White House: ‘We’re Not Returning to Glass-Steagall’

Taking a quick cue from Massachusetts, the Obama administration is putting on its populist hat this week to take on the nation’s largest financial institutions in the name of consumer protection. The president’s proposal — which would prevent large Wall Street firms that trade outside of their clients’ interests from owning commercial banks — is largely a part of the Democrats’ strategy to shift the party’s legislative focus (and the nation’s attention) from health-care reform, which isn’t polling well, to more populist themes.

Here’s a warning, however, from a senior administration official talking to reporters this morning: “We’re not returning to Glass-Steagall.”

What the White House does want, though, is to create a new Consumer Financial Protection Agency to regulate mortgages, credit cards, payday loans and other complex financial products often confusing to consumers. That push is causing some trouble in the Senate, where Senate Banking Committee Chairman Chris Dodd (D-Conn.) is already leaning toward scrapping that idea for the sake of getting a bipartisan bill. Earlier this week, Obama called Dodd to the White House to press him on the issue, but there’s no indication yet what the Connecticut Democrat — who announced this month that he won’t be seeking reelection this year — intends to do.

Indeed, Dodd’s statement this morning reacting to Obama’s new finance reforms says, well, pretty much nothing.

“I look forward to studying the President’s proposal and will give it careful consideration as the Committee moves forward on financial reform,” Dodd said.

Not really going out on any limbs there.