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Mnuchin’s Dangerous Plan to Deregulate Wall Street Is Captured in this Chart

Courtesy of Pam Martens

Prudential Financial Traded as a Clone to the Big Wall Street Banks from October to December of Last Year.

Prudential Financial Traded as a Clone to the Big Wall Street Banks from October to December of Last Year. Prudential, green line, versus Citi, Goldman Sachs and Deutsche Bank.

By Pam Martens and Russ Martens

U.S. Treasury Secretary Steve Mnuchin (a/k/a the former foreclosure king) has been attempting to dismantle regulatory restraints on Wall Street’s worst instincts since he took office. Making Mnuchin even more dangerous is the fact that, under statute, he simultaneously sits as head of the Financial Stability Oversight Council (F-SOC) even as he appears to be attempting to undermine financial stability in the U.S.

One of Mnuchin’s most alarming actions on behalf of F-SOC came last October 17 when the Council announced that it was removing the designation of Prudential Financial as a SIFI – a Systemically Important Financial Institution that required enhanced supervision and prudential standards. Mnuchin stated at the time: “The Council’s decision today follows extensive engagement with the company and a detailed analysis showing that there is not a significant risk that the company could pose a threat to financial stability.”

The chart above shows what happened to Prudential from the date of Mnuchin’s statement to the end of 2018. Its stock started sinking like a rock in a pattern that was so close to the trading pattern of Citigroup, Goldman Sachs and Deutsche Bank that they could have been clones of one another. What does Prudential have in common with those three banks? Like them, it’s a major derivatives counterparty and on the hook for billions of dollars if derivatives blow up Wall Street again as they did in 2008.

Jeremy Kress, an Assistant Professor of business law at the University of Michigan Ross School of Business and a former attorney in the Banking Regulation & Policy Group of the Federal Reserve, had warned against taking this action in March of 2018. Writing for the American Banker, Kress explained that while other SIFIs that had been removed from the list (AIG, GE Capital and Met Life) had taken steps to shrink their systemic footprint, Prudential had actually grown larger and more systemic. Kress wrote:

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