Unfortunately, the Trump administration is tearing away every layer of protection that was designed for the next economic crash.
Unions, religious groups, and community organizations in Chicago rally outside the conference of the American Bankers Association, demanding that the big banks and Wall Street firms stop lobbying against financial reform in 2009.
Nov. 30, 2025, 6:00 AM EST By Julie Siegel
The next shock to our economy can come from anywhere. In the last twenty years, one major economic crisis started with a deadly virus, while the other started with bad mortgages. Since it’s impossible to predict or totally eliminate these risks, the best protection we have is to ensure our economic infrastructure – specifically our financial institutions – is strong enough to survive whatever threat comes next.
Unfortunately, the Trump administration is tearing away every layer of protection that were designed to fortify those institutions, leaving them, and our economy, vulnerable.
The first set of protections being gutted are the rules set by government agencies to keep banks, and the financial system, safe. Some of the most significant of these rules are the limits on the amount of debt banks can use to fund their risky bets, forcing them to put up some of their own money. These “capital requirements” are the difference between banks’ survival and failure, requiring taxpayers to bail them out. The requirements were strengthened after the 2008 financial crisis, and helped banks weather the storm of Covid.
Nearly all of these limits are being undone. Regulators are gutting the capital requirements that are sensitive to the riskiness of banks’ businesses, the ones that are risk-neutral, the ones determined by banks’ performance in annual stress tests, and the ones that require additional protection for the “too big to fail” banks. This wholesale deregulation will allow banks to load up on more debt and have less of their own money available to absorb losses when their investments go south. (read full article)
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