On the same day President Donald J. Trump met with community and regional bank leaders, comments regarding a possible resurrection of the Glass-Steagall Act sent bank stocks tumbling

The Glass-Steagall Act was passed by Congress in 1933, in the wake of the Great Depression. Similar to more modern “ring fencing,” it prohibited commercial banks from engaging in investment businesses. The law was revoked in 1999 during a pro-business deregulation push by the Clinton Administration. The Dodd-Frank Act’s Volcker rule, a prohibition on proprietary trading by federally insured depository institutions, was an effort to fill the longstanding regulatory gap.

Asked during a March 9 press gaggle, Sean Spicer, the Trump Administration’s press secretary, confirmed that reinstating some form of Glass-Steagall remained a priority for the President, who has made doing so an occasional talking point. Reinstating the legislation was also included in pre-election party platforms by both Democrats and Republicans.

Momentum for a Glass-Steagall overhaul and modernization was fueled by recent comments by Treasury Secretary Steven Mnuchin.

On Jan. 19, as a nominee for the post he now holds, Mnuchin, was asked about bank regulation by members of the Senate Finance Committee.

“I fully support regulation for banks with FDIC insurance, but my biggest concern is that all this regulation is killing community banks,” he said. “We are losing the ability of small- and medium-sized banks to make good loans to small- and medium-sized business in the community, where they understand the credit risks better than anybody else.”

 “Sensible regulation is a necessity for healthy markets,” he added. “However, I saw first-hand how regulatory excess can inhibit lending by financial institutions, resulting in a lack of access to capital for small businesses and entrepreneurs.”

What constitutes “sensible regulation?” His view, included the Volcker rule and, even better, a “21st Century Glass-Steagall.”

“I do support the Volcker Rule,” he said. “I think the concept of proprietary trading does not belong in banks with FDIC insurance.” Nevertheless, there are concerns, including that the interpretation of the Volcker rule doesn’t allow banks to create enough liquidity for customers.”

“I don’t support going back to Glass-Steagall as is,” Mnuchin added. “What we’ve talked about with the President is perhaps the need for a 21st-century Glass-Steagall. But no, I don’t support taking a very old law and saying we should adhere to it as is.”

Mnuchin’s answer may have placed his views squarely in line with a proposal by Sen. Elizabeth Warren (D-Mass.), one of Trump’s most vocal critics. In 2013, senators Warren, Cantrell, John McCain (R-Ariz.), and Angus King (I-Maine) attempted bringing back the Glass-Steagall Act, with a new plan for separating traditional banks (with savings and checking accounts that are insured by the FDIC) from riskier financial institutions that provide investment banking services, insurance, swaps dealing, and hedge fund and private equity activities.

The 21st Century Glass-Steagall Act, a modernized version of the Banking Act of 1933, includes measures to keep banks from simply adding a technical partition between commercial and investment banking operations.

As for the President’s “listening session” with community bank CEOs, he hit many of the same notes sounded since the passage of the Dodd-Frank Act.

“Today's discussion is crucial to my jobs agenda and to the American people,” he said. “Community banks play a vital role in helping create jobs by providing approximately half of all loans to small businesses, and that's been dwindling because the community banks have been in big trouble…Community banks are the backbone of small business in America. We are going to preserve our community banks.”

Trump stressed his deregulation agenda in opening remarks, referring to “a big executive order” on Feb. 3. “It's taking a lot of the regulation away,” he said. “You'll be able to loan. You'll be able to be safe. But you'll be able to provide the jobs that we want and also create great businesses.”

Among those attending the meeting were

executives from Cape Cod Five Mutual Company in Massachusetts; Bank of Bennington in Nebraska; Standard Bank in Pennsylvania; Centinel Bank in New Mexico; First State Bank of St. Charles; Chesapeake Bank in Virginia; and FirstCapital Bank of Texas in Texas.