Talk about being a party pooper.
US financial stocks briefly came under pressure on Monday after President Donald Trump said he was actively considering breaking up large US banks, confounding investors who have been piling into the sector on expectations that the White House will move to loosen, not tighten, industry regulations.
In an interview with Bloomberg News on Monday, Mr Trump says he is considering a “21st century version” of Glass-Steagall, alluding to the Depression-era law that separated commercial from investment banking.
“I’m looking at that right now,” he said. “There’s some people that want to go back to the old system, right? So we’re going to look at that.”
The 1933 Glass-Steagall law was repealed in 1999 under president Bill Clinton, paving the way to the mega-mergers of the early 2000s during which a whole host of banking services were offered under one roof. Some critics have blamed the law’s repeal for contributing to the 2008-2009 financial crisis.
The S&P 500 financials index dropped after the report was published, giving up a 0.8 per cent gain to trade nearly flat before bouncing back to trade 0.5 per cent higher at pixel time.
Shares in Goldman Sachs, Morgan Stanley, JPMorgan all briefly declined from their session highs before recovering to trade 0.7 per cent, 1.1 per cent and 0.6 per cent higher.