Steven Mnuchin addressed the Senate Banking Committee and opined that breaking up the big banks would be a “huge mistake.” According to the Financial Times:
Mr Muchin said forcing a split in the banking business would lead to significant problems in the financial markets and the provision of liquidity to the economy and would be a mistake. “We do not support a separation of banks and investment banks,” he said.
The threat that breaking up the big banks would lead to liquidity problems in the economy is getting tired. A study showed that during the 2008 de facto financial collapse, Main Street corporations had no problem tapping into the various short term funding capital markets, primarily the commercial paper market.
Breaking up the Big Banks would be a huge benefit to the entire system, which is why the DC Swamp creatures are against the idea. It would take away the control of the financial system that has been consolidated into the hands of a few entities. Healthy competition in the banking industry would benefit everyone.
One of the primary reasons the Federal Reserve was founded was to consolidate control of the banking system at the time into the hands of the banks which founded the Fed, as the business model and profitability of these big banks was being attacked by the fast-growing regional banks.
The underlying implication of Mnuchin’s statement is that, just like the Obama administration, the Trump administration supports maintaining the status quo. The “status quo” is a well-grease wheel that extracts billions from the public and redistributes it to the people running the big banks. The DC Swamp animals are well-paid to support this status quo. What this means is that the banks are going to bailed out again when the next crisis seizes-up the markets. A crisis that is inevitable.