Treasury Secretary Steven Mnuchin sat in front of the Senate banking committee on Thursday and attempted to explain the Trump administration's position on various economic policies, including the regulation of large banks.

Mnuchin continually said the administration supported a "21st-century Glass-Steagall" — except for the Depression-era law's defining aspect.

"We do think there are potential things we could look at around regulation, but we do not support separation of banks and investment banks," Mnuchin said.

A flabbergasted Sen. Elizabeth Warren, who sits on the committee, pointed out that Glass-Steagall was best known for the separation of commercial and investment banks.

"There are aspects of Glass-Steagall that you support, but not breaking up the banks and separating commercial banking from investment banking?" Warren asked. "What do you think Glass-Steagall was if that's not right at the heart of it?"

What Warren is getting at is this: The Trump administration is doing its best to make everyone think it is bringing back the Wall Street regulation — to deliver on a Republican campaign promise — when all it's really doing is using the old law's name.

For background, Glass-Steagall was repealed in 1999, clearing the way for commercial-investment mergers on Wall Street, such as combinations of JPMorgan and Chase along with Bank of America and Merrill Lynch. This intermingling of the two sides of banking has been blamed by critics — including Warren — for helping to cause the financial crisis (though this point is up for debate among many economists and academics).

Reinstating the law has since become a favorite talking point of the anti-Wall Street movement in Washington.

Anti-Wall Street campaign

As a presidential candidate, Donald Trump railed against Wall Street firms like Goldman Sachs, attacked Hillary Clinton for her ties to big banks, and pitted himself as a populist who would stand up to Wall Street. In fact, the official Republican platform included, for the first time, a call to reinstate Glass-Steagall.

Even after taking office, Trump said he would consider breaking up the banks, and economic advisers like Mnuchin and Gary Cohn reiterated support for a "21st-century Glass-Steagall."

Mnuchin's statements, however, appear to have nothing to do with the core of Glass-Steagall (or at least its most looming legacy) and appear to simply be an attempt to slap a tough name on another deregulation measure.

The White House press secretary, Sean Spicer, maintained that the president was "consistent" in his support of reinstituting Glass-Steagall in February and March, but the so-called 21st-century Glass-Steagall sounded a bit different when Spicer discussed it May 1.

The White House press secretary, Sean Spicer, holding a briefing at the White House on March 20. REUTERS/Kevin Lamarque

"The president's pro-growth agenda, including instituting what he has called a 21st-century Glass-Steagall, will allow [small] banks to spend less time complying with unnecessary requirements, many of which were designed to police much larger entities, and more time infusing their communities and local small businesses with capital," Spicer said.

This, instead of sounding as if it would regulate larger banks, appears to be a deregulation effort for community financial firms.

Tim Pawlenty, the former governor of Minnesota who now leads the Financial Services Roundtable, told Bloomberg's Max Abelson that the new bill from the administration wouldn't really focus on large banks with both investment and commercial arms at all.

"Following the president's remarks on the topic, Gary Cohn clarified the administration's view of a modern-day Glass-Steagall is a two-tiered approach to regulation in which smaller banks would receive some regulatory relief," Pawlenty said.

Basically, Abelson reported, bank executives expect the new Glass-Steagall to be a deregulation effort for smaller banks, with little involving larger banks, that is sold under the guise of a bill for which anti-Wall Street groups have been clamoring.

As Warren pointed out during the testimony, the Trump administration is even cribbing the 21st-century-Glass-Steagall language from a bill partially written by Warren that would, in fact, break up large banks if adopted.