While the media cameras were concentrating on former FBI Director Comey’s hearing on Thursday, followed by hours of panel discussions about the hearings, the Republican-led House of Representatives passed a sweeping bill that deregulates Wall Street big banks. This bill is a huge threat to the economic security of the American people, but it didn’t even get mentioned. I doubt it was even noticed at all.
I’m tempted to say that the media completely forgot about the Wall Street crash of 2008 and the people who suffered as a result, but knowing the media like I know it today, and how they’ve always colluded with the establishment to sell bills and policies to Americans, I can’t quite say that they forgot. I think it’s more likely that it was planned exactly the way it played out: keep the people in the dark and escape the outrage.
Anyway, it may have worked out the way they planned but that doesn’t mean the people have forgotten. Yes, they’ve sneaked it through while nobody was looking, but that doesn’t mean we wouldn’t realize what they have done when we eventually look and see what has been done. The more than 11 million Americans who lost their homes, the millions who lost their savings and pensions, and all those who lost their jobs will never forget.
This, when they realize it, will be like reopening the wounds of 2008 and 2010 all over again. Also, the millions more who will lose homes and savings and pensions as a result of this iteration of deregulation will know exactly who to blame unlike the last time when the culprit wasn’t very clear.
Unemployment rates more than doubled around the country, all as a result of greedy Wall Street banks who gambled heavily on the backs of the American people, all to benefit their pockets. The law that was repealed last Thursday by the House of Representatives, while not completely effective in reigning in the banks, did a lot to keep them in check. Now the beast has been completely unleashed.
The new law, once again, grandly named the Financial CHOICE Act that passed on Thursday takes away the few protections that were put in place after the 2008 crash, and further deregulates the “too big to fail” banks. It wipes out the Volcker Rule which prevents government-insured banks from certain risky speculative investments. It lowers the amount of capital that a bank is required to maintain, placing even more of a burden on the American people who these banks rely on to bail them out. It defangs the Consumer Financial Protection Bureau’s ability to regulate the big banks and payday lenders. The list goes on and on.
Quite clearly, the Dodd-Frank Act regulations on Wall Street banks put in place after the 2008 crash did not go far enough. It did not prevent the big banks that were “too big to fail” in 2008 from getting even bigger and more powerful today. It did not stop the big banks from gambling on the backs of the American people. What it did was place more undue regulatory burdens on small, community banks, who had nothing to do with the financial crisis.
That has been a criticism of mine for Dodd/Frank, and I have always been pro repealing and replacing that Act with something that reigns in the big banks and releases the burden on small community banks: something in the mould of the Glass/Steagall Act. What the Financial Choice Act has done is the exact opposite of what needed to be done. We need to lessen the regulatory burden on our community banks, and strengthen restrictions and oversight of the big Wall Street banks to protect the American people from yet another economic crisis.
What we need is to once again separate regular commercial banking from risky investment practices. That is always a no no. It didn’t work in the 20s which is why Glass/Steagall was instituted. It also didn’t work in the 90s when Bill Clinton repealed Glass/Steagall, and was why we had the financial crash of 2008.
What we need to do is to reinstate Glass/Steagall, or at least, a modern version of it that separates commercial banking from investment banking. There is really no choice, if we will ever get our financial economy in order. We are headed for another crash if we don’t do that.
