Why Trump Wants to Make Banks Risky Again

Why Trump Wants to Make Banks Risky Again

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70% of Americans
say it’s “very important” to regulate banks to keep consumers safe. But deregulation is a huge part of President
Trump’s agenda. He’s already made steps to eliminate Dodd-Frank, the Obama era law that tried to reign in the banks after the 2008 financial crisis. You have regulations that are horrendous. So we’re going to do a very major haircut on Dodd-Frank. So what exactly is Dodd-Frank and what does
it do? The goal of Dodd Frank is to curb the practices that caused the financial crisis. Before the recession, banks realized that mortgages could be a huge money-maker. So they made it really easy to get one, even for people who were at high risk of being unable to repay. Many defaulted and the banks foreclosed on
their homes. Dodd-Frank set out to make mortgages safer. It implemented new rules that forced banks to only make loans to people who could prove they were able to repay them. And it some ways it’s worked. Foreclosures are way down. At the height of the financial crisis, more than 1 million people lost their homes to foreclosure in a single year. Last year, fewer than 400,000 homes entered
foreclosure. But the financial crisis wasn’t only caused by people unable to payback their loans. Banks were also using customer’s money to bet on high-risk investments. So Dodd-Frank also tries to stop banks from doing things that could make them lots of money but weren’t in the best interest of their clients. One of the most controversial parts of the law is what’s known as the Volcker rule, which basically tries to stop the bank from using the money it received from your deposits to take risky bets that could increase its
own bottom line. Here’s a simple way of thinking about it: when you put your money in the bank, a bank can pretty much do whatever it wants with it. But the catch is that your money is protected by a government agency that insures American’s deposits. Bank insurance works like many other forms of insurance. They’ll cover you for a genuine accident, like your house burning down because
you left a candle lit, but not if you were knowingly reckless and threw lit matches on
the floor, then walked away. In finance terms, investing in a hedge-fund can be a little like playing with fire. And the Volcker rule makes it so banks can’t make high-risk bets with people’s money. On the surface, these changes seem sensible and a good fix. But a lot of critics say that this new regulation makes banking inefficient and bad for consumers. Trump campaigned on this. We have to get rid of Dodd-Frank. The banks aren’t loaning money to people
that need it. He’s not totally wrong. Since Dodd-Frank requires banks to be much pickier in who they give loans to, things like mortgages and small business loans are much easier to get if you’re already wealthy and have a solid credit score. So, while we have fewer foreclosures, homeownership
is also its lowest level in decades. Another issue is that small banks complain that they can’t survive with all of the regulations. Complying with the hundreds of new laws, means a lot more work and sometimes hiring more people. This is one of Bernie Sanders’ big problems
with Dodd-Frank: It helped the big banks stay in business, who then eat up the small ones. Banks have been consolidating for years, but Dodd-Frank hasn’t really stopped them from becoming “too-big-to-fail.” The number of commercial banks has declined
by 30% since 2008. Republicans say that banks are simply over-regulated. Dodd-Frank is impeding economic growth. It’s keeping people in poverty. It’s keeping the middle-income people trapped. But the data shows something different. Yes, there are issues with loans and consolidation, but big banks have also been really profitable over the past few years. And the stock market has grown more than 200 times since it’s low point in 2009, one of the largest sustained periods of growth
in modern history. Democrats believe that if they let the banks self-regulate, we’ll end up with another financial crisis, or at the very least, a banking system that can hurt the American people. These aren’t just political debates. The rules we make for banks have real consequences for America’s wallets. This is Unpresidented. A weekly series where Atlantic writers explore what’s happening in this new era of American politics. Let us know what topics you want us to tackle next. I’m Gillian White, and thanks for watching.

33 thoughts on “Why Trump Wants to Make Banks Risky Again

  • Marlon Moncrieffe Post author

    This host is mad pretty!

  • Antonio Diaz Post author

    Great video! Do student loans next!

  • Julian Belkin Post author

    Great presentation!

  • DougOfTheAntarctic Post author

    At 3:24
    The stock market has more than doubled, so it's up over 100%, not 200 times!

  • Teethgrinder 83 Post author

    The thing is it doesn't only effect Americans-if American banks fail and there is circumstances similar to 2008 then it sends shockwaves all over the world so there needs to be decent regulations to safeguard against this. I'm not saying Dodd-Frank is the solution as I don't know all the in's and out's of it but the fact that parts of both parties aren't satisfied with it then that tells me there are issues with Dodd-Frank,but one thing I'm convinced is NOT a good idea is de-regulation,just better regulation

  • Rick Apocalypse Post author

    The end music reminded me Baeb, the porn site.

  • Benjamin Rosen Post author

    clearly the number of foreclosures the year of the second greatest financial crisis in history is going to be higher than a year of economic expansion. that comparison was illustrative of nothing. all the evidence in this video is completely circumstantial. you give a strong opinion, one which i'm not opposed to, but support it very weakly! i am normally impressed with the Atlantic because of the academic nature and depth of its analysis, this video is the opposite.

  • S.G. Post author

    The Dow Jones Industrial average rose from ~7,000 pts on 2/1/2009 to ~21,000 as of 5/1/2017 – a 3x increase, not 200 times. There may be another metric the Atlantic is referring to in the video, but it's misleading when paired with the graph.

    Also, the Dow Jones Industrial Average is a limited proxy for the entire stock market. I would have gone with the S&P500. It's simply a more comprehensive index. As a side note, it too has increased 3x over the same period (from a low of ~800pts on 1/1/2009 to ~2,400 pts as of 7/13/2017).

    Source: Yahoo Finance (not CNN)


  • ownedpked Post author

    Stocks are up 200% not 200 times.

  • TheGodfather441 Post author

    end the federal reserve and all of this goes away

  • Steven Alibaster Post author

    The Atlantic is nothing more than propaganda.

  • Kip Andrew Post author

    Awesome video! I love this series!
    Do a video on Healthcare or student loans or federal reserve or some other bills that are set to go through congress that aren't widely known.

  • Leicester Blackthorne Post author

    Quit fu7cking lying. It wasn't the banks that wanted to give home loans to unqualified buyers, it was the O'bambi administration that forced banks to give loans to unqualified minorities just so they could keep their business licenses.

  • Steven Song Post author

    3:41 – 3:47
    Damn right!

  • Beau Post author

    this is what will happen.. they will get Rid of Dodd-Frank, because the Banking industry gave them a lot of money to do so.. then, banks will carry on the same practices it was doing before the GFC, then in about 6-10 years time, there will be another collapse, MILLIONS of Americans will be left homeless and broke, the banks will get another bailout, bankers will still get there bonus'.. the government will put in place regulations making it harder for banks to do the things they did, BUT will ultimately not punish said banks (I.E. no one will go to jail) and it will go round and round and the people will get screwed, the politicians wont give a fuck because its not their money and the bankers will continue making money hand over fist and NOTHING will really change until the people have a proper revolution.

  • Michael Drum Post author

    Nice job! Talk about Felix Saters email to Michael Cohen about getting Putin to elect Trump

  • viajero288 Post author

    Well thanks to the 12 Democrats who voted for this now this is a reality!

  • Grace Semersky Post author

    End the federal reserve that would solve the problem

  • Jon dow Post author


  • Rob F Post author

    200% not 200 times.

  • jocelyn corwin Post author

    I lost my commercial business because of the banking. Big banks would not touch me . Then my small bank was closed down and its assets sold to Ozarks, friends of the Clinton’s and Obama’s. My interest rate was raised to 11% interest I had to renegotiate mortgage every 1 year with 25 % down. I went without a wage for years so I could pay down my mortgage. I brought it down from over 700 thousand $ down two 280 thousand. I got to the part where I could not afford 25% so I told ozarks could not pay any more. So they drained my bank account. I did a deed en leu. Ozarks would not work with me but they took over 10,000 from my bank account, charged me over 10,000 for a deaden lu. Then sold my building for 180 thousand $….. this what mr Obama did. They stolen my savings and property. The good people of this country were taking to the cleaners.

  • Opinunate ted Post author

    Clinton already weakened Dodd-Frank, which is why we had the great recession of 2008.

  • MessHallProd Post author

    Dodd Frank took away my Line of Credit. We were not high risk, always paid it back, and it hurt and now we struggle along like the rest of the middle class…. trying to hang on.

  • Mujtahid Haque Post author

    I can't buy a house because of Dodd-Frank. I'm a self employed Uber driver and I make more than enough to afford the mortgage on a $50k house. I don't even come close to fulfilling the income requirements.

  • Rahul Jain Post author

    Hey cutee.. its 200 percent not times !!

  • sidharth chand Post author

    Do bank bail ins next, legal theft

  • dinosauria Post author

    watch bank 101 on channel positive money, we' re screwed

  • Evie Courtlandt Post author

    What she leaves out is that the financial crisis happened PRINCIPALLY because in 1999 Congress allowed commercial bank money to be used for investment banks, and the Völker rule DIDN’T solve that. Many investment banks failed before 1999 and it didn’t matter! Now if they fail, because Glass-Steagall was repealed in 1999, the whole system fails. The FDIC only has $50 billion to insure $4 trillion in deposits, and Dodd-Frank legalized a BAIL-IN next time. So despite giving the banks 4 trillion for free, and the banks NOT using it to give small business loans or mortgages, they will next get to keep OUR DEPOSITS to save their banks next time, like in Cyprus, and have expressly our derivatives (tens of trillions) OVER our deposits. As they say, fool me once, shame on me, fool me twice…

  • Seth Reeves Post author

    cough Glass-Steagall cough

  • Troy Body Post author

    Man! She's cute!

  • Nate Frydrych Post author

    The 2008 Housing Crisis had way more fault on the government than anyone else.

  • danceballetacro Post author

    excellent video

  • Pun Jab I Post author

    Only losers and retards think Dodd Frank "regulated" banks. Obama loving retards know nothing.

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