While You Weren’t Looking, Trump Basically Killed Dodd-Frank

WASHINGTON ― As the nation’s capital has been consumed by the frothing chaos of President Donald Trump’s administration — botched Muslim bans, sudden personnel changes and the chief executive’s erratic behavior — a steady current of traditional right-wing orthodoxy is sweeping through the federal government. Whatever happens with Russia or the FBI, this tide is washing away former President Barack Obama’s second-greatest legislative achievement: Wall Street reform. And it’s all happening while you’re paying attention to something else.

Trump campaigned on conflicting promises about big banks. One minute, he was going to stick it to the corrupt financial insiders who had wrecked the middle class. The next, he’d vow to liberate our benevolent princes of capital from crushing regulations Obama had cruelly imposed.

Some of Trump’s populist rhetoric followed him into office. But the actual governing has been pure deregulation. Last week, a council of top regulators quietly met to discuss the future of the Volcker Rule ― the most important structural change Obama established for the financial system. A few days later, a freshly installed Trump official went further, threatening to defang the rule “unilaterally” by “reinterpreting” its entire purpose.

The rule is basically dead, Keefe Bruyette & Woods analyst Brian Gardner wrote in a note to clients Monday: “Examiners can start giving banks the benefit of the doubt regarding compliance with Volcker almost immediately.”

The Volcker Rule was conceived as an update to the Depression-era Glass-Steagall law, which banned traditional banks from engaging in risky, high-stakes securities ventures, which became the domain of investment banks, hedge funds and other firms that didn’t rely on federal support. Until its repeal in the 1990s, Glass-Steagall put an end to many conflicts of interest that had plagued banking during the Roaring Twenties, and prevented government subsidies from flowing into speculative securities schemes, which made it harder for big crazy asset bubbles to accumulate.

Glass-Steagall was as powerful as a sledgehammer, but only slightly more precise. The Volcker Rule tried to draw a finer distinction. Instead of banning banks from the securities business outright, it only barred proprietary trading. Banks were no longer allowed to make reckless bets for their own accounts, but other types of trading to help clients meet legitimate market needs would be permitted. Done right, the Volcker Rule would have been a technocratic improvement on Glass-Steagall, providing all the benefits of its New Deal predecessor without its costs.

It reflected the broader approach Obama and congressional Democrats took with Wall Street reform, treating the financial crisis as a mechanical malfunction best corrected by expert regulators who could write specific rules for nuanced situations. The economic system, they believed, could not be properly repaired with blunt instruments or lines in the sand.

Twenty-first-century banking is indeed a nasty thicket of money and numbers. But the financial crisis was more than a technocratic breakdown. It was an abuse of power. And the 2010 Dodd-Frank law didn’t really try to reshape the political dynamic between Wall Street and Washington. A handful of financial titans retained control over multitrillion-dollar institutions tasked with socially essential functions. They were not prosecuted for fraud, they continued to lobby both Congress and federal agencies with ferocity, and their firms continued to provide lucrative jobs for political operatives from both parties. Against this mountain, Obama set the willpower of individual regulators.

It didn’t work. Consider the Volcker Rule, which ran into trouble almost immediately. “One of the world’s largest banking firms” enlisted the Podesta Group ― a lobbying powerhouse founded by Democratic power brokers John and Tony Podesta ― to water down the rule in Congress. The Podesta Group still boasts about the effort on its website, under “Wins.”

“The client’s desired language on the ‘Volcker Rule’ was passed into law,” reads the page, titled “Challenging Wall Street Reform To Defend Jobs.” The lobbying barrage continued at the regulatory agencies, whose final version of the rule stretched to 300 pages of loopholes, exemptions and special considerations. Bank lobbyists succeeded in delaying the implementation of key elements of Volcker for years. Now the beast is being put out of its misery by Trump appointees with close ties to the financial industry, demonstrating that Wall Street’s political clout remains as strong as ever. Volcker’s destroyers will include former bank lawyer Keith Noreika, along with Treasury Secretary Steve Mnuchin, a Goldman Sachs alum, and Securities and Exchange Commission Chairman Jay Clayton, who served as Goldman’s bailout attorney.

A similar fate will soon follow for the derivatives regulations and other rules written during the Obama years. Even capital requirements, the simplest and last line of defense against bad bank behavior, are under assault following the resignation of Federal Reserve Governor Daniel Tarullo. We will never know if Obama’s tweaks and adjustments would have prevented or ameliorated another financial crisis. Today, big banks are bigger than they were before the crash, and are returning to pre-crash levels of oversight. The potential for financial turmoil under an erratic president is just as strong as the potential for foreign policy dislocation.

The one element of Dodd-Frank that will likely survive the Trump presidency is also the only aspect that seriously restructured the power relationship between government and finance. The new Consumer Financial Protection Bureau is important not because it involves a host of complicated new rules ― stealing from customers was illegal before, during and after the crisis ― but because it changes the way these protections are enforced. Prior to Obama, consumer banking products were regulated by five different agencies that competed with each other for “assessment” fees paid by the banks they regulated. This gave banks political power over their regulators ― an agency that was too tough on consumer protection risked losing its banks, and the funding they brought, to another regulator.

Obama scrapped this regime in favor of a single consumer finance overseer, the CFPB, and charged lifelong consumer advocate Elizabeth Warren with setting up the agency and hiring critical personnel. This established a new power center in Washington capable of challenging not only big banks, but also broken bureaucracy. When Obama’s Education Department turned a blind eye to student loan abuses, the CFPB took action. It has returned over $11 billion in ill-gotten bank gains to customers since its inception.

So the next meltdown probably won’t be caused by consumer fraud. Other than that, we’re pretty screwed.

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Trump’s Wavering Promises And Scandals Complicate Israel Trip

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President Donald Trump arrives in Israel Monday in the midst of political turmoil, following news that he revealed classified information to Russian officials.

The Israeli leg of the president’s trip abroad, his first since taking office, has also seen tension over shifting plans and diplomatic stumbles. Even Trump’s arrival at the airport became a contentious event, as Israeli media reported Sunday that Prime Minister Benjamin Netanyahu angrily commanded his ministers to attend Trump’s welcome ceremony after learning many had planned to skip it.

The controversies around Trump’s visit underscore a larger shift in how some Israel officials are viewing the new U.S. president. Since the inauguration, analysts say Trump’s changing policies and vague statements have made him a more unreliable ally than many on the Israeli far right anticipated.

“There is a sense of disappointment with Trump, because their knee-jerk reaction to his election was ‘great, we don’t have to worry about a Palestinian state, we don’t have to worry about pressure on settlements and we’re going to have the American embassy in Jerusalem,’” Yossi Alpher, a former senior Israeli intelligence official, told HuffPost.

“It’s clear to them that this is not the case, and they are confused and disappointed.”

Israel’s conservatives celebrated Trump’s election, and Prime Minister Benjamin Netanyahu praised Trump as a “true friend of the State of Israel” shortly afterward. Trump had positioned himself as a staunchly pro-Israel candidate, criticizing former President Barack Obama’s policies and vowing to strengthen U.S.-Israeli ties.

Trump last year said he’d move the U.S. embassy to Jerusalem “fairly quickly” after taking office. Past presidents have made the same promise on the campaign trail, but ultimately backed away from it when faced with the political reality of the decision. Moving the embassy would be seen as an acknowledgement that the contested city of Jerusalem belongs to the Israelis, and not to the Palestinians who also lay claim to it. 

As Trump has appeared to delay and vacillate over the embassy move, there is growing discontent within the right-leaning factions of the Israeli government. 

“In a naïve way, [Israeli conservatives] listened to Trump the candidate,” Alpher said. “They really thought this would be a breakthrough for them.”

Trump is also facing diplomatic pressure after he offered Russian officials highly classified information last week that was provided by an Israeli intelligence source.

The Israeli government has not offered much public reaction to the news, but reports say the country’s intelligence community is privately very concerned about Trump’s behavior. Defense Minister Avigdor Lieberman, meanwhile, reaffirmed U.S.-Israeli security ties on Wednesday and tried to brush off the scandal in a boilerplate diplomatic statement on Twitter.

“The security relationship between Israel & our greatest ally the United States, is deep, significant & unprecedented in volume,” Lieberman tweeted.

Headlines about Trump divulging secret intel to an adversarial power drew the most attention last week, but there was also a constant stream of missteps as the president’s Israel visit approached.

The trip’s logistics have also been a source of turmoil. There was confusion over whether U.S. officials requested Netanyahu not be present at certain events, and the timing of other parts of the trip has shifted. The White House cut the length of Trump’s visit to the Yad Vashem Holocaust museum to just 15 minutes, but after criticism in Israeli media it is expected to now last a half-hour.

Israeli media also reported last week that an American official told Israeli officials that one of the holiest sites in Judaism ― the Western Wall ― was in the occupied West Bank territory and not part of Israel’s territory. The alleged remark stirred notable controversy and forced a statement from the White House saying that it did not reflect U.S. position on the matter. 

Another point of contention came when the White House released a video that showed a map of Israel with pre-1967 war borders, excluding the area of the Golan Heights from Israeli territory. Israel’s right-wing Justice Minister Ayelet Shaked criticized the map, saying, “I hope this is a matter of ignorance and not policy.”

The map also struck a nerve among Israeli conservatives because Trump has placed a larger emphasis than many anticipated on seeking an Israeli-Palestinian peace deal.

It’s unlikely that open displays of diplomatic tension will be evident during Trump’s trip, as Netanyahu has strained to give the president a warm reception. But internally, there may be growing questions over what a Trump presidency means for Israel.

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GOP Lawmaker: Lynch Anyone Who Takes Down Confederate Monuments

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A Republican member of the Mississippi House of Representatives has called for lynching anyone who removes a Confederate monument, including lawmakers in a neighboring state. 

On Saturday, Karl Oliver described the “destruction” of Confederate monuments in Louisiana as “heinous and horrific” and compared leaders in that state to Nazis. 

They should be LYNCHED!” Oliver wrote in comments posted on his Facebook page: 

The message drew “likes” from two of Oliver’s fellow Republican lawmakers, Rep. John Read and Rep. Doug McLeod, the Jackson Free Press reported.

Oliver’s post came a day after a statue of Robert E. Lee was removed in New Orleans; it was the city’s fourth Confederate memorial to be dismantled in recent days.

Although no state Republican leaders have condemned Oliver’s comments, Democrats in the state blasted Oliver’s call for the violent murder of people he disagrees with, Mississippi Today reported.

“I am offended and outraged that a public official in 2017 would, with an obvious conviction and clear conscience, call for and promote one of the most cruel, vicious and wicked acts in American history,” Mississippi State Sen. Derrick Simmons, a Democrat, told The Root. 

Rep. Sonya Williams-Barnes, a Democratic member of the Mississippi Legislative Black Caucus, decried Oliver’s “shameful, but seemingly extremely comfortable, choice of words.” In an email to Jackson-based CBS station WJTV, Barnes said Oliver’s comments “were offensive to me as the act of lynching was commonly used and most targeted toward African-American men, women and children in the south and especially in our state.”

She also commended Louisiana for removing a number of Confederate memorials and urged her state to do the same.

Oliver made headlines earlier this year for dismissing the concerns of a resident because she wasn’t born there, and urged her to leave Mississippi. Oliver, who describes himself as a Christian and has referred to Jesus Christ as the “Prince of Peace,” was elected to a four-year term in 2015 with nearly 57 percent of the vote in his district, according to Ballotpedia.

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Roger Stone On Trump’s Saudi Award: ‘Makes Me Want To Puke’

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Long-time Donald Trump pal and former campaign adviser Roger Stone says seeing the president receive an award from Saudi Arabia’s King Salman “makes me want to puke.”

Stone, like many other conservative Trump backers, believes the president may be softening his hardline stand against Islamic terrorism.

Trump eased his own harsh rhetoric in a speech in Riyadh at the Arab Islamic American Summit on Sunday, condemning “Islamic extremism.” During his presidential campaign Trump often rebuked Barack Obama for refusing to use “radical Islamic terrorism,” a phrase which did not make Trump’s speech.

Stone took to social media to criticize King Salman’s bestowing of the nation’s highest civilian award to Trump on Saturday. The president bent his head to receive the Order of Abdulaziz medallion from the king, then did a small curtsy

“Candidly, this makes me want to puke,” Stone tweeted. Trump was among conservatives who blasted Barack Obama for appearing to bow to then-Saudi King Abdullah during a visit to the country.

Stone also said that Trump should have demanded that the Saudis pay for the 9/11 attack on the United States. Fifteen of the 19 hijackers of 9/11 were Saudi nationals. No evidence has ever been presented that the Saudi government was behind the attacks.

But the 2004 report by the 9/11 Commission suggested that the Saudi government had “turned a blind eye” to charities that funded the attack. Twenty-eight pages of an earlier report by a joint congressional commission were classified and are widely believed to include more information on possible links.

Trump himself has blamed the Saudis for the attack. 

“Who blew up the World Trade Center?” Trump asked on Fox and Friends last year during his campaign. “It wasn’t the Iraqis, it was Saudi — take a look at Saudi Arabia, open the documents.”

Later that same day at a campaign stop in South Carolina, he referred to “secret papers” that could prove it was “the Saudis” who were responsible for 9/11. “It wasn’t the Iraqis that knocked down the World Trade Center because they have papers in there that are very secret, you may find it’s the Saudis, OK?”

Stone is an outspoken loose cannon among Trump’s informal advisers. He is also being investigated by the FBI for possible Russian ties. He admitted that he communicated with the hacker linked by the FBI to Russian interference in the U.S. presidential election, but has insisted that doesn’t mean he colluded with the Kremlin.

CNN reported that Stone was among Trump’s confidantes to advise the president to fire FBI Director James Comey— a report Trump denied as “fake news.” Stone also denied the report, but said he backed the firing “100 percent.”

Stone is the latest staunch Trump supporter who has recently had harsh words for the president. Conservative commentator Ann Coulter last week said Trump has a “grotesque personality” and his actions in the White House have been disappointing.

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Billy Bush Plans Return To TV After Soul-Searching And Walking On Fire

Former ‘Access Hollywood’ superstar and ‘Today’ show host Billy Bush is ready to get back to work, seven and a half months after being fired for his role in a 2005 recording in which Donald Trump bragged about sexually assaulting women.

In an exclusive interview with The Hollywood Reporter published Sunday, Bush described the months following a Washington Post report about a now-infamous hot-mic recording as a “roller coaster” that “hurt a lot.”

Bush was suspended then fired by NBC 10 days after the contents of the recording were reported; he received a multimillion-dollar severance package and Trump went on to become president.

“That early part was just chaos. But then things progressed, and when you have a big, traumatic event, you go through stages, and it led to acceptance and understanding. And then I found myself in a place of soul searching. And I developed a commitment to become a better, fuller man.”

Bush went on to say once the tape was released he initially expected to “work through it.”

“I put together an apology right away, the one you saw; I told people that I was ashamed and embarrassed. And I was,” he told the Reporter, later describing his participation in the clip as “awful.”

“It was my first year as co-host of ‘Access Hollywood,’ and I was an insecure person, a bit of a pleaser, wanting celebrities to like me and fit in.”

Bush noted he was frequently around Trump during the time the recording was made, when Trump’s show “The Apprentice” was a primetime behemoth in its second season. He said he hadn’t heard such a profane level of commentary (”I just start kissing them. It’s like a magnet. Just kiss. I don’t even wait.”) about women from the then-reality star before.

“I don’t recall anything to that degree,” Bush said. “But he’s a provocateur. Shocking statements flow like wine from him. And he likes to captivate an audience.”

“I felt that, in that moment, he was being typically Donald, which is performing and shocking. Almost like Andrew Dice Clay, the stand-up comedian: Does he really do the things that he’s saying or is that his act? And in Donald’s case, I equated it that way. When he said what he said, I’d like to think if I had thought for a minute that there was a grown man detailing his sexual assault strategy to me, I’d have called the FBI.”

Bush went on to say he spent time at a weeklong retreat as part of a soul searching initiative, and spent time with self-help guru Tony Robbins that included walking on fire.

“And I’ve done a lot of reading. I’m reading a book now called ‘The Power of Now,’ by Eckhart Tolle. I’ve gotten into a lot of meditation and yoga. Mindfulness meditation is a powerful thing.”

He said he has no desire to interview Trump after the scandal and has not heard from the President since. But he plans to return to television in the future.

“I have changed in a way that I think will make me better at my job,” he said.

Read the full interview at The Hollywood Reporter.

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Newt Gingrich Fans Conspiracy Theory Over DNC Staffer Killed Last Year

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Former GOP House Speaker Newt Gingrich, a staunch supporter of President Donald Trump, is adding fuel to the reinvigorated conspiracy theory that the Democratic National Committee staffer that was slain last year ― not Russia ― was behind a transfer of DNC emails to WikiLeaks. 

During a Sunday morning appearance on Fox News, Gingrich tried to deflect attention from the scrutiny over the Trump campaign’s alleged ties to Russia by pointing to the still-unsolved death of Seth Rich. The 25-year-old DNC staffer was killed last July while walking home from a bar late at night in what police have characterized as a robbery gone wrong. 

“We have this very strange story now of this young man who worked for the Democratic Committee, who apparently was assassinated at four in the morning, having given WikiLeaks something like 53,000 emails and 17,000 attachments,” Gingrich said. 

The Fox and Friends hosts failed to refute any of Gingrich’s claims, and neither they nor Gingrich noted that the claims have recently unraveled when the story’s main source backtracked on his statements, calling them a “misunderstanding.”  

The conspiracy over Rich’s death was revived last week when both Fox News and its affiliate Fox 5 DC ran stories that leaned on anonymous law enforcement sources claiming there was “information” that could link Rich to WikiLeaks.  

At the center of the controversy was Fox News contributor Rod Wheeler, a former D.C. homicide detective who was hired by a GOP donor to serve as a private investigator into the staffer’s death for the Rich family. He made the claim to Fox 5 DC that he had a local police contact who said officers were told to “stand down” in the investigation, implying a cover-up. Wheeler later reversed course, saying this statements to the network were a “miscommunication” to CNN, forcing Fox 5 DC to update its story

A spokesman for the Rich family told Fox 5 DC, “The family has relayed their deep disappointment with Rod Wheeler’s conduct over the last 48 hours, and is exploring legal avenues to the family.”

On Friday, the family sent Wheeler a cease and desist letter ordering him to stop commenting publicly on the investigation. 

“Your statements and actions have caused, and continue to cause, the Family severe mental anguish and emotional distress,” the family wrote.

Despite the pushback from the family, Gingrich on Sunday went on to lament that “nobody’s investigating” Rich’s death and suggested it’s a cover-up.

“What does that tell you about what’s going on? Because it turns out, it wasn’t the Russians,” he said. “It was this young guy who, I suspect, was disgusted by the corruption of the Democratic National Committee.” 

The conspiracy went mainstream last year when WikiLeaks announced a $20,000 reward for information leading to the arrest of Rich’s killer. 

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