than $10 billion in assets from Dodd-Frank regulations. During a recent hearing, Sen. Jack Reed, D-R.I., also appeared interested in the concept.
“It should get bipartisan support,” Kennedy said about the bill. “I have had discussions with both Republicans and Democrats about it. I think any reasonable person has to conclude that insofar as our smaller institutions … that are less than $10 billion in assets, for those institutions, Dodd-Frank has been a loan-killing, anti-job disaster.”
Kennedy said his bill is simple, only two pages, and wouldn’t let community financial institutions off the hook for all regulations.
“You are still subject to substantial regulation, but you are not going to be subject to Dodd-Frank,” he said.
However, whether the Senate can move forward with a regulatory relief package remains to be seen.
“There has been a fair amount of discussion” on community bank and credit union regulatory relief at the banking panel, Kennedy said," but the Senate is "concentrating on health care right now. We need to get the health care bill behind us one way or the other.”