May 26, 2018—The pace of deregulation coming from the Trump Administration, and the U.S. Congress, is stunning. And it runs directly contrary to the principles of the Federally-backed credit system which Alexander Hamilton established, called the American System. Here are three prominent examples (many more are likely hidden in the weeds of the government bureaucracy):
- On May 24, President Trump signed a major bank deregulation bill which loosens trading the reporting requirements on all but the biggest banks in the nation, increasing the instability of a financial system already in big trouble. Warnings about the potential consequences have recently been issued by former top-level bank regulators Thomas Hoenig and Sheila Bair and groups like Americans for Financial Reform .
- That same day, President Trump issued Space Directive 2, which calls on the Departments of Transportation and Commerce to carry out the “streamlining of regulations” for commercial activities in space, in alleged interest of ”economic growth; minimize[ing] uncertainty for taxpayers, investors, and private industry; protect[ing] national security, public-safety, and foreign policy interests; and encourage[ing] American leadership in space commerce.” The role of NASA, the responsible government agency for the nation’s space mission, especially its safety, is not mentioned at all in the directive.
- The Federal Reserve has put changes to the Volcker Rule, a weak nod to the need for banning banks from speculating with their own (read your deposits) money, on its May 29-30 meeting agenda. Anticipation is high that the Fed will weaken the already ineffective rule.
As former Wall Street banker and financial historian Nomi Prins put it recently, “this will not end well.” Just as the shutting of the Second National Bank, the “roaring Twenties” of speculation, and the overturning of Glass-Steagall were followed by major blowouts of the U.S. economy and financial system and widespread human misery, so the lack of regulation—and a positive policy of credit for economic development–will have extremely negative consequences today.
The time is urgent for Americans to study the American System.
Tags: banks, deregulation, Federal Reserve, NASA, Nomi Prins, Trump