By David Treece
It takes an astute eye to keep up with what’s going on politically these days. President Donald Trump stated in his weekly address that House has passed an Obamacare repeal. Well, that’s partly the case.
Mark Sanford, a Congressman from South Carolina stated, “Many Republicans will claim this bill eliminates the Affordable Care Act. These may be good talking points, but it’s not so accurate. It eliminates some portions of the Affordable Care Act and leaves other portions standing.” The reason the “repeal” bill passed the House is because it cut taxes and eliminates penalties. While this is noble, calling it a repeal isn’t quite precise. Next the bill goes to the Senate for consideration and is likely to ultimately look nothing like the House bill.
Arguably the worst piece of legislation of Obama’s tenure, the Dodd-Frank Wall Street Reform and Consumer Protection Act, has stifled the economy. A Congressional House committee passed a bill to overhaul Dodd-Frank. In 2010 Congress passed the Dodd-Frank legislation, which mandates that there will be bank bail-ins instead of bank bailouts.
Meaning, depositor money will be used to stabilize the bank should the need arise. Remember 2008? Banks were sinking and our tax-dollars were used to stabilize it. Now your money in the bank will be used. It’s apparent that the FDIC would be unable to payout should the need arise. It’s broke.
Not to mention that money saved in a bank is not keeping up with inflation. With interest rates being artificially low, there is no way for bank deposits to keep pace with inflation. It would be a wonderful thing if Dodd-Frank wasn’t just overhauled but it was repealed.
As we have explained previously, banks being able to leverage money to borrowers caused the stock market crash of 1929. The stock market was rising higher and higher, much like it has over the last few years, and banks capitalized on the climbing stock market. If you had ten dollars you could get a loan for a hundred dollars and if the market went up ten percent, you doubled your money. Sounds good, right? It did until these loans were called. These loans were called 24-hour call loans. If the bank asked for their money, within 24 hours the borrower had to pay the called loan. Of course, when people could not pay these loans off it caused the crash and as a result banks closed too.
In 1932 the Glass-Steagall Act was passed to prevent banks from lending money beyond what they actually had. Like government does, it created the problem all over again in 1999 when Alan Greenspan lobbied Congress to repeal Glass-Steagall. The Wall Street cartel is a powerful lobbying force in Washington, and it does not care if its actions cause you to be a retirement loser when the market crashes. The monster only cares about being fed our money, and it has an insatiable appetite that’s fed through investor greed.
The repeal of Glass-Steagall didn’t create an immediate problem. However, think about credit card debt… Most of us do not get in credit card debt with one big purchase. It’s little decisions here and there that add up to big consequences that often haunt us. The first manifestation of problems occurred in 2007 with the housing market crash, and then a year later the stock market crashed. Of course Bill Clinton never gets much blame for the 2008 crash, but he should.
President Trump seems to have good intentions but the problems he faces are greater and more severe than most people can or are willing to comprehend. Despite what you hear on cable news, we are living in uncertain times. We implore you not to get caught up in Wall Street greed or banking ignorance. Safely and securely put your money to work for you. That’s what we help people like you do.