Yesterday, the Republican-controlled U.S. House of Representatives voted to pass H.R. 3978, the TRID Improvement Act, a piece of legislation that is designed to allow powerful Wall Street firms to game the stock market, working behind the scenes with technological cheats to direct massive amounts of earnings to well-connected traders, leaving ordinary investors in the lurch.
Maxine Waters spoke before the vote on the TRID Improvement Act yesterday, warning of its dangerous loosening of standards for Wall Street trading. She said:
“H.R. 3978 has been dramatically expanded without input from Democrats to include several highly problematic and damaging bills. If enacted, this amended package of bills would ease the ability of high frequency traders to manipulate the stock markets undetected, encourage a regulatory race to the bottom in our Nation’s stock exchanges, and harm investors and small businesses by weakening efforts to prevent accounting fraud at smaller public companies.
Taken together, this deregulatory package could significantly undermine market stability and gut investor and consumer protections at a time when our financial markets are already rattled.
Madam Speaker, from January 26 until last Thursday, the stock markets plunged just over 10 percent, becoming what the financial services industry calls ‘stock market correction,’ and for the past two trading days, markets have rebounded the most since 2016.
Although market corrections are not new, what distinguishes today’s volatility is that it is driven by complex computer strategies designed to buy and sell stocks and options millions of times a day. As many of us have witnessed, the Dow Jones Industrial Average may be up 500 points and then down 600 in less than a few minutes. For the average American who was hoping to one day retire with dignity by investing her hard-earned savings in the stock market, it can be distressing to see such wild swings always wondering whether the markets are truly fair or whether she is going to be fleeced. Unfortunately, the passage of H.R. 3978 would likely make those swings more extreme and increase the likelihood of problems going forward.”
The TRID Improvement Act harms ordinary investors in the following ways:
– It weakens standards for companies to be listed on stock markets, allowing for unethical deception of investors
– It eliminates the requirement for an independent audit of companies’ financial reporting controls for an entire decade
– It allows companies to engage in a deceptive cycle of misleading financial statements, followed up with later, rarely-read, corrections.
– It bans the SEC from examining Wall Street trading algorithms to detect unethical and illegal automated trading code
– It takes $2 million from the SEC reserve fund, making it more difficult for the SEC to catch unscrupulous traders who cheat investors and break the law
The passage of the TRID Improvement Act provides further evidence that the Republican Party is in the pocket of Wall Street elites, and is willing to throw hard-working middle class investors under the bus in order to make their millionaire and billionaire patrons even more wealthy than before.
The TRID Improvement Act allows criminal activity on Wall Street to go undetected, but what’s worse, the entire US economy is put at risk by this Republican dirty dealing. When Wall Street fraud and abuse enabled by the corrupt TRID Improvement Act exacts its toll, American workers will lose their jobs, and retirees will lose their life’s savings.
We don’t know when it’s going to happen, but market collapse is an inevitable consequence of widespread fraud of the sort enabled by the TRID Improvement Act. When Wall Street tanks, remember that the TRID Improvement Act was the bill that allowed it to happen.