Trump’s first 100 days were super busy with what Steve Bannon calls “regulatory deconstruction”. Here are three new items that have come to light in the press just since the 100 day mark. See if you can discern a pattern here.
Replacing scientists with corporate flacks on EPA boards. According to the New York Times, the EPA has dismissed 5 scientist members of the agency’s 18-member Board of Scientific Counselors. The spokesman for EPA head Scott Pruitt said he was considering bringing in corporate representatives to fill the vacated positions. “The administrator believes we should have people on this board who understand the impact of regulations on the regulated community.” The move was denounced by the president of the Union of Concerned Scientists as “part of a multifaceted effort to get science out of the way of a deregulation agenda.” Basically, this amounts to replacing independent academic scientists with representatives of the industries the EPA is charged with regulating.
This move came after the House passed a bill to change the composition of another EPA board, the 47-member Science Advisory Board, to increase the number of members from industry. This board advises on what should be researched and the scientific integrity of EPA regulations. The bill was written by the chairman of the House Committee on Science, Space, and Technology, Lamar Smith (R – Texas, naturally) who is an aggressive climate change denier. As is, of course, the EPA’s new administrator.
Trump has proposed slashing the EPA budget and is rescinding Obama-era regulations on climate change and clean water. Recently, the EPA has removed climate data from public view on its website, and announced that the website would be “undergoing changes” to better represent the new direction the agency is taking.
Re-deregulating Wall Street. Does anyone still remember the economic crash of 2008? Two things that came out of that disaster and the Great Recession that followed were the Dodd-Frank bill, aimed at curbing risky lending and investment practices by banks, and the Consumer Financial Protection Bureau, which enforces consumer protection laws and scrutinizes the practices of businesses selling financial products and services.
Now the Republican-dominated House has reported out of committee the “Financial Choice Act”, designed to gut both Dodd-Frank and the CFPB, which has turned out to be a remarkably effective agency. The bill would repeal about 40 provisions of Dodd-Frank, ostensibly to relieve struggling local and regional banks overburdened by regulations imposed by that bill. However, the data show that these banks are actually doing quite well under those supposedly onerous regulations.
Republicans have always hated the CFPB, partly because of its association with Elizabeth Warren and partly because it, well, protects consumers. The Financial Choice Act would remove some of the agency’s powers and replace its guaranteed funding from the Federal Reserve with whatever Congress decides would be the appropriate amount. With the Republicans controlling Congress, you can imagine how that would work out–killing the agency by starving it of operating funds, a playbook that’s already being employed in other parts of the government.
One of the more esoteric parts of the bill involves financial rating companies (like Moody’s and Standard and Poor’s), which assign grades to financial securities based on their risk. You may recall that a major factor that precipitated the 2008 crash was that these companies gave absurdly high ratings to “derivative” bonds (which were so complicated that no one really understood them) based on very risky subprime mortgages, which then failed and nearly brought down the entire US economy. Dodd-Frank imposed new accountability measures on the rating companies, which the Republican bill would roll back. According to the NY Times, company CEOs would not be required to attest to internal controls over processes used to determine ratings, and the bill would rescind the requirement to confirm that a rating was not influenced by its business activities. Moreover, it would protect the ratings industry from being opened up to new firms and increased competition.
It would appear that this administration and congressional Republicans learned nothing from the Great Recession and are bent on restoring the lax regulatory regime that led to it by giving Wall Street and the banking industry everything they want.
This brings us to Betsy DeVos’s Department of Education, which is changing regulations to make student loans riskier, more expensive, and more burdensome for borrowers, according to the New York Times. Under DeVos, the department has weakened accountability of the companies that administer student loans. It has make it harder to apply for, and keep enrolled in, repayment programs scaled to borrowers’ incomes. And it is allowing banks to charge higher fees–up to 16 percent of the loan balance–if they fall behind.
The Education Department outsources servicing of student loans to private companies. The Consumer Financial Protection Bureau (see above) has documented thousands of cases where these companies have lost or misdirected payments or paperwork or charged higher interest rates, resulting in serious problems for borrowers. The Department parcels out contracts based on metrics, but didn’t consider whether the contractor engaged in illegal practices until the Obama administration required it. Now under DeVos, the Department has reversed this directive. The same goes for punitive fees charged for falling behind in payments–the Obama administration imposed limits which the Trump administration has reversed. And, of course, the Republicans want to kill the CFPB, as we have noted.
The federal student loan program, which now has more than a trillion dollars in outstanding debt, is not a free market where borrowers can shop around for lenders. Once the loan is assigned to a servicing company, it’s there for good. If the CFPB isn’t there to be a watchdog and if the Department of Education is serving the interests of the banks and servicing companies rather than borrowers, it’s quite clear who are the winners and who are the losers.
Once again this “populist” administration is screwing the average Joe who was naive enough to vote for the self-proclaimed champion of “forgotten America”.
