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Here's Why We Have Financial Regulation -- as Trump and GOP Destroy it
Trump and the GOP are taking advantage of their control over the Executive and Legislative branches to reshape our government in their image, one that works on behalf of corporations and the wealthiest, rather than The People.
Following the Great Recession, Congress and President Obama worked for years to draft reasonable regulations to keep the financial sector (ie Wall Street) from collapsing our domestic and global economy again. Those rules, in our opinion, were too weak yet were a step in the right direction. Republicans and Wall Street banks have cried that the burdens of these regulations were ruining their business and our economy, an odd assertions considering the financial performance they've returned to following the utter collapse they caused.
A decade ago, the worldwide financial crisis began wreaking havoc on the American economy. Over the course of the crisis, many workers lost not only their jobs, but also their savings. By the end of the Great Recession, unemployment had topped out at above 10 percent nationally, and the U.S. workforce had lost 8.7 million jobs as the economy contracted. Throughout the nation, losses to 401(k)s and IRAs totaled around $1.8 trillion in the final two quarters of 2008.
Today, the Dow Jones Industrial Average, S&P 500 and Nasdaq have recovered and are once again trading at historic highs. Likewise, unemployment has fallen back below 5 percent nationally. The Dodd-Frank Act is the law of the land and has established new reforms and tools for oversight.
As Dodd-Frank and other regulations meant to protect our people and our economy are ripped apart for no logical reason, let's please remember why we are supposed to have these rules.
....we cannot afford to forget its stark warning about the dangers of careless oversight of financial markets and products. The country has made great progress in better protecting hard earned nest eggs, and it’s critical to that progress that we don’t let our vigilance fall back.
The first is federal legislation to protect investors. Unfortunately, the current discussion in Congress has turned to rolling back many of the very protections that were enacted in response to financial crises..... must remember the reason laws like Dodd-Frank were passed and the danger it sought to address.
The second component of vigilance against financial disaster is ensuring that regulators throughout the financial services industry have their ears to the ground. Laws don’t stop crime, regulators do.... It will take vigorous enforcement of the laws and outreach to consumers to educate them about their investment decisions for retirement, for college and for the future.
Deregulation makes zero sense and is the precise cause of the next recession. History will repeat itself because clearly the lessons have not been learned.
In the aftermath of the financial crisis, policymakers took care to understand the cause of the crisis by convening the Financial Crisis Inquiry Commission. The 10-member commission concluded that the crisis was the result of high risk, complex financial products, undisclosed conflicts of interest, and loose federal regulatory oversight. Then-NASAA president Denise Voigt Crawford, in testimony before the commission, said, “Deregulation is no longer the presumptive policy prescription. Indeed today, the sense is that the current crisis was deepened by excessive deregulation.”
Even as deregulation sees a new surge of federal support, we must remember the role it played in precipitating the financial crisis of the past, and we must look to how states and state regulators can provide insight and oversight to avoid a future financial crisis.