On Thursday, five federal regulatory agencies elected to roll back a key fiscal pattern reenacted in accordance with the 2008 financial crisis. The change will make it easier for banks to invest in venture capital and will tweak some restrictions on bank investing in hedge funds and private equity–all forms of riskier investing that Congress restriction after 2010.

The revamped power will also wither the financial cushion that banks are required to keep on hand during certain forms of derivatives selling. This particular modification could free up an estimated $40 billion of asset for banks to trade with.

Sheila Bair, who sufficed as chairman of the Federal Deposit Insurance Corporation during the financial crisis, told CNBC that she reputes the changes are “ill-advised” because” that $40 billion that will no longer be in banks to protect them” will expose the administration has more risk.

Called the Volcker rule, the original edition of this regulation has long been one of the most controversial parts of the Dodd-Frank Act, a broad parcel of Wall st. reforms passed after the 2008 crisis and the bailout that stabilized the financial system in its wake. Dodd-Frank’s goal was to prevent future taxpayer-funded bailouts, by cracking down on the riskier investing practices by banks that precipitated the crisis, and propagandizing them to better shield themselves financially for economic downturns.

Since the start of his presidency, Trump has been vocal about his desire to undo Obama-era financial regulations. And his administration has already made a number of such changes, including contract a bill that rolled back parts of Dodd-Frank, and paving the way to undo the fiduciary rule, which requires fiscal consultants to act in the best interest of their clients. This latest roll back of the Volcker Rule is consistent with the administration’s commitment to monetary deregulation.

When proposing this rule change in January, the five regulatory agencies said that the original Volcker rule had led to confusion and curtailed bank act that it was never meant to cut off. The purpose of these changes, “theyre saying”, was to streamline the rules around investing in what are known as” submerge funds “– hedge fund, private equity, and similar firms–to allow for some lower-risk task.

But as the economic crisis wrought by the Coronavirus pandemic continues, some current and former fiscal regulators determine the relax of these rules of as potentially increasing probability in the financial system at a time when there is little room for large-scale losings, given the trillions in government spending on pandemic easing to households and businesses and record-high unemployment .

Rostin Behnam, a commissioner on the Stock Futures Trading Commission, issued a statement of difference, voicing his opposition to his colleagues’ decision.

” As the 10th commemoration of the Dodd-Frank Act sadly coincides with a different kind of crisis, I think it is critical to take a hard look at how far we have come in ten years, and how well sells have adapted to carefully crafted program intended to create a more pliable monetary arrangement ,” he wrote.” Chipping away, particularly at a time of great uncertainty, risks a reversion to the past .”

In his statement, Behnam also mentions a letter from the late Paul Volcker, the onetime Federal Reserve chairman who championed the eponymous ruler. Several months before his death in December 2019, when regulators began moving these changes to the rule, Volcker pencilled a letter to Federal Reserve chairman Jerome Powell warning of the consequences should the administration become the proposed change.

“The new guideline enlarges gamble in the financial system, increases moral hazard and weakens defences against conflicts of interest that were so glaringly on display during the last crisis, ” wrote Volcker.

Following today’s announcement finalizing the Volcker rule alters, bank furnishes rose 2 percent. The power will take effect on October 1.

Read more: motherjones.com