Wall Street’s Deregulation Agenda Will Cost Everyday Americans Everything

Yves here. I might put the headline differently, “Wall Street’s Deregulation has cost everyday Americans everything, and more will make it worse.” As we and many many others chronicled at extreme length, the global financial crisis was the direct result of deregulation, not just in the US but also abroad. It resulted in the greatest transfer from the public purse, in this case to the financiers who nearly blew the world up for fun and profit.

The answer was not to institute tough reforms, as happened during the Great Depression, but to patch up the machinery as much as possible and not even hold anyone responsible to account. The result was millions of preventable foreclosures, and a further concentration of wealth at the top due to a protracted period of asset-price-goosing, incentive-distorting super low interest rates. The odds of becoming a billionaire are twice as high if you are in asset management as in tech.

And that further concentration in the top 1% and even moreso in the top 0.1% has been massively corrupting.

By Samuel Molina, the founding CEO of the Academy of Financial Education. Originally published at Common Dreams

If Californians have a financial dream these days, it’s probably the modest goal of getting by, paycheck to paycheck. A more ambitious goal may be buying a house or building an emergency savings fund. But to a great degree these days, that dream is going to depend on decisions made by elected officials in Sacramento and Washington DC.

At the Academy of Financial Education, based in Fresno, California, we work with everyday people who are not only trying to get by, but are seeking long-term financial stability for their families. People like Aline, a restaurant consultant in the Bay Area, balancing budgets for her family and her business. Or Sara, who is working to increase her credit score and buy her first house.

A major impediment to their efforts is a financial system whose exploitative products flood their social media, TV, email inbox, and every other marketing channel. Buy now, pay later services are simply predatory loans in disguise, hiding the full cost of fees and charges associated with the service. And cryptocurrency, pitched as the next solution to our income woes, is barreling into our economy with little to no oversight.

Our own financial behaviors are intricately connected to the health and fairness of our financial system. The financial services industry, be it Wall Street or newfangled cryptocurrency peddlers, are using predatory and extractive practices that harm workers, families, and communities with impunity. Under their influence, the Trump administration has gutted key financial regulators, eliminated services and protections, and eviscerated oversight and enforcement, setting people up for financial harm. It is ready to allow cryptocurrency into 401k portfolios, putting secure retirements at risk.

The current administration has dismantled the Consumer Financial Protection Bureau (CFPB), one of the best financial advocates we have in the government. Since the start of this administration, CFPB staff have been fired, ordered to stop working on enforcement actions, and drop legal challenges to financial institutions that are causing people harm. Now hamstrung by funding cuts passed by the Republican Congress as well, it is unable to operate properly.

Congress created the CFPB after the 2008 financial crisis, itself a product of negligent financial institutions. Since then, the CFPB has returned $21 billion to 200 million people through its enforcement actions and saved tens of billions more by implementing commonsense safeguards. Safeguards including a cap on overdraft fees, removing medical debt from credit reports, and regulating tech companies providing shiny new financial products. In the seven months since the Trump administration arrived, its actions have cost consumers $18 billion.

A financial marketplace without the CFPB is an open playground for Wall Street, big banks, and tech companies to profit off you and me—without a single guardrail. Companies like Elon Musk’s PayPal, which almost came under supervision by the CFPB until the Republican Congress rolled back that plan.

The newest industry on the block is crypto. Crypto companies claim they provide financial opportunity, flexibility, and freedom, but we know this is a lie. In California alone, crypto scams run rampant enough that the Department of Financial Protection and Innovation (DFPI) has a running list of them. New legislation in the US Senate aims to all but exempt the majority of crypto platforms and digital assets from meaningful oversight. Cryptocurrency is on the verge of becoming an even more predatory and scammy activity.

The losses of financial protection and oversight make it harder for nonprofit organizations like mine, focused on financial empowerment, to help our clients and community with budgeting, credit scores, planning, and more because we do not—cannot—work in a vacuum. Dismantling the CFPB and allowing crypto to run unchecked creates new obstacles, vulnerabilities, and distractions for our clients, disrupting their ability to plan for the future and pursue their goals. They will be more likely to experience financial loss and unnecessary suffering, and they won’t have a government advocate like the CFPB to rely on.

We need our whole government watching out for working people, not big banks and tech companies. Costs continue to rise and new scams plague the financial marketplace—from predatory buy-now-pay-later loans to shady crypto scams. By deregulating our financial system and dismantling critical allies like the CFPB, our elected officials are leaving everyday Americans holding the bag.