Breaking up banks: Trump is all noise

On the first day of May, Donald Trump sat in the Oval Office and declared that his administration was taking a look at breaking up Wall Street’s biggest banks.

If they ever took him seriously, it didn’t last.

Instead of cowering, Wall Street executives and lobbyists are crowing, getting more confident about ditching rules that have annoyed them for years. That’s because the Trump administration is appointing friendly regulators and signalling it will make life easier for bankers.

“Break up the banks? That ain’t going to happen,” said Rick Hohlt, who has advised and lobbied for lenders including Citigroup for three decades.

“You need legislation to do that. And the chance of that is about zero.” Two weeks after Trump’s threat, Wall Street’s hopes are high.

The biggest US banks want him to relax capital requirements that limit their leverage, lighten up on stress tests designed to help them survive another crisis and weaken the Volcker Rule that stops them from placing speculative bets – something the administration is already taking steps to do.

Their confidence doesn’t stop there.

Some executives think that if the White House really does push for a sequel to Glass-Steagall – the 1933 law that separated commercial and investment banking and was partly repealed 66 years later – the new version would just scrap rules for smaller banks without breaking up large ones.

Since taxpayer bailouts saved the financial system in 2008, some of the nation’s biggest banks have grown even bigger.

JPMorgan Chase and Bank of America now have more than $2 trillion of assets each, and Wells Fargo isn’t far behind.

Even Citigroup, which received the most generous bailout, still wields about $1.8 trillion.