Just prior to both Congressman Barney Frank and Senator Chris Dodd hightailing it out of Washington, they jointly helped engineer one of the most egregious banking laws to come out of the 2008 financial crisis. Known as the Wall Street Reform and Consumer Protection Act, this bill did neither of these things and in fact engendered the banks to be allowed to commit even more speculation and risk because the Obama administration refused to enforce it.
Yet perhaps of even greater import from this bill was the new regulations that changed the backstop for the next collapse from the taxpayer to the depositor. And now with Donald Trump in the White House, it did not take long for the new President to start to dismantle the Dodd-Frank act.
As previewed earlier today, moments ago President Trump signed two executive orders aimed at starting the process of rolling back the regulatory system put in place after the financial crisis.
Among the targets are rules that protect against predatory lenders, force brokers to lower fees for retirees and ban proprietary trading. Specifically, Trump took executive action ordering the review of Dodd-Frank rules enacted after 2008 financial crisis, and halting the “fiduciary rule” that would require advisers on retirement accounts to work in the best interests of their clients. – Zerohedge
Rolling back Dodd-Frank is part of President Trump’s initiative to de-regulate finance and industry, and allow the markets to dictate winners and losers rather than the government. However, yesterday’s actions will most likely lead to even greater market and financial risk if they are not complimented by a re-instatement of Glass-Steagall, which would force a separation of the commercial and investment sides of the country’s too big to fail banks.
Trump’s Executive Orders have the potential to bring about the same environment in the banking system that led Wall Street to nearly destroy the global financial system nine years ago through their unregulated greed and speculation. And one has to wonder if this move by the President is in fact a gambit to accelerate the next collapse, so that he can rebuild it from the ground up rather than continue to simply slap bandaids on a system that is beyond the point of resurrecting.
Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.com, Roguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.