Janet Yellen’s term as head of the Federal Reserve Board will soon end and President Trump will select a new leader. There are six other Federal Reserve Board positions that President Trump may have an opportunity to appoint, according to an article by John Mauldin writing for Forbes. Mauldin seems to think that Trump would prefer a less dovish Fed. I would wish for a bigger change than that.
Bank deregulation got going during the Carter Administration and continued until Glass Steagall was repealed during the Clinton Era. Deregulation has led to innovations like derivatives and financialization that benefit large capital holders. Meanwhile the rest of the economy continues to decline in prosperity. Many small businesses have gone under. Hopelessness abounds and is shown by the opioid crisis and mass shootings.
I would like President Trump to shrink the size of banks. He should also increase their solvency by requiring them to hold more capital in reserve. Since the Greenspan Put, the Federal Reserve has promised to shore up banks with tax payer monies in the case of a collapse like the Sub Prime Mortgage Crisis. Greenspan’s promise became a subsidy for bank failure and it should end. Glass Steagall was part of the FDIC era and separation of investment banking and commercial banking was another crucial part of it. According to Dodd Frank, Americans savings can now be used to bail in failing banks (those Americans would lose their savings). So much for FDIC insurance. Glass Steagall should be reinstated with meaningful depositor insurance.
The amount of uncertainty that all Americans now are exposed to continues to harm everyday people. Ninety five million people are out of work in the U.S.. Isn’t it time to realize that deregulation in most areas of our economy has created new harms? Isn’t it time to stop white-collar fraud in banking and money laundering? Isn’t it time to stop monopoly banking and Too Big to Fail Banks? Isn’t it time to use new appointments on the Federal Reserve Board to institute widespread banking regulatory changes that would recapture economic opportunities for more Americans that hold small amounts of capital that they use to raise their families and prepare for retirement?
I heard someone on the radio blaming Americans for the state of the nation. He thought that people who don’t care about political outcomes cause bad outcomes. But most Americans aren’t charged with oversight of American Banking the way that the federal government is. Because of that, I don’t blame everyday people for our economic woes. I blame Congress’s penchant for deregulation. I’m calling for a change of seas in federal banking regulation that would restore security to American banking.
If you’d like to learn about neoliberalism and how it affects American politics today including the state of our economy, buy a copy of Political Catsup with Economy Fries at Amazon.com. It will explain our banking woes and the nature of derivatives and financialization. Those are essential topics for all Americans.
John Mauldin, “Trump Could Get Seven Appointments to the Fed,” Forbes, Dec 22, 2016, http://www.forbes.com/sites/johnmauldin/2016/12/22/trump-could-get-seven-appointments-to-the-fed/#29cc79f339d7, accessed 8 Nov 2017.
Anat Admati and Martin Hellwig, The Bankers New Clothes: What’s Wrong with Banking and What to Do About It,” Princeton University Press, New Jersey, 2013.