Friday, April 03, 2026
Trump Is Silencing Warning Signals of an Economic Crash
If the United States economy is headed off a cliff, better that we receive no warning in advance. That may not be the stated goal of the Trump administration, but, to borrow a term from the late MIT economist Paul Samuelson, that’s its “revealed preference.” The preference in this case is revealed by Russell “Project 2025” Vought’s determined efforts, as director of the White House budget office, to shut down two agencies created by the 2010 Dodd-Frank Financial Reform and Consumer Protection Act.
Dodd-Frank was Congress’s attempt to head off another catastrophe like the 2008 financial crisis. It was the first major financial overhaul since the Great Depression, and despite commentators’ general feeling that it never went far enough, bankers hated it. Now those same bankers want President Trump to gut two significant parts of it, and he’s obliging—at the very moment that the economy is teetering like a spring breaker at Panama City Beach.
The first of the two offending agencies is the Treasury Department’s Office of Financial Research, or OFR. This is a small office—it’s never employed much more than 200 people—dedicated to furnishing policymakers with the kind of detailed information they lacked during the late aughts about mostly-unregulated “shadow banks” such as mortgage companies, private equity, private credit, hedge funds, and the repurchase agreement market, or “repo.” This last provides overnight short-term loans to manage corporate cashflow. The Washington Monthly has called OFR “The Most Important Agency You’ve Never Heard Of.” Here’s a detailed summary of OFR’s accomplishments.
Every year OFR sends an annual report to Congress that’s written in a typically cheerful tone that downplays financial risks. Still, the necessary information is there if you look for it. The latest report, covering the fiscal year that ended on September 30, noted that student loan defaults rose to 9 percent; that, at a time when private credit is stumbling, about 7 percent of the regulated banking system’s assets consist of loans to shadow banks; that hedge funds’ dependence on repo increased by 154 percent; and that growth in private repo (the Fed also has a repo operation) is off the charts. . . . . “If large lenders suddenly decide not to roll over repo,” the report says, “borrowers, many of which are securities dealers, must quickly find other sources of financing or sell assets, which may transmit repo market stress to other markets.”
The financial world doesn’t appreciate seeing the federal government advertise its vulnerabilities, even sotto voce, and Republican Senator Ted Cruz of Texas, who between 2019 and 2024 collected nearly $2 million in campaign contributions from the securities and investment sector, introduced during that same time period three successive bills to abolish OFR, which he called “useless and unaccountable.” Last year’s “One Big Beautiful” reconciliation bill initially zeroed out OFR’s budget, but the Senate parliamentarian ruled against that. So Vought took matters into his own hands. Having already halved OFR’s staff from 196 employees to 100, Treasury officials informed staff last month that 64 percent of the remainder will be laid off . . .
“As risks emerge in the financial system and cracks in the credit markets spread,” Senator Elizabeth Warren told Government Executive, “the Trump administration is gutting the office designed to evaluate financial risks in a giveaway to Wall Street. This is just the latest move by President Trump and his financial regulators to undermine financial stability and pave the way for another crash.”
The other Dodd-Frank agency Vought is trying to shut off is the better-known Consumer Financial Protection Bureau, or CFPB. CFPB’s function is not merely informational but regulatory; it polices abuse of consumers by financial institutions, which is epidemic. Already Vought has reduced CFPB to what E. Tammy Kim, writing last month in The New Yorker, called“The Zombie Regulator.” . . . . Now Vought, who since firing CFPB director Rohit Chopra has been the agency’s acting director, proposes to cut what’s left of the staff in half, from about 1200 employees to 556 employees. The agency had 1750 workers at the start of Trump’s administration.
The CFPB’s primary purpose is to protect consumers, but when financial institutions get busy trying to lure retail customers in over their heads, that’s often a sign that the economy is headed for trouble. In 2008 mortgage companies, ravenous for home loans to package into securities, sold subprime mortgages to customers who quite obviously couldn’t afford them. The result was the worst recession since the Great Depression. At the moment the financial industries perhaps most desperate to find new customers are private equity and crypto. Rather than examine how they got into this fix and take steps to prevent it from happening again, the Trump administration moved this week to “democratize” finance by proposing that 401(k)s be opened to investment in private equity and cryptocurrecies. The only democratization here is that of risk. If the rule is finalized, private equity and crypto will promise unimaginably high returns to non-wealthy investors who can’t weather a sharp downturn. When they go down, as I observed last September, the whole economy will go down with them.
Mike Pierce, a former deputy assistant director at the CFPB who’s now executive director of the nonprofit Protect Borrowers, told me Thursday that he thinks the next financial crisis will stem from private credit, which is different from private equity but often practiced at the same firms. Private credit is in the middle right now of a sort of slow-motion bank run due partly to its exposure to software companies. With household debt right now at $18.8 trillion, or well over half of GDP, consumers are taking out “increasingly risky” loans, Pierce said, with companies “increasingly intertwined … with private credit.”
The administration doesn’t publicize efforts to shut down OFR and CFPB because these agencies serve the interests of non-elites. If MAGA voters knew about OFR and CFPB they might actually like them! Another reason to be silent is that you can’t sell these cuts as fiscally conservative. Closing these two agencies would have zero effect on the budget deficit because neither agency is funded by taxpayers; instead, OFR is funded by assessments on banks and CFPB is funded by the Fed (which in turn is funded by assessments on banks and by interest on securities). The only reason to shutter these agencies is because they get on the financial industry’s nerves.
“The president is very focused on keeping the pieces of his coalition that are still willing to return his phone calls inside the tent,” Pierce told me. “These people have a line directly into the senior staff of the White House. They ask for the world and more often than not they get it.” What they want in this instance is to shut off any warning lights that might dare blink red about the economy. It’s bad for business, and if a bust is coming they’d prefer we suckers don’t know in advance. We may get crushed but the big players will get bailed out, like always.
Thursday, April 02, 2026
Public Anger Focused On the Felon/GOP Is Rising
For a brief moment last week, Congress started to do something productive. The Senate, after weeks of bickering and fruitless negotiations, unanimously approved legislation to fund most of the Department of Homeland Security, taking a small but meaningful step toward resolving one of the many crises that have sprung up like targets in a game of whack-a-mole during President Trump’s second term. All that stood between tens of thousands of federal employees and their paychecks was a similar vote in the House.
But House Republicans would not agree. Instead of considering the DHS bill, Speaker Mike Johnson denounced the bipartisan compromise and then sent the entire chamber home for a two-week Easter recess. The move all but guaranteed that the government’s third-largest department would remain unfunded indefinitely as the nation wages war against Iran. Meanwhile, as lawmakers enjoy time with their families—or jet off on vacations and taxpayer-financed junkets overseas—millions of Americans are struggling with a spike in gas prices caused by the war.
Public anger is rising rapidly. The president’s approval ratings—which were already anemic—have sunk to new lows, and Republicans are facing the prospect of an electoral wipeout in this fall’s midterm elections. The GOP’s hold on the House majority has appeared precarious for months, but now its more comfortable advantage in the Senate may be in jeopardy too. Even TMZ is channeling the national discontent: The website known for trailing celebrities has begun hounding members of Congress, encouraging its readers to send in photos and video of lawmakers fleeing Washington, D.C., and living it up while the public servants responsible for protecting the homeland go unpaid.
Back in their districts, members of Congress—particularly swing-seat Republicans—seem to be in hiding. Hardly any are holding town halls or other well-publicized events that could put them face-to-face with frustrated voters. We contacted the offices of more than a dozen House Republicans in tight reelection races this year. Only Schweikert responded. No one else would agree to interviews about what they were hearing from constituents, nor would they disclose the events they were holding to solicit public feedback.
Trump did alleviate one pain point for the public last week by declaring that he would go around Congress to pay TSA agents, a move that reduced the snaking lines at airport-security checkpoints across the country. Wait times had stretched to hours as missed paychecks thinned the ranks of on-duty TSA agents, causing staffing shortages.
Yet the [Felon's]
president’sunilateral action, though welcomed by lawmakers and air travelers alike, addressed only the most visible part of a crisis that has dragged on for weeks. Thousands of DHS employees, including members of the Coast Guard and FEMA, and administrative staff, have worked without pay for more than a month—and that’s after they missed paychecks during the larger 43-day government shutdown last fall.In Congress, the dispute over DHS funding has centered on ICE and Trump’s mass-deportation campaign. After federal agents fatally shot two U.S. citizens in Minneapolis earlier this year, Democrats said they would not agree to fully fund DHS without reforms to the way that ICE operates. They’ve demanded that ICE agents wear body cameras and not masks, and have asked for requirements that agents seek judicial warrants before entering private homes in search of undocumented immigrants. The two parties appeared to be making progress toward an agreement early last week before Trump scuttled the talks by insisting that Republicans tie any DHS-funding deal to passage of the unrelated SAVE America Act, an elections bill that Democrats staunchly oppose.
Schweikert’s House district in and around Scottsdale, Arizona, is one of the wealthiest and most highly educated in the nation. But its voters are livid at Congress. In interviews this week outside grocery stores, gas stations, and at the airport, many told us they were scrimping on food—cutting back on pricier meats and fruits—and others said they had changed their driving habits because of gas prices that are nearing $5 a gallon in some locations. Retirees, and those close to retirement, told us they are anxiously riding the volatility of financial markets amid the war.
Erica Squires and her sister Christina made trade-offs as they shopped for Easter goodies for their niece and nephew at Walmart. . . . The Squireses also are intentional about buying gas. They opted to fill up at the Walmart in Scottsdale, where they paid about $4.20 a gallon—less than in other parts of town. And rather than driving solo to visit their sister in a far-flung Phoenix suburb, they are now carpooling. Erica gave up shopping at a natural-grocery store because of rising prices. While they are hustling to make ends meet, the sisters told us, they don’t see Congress doing anything to make their lives better. If anything, they said, lawmakers are making it worse.
Others we encountered felt the same way. One young Democrat who works as a health-care administrator said his girlfriend’s luxury car has been sitting at home for the past month because it needs premium gas, which is almost $6 a gallon. He blames Congress: “It’s ridiculous.” A middle-aged woman whose truck sported a Don’t tread on me sticker matter-of-factly summed up her feelings about the country’s lawmakers: “Everything is terrible.”
The security lines had dissipated yesterday, a day after TSA employees began receiving back pay. Passenger frustration had not. Layton Martin, a Republican from Phoenix who was flying to Salt Lake City, told us that members of Congress were playing with the livelihoods of government employees for their own political benefit. “They’re having, like, an ego party,” the 28-year-old fitness trainer said. “It seems very childish.” Martin’s rent is up $300 compared with last year, he said; his cost to fly to Salt Lake was double the normal price, and his friends can’t find jobs.
Schweikert, the Republican who represents Scottsdale in Congress, seemed just as frustrated. He told us that he views the DHS shutdown as a symptom of a larger unwillingness by Congress to tackle the nation’s structural problems. . . . . His constituents, he said, complain that their wages haven’t kept up with inflation, so they are poorer today than they were five years ago and are stressed about rising housing costs and making car payments.
Schweikert said he would have been happy to stay in Washington over the Easter break if it had looked as though a funding deal was possible, but the votes weren’t there. He placed blame on everyone—“Republicans, Democrats, leadership”—who refused to sit down and keep negotiating. “One side is using their rage at DHS to raise money and the other side—my side—is often terrified to actually have detailed, mathematically honest conversations about population and immigration.”
Wednesday, April 01, 2026
Iran: No Good Way Out
[The Felon]
President Trumpclearly wants out—and soon. The war that the United States and Israel started with Iran delayed what Trump sees as a landmark visit to China, which he postponed until mid-May, suggesting that he thinks he will be free to travel by then. He said in a Cabinet meeting that most of Iran’s military capabilities have been destroyed, implying a high degree of success. And, having twice left the negotiating table with the regime in the past year, he now appears keen to make a deal of some sort that will allow U.S. and Israeli forces to withdraw and, he presumably hopes, reopen the Strait of Hormuz so that the stock market can rise and oil prices can fall.But wars rarely, if ever, wrap up neatly, or perfectly solve the problems they aimed to address. Sometimes they lead to new problems. And how they end is always hard to predict. Four weeks into World War II, no one could have anticipated how it would end. By the first month of the 2001 U.S. invasion of Afghanistan, the Taliban-led government was collapsing. Less than a month after the U.S. invaded Iraq in 2003, Saddam Hussein’s regime fell, in what turned out to be the apex of the U.S. military campaign.
One month into the war with Iran, U.S. and Israeli forces have successfully degraded Iran’s military capabilities. But Tehran has proved adept at counterpunching in asymmetrical ways, blocking the Strait of Hormuz and targeting U.S. allies in the Persian Gulf with drones. The regime’s allies, Houthi rebels in Yemen, launched at least two missiles toward Israel over the weekend. Those attacks again expanded the battlefield and raised fears that the Houthis could stop ships from using the Red Sea, as they did shortly after the start of the war in Gaza in 2023.
Trump—as his advisers repeatedly remind the public—has options. He is sending ground forces to the Gulf at the same time as he is considering dispatching senior members of his administration to talk peace. Trump said he was extending a pause on strikes against Iran’s energy infrastructure until April 6, while the negotiations continue.
None of Trump’s four current options to bring hostilities to an end comes close to achieving the grand ambition the president outlined on the first night of the war—regime change in Tehran—in the weekslong timeline he promised. Whether his other stated goals—destroying Iran’s nuclear and ballistic-missile capabilities, and targeting Iran’s proxies—can be achieved, or whether the U.S. can withdraw and claim a victory with any credibility, remains unknown. All of his options come with serious liabilities, not least the fact that Iran appears to consider its own position to be relatively strong, given its de facto control over the Strait of Hormuz and, therefore, the global price of oil. Tehran may not feel that ending the war on a quick U.S. time frame is in its own interests.
“While we are inflicting enormous pain on Iran, we are also signaling to them that we are experiencing pain, and we don’t like it,” Peter Feaver, a professor of political science and public policy at Duke University, told me. “That tells them that their strategy—to just ‘survive’ and that will be a win—might be working. And if they hold on, they might get a better deal next week rather than this week. And that complicates negotiations.”
1. Send in the Troops
Trump could send in ground forces to seize energy facilities in a bid to sever Tehran’s economic lifeline, forcing the regime to sue for peace. . . . Kharg Island—which sits off Iran’s coast in the Gulf, 400 miles from the Strait of Hormuz—is the center of Iran’s energy-exporting industry and has already been hit by U.S. forces multiple times. The U.S. calculus may be that seizing the island in a high-risk mission would put such a severe economic choke hold on Tehran that the regime would be forced into submission.
But Iran would not feel the economic squeeze as quickly as world markets would, current and former defense officials told me, and the island’s seizure could ramp up retaliatory strikes on Gulf energy and civilian infrastructure. Oil prices would likely spike at the prospect of losing exports from Kharg and as a result of further Iranian escalation.
But reopening the strait alone would hardly constitute victory for the U.S.; shipping was flowing fine before the war. Neither Secretary of State Marco Rubio nor the White House yesterday identified ships’ transit as a war goal.
Ground forces have also been mooted for perhaps the most daring expedition being contemplated: a strike deep into the country to seize enriched uranium from Iran’s nuclear processing facilities. This would be an incredibly complex maneuver. The uranium itself may be hidden underground. But if successful, the Trump administration could credibly claim to have removed the most existential threat posed by Iran, something previous administrations failed to achieve.
2. Desist and Depart
Trump could also declare victory and walk away. To hear Trump tell it as recently as Thursday, the United States has reduced Iran’s ballistic and drone capability by at least 90 percent. And on Sunday, he told reporters traveling with him that the U.S. had achieved “regime change.” But the theocrats remain in charge. And Reuters reported last week that U.S. intelligence can confirm only that about one-third of Iran’s missile capacity had been destroyed. More of the arsenal has been damaged, but how depleted Iran’s stockpiles truly are remains opaque.
Still, Trump could declare that the U.S. has achieved one goal—“completely degrading Iranian missile capability”—and simply end the campaign there, much as the U.S. and Israel did last June after 12 days of strikes on Iran.
Such a scenario might mean that, months from now, the U.S. and Israel will have to return to stop the redevelopment of Iran’s missile and nuclear programs, a strategy Israel has called “mowing the grass.” And it takes two sides to end a war. Iran may continue its attacks on U.S. bases and U.S. allies to deter the U.S. and Israel from launching a new campaign.
Among the many reasons Trump has cited for starting the war was to make sure that Iran never has a nuclear weapon. If the U.S. and Israel quickly withdraw, Iran could once again revive its program. Saudi Arabia and other U.S. allies may seek their own nuclear arms in response.
3. Negotiate With the Regime
Trump could still do a deal. The prospect of negotiations has not curtailed hostilities. . . . But Tehran’s five-point plan and the U.S.’s 15-point plan indicate that the two nations are seeking very different outcomes. The Trump administration wants Tehran to give up its ballistic-weapons capability, end its use of proxies, and forswear nuclear weapons. (The U.S. plan makes no mention of better governance for the Iranian people.) Iran wants the promise of no future war with the U.S. or Israel, the lifting of economic sanctions, and to collect a fee to allow ships to transit the Strait of Hormuz. Neither side has retreated from their maximalist claims, signaling that talks could be protracted.
4. Keep Up the Sorties
Finally, Trump could order continued bombing until Iran capitulates or the state fails. If the U.S. and Israeli militaries widen their targeting and keep bombing, Iran’s government may collapse or the country might splinter. But that is an uncertain prospect, given the results so far, and the costs would keep rising. The intense bombing of the war’s first month has already plunged the world into the largest supply disruption in the history of the global market, according to the International Energy Agency. The U.S. military is burning through its weapons stockpiles, and American consumers are seeing prices rise. As of today, the average U.S. price for a gallon of unleaded gasoline crossed $4 for the first time since 2022.
Americans are already paying a daily tax in this war, at the gas pump and at the grocery store. The longer the war continues, the higher that tax becomes, as the midterm elections near. The president also said in the hours after the initial strike that Americans should be prepared for casualties, and the toll has since mounted.
A prolonged campaign would pose even greater challenges to countries that are more dependent on fuel imports. Over the weekend, Egypt implemented a curfew on businesses to preserve energy, and Sri Lanka went to a four-day week for government workers to combat rising fuel prices. Gulf allies may not have air-defense munitions to counter daily attacks from Iran for a sustained period. And the strain on U.S. stockpiles, troops, ships, aircraft, and weapons could leave the U.S. too weakened to protect itself from other threats, including China.
Most important, endless strikes would not resolve the United States’ strategic dilemma. The U.S. has struck 13,000 targets, Trump has said, with 3,000 more to go, and yet administration officials couldn’t tell fellow Republicans on the Hill last week what the president was seeking to achieve. Simply extending a war is not a certain path to victory. The U.S. fought for 20 years in Afghanistan, only to have the Taliban return to power even before the U.S. could complete its evacuation from Kabul.
Tuesday, March 31, 2026
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