CLEVELAND — Donald Trump's decision to embrace the reinstatement of the Glass-Steagall Act is part of an effort to cast him as the champion of community banks, according to his top advisers.
While the move came as a surprise to the banking industry, a Trump campaign adviser said Wednesday that it was part of a broader focus on helping small businesses.
"It is not just about community banks, it is about who really understands local communities," Stephen Moore, a senior economic contributor for the conservative and libertarian activist group FreedomWorks, said in an interview here. "Community banks are critical to small business."
Moore said the Trump campaign will highlight the issue over the next few months as emblematic of a stark difference between the Republican nominee and his rival Hillary Clinton.
"We are going to hammer them on that," he said.
That may be difficult to do, as the Democratic platform also calls for restoring Glass-Steagall, and Clinton has joined calls to grant regulatory relief for small institutions.
But Moore's comments echo those of Paul Manafort, Trump's campaign manager, who said during a press briefing here on Monday that Clinton is the candidate of the big banks.
"They know she is their champion and they have supported her fully; we are supported by small banks and Main Street," Manafort said.
Although big banks have never been fans of the Dodd-Frank Act, both Manafort and Moore sought to portray the 2010 financial reform law as a boon for big financial institutions.
"We have created a posture where we are actually rewarding the big banks like B of A and Citi and we are seeing the sharks swallow up the minnows," Moore said. "That is horrible because you are going to get a Fannie Mae situation where you are going to have five megabanks that are regulated like utilities."
He argued that big banks want to preserve Dodd-Frank because it hurts their competitors.
"That is why a lot of times you see big industry supports regulation," Moore said. "What regulation does is it keeps out the smaller competitors."
Beyond calling for a repeal of Dodd-Frank, Trump himself has not engaged substantively on financial issues during his primary campaign. But embracing Glass-Stegall, which separated commercial and investment banking, may be a smart move politically.
Most Wall Street banks are big donors to Clinton's campaign, giving Trump nothing to lose by embracing a populist position that would damage them. Community banks, meanwhile, are popular with members of both political parties but tend to have Republican leanings.
Whether Trump can actually become the community bank candidate is up for debate, however.
Camden Fine, president of the Independent Community Bankers of America, noted that Trump has yet to speak on the issue and his record is unclear.
"We've only seen these statements the past couple days and we don't know what his policies would be if he were president," Fine said. "We have statements made by his top people at a political convention, but during the primary process, there was nothing."
Brian Gardner, an analyst at Keefe, Bruyette & Woods, said it is possible for Trump to become the community banking champion because neither candidate has taken that mantle. But reinstating Glass-Stegall appears to be more directed at playing to the public's anger over the 2008 government bailout, he said.
"I would argue that there is a downside to" reinstating Glass-Steagall for community banks in that "the large banks would be solely be focused on commercial banking; they may actually then have room to buy banks and then they may get back in the M&A business," Gardner said.
Some community bankers are backing Trump, arguing that he is better positioned to help their interests.
H. McCall Wilson Jr., president and CEO of the $390 million-asset Bank of Fayette County in Piperton, Tenn., said "maybe a businessman can really help our industry," because "politicians and academics have not been kind to us."
Michael Olson, vice president of the $830 million-asset Lincoln Savings Bank in Grinell, Iowa, said, "My hope is that he would champion community banking."
"Working with Congress to dump Dodd-Frank would be a great start," Olson added.
Whether the restoration of Glass-Steagall would help community banks is unclear.
"We would not be in favor of restoring the exact Glass-Steagall law that was repealed in 1999," said Fine. "Conceptually, we favor a restoration, but what I would call a 21st-century version. It would depend on the language of the bill as to whether we could get behind it."
But Wilson said anything might be worth a try.
"Maybe Trump can help us, but we have one hell of a hole to dig out of first," he said.