Trump deregulated the railroads and the banks. He blames Biden for the fallout | donald trump
Ohen a fiery train derailment took place on the Ohio-Pennsylvania border last month, Donald Trump saw an opportunity. Former US president visited eastern Palestine, accused Joe Biden of ignoring community – “Come here— and handed out branded water before heading to a local McDonald’s.
Then, when Silicon Valley Bank last week became the second-largest bank to fail in U.S. history, Trump again wasted no time in gaining political capital. He predicted Biden would become ‘the Herbert Hoover of modrrn [sic] age” and predicted an economic crash worse than the Great Depression.
Yet it was Trump himself who, as US president, rolled back regulations intended to make railroads safer and banks safer. Critics said his attacks on the Biden administration offered a glimpse of a hypocritical presidential campaign to come and, not for the first time in Trump’s career, displayed a shameless double standard.
“Hypocrisy, your name is Donald Trump, and he is setting new standards in so many regrettable ways,” said Larry Sabato, director of the Center for Politics at the University of Virginia. “For his true believers, they’re going to take Trump at his word and, even if they don’t, that doesn’t affect their support for him.”
The collapse of Silicon Valley Bank on March 10 and Signature Bank of New York two days later sent shockwaves through the global banking industry and rekindled bitter memories of the financial crisis that gripped the United States. United in the recession fifteen years ago.
Fearing contagion in the banking sector, the government took steps to protect all bank deposits, even those that exceeded the Federal Deposit Insurance Corporation’s $250,000 limit for each individual account. The cost amounted to hundreds of billions of dollars.
The drama reverberated in Washington, where criticism of Trump was followed by that of Republicans and conservative media, seeking to blame Biden-induced inflation or, improbably, the socially conscious “wake-up” program of Silicon Valley Bank. Opponents saw this as a crude attempt to deflect the bank’s risky investments in the bond market and more systemic problems in the sector.
The 2008 financial crisis, triggered by reckless lending in the housing market, led to strict banking regulations during Barack Obama’s presidency. The 2010 Dodd-Frank Act was intended to keep Americans’ money safe, in part by implementing annual “stress tests” that examine how banks will perform in the event of a future economic downturn.
But when Trump won the election in 2016, the writing was on the wall. Biden, then outgoing vice president, warned against efforts to undo banking regulations, telling an audience at Georgetown University: ‘We can’t go back to the days when financial companies take risks. massive in the knowledge that a taxpayer bailout is imminent. when they fail.
But in 2018, with Trump in the White House, Congress rolled back some of those protections. Republicans — and some Democrats — voted to raise the minimum threshold for banks subject to stress tests: those with less than $250 billion in assets were no longer required to participate. Many big lenders, including Silicon Valley Bank, have been freed from the toughest regulatory scrutiny.
Sabato commented, “The worst example is the banking situation, as it ties directly to Trump and his administration and the changes to banking regulations in 2018. Yes, some Democrats voted for it, but it was overwhelmingly supported by the Republicans and by Trump who heralded as the real solution to future banking problems.”
The minority of Democrats who backed the 2018 law denied it could be directly linked to this month’s bank failures, though Bernie Sanders, an independent senator from Vermont, was adamant: “Let’s be clear. The failure of Silicon Valley Bank is the direct result of an absurd 2018 banking deregulation bill signed by Donald Trump that I strongly opposed.
Sherrod Brown, a Democratic senator from Ohio who introduced bipartisan legislation to improve rail safety protocols, drew a parallel between the collapse of banks and lobbying for rail industry deregulation that contributed to the disaster. eastern Palestine railway. “We also see aggressive lobbying like this from banks,” he said.
Trump repealed several Barack Obama-era U.S. Department of Transportation rules aimed at improving rail safety, including one that required high-risk freight trains to use electronically controlled air brake technology by 2023. rule would not have applied to the Norfolk Southern train in East Palestine – where around 5,000 residents had to evacuate for days – because it was not classified as a high-risk freight train.
But the debate over the railroad crash and the bank failures highlights a perennial divide between Democrats, who insist some regulation is vital for functioning capitalism, and Republicans, who have long claimed to believe in small government. Steve Bannon, an influential far-right podcaster and former chief White House strategist, called Trump’s agenda “deconstruction of the administrative state.”
Antjuan Seawright, a Democratic strategist, said: “The Republican Party has gotten along for many years on this idea that less is more. However, we are now learning in this country that as America continues to mature, in some cases, the better the better, the better for us. Otherwise, mistakes can spiral out of control and cause long-term damage to generations of people.
Biden has called on Congress to allow regulators to impose tougher penalties on failed bank executives while Warren and other Democrats have introduced legislation to overturn the 2018 law and restore Dodd-Frank regulation. He is likely to meet stiff opposition from the Republican-controlled House of Representatives and even some moderate Democrats.
Biden also insisted that no taxpayer money will be used to resolve the current crisis, keen to avoid any perception that average Americans are “bailing out” the two banks in a manner similar to the unpopular bailouts of the biggest corporations. financial in 2008.
But Republican candidates for the 2024 presidential nomination are already arguing that customers will ultimately bear the costs of government actions even if taxpayer funds were not directly used. Nikki Haley, the former governor of South Carolina, said: “Joe Biden claims this is not a bailout. It is.”
Another potential 2024 nominee, Senator Tim Scott, the top Republican on the Senate Banking Committee, also criticized what he called a “culture of government intervention,” arguing that it incentivizes banks to continue behavior. at risk if they know that federal agencies will eventually save them.
Larry Jacobs, director of the Center for the Study of Politics and Governance at the University of Minnesota, said, “This is familiar ideological territory. The battle lines between liberalism and a fake conservatism seem to be playing out here. But the tragedy of the situation is that the Liberals are right.
“You need the government to regulate finance and when you don’t you get mischief and bank failures, but that point can’t be made if you have Donald Trump inventing reality. He demonstrated that the facts and the position do not matter. It’s an extraordinary political strategy, but it’s even more devastating to our entire political system and our media that it can be allowed.
This poses a huge messaging challenge for Democrats, who after the 2008 financial crisis clashed with the Tea Party, a populist movement fueled by economic and racial resentment. Long and winding explanations of the negative impacts of Trump-era deregulation are a tough sell against the former president’s slogans in eastern Palestine.
Wendy Schiller, professor of political science at Brown University in Providence, Rhode Island, said: ‘Once again we see Trump taking advantage of the Democratic Party’s Achilles’ heel by telling voters that Democrats love the great government because it bails out industries and it never provides a bailout for the little guy.
Democrats’ efforts to point out that Trump was responsible for the deregulation are unlikely to succeed, Schiller added.
“Every time it takes more than 10 seconds to explain something, it’s over in politics. That’s why Trump has catchphrases, soundbites. He understands that all voters see is that the wealthy have made a bad investment and that more wealthy people are making sure their money is available to them within three days, after all the shutdowns during Covid, business lost, lost income, people in trouble, inflation.
“Democrats don’t want to call this a bailout, but it is a bailout. The high profile of this bailout drowns out everything else Democrats do for the average voter. This is a perfect question for Republicans. It’s nothing new for Republicans to deregulate an industry and then it collapses and Democrats have to save it. Look at American political and economic history for the past 50 years: that is exactly what is happening.”