White House economic advisor Gary Cohn supports strict regulation of the financial sector aimed at providing stability by forcing big banks to keep their investment banking separate from their consumer banking. Bloomberg News reported on this on Friday.
Bloomberg notes the surprise from some quarters at this view of former Goldman Sachs executive Cohn:
The remarks surprised some senators and congressional aides who attended the Wednesday meeting, as they didn't expect a former top Wall Street executive to speak favorably of proposals that would force banks to dramatically rethink how they do business.
Yet Cohn's comments echo what Trump and Republican lawmakers have previously said about wanting to bring back some version of the Glass-Steagall Act, the Depression-era law that kept bricks-and-mortar lending separate from investment banking for more than six decades.
This is surprising only if you buy into the Big Myth, that Big Business and Big Government are rivals. In truth, regulation typically benefits some well-connected large business. This sort of regulation would benefit Goldman Sachs, it turns out.
"Goldman will also benefit from Trump's planned '21st Century Glass-Steagall,'" one analyst wrote just after Trump's election, "since it could force rivals like Bank of America and JPMorgan to abandon their trading desks."
Goldman Sachs, you see, doesn't operate a commercial bank. So outlawing the business model of JPMorgan (Chase) and Bank of America trims the sails of Goldman's competitors, while leaving Goldman alone.
Timothy P. Carney, The Washington Examiner's commentary editor, can be contacted at firstname.lastname@example.org. His column appears Tuesday nights on washingtonexaminer.com.