Politics

2008 Financial Crisis Likely to Repeat As Republicans Sneak Through Risky Reforms

The Republicans’ latest policy proposal is likely to send the United States into another historic financial crisis like the one we saw in 2008.

The GOP-controlled U.S. House passed a massive bill this week to wipe out thousands of pages of financial regulations that are meant to protect the U.S. economy and consumers. This may be one of the biggest Wall Street handouts in American history.

Under the GOP plan, the biggest banks in the country would be freed up from the constraints of regulations, and therefore they’ll be able to engage in risky lending and investing behaviors that put the American economy at risk.

The Washington Post reports:

The House on Thursday voted to free Wall Street from many of the strict constraints put in place after the 2008 financial crisis, the opening salvo in what is likely to be a protracted battle over deregulation of the powerful banking industry.

Big banks, from Goldman Sachs to Bank of America, would face less scrutiny and other large financial institutions, such as insurance giant MetLife, could escape tougher rules all together under the legislation approved along party lines.

The Trump administration backed the bill as part of a multi-pronged effort to ease banking regulations in order to spur economic growth. The legislation is likely to face stiff resistance in the Senate but it provides a roadmap of sorts for the policies the president plans to put in place as he appoints new regulators. Trump, who has complained about tight lending practices, has ordered three reviews of banking rules, the first of which Treasury Secretary Steven Mnuchin is set to deliver as soon as next week.

The regulations that are under attack right now by Republicans were put in place in response to the 2008 financial crisis, which threatened the foundation of the American economy. Policymakers and economic experts designed the regulations back then in order to protect against a similar catastrophe.

If the Republicans do succeed in dismantling those regulations, America could be in for big trouble.

Read more, from the Washington Post:

Trump has said bank regulators went too far after the financial crisis in cracking down on lending practices, creating an environment that has made it hard for businesses and consumers to get loans. If banks can lend more money, it would help the economy grow and create more jobs, the White House has said. Trump has also ordered three reviews of banking rules, the first of which Treasury Secretary Steven Mnuchin is scheduled to deliver this month.

…¬†Democrats have pushed back against this idea, though, saying the banking industry needs more oversight, not less. The Financial Choice Act would allow the conditions for the next financial crisis to fester, Democrats say, noting that American banks earned record profits last year despite government regulations.

Bad idea, Republicans!

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