Dangerous deregulatory agenda
By Jake Johnson
Common Dreams (6/26/20)
Bank stocks jumped and lobbyists rejoiced Thursday after U.S. regulators voted to gut the so-called Volcker Rule, a set of regulations imposed in the wake of the 2008 Wall Street collapse limiting the ability of financial institutions to engage in high-risk behavior that threatens the systemic health of the economy.
“Instead of protecting our financial system in the middle of an unprecedented economic crisis, Trump-appointed regulators are plowing ahead with their dangerous deregulatory agenda,” tweeted Sen. Elizabeth Warren (D-Mass.). “The big banks couldn’t be happier about it.”
CNBC reported that the shares of JPMorgan Chase, Goldman Sachs, Wells Fargo, and Morgan Stanley “were all trading more than 2% higher” after the changes to the Volcker Rule were announced by five regulatory agencies, including the Federal Reserve, the Securities and Exchange Commission, and the Federal Deposit Insurance Corporation.
It turns banks into Trump casinos. Will the inevitable Trump casino bankruptcy be far away?
The changes, set to take effect on Oct. 1, will make it easier for big banks to devote more of their resources to investments in venture capital funds and other vehicles—the kind risky of speculation that sent the entire U.S. financial system into a tailspin in 2008.
Regulators on Thursday also eliminated a requirement that banks set aside a certain amount of financial cushion to protect against trading losses. The rollback could free up tens of billions of dollars for Wall Street banks.
The Wall Street Journal reported that the combined deregulatory moves hand “Wall Street one of its biggest wins of the Trump administration.”
Exactly the wrong way to boost our economy
Sen. Jeff Merkley (D-Ore.), one of the authors of the original Volcker Rule regulations, warned in a statement Thursday that the changes further destabilize the U.S. financial system at a time when the economy is already reeling from the coronavirus crisis.
“Deregulation of the banks is exactly the wrong way to boost our economy in this moment,” said Merkley. “The last thing we need is to follow a public health crisis that has cratered our economy with another Wall Street-driven financial meltdown.”
“It was only a decade ago when millions of Americans paid the price for Wall Street gambling in lost jobs, homes, and life savings,” Merkley continued. “Reopening the Wall Street casino is the wrong path forward, one that puts all Americans’ financial stability at greater risk.”
Bartlett Naylor, financial policy advocate at consumer group Public Citizen, echoed Merkley’s warning in a statement Thursday.
“This is no longer the Volcker Rule,” said Naylor. “In the hands of revolving door regulators, it turns banks into Trump casinos. Will the inevitable Trump casino bankruptcy be far away?”
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- David Sirota: Wall Street Just Got Legal License To Gamble During Depression — Editor-At-Large at the Jacobin David Sirota explains why bank regulators are loosening the Volcker Rule that will potentially free up billions of dollars in capital for the industry. Link To 7-Minute Video
- The Supreme Court Just Gave Corporations A License To Loot Your Retirement Funds — In the 1987 classic film Wall Street, pension funds make a brief but important appearance, as Gordon Gekko hatches a plan to steal 6,000 airline workers’ retirement savings. An angry Bud Fox asks Gekko: “How much is enough?” — a question warning the audience about unbridled greed and the financial vipers in our midst. Thirty-three years after the release of Wall Street, it seems the U.S. Supreme Court saw the film as a guidebook rather than a cautionary tale: In a landmark ruling last week, Brett Kavanaugh and his conservative cadre undermined workers and retirees who might try to stop Gekko’s scheme at their own companies. … Read The Rest
(Commoner Call photo by Mark L. Taylor, 2020. Open source and free for non-derivative use with link to www.thecommnercall.org )