The Project 2025 Capital Formation Trojan Horse Attack on Mom and Pop Investors
By Oscar Valdés Viera
At a time when far-right forces are literally dismantling the government, including stripping away most agencies’ regulatory and oversight capacity, further deregulation of the financial system would be a dangerous mistake that would help advance the far-right’s democracy-grab. The House and Senate Republicans are advancing so-called capital formation legislation that purports to be about helping companies raise capital but are really about undermining investor protections and exposing small investors—read people’s retirement and life savings—to the riskiest parts of the financial system.
Private markets include everything that is not traded on the stock exchanges and other public markets. That means private equity funds, other privately owned companies, and private financial instruments like private debt. These private market assets are extremely risky, opaque, and illiquid. The deregulation of private markets is a core part of Project 2025, the 900-page blueprint to implement a radical far-right wish list. Now is not the time to loosen the reins on corporate insiders and powerful oligarchs—it is the time to protect investor rights, market and economic stability, and democratic participation.
Companies seeking capital and investors looking for opportunity both rely on effective regulation and functional markets. Our financial system, economy, and businesses rely on informed decision-making by investors, who must have timely access to accurate information, in order to allocate capital effectively. For this system to work, transparency, accountability, and fair access to information are crucial.
Since the New Deal, federal securities laws have played a key role in establishing public and private disclosure obligations, protecting investors, and granting shareholders the rights necessary to hold companies accountable. The size of U.S. public markets and their success in fostering economic growth since World War II have been in large part thanks to, and not despite, a regulatory foundation built upon transparency and accountability.
However, over the past few decades, both Republican and Democratic administrations have yielded to corporate lobbying to weaken these guardrails. The 2012 Jumpstart Our Business Startups (JOBS) Act dramatically weakened securities laws by expanding exemptions from securities laws, making it easier for companies to raise billions without disclosing reliable financial or operational information. This contributed to the decline in the number of publicly traded companies on U.S. stock markets, despite the JOBS Act stated goal to increase job creation and economic growth by improving access to public capital markets.
Meanwhile, private markets flourished, largely driven by private equity firms, and companies now can raise billions from private investors without providing the necessary information to value their securities properly. The lack of transparency also allows companies to offer preferential terms to select investors, often giving more access to information and more favorable pricing to insiders, venture capitalists, and other large investors, while small or individual investors receive unequal access and less favorable terms.
This environment rewards the predatory practices of private equity firms that profit from destroying jobs, harming workers, and imposing huge fees on their own investors. Private equity and private debt markets have expanded rapidly in this deregulated landscape, often operating with minimal transparency, making it harder for investors to accurately assess risks.
“Project 2025 is so diabolical, so insidious, and so disturbing that everyone in this country needs to read it. They need to read it so they can understand the plan to take away their rights, their freedoms, and their democracy and turn this country into a Christo-fascist state.”
Rep. Maxine Waters, Ranking Member, House Financial Services Committee
Expanding private markets at the expense of better-regulated public markets is part of Project 2025’s radical financial deregulatory wish list. At its core, Project 2025 aims to gut regulatory agencies, weaken government oversight, and shift economic power to oligarchs and corporate boards, while retail investors, workers, and the public lose yet another avenue for holding companies accountable.
Congresswoman Maxine Waters, the top Democrat on the House Financial Services Committee, called Project 2025 a “diabolical” and “garbage” plan that would “undermine our government, our social safety net, and our values as Americans.” The House Financial Services Committee has held several hearings on capital formation, including one this month that introduced a raft of bills that mirror the Project 2025 agenda.
In addition to advancing Project 2025, the Trump administration and its so-called Department of Government Efficiency (DOGE) are waging an all-out assault on regulatory agencies. Among others, they have already targeted the Consumer Financial Protection Bureau, the National Labor Relations Board, and the Environmental Protection Agency—agencies designed to protect consumers, workers, and the environment from corporate abuses. Trump also illegally terminated two Democratic Commissioners at the Federal Trade Commission, signaling a broader effort to gut regulatory oversight. There is every reason to believe that the SEC—tasked with protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation—will also be hollowed out once the Chair is confirmed and/or DOGE minions are done with it.
Dismantling these agencies is a direct political assault on the needed public counterweight to corporate power. As private markets expand, companies are increasingly shielded from public influence. Fewer public companies mean fewer opportunities for shareholder activism on critical issues and more opportunities for corporations to avoid scrutiny and sidestep accountability for their environmental, social, and governance practices.
The biggest winners will be financial speculators, corporate raiders, monopolists, and insiders that move swiftly in and out of investments—both public and private—with privileged information. By contrast, ordinary investors will face higher risks, steeper fees, and less liquidity, while capital is increasingly misallocated into wasteful speculation, leading to investor losses on the next multi-billion-dollar fraud like Theranos or WeWork.
Effective regulation of private markets is essential for long-term economic growth and stability. It not only prevents fraud and abuse but also ensures transparency and fairness, giving shareholders a voice in influencing corporate behavior on issues such as climate change, workers’ rights, and diversity and inclusion.
However, if Trump and the Republican Congress enact Project 2025 to further expand private markets, it will reshape the U.S. economy into a landscape dominated by a few egomaniac billionaires, financial speculators, and corporate elites. The public and small mom and pop investors will be left with fewer rights and less influence over the economic forces shaping their lives. The result will be greater inequality, weakened democracy, and an economy increasingly rigged for the benefit of the powerful.