Major Obstacle
The regulation might not mean that commercial and investment banks have to be separated, Cowen Group Inc. analyst Jaret Seiberg wrote in a report. Instead, the government could require that broker-dealers be subsidiaries of holding companies, rather than banks, he said. That would mean that the brokerage arm would have to be separately funded.
“Cohn was the most likely obstacle within the Trump White House,” Seiberg wrote. “With him supporting Glass-Steagall’s restoration, there is no one in the inner circle left to fight it.”
Cohn’s comments came in response to a question from Senator Elizabeth Warren, a Massachusetts Democrat and a persistent critic of the financial industry. When she introduced a 21st Century Glass-Steagall Act in 2015, Senator John McCain of Arizona was the only Republican who backed it.
“Cohn’s comments certainly elevate the headline risk, but we believe it remains unlikely Congress would pass legislation reinstating Glass-Steagall,” Edward Mills, an analyst at FBR & Co., wrote in a report.
This article was provided by Bloomberg News.