Dear America,
The Trump administration being what it is--incompetent, self-interested and disingenuous--I have taken to writing you once a month rather than twice a week. After all, all the complaints about Trump sound essentially the same. But today it was announced that his administration is disemboweling the Dodd-Frank attempt to instate the Volcker Rule, which separates commercial banking from investment banking. In other words, the bank where you keep your checking and savings accounts can't engage in risky investments with your money under the Volcker Rule, which is quintessentially the Glass-Steagall Act.
You may remember Glass-Steagall if you are a baby boomer or older; it was enacted in the depression to prevent another depression. So why did we almost have another depression in 2008? Well, Bill Clinton signed a Republican bill that repealed Glass-Steagall in 1999 saying that it was no longer needed. Congress had chipped away at it over the decades, but in principle it still applied and banks had constraints within which they had to keep their investments. But in 1999, those constraints disappeared and nine years later, history virtually repeated itself. It wasn't the stock market that took down the economy the way it did in 1929 that brought us inches from another depression in 2008; it was the housing-mortgage market, but the effect was the same. Banks had made what amounted to risky bets on the mortgage market in the form of "derivatives," which were based on a few different kinds of investment in mortgages. When the supposedly perpetual climb in real estate prices became a dramatic slide, mortgages and the derivatives based on them began to dramatically lose value, which led to banks verging on failure. Some investment banks actually did fail: you remember Bear-Stearns and Lehman Brothers perhaps. Then the government stepped in and made the teetering banks borrow hundreds of billions of dollars of our money so that they wouldn't fail and the rest is history: unemployment, foreclosures on mortgages and generally, life changing financial harm for millions of families, some of which will never recover. We have Bill Clinton to thank, because he could have prevented a disaster that took less than a decade after his decision to free the banks to do their dubious business to befall us. No matter what you think of him, in this instance he screwed up with a colossal impact on us all. That impact is why I feel compelled to write to you a second day in a row.
Donald Trump has expressed his intention to effectively repeal Glass-Steagall, this time in the form of the relevant provisions of the Dodd-Frank Act, and let the banks have their heads again. That's after unleashing his minions to eviscerate the Consumer Financial Protection Bureau, which was the only thing standing between consumers and predators like Wells-Fargo, which it now appears is at it again, gouging its customers for fees accrued in accounts that they didn't even know they had. Put another way, Donald Trump learned nothing from either 1929 or 2008, and he is enabling the exact same thing that caused our depression and our more recent near-depression, and why is he doing it? Trump wants to be re-elected, and he'll do anything to make that happen. He is pandering to the money people with this repeal of consumer protective banking laws. And now he has also announced that he wants to reduce payroll taxes, which estimates predict will add $150 billion to the deficit, or $1.5 trillion to the national debt over ten years. He's trying to buy it the way he has tried to buy everything else...including Greenland.
I've said it before and I'll say it again. Donald Trump is a menace. He is the most dire threat to American democracy that I've seen in my lifetime, and I'm 73. Richard Nixon pales by comparison, and for stupidity, even George W. Bush looks like a Nobel laureate by comparison. We have a mendacious, deviant sociopath for a president, and he wants to be our president for good I fear. Don't let it happen.
Your friend,
Mike
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