Trump Hawks $TRUMP in New Level of Corruption
The president of a very real country is hawking fake money, making the real lobbyists for a real industry brimming with different fake money really, really frustrated. Because Trump’s money is really, really fake. Got that? (The rest of the country mostly only cares about real money.)
Just days before taking the Oval Office for his second term, Trump and his family launched $TRUMP, the latest in a string of questionably viral memecoins, which have more in common with a Dutch tulip bulb than real money. That, plus the president’s ardent support for digital assets, makes $TRUMP a breeding ground for potential corruption.
For the uninitiated: a memecoin is a type of cryptocurrency token that uses the imagery, or nebulous digital clout, of an Internet in-joke – a meme. Think Dogecoin ($DOGE), based on the 2010s meme of a shiba inu (now reincarnated as a Musk-headed government entity). Or the infamously scammy $HAWK coin, which riffed on an intimate act performed by an unknown woman enjoying a moment of viral fame. They were never meant to be serious; the software engineers who designed Dogecoin, the blueprint for later memecoins, said they were meant to be parody.
Trump never got the joke, but he smelled (real) money. After minting the coin, Trump and family appeared to make billions overnight. But shrewder observers, like crypto researcher Molly White, note that the stratospheric numbers being thrown around are based on unrealized, not-yet-existent stock. For all $TRUMP isn’t actually worth, it makes up for it with a wide-open door to presidential corruption and crony enrichment.
Americans for Financial Reform Education Fund (AFREF)’s Mark Hays lays out the ethical disaster playing out:
The huckster-in-chief launched his $TRUMP meme coin: one part a vehicle for personal profit, one part a playground taunt over federal ethics rules, and one part a crypto-fascist pledge of allegiance. It’s a move that could not only rip off Trump supporters but also significantly corrode the democratic process…It aligns with the interests of rich crypto bros who want to seize the reins of government to make themselves even richer.
If the crypto bros get their way, it will mean a government with little interest in protecting investors, preventing fraud, holding companies accountable, and making sure people don’t get ripped off by big banks, Wall Street, or financial apps.
Even the crypto industry’s mouthpieces are nervous. Said one industry lobbyist: “This is a horrible look for the industry already trying to make the case that we’re not a bunch of hucksters, scammers and fraudsters.”
News flash, bro: Your sector’s already chock-full of hucksters, scammers and fraudsters.
BANKING AND FINANCIAL STABILITY: Two Steps Back – A Case against SVB – Vexed by AmEx – A System that Works for Everyone
CONSUMER: Defend the CFPB – Listen Up, Banks – CashApp Concerns – Taking on Capital One – Credit Reports – De-Junking Junky Data – Student Loan Debt Collection – Constitutional and Financial Rights – Buy Now, Pay When – Honda Loans – Wired
CAPITAL MARKETS: Protecting Pensions – Dealing with Dealers
PRIVATE MARKETS: The Next Financial Crisis? – PE & Healthcare – KKR and Antitrust – Other Private Markets News
CRYPTO: White House Task Force – SEC Task Force – Don’t Bank on Crypto
HOUSING: Mortgage Discrimination – Privatizing a Public Service – Greystar’s Hidden Fees – NAR – PE in the High Housing Chair
CLIMATE AND FINANCE: The Insurance Crisis – Un-Greening Finance
Feedback? Reach us at afrnews@ourfinancialsecurity.org
BANKING AND FINANCIAL STABILITY
Two Steps Back.
President Trump appointed Travis Hill, the Republican who most recently served as the agency’s vice chair, as the acting chairman of the Federal Deposit Insurance Corporation (FDIC) following Gruenberg’s resignation. Some days before Trump’s inauguration, Hill shared his intentions to lead his agency away from critical climate-related rules, scrutiny over digital assets, and a longstanding federal effort to steer banks away from doing business with companies that are at high risk of illicit activity.
Notably, Hill also deflected blame for Silicon Valley Bank’s collapse – which brought down several midsize lenders in 2023 – away from S.2155, an industry-friendly banking law passed in 2018 that AFR has pointed to as a major source of the systemic instability. Worth noting that Hill helped write the bill when he was a Senate staffer.
Related: On his way out, former Chairman Gruenberg offered up some sobering lessons for the future. Looking back on the crisis of the ‘80s, the ‘08 recession and this latest episode of bank trouble, he pointed at poor risk management on the part of banks, inadequate capital, overzealous growth, and other factors. He also raised concerns about the growth of shadow banks on the fringes of regulatory scrutiny, like private equity and hedge funds.
A Case against SVB.
Speaking of SVB: Last month, the FDIC authorized a lawsuit against former SVB execs for their role in the crisis. A couple of weeks ago, the agency explained its case. The regulator alleges that the officers mismanaged its government securities portfolio (which lost value as interest rates rose), stopped the bank’s program of stabilizing interest-rate swaps, and kicked up a $294 million dividend to the bank’s parent company even as they saw the signs of trouble.
Vexed by AmEx.
The Department of Justice slammed credit card issuer American Express with a $108.7 million penalty to settle claims that it allowed some customers to use bogus information to obtain a credit card, and that it used deceptive marketing to push its credit card and wire transfer products. The complaint found that AmEx used a secondary entity to misrepresent credit card rewards and fees to potential customers and failed to clarify whether it would conduct nonconsensual credit checks. The company also allegedly allowed certain small businesses to get credit cards without submitting valid Employer Identification Numbers (EIN), required if the recipient is a business entity.
A System that Works for Everyone.
Ranking Member Rep. Waters of House Financial Services underscored her criticism of the new Republican majority, as it outlined a new rules and oversight plan:
The plan is silent about the pain millions of families experience trying to pay their rent or mortgage, keep food on the table or save for retirement because of the increasingly unaffordable cost of living…Everyone deserves a safe, affordable, and decent place to live, an economy that works for all, and a financial system that no longer benefits Wall Street at the expense of Main Street.
CONSUMER
Defend the CFPB.
Something to keep in mind while you’re reading this: The CFPB’s enforcement and supervisory work has secured over $21 billion in relief and redress for over 200 million consumers. Tons of new fact sheets from AFR on: medical debt, open banking, overdraft fees and Big Tech.
The Republicans are eying the agency’s medical debt and overdraft rules as targets for the Congressional Review Act, which Congress can use to reverse executive agency rulings. Trump wants to fire CFPB Director Rohit Chopra (but Chopra says he’ll serve at the agency until he hears otherwise). And the president’s transition team is considering a hiring freeze and rollbacks on certain CFPB actions.
Rep. Maxine Waters reminds everyone that efforts to “delete the CFPB” will “have disastrous effects for American families and the economy.”
Listen Up, Banks.
On the topic of the CFPB’s efficacy: A report from the Federal Reserve finds that banks are more likely to make changes in favor of the consumer when complaints about their practices filed with the CFPB are disclosed. It's all about accountability: more complaints mean lower stock prices, decreases in deposit and mortgage market shares, and more deposit withdrawals. There’s evidence, though currently limited, that banks change their deposit rates in response.
Cash App Concerns.
In the days leading up to Trump’s swearing-in, the CFPB compelled Block, the operator of the online payments platform Cash App, to issue $120 million in refunds and set $55 million aside for the agency’s victims relief fund due to its “weak security protocols.” The agency found that Block, which is required to assess and resolve disputes about unauthorized transactions, performed lackluster investigations into wrongdoing. Defrauded customers were told to have their banks reserve the transactions… which Block would promptly deny. The company also allegedly tried to keep users from seeking help, reducing its own costs.
Taking on Capital One.
The CFPB filed a lawsuit against credit card issuer Capital One – the one pursuing an anticompetitive, bad-for-consumers merger with Discover – for misleading customers about its 360 Savings account. Its actions, CFPB alleges, cost its customers $2 billion. From 2013 to 2019, Cap One said that its variable-rate savings account was “high interest,” one of the nation’s best, and would earn more interest than the average savings account. The agency alleges that the messaging was false, and that, from December 2020 to August 2024, the bank kept the rate fixed at 0.30%. Not only that: Capital One kept 360 Savings customers from finding out about a newer 360 Performance Savings account that offered 14 times higher rates.
Credit Reports.
Equifax, one of the Big Three credit reporting bureaus, will pay $15 million for lapses in its investigations into credit reporting errors. A CFPB investigation found that the company ignored documents and evidence, let deleted inaccuracies return to reports, provided confusing letters to consumers about their disputes, and used flawed software, resulting in inaccurate credit scores.
De-Junking Junky Data.
The CFPB filed a brief in Arora v. TransUnion pushing back against an industry effort to punch a loophole into the law allowing them to withhold important information from consumers. The case centers on TransUnion’s argument that credit reporting bureaus aren’t required to provide consumers – including those whose reports contain wrong or misplaced information – the source of the information found in their credit reports, like phone numbers, Social Security numbers, addresses, or names. The CFPB recommends Congress push for greater transparency in the system by requiring disclosure.
Student Loan Debt Collection.
The CFPB required the National Collegiate Student Loan Trusts – an amalgam of investment vehicles that own the nation’s largest amount of bank-originated private student loan debt – to pay $2.25 million in redress to borrowers who the Trusts unlawfully sued with “defective debt collection lawsuits.” In its 2017 lawsuit, the agency alleged that the Trusts sued borrowers for debts they couldn’t prove were even owed, filed misleading affidavits and tried to collect on expired debts.
Constitutional and Financial Rights.
The CFPB proposed a rule to ban clauses in the contracts that consumers sign to use companies’ services which infringe on basic liberties. Seeking to level the playing field between consumer and corporation, the agency wants to prevent companies from suppressing consumer speech (like negative reviews and political messaging), unilaterally updating contracts in their favor, forcing customers to plead guilty in disputes, and generally undermining the rule of law (like servicemember protections and elder fraud prevention).
AFREF applauded the proposal. Said AFREF’s Christine Chen Zinner: “The financial marketplace is not truly free and competitive for consumers if they are forced into abusive terms and conditions that can be unilaterally modified by powerful corporations.”
Buy Now, Pay When?
The CFPB discovered heavy use of Buy Now, Pay Later (BNPL) services – like Afterpay or Klarna – among people who already had high credit balances and other pay-in-four loans. In 2022, over 60 percent of BNPL borrowers took out multiple BNPL loans, more often consumers with lower credit scores, people with high existing balances, and younger borrowers. Economists have previously raised the alarm about the billions in invisible debt obscured in installment payment plans, which are typically hidden from credit reporting agencies and lenders.
Honda Loans.
The CFPB ordered the lending arm of Honda, the car manufacturer that brought us the bizarrely shaped Honda Insight, to pay $12.8 million for credit reporting failures during the COVID-19 pandemic and beyond. The CFPB found that, although the company deferred vehicle loan payments for some Honda and Acura drivers, it still told credit bureaus that borrowers were delinquent on their payments. The agency also determined that the company’s other credit furnishing processes and dispute investigations were lacking.
Wired.
A federal court in New York ruled that wire transfers fall under the Electronic Fund Transfer Act (EFTA) – meaning that consumers could have actual recourse if a scummy scammer drains their bank accounts using electronic transfers. The decision came from a lawsuit, New York v. Citibank, over the financial institution’s failure to reimburse customers who had their money stolen because of Citi’s allegedly poor online security protocols. Citi tried to convince the court that the EFTA doesn’t apply to consumers whose accounts are broken into by bad actors. Judge Oetken of the Southern District of New York ultimately disagreed, ruling partially in favor of New York’s attorney general. The Consumer Financial Protection Bureau had previously filed an amicus brief in support of the NY AG.
CAPITAL MARKETS
Protecting Pensions.
A new report from AFREF provides a roadmap for state policymakers and pension officials to protect public pensions – the invested pools of public workers’ money – from federal threats. The barrage of attacks on ESG investing (a.k.a responsible investing) driven by fossil fuel and other corporate interests hopes to slow the clean energy transition, curtail labor power, and reverse corporate progress on racial justice, diversity, and worker protections. The report identifies three central threats to the ability of state and local pensions to make investment decisions that benefit workers whose deferred wages make up these funds: misguided anti-ESG pension-related policies, financial deregulation, and the effects of the anti-ESG campaign on large asset managers. It then offers a roadmap to safeguard pensions’ ability to make investment decisions that promote retirement with dignity and economic security.
Said AFREF’s Natalia Renta, the report’s author:
“Fossil fuel and other corporate interests have made clear they want the incoming presidential administration to strangle pensions’ right and ability to make investment decisions that benefit workers, whose deferred wages make up these funds, and their communities. States must fight back against these federal threats and defend their pensions.”
Said Randi Weingarten, American Federation of Teachers President:
Public pensions are a cornerstone of retirement security for millions of workers and a driver of local economies, but they are under relentless attack. When lawmakers play politics with working people’s pension plans by restricting consideration of environmental, social and governance (ESG) risks in investment and proxy voting decisions, they threaten not only retirees but also the greater good.
Dealing with Dealers.
In November, a federal court bent to industry pressure when it struck down an SEC rule – the dealer rule – that would have heightened scrutiny of the shadow banks and other financial firms facilitating trades in the bond market by requiring them to register as dealers, a designation that comes with various guardrails to protect markets, managers and investors. This month, the SEC filed an appeal.
PRIVATE MARKETS
The Next Financial Crisis?
The IMF signals that the risky private credit sector, spearheaded by private equity and venture capital firms, may threaten the stability of the global financial system. An op-ed in the Financial Times points to the sector’s opacity, making investors, policymakers and the general public largely unaware of what’s going on in these illiquid markets. The International Monetary Fund is concerned that the growth of private credit may “lead to a deterioration in pricing and non-pricing terms, including lower underwriting standards and weakened covenants, raising the risk of credit losses in the future,” FT writes.
Despite the underlying risk, global investment banks like Goldman Sachs are increasing their exposure to the sector, with some in the press suggesting they’re beginning to resemble their private equity counterparts.
PE & Healthcare.
Private equity is now a behemoth in the healthcare industry, and the effects are disastrous. The Department of Health and Human Services ran through the responses to its request for information (RFI) about the trend, finding that private equity’s consolidation raises prices, worsens patient access, reduces quality, and offers insufficient transparency. And physicians that worked with PE firms offer “mixed reviews.” The HHS uses the collapse of formerly Cerberus-backed Steward Health as a case study, as well as instances of closures from systems in Pennsylvania, and the report cites AFR research that points to the danger of PE consolidation in nursing homes.
Meanwhile, a case study in real-time: Prospect Medical Holdings filed for bankruptcy this month, making it the second major PE-backed healthcare system to collapse in less than a year.
Makes sense why the Federal Trade Commission’s Lina Khan warned about “catastrophic consequences” if the Trump administration lets PE’s healthcare takeover go unchecked.
And: PE’s investments in healthcare are going sour, as defaults and bankruptcies rise among PE-backed physician practices.
KKR and Antitrust.
The federal government sued private equity megafirm KKR over allegations that it evaded the premerger antitrust review process for at least 16 different transactions from 2021 to 2022, masking the “market impact of its deals and serial acquisitions.” KKR has pushed back against the claims in a countersuit.
Other Private Markets News.
Low Exit Values. In 2024, the value of private equity exits reached a five-year low, despite a spike in so-called acquisition “megadeals.” When PE firms can’t get out of investments with IPOs, they just pile portfolio companies with more and more debt to net themselves a payout.
Free Money from Fees. Since 1969, hedge funds have earned $1.8 trillion in fees – almost half of their total profit during the period, meaning they earn almost as much as they pay out to their clients.
CRYPTO
White House Task Force.
Trump signed an Executive Order to create a Working Group on Digital Assets Markets, headed up by crypto advocate and venture capital billionaire David Sacks. Sacks is peddling the line that NFTs and memecoins are not securities.
SEC Task Force.
The SEC’s Acting Chairman Mark Uyeda leaned into industry demands when he announced the creation of a so-called “crypto task force” to create a new regulatory framework for digital assets. Over the past several years, the SEC has brought enforcement actions against several crypto platforms, which facilitate the trade of volatile assets, for operating as unregistered securities platforms. Major players like Coinbase, one of these unregistered securities dealers, have tried to make the SEC write laxer new rules just for them.
Don’t Bank on Crypto.
The OCC’s Acting Comptroller Michael Hsu issued a warning in an American Banker op-ed that banks should “continue exercising caution” when it comes to crypto. He reminds us that “excessive industry accommodation and deregulation” results in instability and inevitable bailouts when things go wrong and that strong safety measures can prevent sudden shock.
HOUSING
Mortgage Discrimination.
The CFPB undertook enforcement against mortgage lender Draper & Kramer Mortgage Corporation for alleged redlining in Chicago and Boston. The agency alleges that the lender conducted business primarily in majority-white neighborhoods, while avoiding marketing its services to majority-Black and Latine neighborhoods. Rival lenders reportedly originated over 2.5 times more mortgages in majority-Black and Latine areas than Draper. If approved, the CFPB would ban Draper from mortgage lending for five years and require it to pay a $1.5 million penalty.
Related: The agency has reminded mortgage lenders that they have to comply with the law, like the Truth in Lending Act, rather than waste their time inventing loopholes to elude consumer protection.
Privatizing a Public Service.
Amid talk of releasing the mortgage enterprises Fannie Mae and Freddie Mac from conservatorship, a move that would send destabilizing shockwaves through the housing industry, Republicans have drafted a plan to overhaul Fannie and Freddie.
Greystar’s Hidden Fees.
The Federal Trade Commission is teeing up a lawsuit against Greystar, the country’s largest apartment landlord, for allegedly charging tenants deceptive and overwhelming hidden fees. The lawsuit alleges that Greystar didn’t tell tenants about certain fees, like pest control, garbage services and background check fees.
NAR.
A few years ago, the Department of Justice launched an investigation into the National Association of Realtors (NAR), the largest trade association for real estate brokers in the country, over organizational rules that increased broker commissions by inflating sellers’ costs. The NAR petitioned to either stop or modify the terms of DOJ’s probes. This month, the Supreme Court declined to hear the group’s appeal.
PE in the High Housing Chair.
President Trump has appointed private equity CEO Bill Pulte to head up the Federal Housing Finance Agency, putting a member of an industry whose extractive practices have boosted home prices across the country in striking distance of housing policy.
CLIMATE and FINANCE
The Insurance Crisis.
On Friday, a sobering article from the Los Angeles Times called the California wildfires “one of the most costly natural disasters in U.S. history.” For many residents in regions battered by climate-intensified disasters, insurers have punched a devastating hole in coverage exacerbated by a crisis that many of them helped to create by investing in fossil fuels. Some of the largest corporate insurance companies have abandoned neighborhoods - or even full states - wholesale. And in places they haven’t pulled out, they’ve raised rates to untenable levels. These conditions have left public insurers-of-last-resort, like California’s FAIR Plan, burdened by billion-dollar losses, and taxpayers on the hook for whatever they can’t cover.
Recently, the Treasury’s Federal Insurance Office (FIO) issued a report revealing how climate change is making homeowners insurance more expensive and harder to obtain, analyzing data released by insurers via FIO and the National Association of Insurance Commissions (NAIC). The CFPB also recently found that hundreds of thousands of mortgages across the Southeast and Central Southwest are likely under-insured against flood risk.
Said AFREF’s Kelsey Condon: “Climate change is making it harder for people to find affordable insurance, if they can find it at all.”
It has also created what some sources, including The American Prospect, have called the next possible financial crisis. Beyond just losses to individuals, the pullback of insurers has the potential to send shockwaves through the financial system, as mortgages on uninsured and lost homes may be foreclosed, leading to losses on bank balance sheets and less mortgage lending overall.
Said AFREF’s Jessica Garcia: “State insurance commissioners [should] ask hard questions of insurers, prioritize protecting consumers, and appropriately integrate the risks of climate change and opportunities of climate resilience into long-term planning and decision making.”
Un-Greening Finance.
The Federal Reserve announced it would withdraw from the climate-oriented Network of Central Banks and Supervisors for Greening the Financial System (NGFS), marking a move away from addressing serious climate-related financial risks.