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  February 1, 2017

Trump Set to Rollback Financial Regulation Passed After the 2008 Crisis

The Democrats have refused to challenge Clinton and Bush-era deregulation and explain the causes of the financial crisis to the public, says former financial regulator Bill Black
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William K. Black, author of The Best Way to Rob a Bank is to Own One, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics.

Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement.

Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.


SHARMINI PERIES: The first major piece of regulations to be on the chopping block is, of course, the Dodd-Frank financial sector regulations that were passed following the financial crisis of 2008. Joining us now to take a closer look at these regulations and what might get chopped is Bill Black. Bill is Associate Professor of Economics and Law at the University of Missouri - Kansas City. He's a white-collar criminologist and a former financial regulator and the author of "The Best Way to Rob a Bank is to Own One." Thanks again for joining us, Bill.

BILL BLACK: Thank you.

SHARMINI PERIES: And this is a good way for what's next on the chopping block, the Dodd-Frank financial regulations. So, tell us more about what you think will happen.

BILL BLACK: Yeah. This was a really sad part. We knew it was coming. This supposed populist who ran against big banks, against Goldman Sachs, has of course, appointed all these top people in finance. That's who he's listening to, not small business people. And so he said that Dodd-Frank has been disastrous, which is hilarious -- you know, bank profits are high, their capital levels are much higher, it's just ridiculous -- and said, we're really going to do a number on that. And Mnuchin has said that he's going to go after the Volcker Rule.

But, of course, this is an area where the new Democrats have neutered themselves because, if you recall, Hillary Clinton supported by Paul Krugman said, "No, no, no. Don't bring back Glass-Steagall."

Well, think how much shorter Dodd-Frank could have been if it had done intelligent things like the following: "The act repealing Glass-Steagall is hereby repealed. The interpretive rules as of 1965 are hereby reinstated 180 days after the effective date of this statute." That removes about 350 pages of statutes and about 2,000 pages of Volcker regulations and interpretations. And, "The Commodities Future Modernization Act is repealed" -- that would have saved, again, 120 pages of statute perhaps and 600 pages of regulation.

So, because Obama and the new Democrats lacked the courage to actually unwind the Clinton Era and Bush Era deregulation. And because they never created an understanding in the populace of what caused the crisis, which was these three epidemics of elite fraud -- you could almost never hear the word fraud even uttered by the President or Hillary Clinton, right? -- there was nothing to push back against.

So, you don't have the population going, "Wait a minute, what is Trump and Mnuchin, you know, the Goldman folks doing? They're getting rid of the rules that weren't anywhere near as tough as the rules we had 60 years ago that industry blew through the holes in. And you know, they're going to produce the next crisis."

I mean, Hillary was telling us, "No, no, no. We don't need these rules." Paul Krugman was saying, "No, no, no. We don't need these rules." It's just kind of, sort of risk.

So, you can expect that they will chop away what other things. Just astonishing that they are putting in print that they intend to get rid of is the Securities and Exchange Act regulation that anti-corruption people like me have been calling for, for decades -- and it was finally put in place. And what it did, it's all it required, is if you were, say, Exxon you had to tell publicly how much you were paying to the government of Nigeria for your rights to extract oil.

And, of course, this is an enormous benefit in anti-corruption because then you can say, "Wait a minute! We know there are $27 billion coming in" -- I made up that number but you know, it's numbers like that – "to the government. Let's make sure it actually comes to the people. Now that we know how big the number is, we can track it."

So, this is something that causes no expense. You literally have to add a sentence to your annual report -- a sentence -- and is something that anti-corruption experts have been calling for forever. The US has been leading this effort for 20 years to get people to do this. We haven't led very well but, you know, we were the leader. We finally get it done and this thing which can only help the corrupt, this elimination, that's the sole thing it can do -- that's their priority at the Security and Exchange Commission. That's how corrupt these people are.

What you have to understand is people like Trump and the people he's put in his cabinet hate the rule of law. The rule of law is the only thing that can bring them down. And throughout their careers they've been able to simply cut through the law with impunity because of their political contributions, because of their $750-an-hour lawyers and such. And those are the people, and that is the mentality that is in power now.

SHARMINI PERIES: Bill, we are going to continue this discussion because what's coming up in terms of regulation is even more concerning in other areas, for example, the Consumer Financial Protection Board and so forth. But we're going to take that up in our next segment. Thanks for joining us for now, Bill.

BILL BLACK: Thank you.

SHARMINI PERIES: And thank you for joining us here on The Real News Network.




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