Debate renewed over breaking up big banks

The rollout of legislation this week that would rip up much of the Dodd-Frank Act marks a pivotal moment for Republicans' efforts to overhaul post-crisis financial rules.

It's also an opportunity for Democrats to push an agenda that Republican lawmakers and finance executives are less keen to talk about - breaking up Wall Street megabanks.

The Republican bill, drafted by House Financial Services Committee Chairman Jeb Hensarling, has a lot that banks like. It would repeal the Volcker Rule, which restricts lenders from making speculative bets unless they use clients' money.

And it would reduce the frequency of burdensome exams that determine whether banks can pay shareholder dividends.

But some Democrats have started strategizing on ways to leverage Hensarling's bill to force Republicans to take a stand on controversial issues. That includes bringing back some version of the Glass-Steagall Act, the Depression era-law kept investment banking and consumer lending separate for more than six decades until it was scrapped in 1999 during the Clinton Administration.

A handful of lawmakers blame the repeal for contributing to the 2008 meltdown, an argument that Wall Street flatly rejects.

'A total breakup of the banks is my goal, but I'm not averse to making compromises,” said Rep. Mike Capuano, a Massachusetts Democrat who is considering proposing a Glass-Steagall amendment to Hensarling's legislation. 'Any progress we can make toward the concept of separation is better than what we have.”

Capuano and others who want to see banks shrunk have been emboldened by recent statements from Trump administration officials, including White House economic adviser Gary Cohn. Earlier this month, the former top executive at Goldman Sachs said he would support some version of Glass-Steagall being brought back.