Banking ‘ring-fence’ seen in Trump Treasury pick’s ’21st-century Glass-Steagall’
By Henry Engler
Lost amid the political rancor over the appointment of the U.S. Treasury secretary nominee, Steven Mnuchin, are outlines of a proposal to overhaul Dodd-Frank, and substitute a financial structure akin to the UK’s “ring-fence” structure, which separates commercial and depositing taking activities of banks from trading and riskier activities. … “Reflecting this UK approach, Mr. Mnuchin made it clear that he thinks complexity should be pushed out of insured depositories,” said Karen Shaw Petrou, managing partner of Federal Financial Analytics, a Washington D.C. consultancy, in a recent note to clients. “Further, he suggested that isolating traditional from complex business lines settles the U.S. orderly-resolution dilemma because what’s in a bank would be handled by the (Federal Deposit Insurance Corporation) . . . and what’s outside of it would have to fend for itself,” she added.