Former Utah Gov. Jon Huntsman (R) has had no issue taking stances contrary to those held by his Republican primary opponents, whether on climate change, civil unions, or immigration. But one area in which Huntsman has stood firm with his colleagues is in his opposition to the Dodd-Frank financial reform law that President Obama signed in 2009 in an effort to rein in big banks and prevent another financial crisis. The jobs plan Huntsman proposed would repeal Dodd-Frank, and he has said the law is “making it impossible to get our life blood to small businesses.”
But after Tuesday’s Republican debate, Huntsman seemingly endorsed the financial reform plan that came out of the Great Depression — a law Republicans have fought, sometimes successfully, for decades — saying he wants to “return to the spirit” of the Glass-Steagall Act, the Huffington Post’s Alex Becker reports:
“I want to return to the spirit of Glass Steagall,” Huntsman said after tonight’s debate. “You’ve got to look at, fundamentally look at, downsizing some of our banks, looking at some sort of a cap requirement on the size of things. When you have financial institutions of which there are six and any one of them collapsing could cause such dire reverberations in the global economy that it could be catastrophic, it becomes too big to fail.”
“Not Glass-Steagall from the 1930s but something in the spirit of Glass-Steagall, something that would ultimately right-size banks,” he added.
It’s unclear what Huntsman means by “something in the spirit of Glass-Steagall,” but the portion of the Glass-Steagall Act that worked to “right-size banks” was repealed by the Gramm-Leach-Bliley Act — named after its three Republican sponsors — in 1999. Gramm-Leach-Bliley removed the portion of Glass-Steagall that prohibited bank holdings companies from owning other financial companies. Put simply, before 1999, a deposit bank like Chase couldn’t be owned by an investment and trading company like JP Morgan, or vice versa. This type of entanglement eventually led to the creation of the companies that were at the center of the 2008 financial crisis, bailed out by the federal government because they were deemed “too big to fail.”
In the aftermath of the financial crisis, former Federal Reserve Chair Paul Volcker and some Democrats advocated for the repeal of Gramm-Leach-Bliley, thus returning to the era in which a firewall existed between deposit and investment banks. Even John Reed, the former Citigroup CEO whose lobbying efforts led to the repeal of Glass-Steagall, said that re-instating such requirements would “go a long way toward building a more robust financial sector.” With the exception of Sen. John McCain (R-AZ), however, such a policy is anathema to Republicans, as is reforming Wall Street in any form or fashion.
By issuing a jobs plan that would repeal Dodd-Frank, Huntsman took the popular position within his party. But now, by calling for something “in the spirit of Glass-Steagall” that would put a “cap requirement on the size” of financial institutions, Huntsman has seemingly endorsed a plan that goes even farther than the financial reform law that contains Obama’s signature.