If there is one thing that has become rather clear from President Trump's slightly over 100 day stint in the Oval Office, it is that he has a penchant for bold proposals. In a bid to kick start the economy and send it moving ahead at a faster pace, Trump has mooted the proposal of deregulating banks. This was a move that was adopted before, during the Great Depression, with good results. In a statement made earlier, Mr. Trump said that deregulating banks will help improve market trading liquidity.
Is it good news for working Americans?
Well, according to the President, it is. Following up his cautionary statement that banks should not expect any helping hand from the government if they cannot manage their affairs, post deregulation, Trump has also highlighted his expectation that the elimination of regulation pertaining to mortgages will benefit working class Americans. He believes that excessive restrictions on mortgages are keeping these Americans from buying their own homes. Deregulation will do away with government interference in these matters and help Americans become home owners sooner than later, he expects.
A split in consumer and investment segments of banks
The biggest goal behind the proposed deregulation is to split up the consumer and investment businesses of banks. To do this, the President is, in effect, proposing to get back in force the Glass- Steagall law of 1933 which required the same separation. This law was done away with only as late as in 1999 by Bill Clinton. However, this elimination of the law was believed to be the culprit behind high risk mortgages coming into the market and weakening the economy at a fundamental level, leading to the financial crisis, later on.
Steve Mnuchin given responsibility to find gaps
The onus of finding out where the gaps lie with the banking system currently in place lies with Mr. Steve Mnuchin, who is President Trump's Treasury Secretary. The main objective of Mnuchin will be to determine ways and means in which the President's plan can be put into motion to improve liquidity in the marketplace. The focus is on giving support to the beleaguered mortgage market which has been in sorry straits for a span of several years now. The specifics of the proposal are yet to be made clear and the lawmakers will have to approve the proposal before it can be implemented so any dramatic changes are still quite a distance away, as of now.