President Donald Trump just began demolishing the Dodd-Frank Wall Street Reform and Consumer Protection Act, one of the most important pieces of former President Barack Obama’s legacy. Obama took office in the wake of autumn 2008 financial crisis which marked the beginning of the deepest economic recession the United States has faced since the Great Depression. The main cause of the crash was exploitative and reckless banking practices.
Bankers developed tricks to play high-risk high-stakes games with customers’ money that resulted in big profits for bankers while customers unknowingly bore all of the risk. Bankers got rich by loaning money to people without the means to pay it back and then combined these bad loans with other assets into derivatives, financial products that concealed the true risk they bore. Most notably these practices culminated in the subprime mortgage crisis in which Americans were given mortgages that they should never have qualified for and were never able to pay back.
Obama responded to the mess created by the financial industry by signing into a law a sweeping set of Wall Street reforms known as the Dodd-Frank Act. Dodd-Frank reigned in big banks and forced them to develop more risk-averse and transparent practices, including only loaning money and giving mortgages to consumers with adequate credit ratings. It stopped bankers from enriching themselves at the expense of their clients and the economy as a whole.
Now Trump says he wants gut Dodd-Frank. The reason? Some of his good friends are being denied loans. Remember that one of Dodd-Frank’s main aims was to stop banks from loaning to unqualified clients because doing so creates too much risk in the financial system.
Trump told the press, “We expect to be cutting a lot out of Dodd-Frank because, frankly, I have so many people, friends of mine, who have nice businesses who can’t borrow money. They just can’t get any money because the banks just won’t let them borrow, because of the rules and regulations in Dodd-Frank.”
Not to worry, Trump has a good plan of who he should talk to in order to get Dodd-Frank reform right: big bankers. Big bankers are the ones who gained in a pre-Dodd-Frank era while everyone else in America suffered. Now Trump literally wants to gut Dodd-Frank to make his millionaire and billionaire friends richer, and he wants to do so in a way that will let the banks rewrite the system in their favor again.
Trump explained, “We have a great plan, but I want to have your input on the plan in particular, and to do what we have to do in terms of regulation, we have some of the bankers here. There’s nobody better to tell me about Dodd-Frank than Jamie” (referring of course to Jamie Dimon, billionaire CEO of JP Morgan Chase and one of the most influential oligarchs in the United States).
Trump: plans to cut Dodd-Frank “because, frankly, I have so many people, friends of mine that have nice businesses, they can’t borrow money” pic.twitter.com/yniTRCklA7
— Bradd Jaffy (@BraddJaffy) February 3, 2017
Trump is selling out the working class and middle class voters that he promised to stand up for. On the campaign trail Trump repeatedly announced that he, a successful billionaire who knew the system, understood how the rich are taking advantage of the poor and will stop the exploitation. Now he is doing everything he can to enrich himself, his elite 1% friends, and the banks and the expense of hardworking Americans.
Watch Trump commit the ultimate act of betrayal here:
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.