Senator Elizabeth Warren, the Massachusetts Democrat super-star who engaged in a noisy name-calling war with then-Presidential candidate Donald Trump on behalf of Hillary Clinton, is now sending public signals that she is willing to work with the President on a signature legislative initiative that they both publicly support: The reinstating of the 1933 Glass Steagall Act to break up the too-big-to-fail Wall Street banks. During the 2016 presidential campaign, both the Republican and Democratic Party platforms called for restoring Glass Steagall, and there are now bipartisan bills in both Houses of Congress to reinstate it. Warren, along with John McCain, Maria Cantwell and Angus King, initiated the Senate bill, and Marcy Kaptur and Walter Jones reintroduced the bill into the House (where it now has 47 co-sponsors). During his own presidential campaign, Donald Trump called for the reinstatement of Glass Steagall during a high-profile campaign appearance in Charlotte, North Carolina just weeks before the election. Hillary Clinton opposed the restoring of Glass Steagall. In 1999, then-President Bill Clinton had signed legislation repealing Glass Steagall.
After the 2008 financial blowout, two Congressionally-mandated commissions concluded that the repeal of Glass Steagall had contributed to the financial bubble that burst beginning in 2007, leading to the biggest Wall Street bailout in history.
In recent days, newspaper headlines have been touting the possibility of a cross-party alliance between Warren and Trump to restore Glass Steagall. On May 10, Senator Warren gave an exclusive interview to Bloomberg News, in which she openly stated her willingness to work with the President on legislation to break up the banks. "We're certainly reaching out to the administration. So far, we've had some good conversations and that's what I want to see happen. I'm ready. Because, you know, this is one of those basic things–folks on Wall Street may resist it. But most of the American people get it."
Two days later, the Los Angeles Times published an extensive article under the headline "Something Trump and Elizabeth Warren agree on: Bringing back Glass-Steagall to break up big banks." The article cited a broad range of politicians boosting Glass Steagall, from Warren and McCain to Trump economic adviser Gary Cohn, to Congressional fire-brands Bernie Sanders and Barbara Lee.
There are big hurdles to overcome before Glass Steagall becomes law again. Jeb Hensarling, the Chairman of the House Financial Services Committee, has his own legislation to create further protections against a repeat of 2008 or worse, but his bill does not explicitly move to break up the TBTF banks, which have become 40 percent bigger, as the result of Federal Reserve and Treasury-engineered mergers at the height of the 2008 blowout.
But the idea that Elizabeth "Pocahontas" Warren and Donald Trump could work together on such a big undertaking is in and of itself significant. During the first 100 days of the Trump presidency, the level of partisanship has gone off the charts, creating the appearance that nothing of a bipartisan character stands a chance of moving forward. Glass Steagall could break the mold and hold open the possibility of other areas of bipartisan cooperation, at a moment when there are an abundance of issues that ought to be of common concern.
The big question is: Will Trump act on the basis of his recently repeated sentiments in favor of Glass Steagall? If the President of the United States presses the Majority Leaders in Congress to bring the bill to a debate and vote, it stands a far better chance of happening. That, ultimately, is the test of whether the recent back and forth between Senator Warren and President Trump will have any real impact.