The push to let loose even more gambling by Wall Street and the big banks gets a boost with an important nomination.
French statesman Talleyrand supposedly said of the restored Bourbon dynasty, “They had learned nothing and forgotten nothing.” The same is true of Republicans, who have total control of national economic policy. Besides tax cuts for the rich and corporations, the party is all-in on deregulation, no matter the uneven, sometimes catastrophic, results.
Thus, less than a decade after the worst financial panic since the eve of the Great Depression, one caused by a reckless Wall Street and banking system operating under deregulation, President Donald Trump and the GOP-controlled Congress are determined to roll back regulation. There’s more: The administration on Monday said it would nominate Randal Quarles to a seat on the Federal Reserve Board of Governors overseeing banking regulation.
Quarles worked in the George W. Bush Treasury Department as undersecretary of domestic finance. That should be self-disqualifying out of shame. But Quarles never expressed any second thoughts about how the repeal of Glass-Steagall (under President Bill Clinton) and the wild risks of the 2000s bubble thanks to industry-captured regulators were prime drivers of the collapse.
Quite the contrary. He’s been a critic of the Dodd-Frank Act, a modest reining in of the financial sector — many of whose provisions were never made into rules or were damped down by bank lobbyists. He opposes the Volcker Rule, which would tighten risky proprietary derivatives. As for the Fed, he thought it kept interest rates too low for too long (My translation: To heck with creating jobs, the low rates were hurting bank profits). He defends the too-big-to-fail banks.
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Quarles also comes out of private equity, as head of Cynosure Group and formerly a partner in the huge Carlyle Group. What could possibly go wrong with him in such a position of power? The Fed is independent — it would be less so if many in Congress had their way — but we were fortunate to have a central bank led by pragmatists during the 2008 crisis. We might not be that lucky next time.
Today’s Econ Haiku:
Stick it to the rich!
But you want a pothole filled?
A poke in the eye!