Page 113 - TrumpsEconEra_Flat

Trump’s Economic Era

through stress tests every two years instead of every
year and repeals the Volcker Rule. I discuss the Volcker
Rule in Chapter 5: The Fed on Steroids.

The panel’s chairman, Representative Jeb Hen-
sarling stated, “Our plan replaces Dodd-Frank growth-
strangling regulations on small banks and credit unions
with reforms that expand access to capital so small
businesses on Main Street can grow and create jobs.”
The Senate is preparing to scale back the banking
regulations passed by the Dodd-Frank Law and the
House passed a bill to repeal the law. The lack of the
rule of law principles, the arbitrary and opaque
decision-making process by a few officials with near-
absolute authority, and the emphasis on politics over
economics has stifled growth. Small start-up
businesses, the lifeblood of the American economy,
have been adversely affected by the demise of local
banks.
The dynamic effect of these laws generates a
moral hazard and distorts the behavior of market
participants in a way that contradicts the principles of
free and open markets while favoring only the largest
financial institutions. Meanwhile, these laws allow the
American consumer with fewer choices, higher costs,
more paperwork when applying for a loan, and liable
for a financial collapse. According to the Federal
Reserve Bank of Richmond, the federal government
backs 60 percent of the liabilities in America’s financial
markets in one way or another. These changes are
leading to a concentration of power; they are trading
economic growth for perceived security and making the
U.S. economy less vibrant.

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