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Repeal of Dodd-Frank Act Means Big Bucks for Financial Sector

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Following the 2008 financial crisis, the Obama administration enacted the Dodd-Frank Act to provide tighter regulations for the banking industry in order to prevent another meltdown. The Act was meant to protect consumers from bad investment advice by requiring banks to be more stringent in their investment and loans processes. However, critics of the act say that it hurts the economy by making it too difficult to borrow money. Now, those critics have their day as President Trump signed an executive order to begin the repeal of Dodd-Frank.

What Does This Dodd-Frank Act Repeal Mean for the Financial Industry?

So far, President Trump is following through on all of his campaign promises. But the one that could have the biggest impact on our economy is Trump’s repeal of Dodd-Frank. The act was put in place to oversee a lack of regulations under Bush and Cheney, which led to the financial collapse (and subsequent recession) of 2008. Are we headed back to the same system which got us into the 2008 mess in the first place?

Not exactly.

The act hasn’t actually been repealed. But Trump has promised to dismantle it, using unclear wording with far reach. The Dodd-Frank Act is never actually mentioned by name, but Trump’s latest executive order lays out core principles for regulations which include empowering American investors and improving the competitiveness of American companies. The new order gives the Treasury department almost unprecedented power to “make sure existing laws align with administration goals.”

Supporters of Dodd-Frank say the law is in place to protect consumers, and that Trump is giving Wall Street a huge gift by removing their regulatory hurdled. His theory is that the removal of the act does help Wall Street, but helps consumers and businesses as well by allowing banks to lend more money more frequently to companies, who would then, in turn hire more workers.

But theory and reality are two very different things.

Dodd-Frank has been targeted by conservatives since it was signed into law in 2010. Now, with the right controlling the House and Senate, Dodd-Frank is sure to be dead. And while that may scare supporters of financial regulation, it could actually do exactly what Trump proposes. Banks are in the business of lending. The interest on loans brings in billions for the financial institutions. And with fewer regulations, that lending power goes up significantly. If banks are more willing to loan money, companies which otherwise wouldn’t be able to get loans would be far more likely to now secure capital and launch their big idea.

Watch the latest news from Bloomberg regarding the repeal of the Dodd-frank Act:

Regardless of what results from the repeal, investors would be wise to bet on financials. Giants such as Wells Fargo & Co. (WFC), Bank of America (BAC), and JPMorgan Chase & co (JPM) are all UP on the news, and will continue to rise as a result.

 

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Business

American Firms Keep Hiring, Easing Worries of Weakening Economy

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The unemployment rate is “now at a half-century low of 3.5%” – this matches the lowest jobless rate since 1969 – and economists have also given a warning that hiring would soon slow because there are fewer unemployed workers. However, in November, employers added 266,000 jobs – the highest number since January. Monthly hiring has averaged 205,000 for the past three months.

Associated Press reported that “Friday’s jobs report largely squelched fears of a recession that had taken hold in the summer. Steady job growth has helped reassure consumers that the economy is expanding and that their jobs and incomes remain secure.”

President Trump tried to focus voter’s attention on the state of the economy instead of his impeachment inquiry. Trump even tweeted “JOBS, JOBS, JOBS!”

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Economy

Could Trump’s Tariffs Hurt The U.S. Economy?

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Could Trump’s Tariffs Hurt The U.S. Economy

About a year ago, the media was talking about how Trump’s trade wars could negatively affect many industrial companies, the agricultural sector, and right down to the every day American worker.

The recent stats from Gross Domestic Product has now revealed the current reality of Trump’s multiple front trade war.

Data shows that imports increased, while exports decreased by over 5%. Business investments have declined by 0.6%, and this decline has been happening since 2016. Most North American corporate capital spending is also on a declining trend.

Trumps’s tax reform was short-lived for most American companies. We did not get many benefits from the trade tensions either. U.S. corporate debt is getting much worse and far more significant than household debt.

Many are speculating that the cutting interest rates will lead to more zombie companies that will threaten both the U.S. and global economy.

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Economy

CryptoRuble | Cryptocurrency in Russia

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What do you get when you implement cryptocurrency in Russia? Cryptoruble! Read on to find out how Russian cryptocurrency is doing.

CryptoRuble | Cryptocurrency in Russia

Russia’s Pivot Toward a Pro Cryptocurrency Policy

Prior to the great boom which propelled Bitcoin over $7,000, both Russian bankers and politicians alike voiced their conflicting opinions and hesitancy toward the cryptocurrency.

Vladimir Putin called for tighter regulation of cryptocurrencies only a month prior to his speech where he touched on nurturing the new technology, while authoritative bankers compared cryptocurrencies to Ponzi schemes.

At one time, a proposal was made that would punish those owning bitcoin with up to seven years in jail for a violation.

Recently however, these antagonistic statements from central banks and the Kremlin have pivoted with a series of official announcements that would strengthen Russia’s position as a possible focal point for the impending and inescapable cryptocurrency revolution. The major impetus for this considerable change in rhetoric is demanded from people all over the world for digital cash as instruments of investment, payment, and more. The people’s demand hasn’t fallen on deaf ears in Russia.

But the Russian elite have answered the people’s call in a uniquely Russian way.

To everyone’s surprise, President Putin, in late October of 2017, announced his support for cryptocurrency in Russia and subsequently ordered legislation that would put into place infrastructure for its national adoption.

Unique legal frameworks has since been conceived for the taxation of cryptocurrency mining, regulating initial coin offerings (ICOs), developing blockchain technology in business, and establishing a far-reaching system of payment for Russian citizens.

Perhaps, the most astonishing statement given by President Putin’s was his announcement that Russia intends to form a digital crypto rendition of the ruble termed the ‘CryptoRuble’. The CryptoRuble is supposed to be interchangeable with the ruble on a 1:1 ratio. Quite dissimilar to other more ‘traditional’ forms of cryptocurrencies, the CryptoRuble will not be able to be mined and will be exclusively issued by the Russia’s central bank. This kind of approach is distinctly Russian, and is based on years of meticulous observation of how various forms of cryptocurrency has previously affected other countries.

This Russian model cedes some economic freedoms for government control, while still preserving and incorporating the technology’s primary advantages.

Additionally, an unchangeable ledger will make citizen cash flows transparent to the government and help stem fraud and corruption. In theory, it should also help to bring down walls of previous systems plagued by middlemen.

CryptoRuble income is expected to be taxed at a rate of 13 percent for those wo’re unable to provide a legitimate source for it. Not only is this an attempt at preventing corruption, but it’s also a way the Russian government can profit from it.

Russian leadership is likely to remain watchful of any new methods they can use to achieve a competitive edge in international politics, finance and trade.

Cryptocurrency seems to be one of the most likely channels for increased influence across borders; thus, Russia’s pivot toward a pro-crypto policy stance is quite logical.

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