US Paves Way For Private Assets To Be Included In 401(k) Retirement Plans (reuters.com) 99
An anonymous reader quotes a report from Reuters: The Trump administration on Monday issued a long-awaited proposed rule to open up retirement plans to alternative assets, paving the way for private equity and cryptocurrencies to be added to 401(k) accounts. The measure, announced by the U.S. Department of Labor, is intended to ease longstanding barriers to incorporating these less liquid and less transparent assets into American retirement plans. It follows an executive order from President Donald Trump last summer and could clear the way for alternative asset management firms to tap a large new source of capital.
Industry groups have argued private market investments can enhance long-term returns and diversification for retirement savers, while skeptics warn higher fees, complexity and limited liquidity could limit those gains and pose risks for retail investors. Some private market funds that are already available to wealthier individual investors have shown signs of strain in recent months. Private credit funds known as business development companies have seen a wave of withdrawals. Treasury Secretary Scott Bessent said the proposed rule was "an initial step" and aimed to be "mindful of the importance of protecting retirement assets."
The guidance lays out how plan trustees, who have a legal fiduciary duty to act in the best interest of members, can incorporate these assets. They would have to "objectively, thoroughly, and analytically consider, and make determinations on factors including performance, fees, liquidity, valuation, performance benchmarks, and complexity," the DOL said. Trustees who abide by them will be granted safe harbor that protects them from lawsuits, it added. The Supreme Court agreed earlier this year to hear one such case filed in 2019 by a former Intel employee claiming trustees made "imprudent" decisions by investing in hedge funds and private equity funds.
Industry groups have argued private market investments can enhance long-term returns and diversification for retirement savers, while skeptics warn higher fees, complexity and limited liquidity could limit those gains and pose risks for retail investors. Some private market funds that are already available to wealthier individual investors have shown signs of strain in recent months. Private credit funds known as business development companies have seen a wave of withdrawals. Treasury Secretary Scott Bessent said the proposed rule was "an initial step" and aimed to be "mindful of the importance of protecting retirement assets."
The guidance lays out how plan trustees, who have a legal fiduciary duty to act in the best interest of members, can incorporate these assets. They would have to "objectively, thoroughly, and analytically consider, and make determinations on factors including performance, fees, liquidity, valuation, performance benchmarks, and complexity," the DOL said. Trustees who abide by them will be granted safe harbor that protects them from lawsuits, it added. The Supreme Court agreed earlier this year to hear one such case filed in 2019 by a former Intel employee claiming trustees made "imprudent" decisions by investing in hedge funds and private equity funds.
MAGIC BEANS! (Score:5, Insightful)
Re:MAGIC BEANS! (Score:5, Insightful)
Makes sense to me. Bitcoin seems to be stuck in the $65,000 to $70,000 price range right now, and they need to find a new batch of suckers... er... "investors" to jack up the price. Letting crypto bros invest Bitcoin in their 401k will give them that actual liquidity to start the next price ramp up.
I just hope that they know where the exit point is. Bitcoin seems to be a 4 year up and down price cycle, and you don't want to get caught holding it the next time it crashes in value again.
Re:MAGIC BEANS! (Score:4, Insightful)
Bitcoin seems to be a 4 year up and down price cycle, and you don't want to get caught holding it the next time it crashes in value again.
Well this seems like a key asset to have in a long-term growth strategy then.
Remind me why I would want to put my retirement savings into an investment vehicle that can disappear overnight?
Re:MAGIC BEANS! (Score:5, Insightful)
Bitcoin seems to be a 4 year up and down price cycle, and you don't want to get caught holding it the next time it crashes in value again.
Well this seems like a key asset to have in a long-term growth strategy then.
Remind me why I would want to put my retirement savings into an investment vehicle that can disappear overnight?
You're looking at it wrong. It's not about you or your wealth potential. It's about making sure what wealth you have available to you is openly available to some already far richer asshole to pilfer. That's the end-goal with this shit, to make sure the middle and lower classes have *ALL* their retirement funds stripped and handed to the wealthy. And this crypto-scam 401k link will be a very, VERY efficient way to make that happen.
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Mod parent and all ancestors Funny. Crying doesn't help, so let's try Funny.
And I already checked the entire discussion for Funny and the rich target was again missed. At least that's what the moderators say, even though I think this FP branch went there...
"You want to get to Solution City? Sorry, you can't get there from here. All the roads have been torn up and replaced with fences with minefields underneath and drone patrols flying over."
A larger compounding mistake (Score:2)
Promoting and allowing even more debt at all levels and securitizing every transaction revenue stream is not going to help in the long run.
Countries need to very slowly reduce the total debt and financial derivatives in use.
Each expansion of debt beyond a point (likely in the 1990s) public or private increases the cost of living and reduces inflation adjusted wages.
Lower wages, losing out to inflation, easier to get debt means less growth, less housing, less household formation and less births.
It maybe as s
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Yea I was wondering about this. I pretty clearly saw that some (all?) of the Fidelity funds that a 401K can invest in include bitcoins as part of the portfolio. So what exactly is new?
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Which ones do the proles need to pay to keep the IRS from throwing their ass in jail?
They never pay taxes, so don't recognize the inherent problem there.
Re:MAGIC BEANS! (Score:5, Insightful)
The point of buying Trumpcoin is to pay a bribe. You just need to remember to communicate what you want in exchange for the purchase, out of band.
It's a really good system, but making it tax-deferred would make it even better. Since the goal is for Trump to end up with all the value, a Trumpcoin's value should be 0 by the time you're required to take distributions. That way, there's effectively no tax on your bribe. Win/win for everyone.
In the US, it's my god-given constitutional right (Score:4, Insightful)
The flip side is that I'm also free to become wildly successful, and society won't hammer me down like a nail.
But, the consequences of my actions land squarely in my own lap. Good, bad, or something in between. I own it. And I won't get much help if my stupidity blows up in my face.
If people want to bet their retirement money on crypto and opaque shady investments with valuations that amount to "whatever the cryptowallstreet bro says it is", so be it. I will stick with publicly-traded equities, real estate and bonds. There's a really old-timey rule in investing that's still pretty solid - "you should only invest in what you can understand."
Re: In the US, it's my god-given constitutional ri (Score:2)
Oh, I can understand the private credit markets. I just donâ(TM)t think theyâ(TM)re a good investment. same with bitcoin.
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ahh, the glorious american national dogma, which elevates the normal conditions of the developed world to "thpecial amewican pwividwedges"
i really hope this guy deletes your income tax and then does nothing to replace the lost govt income, shkreli-level trolling that is
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But you can't deny that it represents the thinking of the booger-eating moron perfectly.
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The problem is that individual owners of 401K investment funds have no say in how their funds are invested.
The investments are managed by "experts" who are paid to make these decisions. Guess who pays them more.
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Where I live the retirement savings system is quite different, so maybe I'm not understanding the US system well (or, at all). But I'm sure many people with retirement savings are not financially savvy and will delegate all decisions on how to invest their savings to some financial management companies, brokers, banks or however it works in the US. So doesn't that now allow those companies to invest people's savings into cryptocurrency, obviously with potentially very unfortunate results for said savings? C
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Currently retirement accounts enjoy heightened protections typically -- managers are supposed to be fiduciaries, which means they need to prioritize the interests of the investor over their own interests, and are more liable if they fail to do so.
You are absolutely not free to be successful (Score:1)
As a employee you're also fucked because we also stopped and forcing labor protection laws. So companies can collude to lower wages while getting tax breaks for offshoring
Limited Investment Choices for Retirement Plans 40 (Score:3)
The choices of investment funds and their internal structure is very small and limited on purpose by the management companies to limit investments I to their choice of funds, so employees are forced down a very narrow path of carefully bad or expensive to manage choices to only arrive at the single target date fund that their employer and management company wants them to keep their retirement money in.
The emplyees cannot just choose to invest into index based funds of their choice and that is the purpose of
Sub Prime Mortgage Crisis Do Over from 2008 (Score:4, Interesting)
The 2008 financial crisis was due to Collaterized Debt Obligations (CDO)s that had real good and normal mortgages but were mixed in with no collateral and bad mortgage loans into tranches to make the crap passable and to get the credit rating companies to upgrade the ratings by hiding the bad debt among some good debt.
This new retirement account legislation is going to do the same thing for all the 401(k), 403(b), and 457(b) plans which force you into target date funds and to allow those funds to allocate percentage of their holdings into their bad assets like cryptocurrency and private debt, which are both opaque and poorly if at all regulated.
Private debt defaults at 10%+ rate and higher very quickly and quietly even after passing audits, which are no longer trust worthy after so many incidents of complete debt write off right after a clean audit. Private debt companies limit liquidity by preventing withdrawals using ponzi scheme like timing and amount limits per customer or per entire fund.
Cryptocurrency is inherently a ponzi schemensince it always requires new suckers to hold the bag and is unstable so it can implode or get rug-pulled anytime without recourse. Very bad for an asset class which should hold value and provide growth without surprise and without massive value swings.
Very bad for US employees. They will be forced to hold bad assets by heir employers and retirement account administration companies without recourse because of the limits of investment choices they have with retirement accounts.
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The employer and the administrator firm want to force you into target date funds
No they don't. You don't have to participate in a TDF. It's pretty rare for a plan to not offer at least a few low cost vanilla options like a S&P 500 index. Yes, some plans blend in higher cost funds with 12b-1 expenses to cover plan costs. I don't dig that but it's considered acceptable and plan costs have to paid somehow - employer pays the cost, the employee does through fees, or some funds "give back" some management fees.
Did you get picked? (Score:2)
What part of that fiction has any connection with the reality of the 1%?
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The problem is that this allows the trustees to bet someone else's money on wildly speculative things. Proving that they acted irresponsibly will be on the person who lost all their means of hiring a lawyer.
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How are the trustees betting someone else's money? They don't get compensation.
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the consequences of my actions land squarely in my own lap. Good, bad, or something in between. I own it. And I won't get much help if my stupidity blows up in my face.
Unless you're stupidly wealthy, in which case your failure can become a structural threat to the market, and your mistakes and losses will be met with gov't intervention to ensure you can't really fail. Or you just send enough money to various super PACs and election funds to ensure the gov't isn't picking winners and losers, except when it comes to you; you're the winner, your competition is the loser.
Be prepared for ... (Score:3)
Some private market funds that are already available to wealthier individual investors have shown signs of strain in recent months. Private credit funds known as business development companies have seen a wave of withdrawals.
You can't really expect rich people to sell into a market that isn't buying.
Re:Be prepared for ... (Score:5, Insightful)
Yup.
https://www.bloomberg.com/news... [bloomberg.com]
When your shareholders want to redeem their shares, and you fix cap outflows at 5%, that's not a good sign.
Essentially, it's the bit in "Wonderful Life" where they're trying to minimize the run on the bank.
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Nothing really wrong with a 5% withdrawal rule. In exchange for the extra risk, the investor generally gets paid more interest. But this is why such investments should be restricted to institutional and high net worth investors. Most retail investors either can't afford to give up the liquidity or will panic when there is blood in the water. These are long term investments.
No more than 10% (Score:5, Informative)
No more than 10% of your portfolio should be in high-risk assets. That's a very old rule and still applies.
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The Life Investment. (Score:2)
No more than 10% of your portfolio should be in high-risk assets. That's a very old rule and still applies.
This. The earlier people can understand the difference between investing and gambling, the better.
This isn't merely a multi-decade strategic investment. It's a personal survival plan. Invest as if your life depends on it. Because it does.
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Even that depends on how long you expect it to be before you need the funds. As the "cashing in" time gets closer, you need to reduce the high-risk part.
Holy... (Score:5, Informative)
These sick fucks won't be satisfied until they can do whatever they want with our 401k money. From guaranteed company pensions to 401k plans that are simply fodder for the Wall Street assholes to claim priority over our retirement savings to 401k money being used to prop up the crypto bros in one lifetime's span. Amazing. Our society just keeps finding ways to tell us that our main priority is making sure the rich keep getting richer at the expense of the rest of us.
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oh yeah those coffers are RIPE for the picking. Honestly it'd surprise me to learn they've not actually been dry for years now thanks to financial sector shenanigans
Re:Holy... it gets worse (Score:2)
Wall Street could seize your retirement savings in the next financial crash - and it's perfectly legal
https://www.aol.com/articles/w... [aol.com]
https://www.foxnews.com/opinio... [foxnews.com]
Re: Holy... (Score:1)
Not sure what the hell you are talking about. On one hand, you sound like a MAGAt railing about election rigging, but you're also calling the corrupt oligarchy in this country "assholes".
Pick a side, fool
And the grift continues (Score:5, Informative)
Of course, the trump crime family has huge investments in crypto and stands to make millions from the suckers. Nothing slimy or sleezy in that!
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Not to this degree.
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I believe there was a period right after the civil war that was as bad.
It's all legalized gambling anyway.... (Score:2)
I don't see why I care about government trying to protect people from themselves with this one? I would never invest in crypto and very likely not private equity funds as part of a retirement plan. But that doesn't mean other people wouldn't want to. If you've got enough money already saved up in retirement funds and you believe you've found a window where it makes sense to risk, say, 20% of what you've got on something like crypto? It might double that money for you practically overnight. It also might jus
Re: It's all legalized gambling anyway.... (Score:3)
Programs like these arenâ(TM)t meant to protect people from themselves. Itâ(TM)s to protect us from their inability to plan ahead (whether that is because they are struggling to get by, or they are just dumb and make bad investments or refuse to save for the future).
Re:It's all legalized gambling anyway.... (Score:5, Insightful)
>>I don't see why I care about government trying to protect people from themselves with this one?
Because when they lose everything and have nothing left when to retire on, guess who will end up paying to bail them out? It's not the scammers who got rich selling them snake oil, it's the rest of us. And don't think they won't get a bail out; retired people are an important voting block and will support whoever promises them the most.
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A gift to the Crypto-barons (Score:1)
It does seem that this is primarily intended to be a gift to the crypto-barons, to pump up the value of their crypto assets.
Elon Musk is going to dump 1.5 trillion (Score:5, Informative)
Basically SpaceX is going to be valued at 1.5 trillion. However it is impossible for it to reach that valuation in the real world.
SpaceX already has all the launch customers that can possibly get even under the best case scenario. And in unfavorable administration would almost certainly start looking for alternatives because Elon meddled in a war.
So the only possible growth sector for SpaceX is launching its own satellites, specifically the ones for internet.
But that's a dead end too because there aren't enough customers who can afford high-speed internet and also do not have access to some form of landline based internet like cable or DSL
the only other growth sector would be AI bullshit but Elon has lost most of his engineers to other companies. SpaceX got this huge boost because Elon had a mystique and he was talking about going to Mars so a shitload of rocket engineers took lower pay than they could get in any other job and work longer hours to work for spacex. That isn't happening with elon's AI companies. So he can't compete and the stuff he's building is barely better than what you could build yourself and run off your own GPU.
Everybody knows this, at least everybody who is investing that kind of money, so in order to get the kind of money he wants he's doing a weird stock scheme that limits access to the stock in order to drive up the price. Basically a few insiders will get all the profit and it's going to leave a huge amount of worthless stock that needs to be sent somewhere.
Normally it would be dumped into public pensions but those have been maxed out with bad stock already. So we are 401K is going to get hammered.
This is just the largest of many scams that are going to loot your retirement and there's basically nothing you can do about it except vote for pro-consumer politicians who want to regulate Wall Street but that's going to be annoying people like Elizabeth Warren and AOC and Bernie Sanders and frankly people don't like them... And in politics likeability is basically everything now.
What I'm saying is that if you are retiring or even if you're just retired you're a fucked. You have money and somebody wants it and they're going to get it
Re:Elon Musk is going to dump 1.5 trillion (Score:5, Insightful)
You have positively no understanding of economics whatsoever.
Please I beg you take a look: https://www.khanacademy.org/ec... [khanacademy.org]
Not gonna address any of Patrick Boyle's points? (Score:2)
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I did it purely as a free public service.
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LOL, why did you log out to post this? And which LLM did you use?
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I pasted your comment into grok following the prompt "analyze this person's mental state". Here is the result it gave:
The poster's mental state, based solely on this comment (and its context as a reply to a Slashdot story about AI-driven collapse in entry-level tech jobs), appears to be one of profound, chronic distress characterized by catastrophizing, paranoid ideation, grandiosity, and emotional exhaustion.
This isn't a clinical diagnosis—I'm an AI, not a therapist, and I have only the text to go on
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That was fun. Perhaps my favorite line:
"This mix (superior insight + ultimate futility) is common in people who've burned out on online activism or forums like Slashdot."
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I mean if you could offer counter arguments that would be great.
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My graduate degrees are in economics and I think the GP probably has a better understanding of how the system works than you do. Or at least he does a better job of keeping up with the news [ft.com] than you do.
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Once nice thing about S&P 500 Index funds is that your stock has to be profitable for several quarters before it enters that index.
So, you don't have to be worried about your retirement investments being polluted with SpaceX AI slop... yet.
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There will be an initial gold rush by Insiders. And then the regulations will quietly be altered. Just in time to let them screw us all over and make out with all our money.
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S&P is looking to repeal that rule [ft.com] at least for the case of SpaceX.
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YouTube is not a source, it's a soapbox. People on YouTube will say *anything* as long as it generates clicks.
History Repeats (Score:3)
Re:History Repeats (Score:4, Insightful)
Near as I can tell is the only lesson learned was by investment bankers who promulgated that debacle and what they learned was they could lie, cheat, and steal all they wanted and the DoJ and SEC would not do a goddamn thing about it. In fact, they bank rolled firms deemed too important to the economy by subsidizing their losses with taxpayer dollars to prevent them from going under and no one went to jail. Cryptobros saw that and thought "I gotta get me some of that!" and so paid off trump and the GOP leadership to put themselves at the head of the feeding trough.
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I began working for a hedge fund in June of 2008, midway between Bear Stearns failing and Lehman Brothers failing. In early 2009, seven or eight months after I joined, and after it was very clear how bad things were, and what caused it, I got called into a meeting with the quants (I was just a code monkey) in which they decided that, while we hadn't been in subprime mortgages before, now was the perfect time to get in on them, as the collapse supposedly made the prices more proportionate to the risk.
Nobody
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It does beg the question as to why there wasn't punishments.
I speculate it was shown to Obama, behind closed doors, that the previous administration had been the architect of the mortgage market corruption.
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Taxpayers earned a $12-billion profit [latimes.com] on the U.S. Treasury’s $45-billion bailout of Citigroup Inc., the government reported as it sold the last of its stock in the banking giant.
Disclaimer: I worked for Citi for a couple of years, 2010-2012, before I got disgusted with their rather hidebound management.
TL;DR Private equity needs a bailout (Score:1)
Wall street (Score:2)
When was the last time wall street had mass layoffs?
How come every idea they come up with makes them tons of money and their investors take the hit?
All of those ideas 10 years later are looked at and decided that is not ethical so maybe we should make a law saying you can't do it.
Then the SEC says you can't make laws.
and around and around we go.
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That's certainly how Trump made his money, he didn't pay for all his bankruptcies out of his own pocket!
Trump did not make any money. He inherited it.
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I have news for you. Absolutely none of this is for your benefit.
Pretty much do a boglehead 3 fund portfolio (Score:4, Interesting)
Everyone put their savings into stocks.. (Score:2)
Re:Everyone put their savings into stocks.. (Score:4, Informative)
Socialize the loss.
Privatize the gains.
The motto of Wall Street since that bull in front of the stock exchange was a tiny calf.
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To quote Charlie Stross (Score:2)
Invest now, before you miss your chance to lose everything!
I'm surprisingly supportive of this (Score:2)
Fiduciary responsibility changed (Score:2)
These changes redefine the rules to allow high volatility investing for large 401k funds.
Previously, the managers of these big 401k funds (that most of us have retirement money invested in) were bound by a fiduciary duty to not take excessive risks with our money. This meant that returns were relatively safe, but not spectacular. The fund managers get paid a % of the return as a bonus -and they want more.
Under these new rules, they can bet big (with your retirement money) on the big payout -which will ear
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Under these new rules, they can bet big (with your retirement money) on the big payout -which will earn them a bigger bonus if it pays out. They are no longer required to play it safe with your money. Acceptable risk has been officially redefined. Imagine if your 401K fund had bought bitcoin 20 years ago. Imagine if your 401K fund goes all in on OpenAI when they IPO.
Imagine if your 401k bought bitcoin six months ago.
Weird title (Score:3)
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Potentially Good (Score:2)
The Public Markets have rules and laws that incentivize very destructive and predatory behaviors. Corporations behave like psychopaths to hit quarterly numbers for 'fiduciary duty' laws.
Private assets don't have these so they can build real companies with an eye on the future.
But private companies don't have nearly as much access to capital because all the investment money goes into retirement because of stupid tax laws which goes into psychopathic public companies.
And then Blackrock / State Street / Vangu
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The Public Markets have rules and laws that incentivize very destructive and predatory behaviors. Corporations behave like psychopaths to hit quarterly numbers for 'fiduciary duty' laws.
Private assets don't have these so they can build real companies with an eye on the future.
Tell me you haven't been paying attention to the actions of private equity without telling me you haven't been paying attention to the actions of private equity. Vulture private equity is a thing; the basic trick is:
Well I know one thing (Score:2)
It's risk transfer to retirement accounts (Score:2)
Banks won the right to tie their deposit accounts to their riskier trading activities [google.com] in 1999 with Graham Leach Bliley "Financial Services Modernization Act [investopedia.com]" which finally fully repealed Glass Steagall, which had been getting chipped away over the years.
So, they received bailout protection - "privatize the profits, socialize the losses" to protect the consumer deposit arms of their organizations, when the rest of it blew up.
Transferring cryptocurrency and other asset risk to retirement accounts has the same
Trump wants your retirement money (Score:2)