New Amendment Strips Regulations Giving Banks Freedom To Risk Your Money

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Published on 4 Jul 2020, 18:00
Via America's Lawyer: RT Correspondent Brigida Santos joins Mike Papantonio to explain how amendments to the Volcker Rule will allow big banks to resume the kind of risky investments which led to the 2008 financial crash.

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*This transcript was generated by a third-party transcription software company, so please excuse any typos.

Bank stocks are surging now that the federal reserve and other regulators have finalized an amendment to the Volcker rule, the rule was implemented in the aftermath of the 2008 financial disaster to protect bank customers. RT's Brigida Santos joins me now to talk about that story. Brigida, this is deja VU, right? I mean, you know, did we not learn anything? Have people forgotten that the banks led us to the edge of the abyss and right into the center of the abyss. For those who don't remember what the Volcker rule, Volcker rule is, tell us about it.
Well, the Volcker rule was approved in 2013 to prevent banks from engaging in risky investments with their own funds, which is what led to the 2007, 2008 global financial crisis. It also barred banks from sponsoring or owning hedge funds and private equity firms. The rule can also be found under section 619 of the Dodd-Frank wall street reform and consumer protection act, which imposed comprehensive regulations on financial markets and established new government agencies, including the consumer financial protection bureau. But under president Trump, Dodd-Frank regulations have been slowly rolled back over claims that they make the US less competitive than their foreign counterparts.
Okay. So here we have a situation where we know, we've already seen the history. We've seen what happens when banks are allowed to go to Vegas. That's the term. They, they go to Las Vegas. Basically they go to Las Vegas with, with taxpayer money, because we have to bail them out, right? They go to Vegas with mom and pop money who have everything counting on that bank doing, you know, being able to stay alive. And so they, they simply take these risks because of one reason, people at the top management want to make as much money as they can and to hell with everybody else. That's their, that's their attitude. So the Volcker rule is put there to fix it. How might this new amendment impact the public, Brigida?
Well, the banks and the people with a lot to gain on wall street are going to see this as a win. They love it, while critics down on main street see these rollbacks as more evidence that the US is a plutocracy. You know, average and poor Americans are still struggling with the consequences of an unprecedented economic crisis due to the COVID-19 pandemic. Meanwhile, the rich keep getting richer because they have better lobbyists. Wall street interests have long sought to weaken the Volcker rule and when these changes take effect on October 1st, it's going to be a lot easier for banks to make risky investments in venture capital funds that don't benefit customers, yet generate profits for themselves. Without oversight, as you said, history could absolutely repeat itself since these activities are what led to the crash of 2008, which let me remind you was the worst economic disaster since 1929. This decision could jeopardize the entire financial system, which is already teetering on the edge due to the economic consequences of the pandemic. As you said, they're going to the casino, but unfortunately they are the house. So it's not great for everybody else, but it's great for them.
Yeah, so the, the, the federal reserve has purchased corporate debt for the first time. This is very significant. They purchased corporate debt for the first time ever as part of the response to the coronavirus. And, and you can't avoid the question and, and if you're in the market, you need to take the very seriously. Is this the next bubble? Do we have these, do we have these same thuggish predator bankers looking for a quick fix?

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