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New Amendment Strips Regulations Giving Banks Freedom To Risk Your Money - YouTube
Channel: The Ring of Fire
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Bank stocks are surging now that the federal
reserve and other regulators have finalized
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an amendment to the Volcker rule, the rule
was implemented in the aftermath of the 2008
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financial disaster to protect bank customers.
RT's Brigida Santos joins me now to talk about
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that story. Brigida, this is deja VU, right?
I mean, you know, did we not learn anything?
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Have people forgotten that the banks led us
to the edge of the abyss and right into the
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center of the abyss. For those who don't remember
what the Volcker rule, Volcker rule is, tell
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us about it.
Well, the Volcker rule was approved in 2013
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to prevent banks from engaging in risky investments
with their own funds, which is what led to
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the 2007, 2008 global financial crisis. It
also barred banks from sponsoring or owning
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hedge funds and private equity firms. The
rule can also be found under section 619 of
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the Dodd-Frank wall street reform and consumer
protection act, which imposed comprehensive
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regulations on financial markets and established
new government agencies, including the consumer
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financial protection bureau. But under president
Trump, Dodd-Frank regulations have been slowly
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rolled back over claims that they make the
US less competitive than their foreign counterparts.
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Okay. So here we have a situation where we
know, we've already seen the history. We've
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seen what happens when banks are allowed to
go to Vegas. That's the term. They, they go
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to Las Vegas. Basically they go to Las Vegas
with, with taxpayer money, because we have
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to bail them out, right? They go to Vegas
with mom and pop money who have everything
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counting on that bank doing, you know, being
able to stay alive. And so they, they simply
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take these risks because of one reason, people
at the top management want to make as much
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money as they can and to hell with everybody
else. That's their, that's their attitude.
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So the Volcker rule is put there to fix it.
How might this new amendment impact the public,
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Brigida?
Well, the banks and the people with a lot
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to gain on wall street are going to see this
as a win. They love it, while critics down
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on main street see these rollbacks as more
evidence that the US is a plutocracy. You
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know, average and poor Americans are still
struggling with the consequences of an unprecedented
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economic crisis due to the COVID-19 pandemic.
Meanwhile, the rich keep getting richer because
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they have better lobbyists. Wall street interests
have long sought to weaken the Volcker rule
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and when these changes take effect on October
1st, it's going to be a lot easier for banks
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to make risky investments in venture capital
funds that don't benefit customers, yet generate
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profits for themselves. Without oversight,
as you said, history could absolutely repeat
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itself since these activities are what led
to the crash of 2008, which let me remind
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you was the worst economic disaster since
1929. This decision could jeopardize the entire
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financial system, which is already teetering
on the edge due to the economic consequences
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of the pandemic. As you said, they're going
to the casino, but unfortunately they are
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the house. So it's not great for everybody
else, but it's great for them.
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Yeah, so the, the, the federal reserve has
purchased corporate debt for the first time.
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This is very significant. They purchased corporate
debt for the first time ever as part of the
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response to the coronavirus. And, and you
can't avoid the question and, and if you're
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in the market, you need to take the very seriously.
Is this the next bubble? Do we have these,
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do we have these same thuggish predator bankers
looking for a quick fix? Where they make billions
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of dollars, build their mansions, buy their
yachts, buy their jets and then everything
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goes belly up and they don't, they don't go
to jail. They don't have to give anything
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back. Life as usual. What's your call?
Yeah. Companies have amassed record amounts
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of debt during the pandemic due to stay at
home and social distancing orders. The entire
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supply chain has been affected by this and
in response, the fed began buying individual
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corporate bonds and corporate bond ETFs aimed
at restoring liquidity to credit markets.
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Now the central bank says it plans to buy
debt from nearly 800 companies, while some
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of these businesses are absolutely struggling
due to the pandemic, others are not including
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Walmart, Coca-Cola, AT&T and McDonald's to
name a few. And prior to the pandemic in 2019,
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companies were already borrowing far more
money than they could ever pay back. In fact,
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last year, corporate debt hit nearly $10 trillion.
That's a record 47% of the economy. Now the
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fed is trying to clean up a mess that has
only gotten worse during the pandemic, but
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started a long time ago. And experts now worry
that if the fed keeps flooding the market
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with emergency bond purchases, the central
bank could end up creating the greatest financial
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bubble in history. And again, it's not going
to matter to them because they're going to
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get those bailouts.
You want to have some fun, go on the internet
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and check out how many billionaires were created
out of the 2008 burn down by banks by this,
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this corrupt conduct. They all were billionaires.
They left mom and pop out to dry, and then
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taxpayers had to end up paying for their jets
and their mansions and their yachts. But today
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nothing's changed. They live in those same
mansions. They drive those same, you know,
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jets. They drive the same yachts. Nothing
changed. Nobody went to prison. So, hey, what
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the heck, why not try it again? Brigida, thanks
for joining me. Okay.
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Thanks Mike.
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