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Trump to Let Wall Street Loose Once Again.

In 2007, the US experienced one of the worst economic recessions since the great depression. Known as the great recession or the subprime mortgage crisis, the recession of 2007 was caused by nationwide bank failure following the collapse of the housing bubble. In the years following, many experts have sought to explain the cause of the recession with most blaming financial institutions, regulators and credit agencies for creating a system in which debt was encouraged and real estate was sold on a whim. The crisis coincided with the very beginning of Barack Obama’s presidency, so one of his first tasks was to devise a plan to bring America’s economy back on track. One part of this plan was to create the Dodd-Frank Act which imposed various sets of regulations on markets in order to improve accountability and transparency in the financial system and to end the “too big to fail” trend that had emerged from the Great Recession. Some may not recognize the phrase “too big to fail” if they are not familiar with the financial crisis of 2007, the phrase refers to how banks become so big and amass so much power that they essentially are incapable of failure as they are so intrinsically woven into the US economy their shut down would drastically upset the status quo. Fast forward to february 2017, Donald Trump as part of his first 100 days plan has just signed an executive order to scale back the Dodd Frank act in order to make US corporations more competitive with their foreign competitors. Donald Trump seeks to repeal various sections of the rule which may lead to bank regulations in similar fashion to those leading up to the great recession. Decreased bank regulation allowed for banks to essentially run wild buying and selling mortgages on a whim all the while knowing that they would be bailed out by the government if they faced collapse, and with Trump’s new approach, it seems that we may be entering similar conditions in the near future. Though some argue that decresed regulation is the extra push needed to make our economy dynamic once again, many people believe that it was the Dodd Frank’s restrictions which provided the US economy with the stability to reestablish and grow following the volatile period of the early 2000s in which economic bubbles ran rampant.

 

 

Article Link: http://www.forbes.com/sites/antoinegara/2017/02/03/with-a-stroke-of-the-pen-donald-trump-will-wave-goodbye-to-the-dodd-frank-act/#f5482215b641

 

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