Trump took the steps so he would look good and receive high approval ratings due to a booming economy.
But Trump’s economy is built on extremely high risk loans made to hundreds of large companies that could soon default on those loans, throwing the economy into the worst crisis since 2008.
In making the rules changes, Trump worked with complicit Republicans in Congress who had received large campaign donations from financial firms. These firms have lobbied the government to relax the strict financial rules which have been protecting consumers and the economy.
The new rules have been worked on by federal regulators for the past two years, ever since Trump took office. The changes allowed banks and other financial companies to issue more than $1 trillion in risky corporate loans.
And now there is spreading fear that the U.S. government has once again been manipulated by Wall Street, making the same mistakes that were made before the last financial crash.
Trump, congressional Republicans, and the people they appointed to administer and oversee financial regulations have all worked together to undo the economic protections put in during the Obama administration.
And the result has been an economy built on risk.
Now, regulators are struggling to comprehend the scope and potential dangers of the trillions of dollars of leveraged loans that have been made that could go bad at any time.
Hundreds of companies received the loans even though they were already highly leveraged with large amounts of debt. The risk of default is extremely high.
The reason the loans were made is that Goldman Sachs, Wells Fargo, JP Morgan Chase, Bank of America and other financial companies have earned huge fees from making them.
If the loans go bad, these Wall Street firms won’t be on the hook, since they have sold the debt to other companies. And the risk of default is very high since the loans won’t be repaid if the economy slows down or if interest rates go up.
“This means that the next downturn that we have could be more serious and longer-lasting and more difficult to deal with than it would have been if we had constrained these practices,” former Federal Reserve chair Janet L. Yellen told the Post.
After Trump was elected new regulators came into the government anxious to ‘strip away post-crisis financial rules and find ways to juice the economy by encouraging more lending.”
And the new regulators all came from Wall Street, where they maintained close ties. Their actions were taken to benefit their Wall Street firms, not the American people.
According to the Post:
“By freeing banks to make more of these loans, regulators allowed more money to be pumped into the economy. White House officials believe this helped achieve President Trump’s goal of growing the economy faster in the first half of his term.”
Donald Trump and Republicans in Congress have sold out America’s people to the sharks on Wall Street. When things go bad, the Wall Street firms are protected. They’ve already made their huge profits, and they have made sure the risk has been spread around to other people.
There is growing concern in Washington now that it won’t take much for the economy to be plunged into a severe recession due to the large amount of high-risk loans which the Trump people allowed to be made.
This is one more reason to make sure that Donald Trump is a one-term president. We need to restore stability to America’s economy again by getting rid of the people in Washington who have been serving the interests of predators on Wall Street.
I am a lifelong Democrat with a passion for social justice and progressive issues. I have degrees in writing, economics and law from the University of Iowa.
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