Are we all being duped by a master plan of “bait and switch?” As the media and the nation are mesmerized by the chaos of the present presidential administration – Muslim bans in court, abrupt personnel changes, early morning Tweets and overall erratic behavior – an ongoing movement from the right wing core is rolling through the federal government. While we are all focused on Russia and the FBI, one of Barak Obama’s proudest legislative achievements is being stripped away: Wall Street reform.
Although Trump campaigned on promises to elevate the middle class, he also vowed to liberate big banks from the regulations Obama inflicted on them. Last week a council of top regulators met to quietly discuss the future of a structural change Obama had established, and a few days later a newly appointed Trump official threatened to “reinterpret” its entire purpose.
At issue is what is known as The Volcker Rule. It was conceived as an update to a Depression-era law which banned traditional banks from engaging in risky, high-stakes ventures. Brian Gardner, an analyst with Keefe Bruyette & Woods, said that this rule is basically dead. “Examiners can start giving banks the benefit of the doubt regarding compliance with Volcker almost immediately.”
Strong lobbyists for the banks succeeded in delaying the implementation of key elements of the Volcker Law for years; now it is being put to death by Trump appointees who have close ties with the financial industry. Those who are responsible for its destruction include former bank lawyer Keith Noreika, along with Treasury Secretary Steve Mnuchin (a Goldman Sachs alum) and Securities and Exchange Commission Chairman Jay Clayton (a former Goldman’s bailout attorney).
Before the Obama administration, banking products were regulated by five different agencies that competed for assessment fees paid by the banks. If an agency was too tough on consumer protection, it risked losing its banks and their funding. This gave banks significant political power. Obama tossed this plan for single consumer finance oversight, the CFPB, and charged Elizabeth Warren with setting up the agency. This established a new power center in Washington that could challenge big banks and broken bureaucracy.
This is all now just melting away while we are focused on dialogue with Russian officials about “nut jobs” in the Oval Office. Is this a massive “bait and switch?”
Credit: Huffington Post