President Trump came into office on a wave of promises to look out for regular, working Americans, make the rich pay their fair share and “Make America Great Again.”
That was what old time con men would call "the set up". But you can only call what has happened next "the sting".
President Trump has put together an economic team completely dominated by Goldman Sachs alums, made attacks on the financial regulations and agencies that most directly protect working Americans and has completely abandoned the real Republican financial reform agenda — measures like restoring Glass-Steagall that would really help Main Street America.
The Wrong People
What is wrong with Steve Mnuchin as Treasury secretary? You could start with the sheer audacity of the con — Trump vowed to get Goldman Sachs out of government, then appointed a Treasury secretary from Goldman Sachs, a chairman of the National Economic Council from Goldman Sachs, and a special advisor from Goldman Sachs.
But it’s really much worse than that. There are people from Wall Street, even from Goldman Sachs, that have made honorable livings and served our country well as public servants. But Secretary Mnuchin made his money taking homes away from working people.
When Wall Street put this country into economic crisis, people with wealth and power had a choice — be part of the solution or part of the problem. Steve Mnuchin chose to feed on the suffering of working people, gaining wealth by putting families out of their homes and leaving children to do their homework by flashlight in the family car.
Taking the Cop off the Beat
The Consumer Financial Protection Bureau (CFPB) is, together with the SEC, the cop on the financial beat. Under its first director, Richard Cordray, the CFPB has recovered billions of dollars for consumers.
Naturally, the first move of the new administration that promised to stand up for ordinary Americans was to remove the cop. The new administration has tried to fire Cordray and pledged to destroy the CFPB entirely by repealing the Dodd-Frank Act that created it.
License to Steal — Part 1 — Picking Our Pockets
If you are going to take cops off the beat, no one should be surprised if the next item on the agenda is looting, and that’s what the White House’s memo requesting a review of the Department of Labor’s Fiduciary Rule is all about.
Financial advisors have a history of steering retirement savers into riskier investments in order to earn money for themselves. The DOL’s Fiduciary Rule requires financial advisors act in their clients’ best interest instead of their own.
When the Fiduciary Rule was enacted, the Council of Economic Advisors estimated it would keep Wall Street firms from taking over $18 billion a year from working people’s pockets by steering clients into excessive fees and inappropriate investments. Repealing the fiduciary rule is simply a license to steal.
License to Steal — Part 2 — Bringing Back Too Big to Fail
In 2010, Congress passed the Dodd-Frank Act, which created a process for the orderly restructuring of big banks. “Orderly restructuring” is a nice way of saying that, just like in a bankruptcy, the people who are supposed to bear the losses — the stockholders and bondholders of the failed bank — will do so, but that the process will be managed to protect the larger financial system from collapse.
If you don’t have a process like this then you will have “too big to fail” when a crisis comes. So when the new administration issued an executive order seeking to weaken Dodd-Frank and called on Congress to repeal it, they were doing exactly the opposite of what they promised in the campaign.
President Trump might as well have promised to write big Treasury checks to JP Morgan Chase and Goldman Sachs and said, “Go out and gamble. I’m here to back you up.”
Abandoning the Republican Reform Agenda
On the campaign trail, the president called for a 21st Century Glass Steagall Act, which would effectively separate regular, everyday banking on Main Street from high-stakes gambling on Wall Street.
It has long been embraced by leading Republicans, like Sen. John McCainJohn McCainMcCain made secret trip to Syria A guide to the committees: Senate Webb: The future of conservatism MORE (R-Ariz.) and Sen. Bob CorkerBob CorkerA guide to the committees: Senate Republicans play clean up on Trump's foreign policy GOP Congress unnerved by Trump bumps MORE (R-Tenn.). As have other measures that would level the playing field between large firms and community banks and orient the financial system toward supporting the real economy, such as ending the carried interest loophole for hedge funds and private equity and placing size limits on the big banks.
We heard a lot about these ideas in the campaign. But as con men are wont to say, "That was then, this is now".
Damon Silvers is the director of Policy at the AFL-CIO.
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