Episode 2239: Frank Vogl on why Trump's financial deregulation is likely to lead to another global economic crash

The zealously anti-regulatory Trump is back and anti-corruption activist Frank Vogl is very worried. Vogl warns that MAGA’s increasingly deregulated America financial landscape could make the 2008 crash look like a minor bump in the economic road. With Trump putting the Foreign Corrupt Practices Act on "pause" and DOGE kingpin Elon Musk openly dreaming of turning X into a bank, we're watching traditional financial regulation shrivel to the minimal levels of Calvin Coolidge’s 1920’s. Meanwhile, Melania is launching crypto tokens, Putin's kleptocracy has been legitimized by the Ukraine “peace” negotiations, and the increasingly unaccountable banks are begging to gamble with our money again. What could possibly go wrong?

Here are the five KEEN ON takeaways from this conversation with Frank Vogl:

* Financial Deregulation Concerns - Frank Vogl warns that Trump's administration is actively dismantling financial regulations, including pausing the Foreign Corrupt Practices Act and weakening the Consumer Financial Protection Bureau. He fears this deregulation could lead to a financial crisis potentially worse than 2008.

* Three-Pronged Financial Risk - Vogl identifies three interconnected areas of concern:

* Traditional banks seeking reduced capital requirements and fewer restrictions

* Unregulated expansion of Silicon Valley firms (like X/Twitter) into banking

* The growing crypto market and its potential for money laundering and speculation

* Regulatory Enforcement Weakening - The Trump administration is systematically weakening regulatory agencies by appointing anti-regulation leaders and reducing staff (e.g., the Federal Deposit Insurance Corporation lost 500 staff). This reduction in oversight capacity could enable financial abuse and fraud.

* International Corruption Implications - The suspension of the Foreign Corrupt Practices Act and potential lifting of Russian sanctions could create a vacuum in global anti-corruption enforcement, as no other country (including the UK or Switzerland) is positioned to take over America's leadership role in fighting international financial crime.

* Big Tech and Government Contracts - There's growing concern about the relationship between the Trump administration and tech leaders, not just for potential government contracts but also for their control of media platforms. Vogl argues this could be problematic for democracy if proper procurement and transparency processes aren't followed.

FULL TRANSCRIPT: Frank Vogl Warns of a New Financial Crisis Under Trump 2.0

Interview with Frank Vogl February 16, 2025

Two months into Donald Trump's second presidency, financial corruption expert Frank Vogl returns to Keen On to discuss the dismantling of America's financial regulatory system and its potential consequences. Vogl, co-founder of Transparency International and author of "The Enablers: How the West Supports Kleptocrats and Corruption, Endangering Our Democracy," warns of parallels to both the 1920s and 2008 financial crisis, but with new digital-age complications.

Andrew Keen: Hello, everybody. It is Sunday, February 16th, 2025. A couple of years ago, we did a show with my old friend Frank Vogl on the global fight against corruption. He is the author of "The Enablers: How the West Supports Kleptocrats and Corruption, Endangering Our Democracy" and co-founder of Transparency International, a nonprofit focused on exposing financial corruption. Last year, we had Frank back to discuss whether Donald Trump 2.0 would be what we called a semi-legal repeat of the Sam Bankman-Fried FTX debacle. Now, almost two months into the Trump regime, I'd like to revisit this question. Frank, you have an interesting new piece out in The Globalist about Trump-style U.S. financial deregulation and its global ramifications. Is it as bad as we feared?

Frank Vogl: Yes, it's good to be with you, Andrew. We are in danger of developments that could lead to a financial crisis in a few years' time, potentially worse than the 2008 financial crisis. That crisis led to massive unemployment and economic hardship, not just in the U.S. but across the world. It was caused by wild speculation, greed, and mismanagement by fewer than two dozen financial institutions, many of which were bailed out. Now, thanks to what Trump and Elon Musk are doing, we're setting the stage for a new era of financial deregulation with all the risks that involves.

Andrew Keen: It's chilling. Frank, I wonder about the historical parallels. Some people have made much of Trump's interest in McKinley's presidency, colonialism, and Latin America. But I wonder whether we're really returning to the 1920s and the unconstrained speculative capitalism of the Coolidge, Harding, and Hoover era. Are there historical analogies here? The teapot scandal and unregulated capitalism of the '20s resulted in the great crash.

Frank Vogl: Yes, that's true. But we should remember it led to a new era of regulation - the establishment of the Securities and Exchange Commission and other regulatory bodies focused on ensuring financial institutions didn't have excessive power. What we're facing now is not only the prospect of excessive power by financial institutions but a much more complicated array of financial institutions. Take Elon Musk, who unquestionably wants to enter the financial arena by operating his own quasi-bank.

Andrew Keen: He's always been clear about that - he's said X will ultimately be a bank among other things.

Frank Vogl: What we're seeing now is not only the possibility of bank deregulation, but also the emergence of a whole new unregulated system of finance from Silicon Valley. Add to that the complete mayhem of gambling, greed, corruption, and money laundering associated with crypto tokens. Put all of that together and you have a dangerous situation that could affect the global economy.

Andrew Keen: Some might say you're overreacting. A Silicon Valley entrepreneur friend who was on the show yesterday argued that the Biden administration, particularly figures like Lina Khan, was stifling innovation. They'd say Trump's people are just letting innovators innovate, with Musk as a prime example. How would you respond to that?

Frank Vogl: I disagree when it comes to finance. Let me explain. Our government essentially has two components: the administrative state, where government departments monitor and implement programs and projects, and the regulatory state, where agencies protect American citizens in health, consumer safety, and finance. First and foremost, we need a safe and sound financial system. Everyone benefits from that. We have a healthy financial system right now - just look at the stock market. It could be improved, but let's not demolish it. The profits of the biggest banks in 2024 were at record levels. Jamie Dimon, head of JP Morgan Chase, took home a record $39 million in compensation. The head of Goldman Sachs got an $80 million bonus.

Andrew Keen: Which in Silicon Valley terms isn't that much money, certainly compared to the Musks and others of this world.

Frank Vogl: My point is that banks are the bedrock of our financial system. The people at the top are being compensated better than ever before. So what are they campaigning for? What are they supporting Trump on? They're arguing for the kind of deregulation that Paul Volcker, the former Federal Reserve Board president, warned would be dangerous.

Andrew Keen: My understanding of the 2008 crash was that banks took advantage of vulnerable consumers and lent them money they shouldn't have borrowed, creating the subprime mortgage crisis that crashed the economy. What do bankers want to do in 2025 that, in your view, they shouldn't be allowed to do?

Frank Vogl: You're right about what happened, but also many financial institutions borrowed enormous sums. They leveraged their basic resources to speculate on complicated derivative financial instruments. They were essentially gambling. As Chuck Prince, who ran Citigroup, said, "We have to keep dancing as long as the music is playing."

Andrew Keen: Capitalism is about dancing, Frank. It's about taking risk, isn't it?

Frank Vogl: To some degree, but when you have an institution like JPMorgan Chase with over $4 trillion in assets, you have to think hard about its mission. That mission fundamentally is to serve customers, not just the top executives. Let them get rich at the top, but let them be prudent and maintain integrity. Trump and Musk have no time for that. Let me give you one example: Trump recently announced we're no longer going to investigate international and corporate corruption. He put the Foreign Corrupt Practices Act on pause.

Andrew Keen: Yes, that was February 10th. Quoting from whitehouse.gov: "Pausing Foreign Corrupt Practices Act enforcement to further American economic and national security," whatever that means.

Frank Vogl: The act was signed by Jimmy Carter in 1977. The largest single fines ever paid for foreign bribery were by Goldman Sachs - nearly $4 billion globally, with $1.6 billion to the U.S. alone. Now we're ending investigations of exactly the kind of activity that made Goldman Sachs very profitable. We're ending all manner of fraud investigation in finance. Take another example: last week, the Consumer Financial Protection Bureau was essentially shuttered. A judge ruled it should continue, but Tru