‘Big Banks Couldn’t Be Happier’: Stocks Surge as Trump Regulators Gut Restrictions on Risky Wall St Gambling

NEW YORK - AUGUST 15: Traders works on the floor of the New York Stock Exchange (NYSE) August 15, 2008 in New York City. Stocks were up in morning trading on Wall Street as the strengthening U.S. dollar drove global commodity prices down. (Photo by Spencer Platt/Getty Images)

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.

“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?”

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6 Comments on "‘Big Banks Couldn’t Be Happier’: Stocks Surge as Trump Regulators Gut Restrictions on Risky Wall St Gambling"

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Marie Tobias
Member
Let’s be completely clear. Wallstreet has already succeeded in virtually duplicating the environment that precipitated the 2008 Wallstreet crash. Because they’ve been lobbying for over a decade to get their hands on those juicy dividends. Wallstreet Banking is a crack addict, you don’t let crack addicts dictate whether they get more crack. That would be insanity. Of course, trying to find sane in the last 4 years of raging bat-sh!t, is a little like looking for a bottle of Chanel #5 in a ten million gallon vat of aerating sewage. The bang is already imminent. Because the new bomb is… Read more »
Independent
Guest
Independent

We cant afford afford six months of donnie and his apostles. Once again greed takes conteol

drjillinNH
Guest
drjillinNH
THIS IS THE MOST DELIBERATELY EVIL THING TRUMP COULD HAVE DONE. This is our Sociopath’s vehicle to punish the entire nation for not appreciating his genius and tolerating his indifference to human life (and everything else that’s vile and lawless and hateful, as well). In the process of bringing the USA into every imaginable kind of ruin, it’s also his way of getting EVEN for people’s strong and consistent high regard for Barak Obama. We’re on the brink of at least HALF of the nation’s families being unemployed — because their jobs vanished, companies folded, or their small businesses or… Read more »
J. M.
Guest
J. M.

The party will be over if Elizabeth Warren becomes treasury secretary with Biden.

MaryS
Guest
MaryS

Good thinking

chris whitley
Guest
chris whitley

It didn’t work under Bush and he actually knew what he was doing compared to the orange baboon. This mixed with the pandemic and other great trump innovations like the tariffs should really f@ck things up. Of course with trump running something it should go bankrupt before he goes. Every other business has.