Maybe you remember this scene early on in Arrested Development’s first season. Michael Bluth opens his refrigerator, finds a bag marked “Dead Dove, Do Not Eat!”, opens it, flinches and says, “Well, I don’t know what I expected.” When I read about President Trump’s first move to rip Dodd-Frank and other financial crisis legislation to shreds, I reacted the same way.
The president exists in a weird plane of reality. Each new insane action of his is equally shocking and unsurprising. He is the dove in Michael Bluth’s bag: a promise too absurd to be kept being kept. Trump’s brown-paper bag would probably be labeled: Crazy, Corrupt Billionaire, Do Not Elect. In these last few weeks, we’ve all been so caught up in his craziness that it’s been a little harder to pay attention to his corruption.
Most of the headlines on this “Dodd-Frank” order are clickbait. When I read the actual text, it was a letdown. For a predictably chaotic person, his actions here were unpredictably mundane. The order in question is a paper tiger and a defanged one at that. After outlining several of the most benign and innocuous regulatory ideas anyone with a brainstem could dream up, all he really requests is a report from the Secretary of the Treasury as to how we can better proceed in the future.
The order itself is something you would see coming out of the Oval Office no matter who was our President or Secretary of the Treasury. The issue is, of course, Donald Trump is the President and Steven Mnuchin is the Secretary of the Treasury. That makes all the difference in the world.
Trump spent a decent amount of time on the campaign trail trying out a Diet Bernie Sanders impersonation when it came to Wall Street. His own rhetoric was never quite as damning but, especially early on, he tapped into the rage left over from the bailouts and crises that ushered us into our current decade. Even now, it seems like the folks at our financial center have conflicting views on how Trump will turn out for them overall. He’s solicited a fair amount of praise and concern.
Most sane people questioned Trump’s “Screw Wall Street, I’m for the people” rhetoric. This turned out to be a fair critique—aren’t they all?—once he started appointing people to his administration. As of now, he’s hired six former Goldman Sachs bankers, a Wall Street lawyer to run the SEC and a distressed assets investor to run Commerce. All of this is just the tip of the iceberg. The reason everyone thinks Trump’s boring order is due to sink our Titanic of banking regulations—Dodd-Frank—is because said iceberg is chartering a course for it under Mnuchin’s guidance.
Steven Mnuchin’s bank OneWest became known as a Foreclosure Machine during the financial crisis. Mnuchin himself is known as the Foreclosure King but His Majesty doesn’t like the title. One story dogging him in particular is the one where his bank foreclosed on an elderly woman’s home despite her only owing them 27 cents. Here’s hoping a dead business partner will tell him he’ll be visited by three ghosts come Christmas 2017. He blames all this on HUD’s regulations but, luckily, this sort of thing won’t be happening anymore now that a supremely qualified person is in charge of that department. Totally unrelated: he was also Trump’s top fundraiser.
After Democrats boycotted his hearing, Mnuchin was sent to the final round of his confirmation by a 14-0 Republican vote. He’s already made a stir claiming Dodd-Frank is heading to the dicing board, if not the chopping block, soon. He and most of his friends in the banking and Republican communities say the act made it too hard to lend and keep capital flowing. It has made it harder for banks to lend—no one denies this—but whether that’s a good or a bad thing is the real issue here. At the same time, it hasn’t made lending that much harder to begin with.
When Trump asks for a report back from this Treasury Secretary, it’s very easy to guess what the report will entail. It will call for dismantlement of government oversight committees and regulatory legislation. It will suggest freeing up Wall Street to start lending in less-than-savory ways again. It will present a full measure surge to the right economically where Dodd-Frank was a half measure shift to the left.
It’s not to say Dodd-Frank wasn’t a sweeping overhaul. It’s sort of the Obamacare of financial reforms: something so bloated and bureaucratic it ironically made its conservative critics cry for communist blood and its begrudging appraisers bemoan its centrism. It’s a pain in the ass for bankers and Bolsheviks alike, too much of an impediment for the right and too little of one for the left.
Within 120 days, President Trump will get a report with Steven Mnuchin’s signature on it. After this, his toothless executive order will grow fangs and a host of laws and acts we should try to make better will be torn to shreds. With Dodd-Frank, we the people are only a little better off. Without it, let’s just say it’s likely a newer, angrier Occupy movement is in our near future.
Well, I don’t know what I expected.