Make no mistake, the anger unleashed by the subprime mortgage crack-up and more than $1 trillion in bank bailouts still simmers. In a 2016 Survey Monkey poll that asked 10,000 Americans to list the companies most damaging for the nation, three of the top five were banks. Not all of Trump’s supporters want Wall Street to get a free pass.
“People have not forgotten what happened in 2008 and we will hold bankers’ feet to the fire,” said Janet Tavakoli, a Trump backer and president of Chicago-based Tavakoli Structured Finance Inc.
A more permissive attitude toward Wall Street may pave the way for rolling back safeguards, said Phil Angelides, the chairman of the Financial Crisis Inquiry Commission, a bipartisan body that probed the causes of the crash.
In addition to the Dodd-Frank Act, which overhauled regulation, Trump and his allies in Congress are taking aim at the Consumer Financial Protection Bureau, the six-year-old agency that fined Wells Fargo & Co. $185 million last year for fabricating millions of phony accounts to meet sales goals.
Price to Pay
“This is dangerous,” said Angelides, a Democrat and the former Treasurer of California. “Taking down the bulwarks of public protection will expose communities and the economy to another financial disaster. It may not be this year or next, but eventually we’ll pay a very dear price for this.”
In Europe, ever since Britain voted to quit the EU last June, officials from Germany to Ireland have set out to attract bankers leaving the City of London. Perhaps no nation has done as sharp a U-turn as France. After his election in 2012, Hollande drove away wealthy residents by imposing a short-lived 75 percent income tax on the highest earners. Now, he’s pledging to cut the corporate rate and to offer tax benefits for workers moved to France.
In the U.K., Prime Minister Theresa May has been careful to convey that she won’t give banks, which strongly supported Britain remaining in the EU, special treatment as the country separates from the bloc over the next two years. Yet behind the scenes, after threats from the industry to move jobs and operations abroad, May has more recently sought to reassure financial-services chieftains that she’s aware of the importance of an industry that accounts for about 12 percent of U.K. economic output.
Lessons Learned?
Earlier this month, she spoke at a celebration commemorating Morgan Stanley’s 40th anniversary in the City. Surrounded by ancient treasures in the British Museum, the prime minister told the assembled guests that she would do everything possible to protect London’s role as the world’s preeminent hub for financial services, according to people present at the event.