Apparently Rep. Jeb Hensarling (R-TX) has forgotten how bad the financial industry collapse of 2008 was, because he has just outlined his plan to deregulate the banks and make the American economy – and the American people – as vulnerable to the whims of casino capitalists as they were at the beginning of the Great Recession. Hensarling’s proposals will set the Republican agenda on the issue into the next congressional term. The bill, called the Financial CHOICE Act will strip away significant portions of the Dodd-Frank Act, the landmark legislation that was passed to prevent Wall Street from gambling with the American economy and triggering another collapse – for which they would certainly demand another bailout. It will not create hope and opportunity, unless Hensarling defines “hope and opportunity” as an economy that needs a $700 billion bailout, an $839 billion stimulus package, and has an unemployment rate of 10%.
One of the most significant portions of the bill will remove regulations from big banks as long as they maintain a limit of 10% leverage. Leveraging is the practice of banks using money they currently have to acquire debt. Basically, a 10% limit means that for every $1,000 a bank has, it can borrow $10,000 dollars. If a bank makes a good investment, leveraging means that their win is huge, but if the investment goes bust, they lose big. Bankers can make tremendously risky investments, knowing that they can fall back on their outrageous salaries while their customers lose everything. The risk is born by the economy as a whole, which means that every day Americans, the poor, the working class, and the middle class, are exposed to the risks that a rich banker on Wall Street decides to take – and receive none of the profits if that banker wins big. If we put all this together, the conclusion is that Hensarling wants to let banks get around regulators as long as the banks “only” borrow ten times what they own.
Hensarling’s bill would – of course – also dissolve the Consumer Financial Protection Bureau, leaving the American consumer vulnerable to the machinations of predatory corporations and practices, with and the committee he will replace it with will have to jump through so many hoops to create rules, critics say it will be impossible for it to accomplish anything at all.
It is extremely disturbing to see that just a few years after sending the entire world’s economy into a tailspin with their reckless gambling, Wall Street’s puppets on Capitol Hill are working relentlessly to let them do it again. Just last week President Obama said, ““Have we really forgotten what just happened eight years ago? It hasn’t been that long ago.” Let’s stand up to Washington and Wall Street politicking and show Obama that the American people have not forgotten the Recession, and will not tolerate the rich getting richer at the expense of the typical hardworking citizen.
Marisa completed her undergraduate degree in 2013 at the University of Wisconsin with a double major in creative writing and media studies. She is an advocate of progressive policies and focuses her interests on gender equality and preventing sexual and domestic violence.