Donald Trump just threw out decades of conservative economic orthodoxy in one paragraph...but did you see that smoke machine?
On a day characterized by a very boring floor protest, Scott Baio, a frothy-mouthed former mayor who didn't know what do with his hands and a Slovenian model doing some Michelle Obama covers, the GOP managed to somehow keep its own platform far from the forefront of its own convention. Which makes some sense when you realize that one part of it reads like Trump wrote it with Elizabeth Warren while they got stoned in Bernie Sanders' sweat lodge.
In a portion of the platform entitled "Regulation: The Quiet Tyranny," the writers provide us with a paragraph that starts off normally but ends with a bizarre about-face that must be read to be believed:
The Dodd-Frank law, the Democrats’ legislative Godzilla, is crushing small and community banks and other lenders. The Federal Communications Commission is imperiling the freedom of the internet. We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment.
No, we don't know how the FCC got shoehorned into there either, but you're missing the point. The Republican party platform is officially calling for a reinstatement of Glass-Steagall.
It's the political regulatory equivalent of Freaky Friday.
Sure, it's an objectively cunning parry to outflank Hillary on her left, hammering her again on those Wall Street ties while simultaneously calling attention to a piece of legislation that her husband repealed while he was in the Oval Office. This tactic could even be considered brilliant if it wasn't what Bernie Sanders did every day for more than a year, and/or it didn't go against the most basic philosophy of GOP regulatory policy.
But that's just politics. It doesn't even address how dumb the idea is on its face.
Glass-Steagall was written in 1933 and rendered efficaciously obsolete not much later. The interpretation of it acted like a bulwark against a lot of chicanery for many years, but we all remember that Citibank treated it like the Knicks defense when it acquired Salomon Smith Barney in 1998.
Pointing to what happened after Bill Clinton burned it in 1999, and then bringing up Hillary's paid Goldman Sachs speeches is, like we said, very good politics, but it's a long leap to say that reinstating Glass-Steagall is a good idea. Overlooking the arguments that Glass-Stegall would have prevented Jamie Dimon from rescuing Bear Stearns or BofA taking in a badly wounded Merrill Lynch as its own kin, the legislation is hidebound and failed to foresee the vast majority of what Wall Street looks like today.
Even Pink Liz Warren has taken pains to say that she'd like to see "A modern day Glass-Steagall." But that notional legislation would be even more threatening to financial firms and Trump would have a hard time even getting that empty promise by GOP leaders like bank BFF Jeb Hensarling. Promising to bring it back in any form will also have an adverse affect on Trump's already poor Wall Street fundraising efforts.
And some policy experts see that scattershot approach as both increasingly bizarre and sui trumperis. "Trump is inherently flexible when it comes to core policy questions which makes him a difficult opponent for the Clinton campaign," said one DC-based policy analyst. "During a convention where he is supposed to throw red meat to the base, he instead calls for Glass-Steagall which is meant to outflank Clinton on the left."
But any chance the Glass-Steagall maneuver has to appeal to Bernie Bros was probably canceled out by a day one GOP convention program that felt at times like an all out war on social justice warriors. Which points to both Trump's Olympian flexibility and potential dearth of actual beliefs. In 2016, that combo might be good for a lot of votes, but Glass-Steagall is a wonky piece of pie that only appeals to people who are nowhere in the Venn diagram of undecided voters.
However, what makes this Glass-Steagall idea most ludicrous is that banks are maybe finally crawling out of the shame basement. In a very good piece for Fortune, Chris Matthews looks at how the Big Four did this most recent quarter and sees something very telling:
If you look at the financials of four of the largest American banks, Wells Fargo, JPMorgan Chase, Citigroup, and Bank of America, they all show higher lending today than three months ago.
This is hugely important for the continued health of the U.S. economy, as there is a strong correlation between growth in bank lending and economic growth. In fact, one can argue that changes in lending by private banks is more important to the real economy than policy changes at the Federal Reserve. That’s because all Federal Reserve policy works through big banks before it makes it way to the broader economy.
According to Matthews, Jamie, BriMo, Corbat and Stumpf managed to pump $53 billion of new money into the economy last quarter alone. People are borrowing again and that is the fastest way to get people to love their banks again. It also makes it hard to get them to care about prop trading or the sundry other investment banking activities that they don't understand.
So here we are, Trump has built a campaign and platform that seems to play most closely to his whims and desire to win. But while he tries to emulate the version of Nixon that no one really liked in the first place, he's painting Hillary Clinton as an anti-regulation hawk with deep ties in the private sector.
Or as they used to call that; a Republican.