by Pam Martens and Russ Martens, Wall St On Parade:
On the campaign stump in Charlotte, North Carolina last October 26, Donald Trump promised to bring back a 21st Century version of the Glass-Steagall Act as a means of reforming Wall Street’s casino culture. At around noon today, Trump will continue the Orwellian reverse-speak of his campaign promises and do the opposite of what he promised. According to leaks to the financial media, Trump will today sign executive actions ordering swift reviews aimed at rolling back the feeble safeguards on Wall Street that currently exist while replacing them with — nothing. There has been no further word from Trump on bringing back the core principles of Glass-Steagall which would force the formal separation of banks holding taxpayer-backstopped insured deposits from the high-risk, derivatives-peddling, hedge-fund-financing investment banks.
Trump is expected to sign one executive action today ordering financial regulators to review rolling back parts of the Dodd-Frank financial reform legislation that was passed by Congress in 2010. Another executive memorandum is expected to order the Labor Department not to implement the Fiduciary Rule that was set to take effect in April. The Fiduciary Rule, hated by Wall Street and its lobbyists, would force Wall Street firms to put the interests of clients owning retirement accounts above the interests of the firm. For example, it would mean that Wall Street would have to offer the client the best mutual fund at the lowest fee rather than one of its own in-house concoctions laden with far more onerous, self-serving fees and investments. Wall Street has had the gall to say the Fiduciary Rule is bad because it would limit opportunities for investors. Apparently, Wall Street means it would limit the opportunity for investors to be fleeced, thus limiting profits on Wall Street.
As every other President has found in the past two decades, pleasing Wall Street and its billionaires is what it takes to get reelected. Trump is apparently already focused on marketing and building his brand from White House Inc. for a full eight years. According to filings made at the Federal Election Commission, the Donald J. Trump for President committee raised $9.6 million from November 29, 2016 through December 31, 2016 toward Trump’s next run.
One Wall Street firm that will be essential to Trump’s tenure in the Oval Office is his largest contributor to date. According to the Center for Responsive Politics, Renaissance Technologies – a hedge fund investigated by the U.S. Senate Permanent Subcommittee on Investigations for playing fast and loose with tax law and securities law – gave $15.5 million to Trump’s first run. (The Center for Responsive Politics notes that the political contributions came from the firm’s PACs; their individual members, employees or owners; and those individuals’ immediate families.)
In 2014, the Senate’s Permanent Subcommittee on Investigations determined that Renaissance Technologies had avoided $6.8 billion in taxes through a scheme with Wall Street banks. The gambit worked like this: the hedge fund would make a deposit of cash into an account at the bank which had been established to facilitate the hedge fund engaging in the high frequency trading of stocks. The account was not registered in the hedge fund’s name (the beneficial owner as required by law) but in the bank’s name. The bank would then deposit $9 for every one dollar the hedge fund deposited into the same account. At times, the leverage could reach the astronomical level of 20 to 1.
The hedge fund would then generate tens of thousands of trades a day using their own high frequency trading program and algorithms. Many of the trades lasted no more than minutes. The bank charged the hedge fund fees for the trade executions and interest on the money loaned.
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