Treasury Secretary Steven Mnuchin finally clarified the administration's stance on the Glass-Steagall separation of commercial and investment banks Thursday, saying that he does not favor breaking up banks.
The administration has not reversed itself on the policy, Mnuchin said at a Senate Banking Committee hearing, although the Trump campaign and Republican platform called for reinstating some form of the Glass-Steagall policy.
"We never said we were in favor of Glass-Steagall," Mnuchin said. "We said we were in favor of a 21st-century Glass-Steagall. It couldn't be clearer."
What Mnuchin has in mind does not involve separating the commercial banking functions from megabanks that also have investment banking, hedge fund or insurance businesses.
"We do not support a separation of banks from investment banks," he said. "We think that, that would have a very significant problem on the financial markets, on the economy, on liquidity."
In the past, the administration's comments on Glass-Steagall have been difficult to parse and seemingly at odds with Trump officials' broader deregulatory agenda.
Mnuchin's comments Thursday are the clearest indication yet that the Trump administration does not intend to force big banks to divest business lines in any way.
One point of confusion is that a bipartisan group of senators has authored legislation that would break up banks called the "21st Century Glass-Steagall Act."
On Thursday, Mnuchin apologized to one of the bill's authors, Democratic Sen. Elizabeth Warren of Massachusetts, for the confusion created by his use of the term "21st-century Glass-Steagall" to refer to a set of unspecified changes that won't break up banks.
"This is just bizarre," Warren said of his use of the term to mean something other than splitting up investment and commercial banks.