The New Republic: Second Trump administration dismantles US financial regulations, creating 'Golden Age' for white-collar criminals
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This opinion article from The New Republic argues that the second Trump administration is rapidly dismantling U.S. financial regulations, creating a 'Golden Age' for white-collar criminals and kleptocrats. It traces the history of financial regulation from the New Deal era, which brought stability, through decades of deregulation starting in the 1980s that led to more frequent crises. The author warns that the current administration is accelerating the removal of remaining safeguards just as potential crises from AI, crypto, and fossil fuels loom. The piece attributes the current deregulatory push to President Trump and notes that this trend predates him, citing bipartisan deregulation efforts under Clinton and earlier. It concludes that the erosion of oversight, combined with new threats, risks severe economic instability.
Source report
Here's some bad news for anyone who wants a sane and functional banking system. The second Trump administration is hard at work destroying every vestige of financial regulation in the United States. A meticulously built oversight infrastructure is facing an accelerated teardown after years of willful neglect.
It's hardly news that Donald Trump has made it easier than ever to be a plunderer. This is a Golden Age for white-collar criminals at home and kleptocrats abroad. Moreover, Trump isn't solely to blame for the sorry state of affairs.
Still, it wasn't always this way. When New Deal–era banking regulations were firmly in place, financial crises were few and far between; when such crises emerged, they were relatively contained. But the steady erosion of financial-sector guardrails since the start of the neoliberal era has coincided with more frequent and explosive meltdowns. Today, the White House is speed-running the obliteration of remaining safeguards, just as AI, crypto, and fossil fuel–related crises threaten to upend the global economy. Buckle up: It's going to get bumpy.
A Brief History of Financial Regulation
In the pre–New Deal United States, financial crashes—brought on by poor bank management or speculative bubbles enabled by overly loose credit—were commonplace. Following the Great Depression, however, the federal government rapidly built up the foundations of our modern finance system.
Key New Deal Legislation
- Banking Act of 1933 (Glass-Steagall): Created the Federal Deposit Insurance Corporation (FDIC) and federal deposit insurance; established a firewall between commercial and investment banking.
- Securities and Exchange Act: Created the Securities and Exchange Commission (SEC).
- National Housing Act: Created the Federal Savings and Loan Insurance Corporation.
- Banking Act of 1935: Centralized the Federal Reserve's power in its board of governors to improve nationwide supervision; created the Federal Open Market Committee (FOMC) to conduct monetary policy; strengthened the independence of the Fed.
What followed was the longest span in American history of no major financial crashes. Stability was the norm. It wasn't until the early 1970s that the OPEC-induced oil crisis caused a stock market crash. It wasn't until the 1980s savings and loan crisis that the U.S. experienced a financial crash originating from within the domestic financial sector. It still took several more years and the confluence of several other factors—notably very tight monetary policy and an oil shock from Saddam Hussein's invasion of Kuwait and the resulting Gulf War—for it to result in an economy-wide recession at the start of the 1990s.
The Beginning of Deregulation
Even then, a big reason why the savings and loan crisis spread beyond the financial sector was because Congress had started to deregulate the financial sector years earlier. As high interest rates undermined long-term fixed-rate mortgages—the centerpiece of savings and loans' business model—lawmakers deregulated the banking activity in which thrifts and savings and loans firms were allowed to engage. The legislation was called the Depository Institutions Deregulation and Monetary Control Act of 1980. Congress was thus knowingly incentivizing revenue-needy institutions to take on additional risk in pursuit of higher returns to salvage their businesses, helping drive speculative investment.
The episode also marked the first major rollback of financial oversight since the Great Depression. Since then, there have been a number of forays into deregulation and weakening oversight, but the regulatory system overseeing banking remained mostly intact.
The 1990s: Further Erosion
The 1990s saw substantial relaxation of supervision, particularly of commodity markets, which were allowed to proliferate—especially after the Commodity Futures Modernization Act. Warnings from within the Clinton administration about growing speculation, coming from people like Brooksley Born, chair of the Commodity Futures Trading Commission, and Edward Gramlich, the Federal Reserve governor, were drowned out by the voices of leading neoliberal advisers such as Robert Rubin, Larry Summers, and Alan Greenspan.
Source
The New RepublicWestern