Deregulation Is Here Again

 

Somewhere between no government regulation and governmental overreach, there has to be a happy medium. Every new occupant of the captain’s seat of the good ship USS Government that results in a change of party domination, seems to bring about a 180-degree course correction. The compass needle swings wildly during the U-turn.

Republicans are now at the helm and the elimination of all regulations is seen by them as a reasonable goal. As was the response of the scorpion in the Russian fable of The Scorpion and the Frog where the scorpion dooms them both by stinging the frog that was carrying him across a river, "I am sorry, but I couldn't help myself. It's my character."

I recently watched the movies Margin Call and Too Big to Fail. Both movies involved the 2008 financial crisis. That event was considered the most severe economic meltdown since the Great Depression. The erosion of regulatory oversight allowed the extension of mortgage credit to high-risk borrowers resulting in a large number of so-called subprime mortgages. In some cases, the risk was compounded by extending additional credit backed only by inflated property valuations. I had a neighbor with a modest income who took that money and spent it on a new boat, a new car, vacations, and a pool. When the housing market bubble burst, he lost his house and was forced to move in with his in-laws.

These high-risk mortgages were bundled into complex financial products and sold to unwary investors as “mortgage-backed securities” (MBS) to spread the risk. The housing market valuations skyrocketed until the foreseeable defaults began and the bubble burst. When Lehman Brothers went bankrupt in September of 2008, it triggered a global financial crisis that became known as the Great Recession. The deregulation effort that allowed this to happen was started under Reagan and continued under Clinton and Bush.

The crisis resulted in massive bailouts of banks by the government, a sharp decline in consumer wealth, a significant downturn in economic activity, decimated retirement plans, and it triggered a global recession. The effects of the crisis lingered for years, reshaping financial regulation and economic policies worldwide. To prevent a future recurrence, the US enacted the Dodd-Frank Act with stricter regulations on the financial industry.

By 2018, however, under Donald Trump’s first presidency, major portions of Dodd-Frank were rolled back. Now, in 2025, the American oligarchy has assembled to hail their new leader who is once again bent on deregulation as a way of eliminating those pesky rules that protect consumers but, the elimination of which, benefit big business.

Financial deregulation is but one piece of the government regulation puzzle as this mindset factors into all manner of consumer protections. Food inspections, drug approvals, health and safety, agriculture regulations, and environmental protections are all now subject to serious cutbacks or elimination. The short-term effect of deregulation is to put more money into the hands of big business to the delight of the oligarchs surrounding Trump and contributing to his success. Trump makes money, big business makes money, Congress makes money, and local politicians make money, what could go wrong? Their mantra is, “Let us make the big bucks and we promise that some of it will trickle down to you poor folks at the bottom.”

The only ones at risk are the ones who can’t afford to ride out any setbacks. A new pandemic could once again catch us off guard. The current bird flu may only infect poultry raising chicken and egg prices, but it could also infect other livestock more broadly than it already has. It could spread to more humans than it already has.

The wealthiest cabinet in history

With fewer regulatory agencies and inspectors monitoring the situation and with political appointees with little experience running these agencies, again, what could go wrong? If things get out of hand you can always jump into your private jet and head to your private island where you will probably be safe. What’s that you say???