In 1913 the great American lawyer Louis Brandeis railed against “The Curse of Bigness” in Harper’s Weekly, documenting the troubling concentration of economic power among the new tycoons and trusts of the industrial age, from railroads to steel to oil. By establishing monopolies, he argued, these private actors could dictate prices and shape the terms of access to essential goods, thus allowing them to exploit, extract, and otherwise dominate society.
But behind the monopolies lay an even more dangerous force: the financiers who jointly invested in these companies through a variety of legal and corporate vehicles. For Brandeis, this “money trust” of “banker-barons” was the ultimate villain in the industrial economy since it existed beyond the ordinary scope of traditional checks and balances. In his famous pamphlet, Other People’s Money, he warned that financiers had “acquired control so extensive as to menace the public welfare.”
A century later, finance persists as a problem. As the Trump administration moves on from the healthcare battles of the last month, a critical next frontline is emerging in financial regulation. Trump has repeatedly called for a “major elimination” of the Wall Street regulations created by the Obama administration and the 2010 Dodd-Frank financial reform bill. And Republicans in Congress are set to introduce the Financial CHOICE Act, which would dismantle many of the key innovations of Dodd-Frank. The proposed bill would weaken the regulatory authority of the Consumer Financial Protection Bureau, which has been critical to addressing problems of fraud, misinformation, and abuse in everything from mortgages to lending to student debt. Crucially, it would also undermine oversight of “systemically risky” firms, potentially recreating the regulatory loopholes that gave rise to “too-big-to-fail” firms operating beyond regulatory supervision.
– Boston Review