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Affluent Christian Investor | August 18, 2017

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300,000 Jobs to be Lost in Financial Services

Morgan Stanley announced today they will be laying off 1600 workers, primarily from institutional sales, trading and investment banking. Back office operations will also be affected, as the Wall Street Journal explained today.

This is a continuing trend in the financial services business that is a direct result of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Since I left The Street myself a year ago, I still maintain many personal connections and a view to the carnage impacting the business.  Enjoying a front row seat on an emerging market debt trading desk, I watched with my own eyes as the liquidity dried up and trades became harder and harder to get closed.  The trend has only worsened over the last twelve months, hence the layoffs.

Now let me say one thing up front: I can remember vividly the day Sandy Weill came through my office as the CEO of newly formed Citigroup and telling us all how he would push President Clintonto have Glass-Steagall repealed, which had separated commercial and investment banks since theGreat Depression. I recall thinking, “this will not end well.” Having banks levered up 30 to 70 times and funded by government guaranteed deposits was not a prudent strategy, and the banks are still being weaned off of this leverage. I do believe that commercial and investment banks should be separate. We’ve learned this the hard way twice now.

However, in the long run, the cure will be worse than the disease. The Obama Administration has taken this crisis and used it to force a suffocating blanket of government control over the industry. An unaccountable Consumer Financial Protection Bureau can now make arbitrary decisions about what products are good or bad.  Three thousand new government jobs and multiple new agencies have been created.

The main glaring error of Dodd-Frank is that it did nothing about the cause of the housing crisis: the U.S government forcing banks to make non-commercial loans and then having the taxpayer guarantee them through FNMA and FHLMC. This was also started by Clinton.

The result of all this intrusive government oversight is less capitalism, fewer liquid markets, less trading and less commerce.  Therefore, you need fewer people and create fewer jobs. It is hard to see how more government control will fix problems caused by more government control.

The ironic fact is that New York, which is the capital of liberalism in this country, is also the financial capital of the world. My sources tell me that upwards of 300,000 jobs will be lost in the financial services business in the next five years due to Dodd-Frank.  It seems that New York has shot its golden goose. Its tax base will shrink, the budget deficits will only worsen, and people will continue to leave.

 

Article originally published on The Brenner Brief.

Born in Georgia and raised in Savannah, Todd spent his early summers in Carp Lake, Michigan listening to the vivid stories of his grandparents recalling their youth in the northern wilderness. Ever since his earliest days, he loved story telling.

Todd left Savannah in 1982 to attend the U.S. Air Force Academy in Colorado Springs, CO where he studied aeronautical engineering. Upon graduation in 1986, he immediately left the Academy for flight school. His initial assignment was flying Combat Search and Rescue helicopters at Elmendorf Air Force Base in Anchorage, Alaska. In the UHAE (Unique Harsh Arctic Environment-pronounced “Yoo Hay” by Alaskans) he flew local rescue missions and was also deployed throughout Asia. During this time he was credited with saving many lives and even more assists. In addition to flying exciting missions, Todd also managed to graduate from the University of Alaska Anchorage with an M.S. in Engineering Management. In 1990 he volunteered for Special Operations and went back to flight school. In 1991 he was assigned to the 20th Special Operations Squadron at Hurlburt Field, FL, flying MH-53J Pave Low helicopters. Immediately he was deployed to Kuwait. Over the next three years he was active in classified missions in support of counterterrorism under the control of the National Command Authority and deployed throughout the world. His customers included SEAL Team Six and Delta Force. He left the Air Force as a Captain in 1994. During this hectic period in his life he found time to write his first novel, The Ultimate Solution which was never published. He did publish an article in the Armed Force’s Journal in 1994 on Special Operations Aviation.

1994 found Todd joining an investment bank and earning a chance to expand his knowledge of his other passion, Finance. During this second career he became highly knowledgeable in Emerging Markets Fixed Income and traveled a great deal internationally with a focus on the Caribbean. He has conducted business in over forty different countries. He became acutely aware of the consequences of economic decisions and their effect on national and economic security.

However, Todd.’s love of storytelling was uncontrollable. He left the financial business in 2011 to write. Currency was published in December of that year. Once he began typing, he never stopped.

Todd lives on a three-hundred year old farm in Connecticut deeded by King George of England with his children.

 

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