Hello, this is Yves. There’s another way to phrase the headline: “Wall Street’s Deregulation has Cost Everyday Americans Everything, and More Will Only Make Matters Worse.” As we’ve documented extensively, the global financial crisis stemmed from deregulation not just within the United States but internationally as well. This led to an unprecedented transfer of wealth from the public to financial elites who nearly jeopardized the global economy for their own gain.
Rather than implementing stringent reforms similar to those seen during the Great Depression, the response involved merely patching up the failing system and avoiding accountability. This negligence resulted in millions of unnecessary foreclosures and a deepening wealth gap, exacerbated by a prolonged period of low-interest rates that distorted incentives. Notably, individuals involved in asset management have double the likelihood of becoming billionaires compared to those in the tech sector, underscoring the concerning shift of wealth toward the top 1%—and especially the top 0.1%—which has been profoundly corrupting.
By Samuel Molina, the founding CEO of the Academy of Financial Education. Originally published at Common Dreams
In today’s California, many people’s financial dreams have become more modest. Simply making ends meet, living paycheck to paycheck, is the goal for many. Some aspire to own their own home or establish an emergency savings fund, but these ambitions are increasingly contingent upon decisions made by policymakers in Sacramento and Washington D.C.
At the Academy of Financial Education in Fresno, California, we assist individuals striving for long-term financial stability for themselves and their families. Take Aline, for example, a restaurant consultant in the Bay Area, who juggles her family’s budget alongside business expenses. Then there’s Sara, who is dedicated to improving her credit score to purchase her first home.
A significant barrier to their efforts is a financial system inundated with exploitative products that pervade social media, television, email inboxes, and various marketing channels. “Buy now, pay later” services are essentially predatory loans in disguise, obscuring the true costs of associated fees and charges. Additionally, cryptocurrency—billed as the solution to our financial struggles—continues to surge into the economy with minimal oversight.
Our financial behaviors are closely tied to the overall health and fairness of the financial system. The actions of the financial services industry, whether from Wall Street or emerging cryptocurrency ventures, utilize predatory tactics that harm individuals, families, and communities without consequences. Under the previous administration, measures were taken to weaken essential financial regulatory bodies, removing key consumer protections and enforcement mechanisms, and exposing citizens to increased financial risks. A recent proposal aims to allow cryptocurrency to be included in 401(k) portfolios, jeopardizing secure retirements.
The current administration has also made strides in dismantling the Consumer Financial Protection Bureau (CFPB), which has been one of our government’s strongest advocates for financial consumers. Since taking office, some CFPB staff have faced termination, been instructed to cease enforcement actions, and been forced to abandon legal challenges against harmful financial institutions. Budget cuts imposed by the Republican Congress have further hampered its ability to function effectively.
Created after the 2008 financial crisis—an event driven by reckless financial practices—the CFPB has since aided over 200 million individuals by reclaiming $21 billion through enforcement actions and saving tens of billions more through practical safeguards. These safeguards include limits on overdraft fees, the removal of medical debt from credit histories, and the regulation of tech companies introducing new financial products. Unfortunately, in just seven months since the last administration’s changes, these moves have cost consumers $18 billion.
In a financial landscape devoid of the CFPB, Wall Street, large banks, and tech companies can exploit consumers without limitations. For instance, Elon Musk’s PayPal nearly came under the CFPB’s regulations before the Republican Congress rescinded that oversight plan.
The cryptocurrency sector, claiming to offer unparalleled financial opportunities, flexibility, and freedom, is deceiving the public. In California, crypto scams are widespread, prompting the Department of Financial Protection and Innovation (DFPI) to maintain an ongoing list of fraudulent activities. New legislation in the Senate threatens to exempt many crypto platforms and digital assets from necessary oversight, paving the way for an even more predatory environment.
The reduction in financial protections and oversight complicates the mission of nonprofit organizations like ours, which focus on financial empowerment. We strive to help our clients and community with budgeting, credit scores, and planning; however, we cannot do this effectively without a supportive regulatory environment. The weakening of the CFPB and the unregulated rise of cryptocurrency create new challenges, risks, and distractions for our clients, hindering their ability to build a secure future. This leaves them vulnerable to financial losses and added stress, without a dedicated government advocate to rely on.
It is imperative that our government prioritizes the protection of working individuals over the interests of large banks and tech firms. As costs continue to rise and new scams infiltrate the financial market—from predatory loans to dubious cryptocurrency schemes—our elected officials must recognize that deregulating the financial system and dismantling vital entities like the CFPB only leaves everyday Americans at a disadvantage.
