Back in the 1920s, Charles Mitchell — the swaggering head of National City Bank, the forerunner to Citigroup — had a ritual. He would take his bond salesmen to lunch at the Bankers Club, perched atop the Equitable Building at 120 Broadway, and point to the city below, stretched out in miniature. “There are six million people with incomes that aggregate thousands of millions of dollars,” he’d say. “They are just waiting for someone to come to tell them what to do with their savings. Take a good look, eat a good lunch and then go down and tell them.”
For Mitchell, finance and the new instruments of wealth — stocks, margin loans, investment trusts and even exotic foreign bonds — were not to be hidden away but promoted like any other product. “It has always seemed to me that there is, and always has been, too much mystery connected with banking,” he liked to say.
He wasn’t alone in preaching the gospel of access. John Raskob — a top executive at General Motors, a born promoter and the man who built the Empire State Building — famously declared, “Everybody ought to be rich!” He explained: “I didn’t see why the working men and women of our country should not be let in on the tremendous profits being made in America today.” Raskob set out to create one of the first mutual funds, explicitly designed to give “the little fellows” a chance to join the boom.
Nearly a century later, we are in the grip of a sweeping new age of financialization and innovation — the boldest transformation in money and investing since the 1920s — that is also driven by the idea of expanding access to markets. Private equity, venture capital and private credit, once the preserve of institutions and wealthy individuals, are now about to be repackaged for the masses, even woven into 401(k) retirement plans. Crypto tokens are being sold as a way to buy slices of private firms like SpaceX and OpenAI, in the gray zone of securities law.
It all comes amid a new stock boom, fueled by a mania for A.I., and with a new administration in Washington that is determined to loosen rules — creating a permissive spirit similar to the one that passed for innovation in the 1920s. The Trump administration is working on rolling back key provisions of the Dodd-Frank Act, easing capital requirements for midsize banks and sidelining the Consumer Financial Protection Bureau — an agency born after 2008 to police predatory lending. Congress, for its part, has advanced measures like the Genius Act and, more recently, the so-called Financial Innovation and Technology for the 21st Century Act — billed as modernization and, in practice, opening the gates for crypto and other speculative products.
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The post The Rules of Investing Are Being Loosened. Could It Lead to the Next 1929? appeared first on New York Times.
