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Republicans want to bring back Wall Street's worst nightmare

Jul 19, 2016, 01:01 IST

Delegates look at their pamphlets on the first day of the Republican National Convention on July 18, 2016 at the Quicken Loans Arena in Cleveland, Ohio.Jeff Swensen/Getty Images

The Republican Party wants to bring back one of the toughest regulations Wall Street ever had to tackle.

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According to reports, presumptive Republican nominee Donald Trump's campaign manager Paul Manafort told reporters that the platform for the party will call for the reinstatement of the Glass-Steagall regulation, which from 1933 to 1999 made it illegal for one firm to own both commercial and investment banking businesses.

The re-institution of the bill would force America's largest banks to divorce their recently ailing but still profitable investment banking businesses from their consumer banking segments. This would not only affect the banks' future earnings potential, but it would most likely be a long and costly process.

For those reasons, a move for reinstatement is likely to be resisted by Wall Street regardless of which side of the political spectrum it comes from.

The adoption of the idea into the Republican platform comes after the financial crisis of 2007 to 2009 sparked renewed calls for the act, mostly from Democrats.

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Two of the most vocal supporters of Glass-Steagall's re-introduction have been Democratic Senator Elizabeth Warren (a potential Hillary Clinton running mate) and Democratic presidential candidate Bernie Sanders, who has consistently called for the measure on the campaign trail this year.

This time around, however, the call will come from the official statement of views for the Republican Party.

"We believe the Obama-Clinton years have passed legislation that has been favorable to the big banks, which is why you see all the Wall Street money going to her," Manafort told The Hill. "We are supporting the small banks and Main Street.

While the platform isn't binding - Trump could renege on the promise or the effort to pass legislation re-establishing the rule could fail to pass Congress - it does appear to be a change of outlook for the Republican party.

Of note, the final nail in the coffin for Glass-Steagall was signed by President Bill Clinton, husband of current candidate Clinton.

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