Published on
Friday, June 26, 2020
byCommon Dreams
'Big Banks Couldn't Be Happier': Stocks Surge as Trump Regulators Gut
Restrictions on Risky Wall St Gambling
The rollback, noted the Wall Street Journal, hands "Wall Street one of its
biggest wins of the Trump administration."
byJake Johnson, staff writer
A view of the Wall Street street sign with the New York Stock Exchange
during the coronavirus pandemic on May 25, 2020 in New York City. (Photo:
Noam Galai/Getty Images)
A view of the Wall Street street sign with the New York Stock Exchange
during the coronavirus pandemic on May 25, 2020 in New York City. Bank
stocks jumped and lobbyists rejoiced Thursday after U.S. regulators voted to
gut the so-called Volcker Rule, a set of regulations imposed in the wake of
the 2008 Wall Street collapse limiting the ability of financial institutions
to engage in high-risk behavior that threatens the systemic health of the
economy.
"This is no longer the Volcker Rule. In the hands of revolving door
regulators, it turns banks into Trump casinos. Will the inevitable Trump
casino bankruptcy be far away?"
-Bartlett Naylor, Public Citizen
"Instead of protecting our financial system in the middle of an
unprecedented economic crisis, Trump-appointed regulators are plowing ahead
with their dangerous deregulatory agenda," tweeted Sen. Elizabeth Warren
(D-Mass.). "The big banks couldn't be happier about it."
CNBC reported that the shares of JPMorgan Chase, Goldman Sachs, Wells Fargo,
and Morgan Stanley "were all trading more than 2% higher" after the changes
to the Volcker Rule were announced by five regulatory agencies, including
the Federal Reserve, the Securities and Exchange Commission, and the Federal
Deposit Insurance Corporation.
The changes, set to take effect on Oct. 1, will make it easier for big banks
to devote more of their resources to investments in venture capital funds
and other vehicles-the kind risky of speculation that sent the entire U.S.
financial system into a tailspin in 2008.
Regulators on Thursday also eliminated a requirement that banks set aside a
certain amount of financial cushion to protect against trading losses. The
rollback could free up tens of billions of dollars for Wall Street banks.
The Wall Street Journal reported that the combined deregulatory moves hand
"Wall Street one of its biggest wins of the Trump administration."
Sen. Jeff Merkley (D-Ore.), one of the authors of the original Volcker Rule
regulations, warned in a statement Thursday that the changes further
destabilize the U.S. financial system at a time when the economy is already
reeling from the coronavirus crisis.
"Deregulation of the banks is exactly the wrong way to boost our economy in
this moment," said Merkley. "The last thing we need is to follow a public
health crisis that has cratered our economy with another Wall Street-driven
financial meltdown."
"It was only a decade ago when millions of Americans paid the price for Wall
Street gambling in lost jobs, homes, and life savings," Merkley continued.
"Reopening the Wall Street casino is the wrong path forward, one that puts
all Americans' financial stability at greater risk."
Bartlett Naylor, financial policy advocate at consumer group Public Citizen,
echoed Merkley's warning in a statement Thursday.
"This is no longer the Volcker Rule," said Naylor. "In the hands of
revolving door regulators, it turns banks into Trump casinos. Will the
inevitable Trump casino bankruptcy be far away?"
