Why do the intelligent, worldly, data-driven, risk-sensitive leaders of Wall Street tolerate and support a presidential administration led by a deranged, incompetent racist narcissist? Here’s why.
Because the Republican Party is a machine for serving the financial interests of the rich by tricking The Little People into voting against their own economic interests, is the short answer. The more specific answer is that the biggest banks in America see a golden opportunity to get out from under some of the (small amount of) pesky regulation imposed after the financial crisis to try to ensure they don’t do things like “crash the global economy” again.
The financial press these days is full of stern warnings that the bull market that has been making investors rich since 2009 is due to come to an end soon. The easy money has already been made. Banks are always looking for profits, but now that search has become more difficult and taken on a new urgency. And there is no quicker and easier way to boost profits than deregulation—tearing down rules that rein in the riskier practices of banks. Yes, it creates more systemic risk, but in America the banks know that the government will bail them out if worst comes to worst! Donald Trump is a racist maniac who smears Mexicans and jokes about nuclear war, but his Goldman Sachs hangers-on will deregulate Wall Street, and that is what Wall Street really cares about. Bloomberg today quantifies what’s at stake here if Republicans can maintain power long enough to execute:
The deregulation winds blowing through Washington could add $27 billion of gross profit at the six largest U.S. banks, lifting their annual pretax income by about 20 percent.
JPMorgan Chase & Co. and Morgan Stanley would benefit most from changes to post-crisis banking rules proposed by Donald Trump’s administration, with pretax profit jumping 22 percent, according to estimates by Bloomberg based on discussions with analysts and the banks’ own disclosures. Goldman Sachs Group Inc. would have the smallest percentage increase, about 16 percent.
To be clear, all of the deregulation we’re talking about would increase profits by making the activities of banks more risky. That is, more prone to meltdown in times of crisis. The current vice chair of the Federal Reserve said recently that these deregulation proposals are “extremely dangerous and extremely short-sighted.” But hey, the financial crisis was years ago, the stock market is booming now, and there is almost no amount of racism that Wall Street won’t tolerate for $27 billion.
So CEOs can gently needle Trump on Twitter or step down from his public business councils, but ultimately they will support his agenda, because that is where the profits lie. And if—like the majority of the nation—his agenda involves rolling over you, then you can mark down Wall Street in your enemies column. They do not like civil rights or workers rights or global peace or the environment more than they like $27 billion.
The swamp-draining is going great.