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What about the "and afterwards" part, where the banks that were too big to fail were split up, and regulation was improved?

by noja 3y ago

JumpCrisscross 3y ago
> What about the "and afterwards" part, where the banks that were too big to fail were split up, and regulation was improved? Whether TBTF banks should be split up is still being debated. With size comes resilience (and fewer books to look over). In terms of improved regulation, the fact that we're less than a year out from the second, third and fourth largest bank failures in our nation's history with seemingly no memory of it seems to speak for itself [1]. [1] https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...
hluska 3y ago
I don’t understand your point, but yes, aspects of the US financial industry were improved as a result of the 2008 crisis. That happened because of roughly two years of work by congressional and senate oversight committees. Other things (ie - derivatives) were not properly regulated. If you’re interested in what one form of regulation could have looked like, you should look up Brooksley Born. Most specifically, what happened to her when she proposed regulation. Ben Bernanke spent so much time testifying and was so bothered by his experience that he used to be a registered Republican. Now he’s independent.
- deleted 3y ago
  [deleted]
- no_wizard 3y ago
  For anyone interested, here's a good summation of the Brooksley Born story[0]. Its a tragedy through and through. She faced harassment from all sides and her expertise was brushed off carelessly. Its really truly sad. The same thing happened to Raghuram Rajan from the IMF. He delivered a paper criticizing the financial sector entitled "Has Financial Development Made the World Riskier" which argued that disaster loomed. The paper, which proved accurate, was aggressively criticized by Larry Summers, who served as the director of the National Economic Council in the Obama Administration. He was also ostracized for expressing a legitimately dissenting opinion on how financial markets in their then current form were a great risk the global financial system [0]: https://www.sfgate.com/business/bottomline/article/Brooksley-Born-foresaw-disaster-but-was-silenced-2454453.php https://www.sfgate.com/business/bottomline/article/Brooksley...
  - hluska 3y ago
    That link is an excellent summary! It’s quite interesting because we can look back in time and find some excellent people who sounded the alarm bells. They all got trounced. I think if we can take any solace, it’s that Larry Summers did not serve as Obama’s Secretary of the Treasury. It went to Tim Geithner instead.

What about the "and afterwards" part, where the banks that were too big to fail were split up, and regulation was improved?

by noja 3y ago

What about the "and afterwards" part, where the banks that were too big to fail were split up, and regulation was improved?

JumpCrisscross 3y ago

> What about the "and afterwards" part, where the banks that were too big to fail were split up, and regulation was improved? Whether TBTF banks should be split up is still being debated. With size comes resilience (and fewer books to look over). In terms of improved regulation, the fact that we're less than a year out from the second, third and fourth largest bank failures in our nation's history with seemingly no memory of it seems to speak for itself [1]. [1] https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...

hluska 3y ago

I don’t understand your point, but yes, aspects of the US financial industry were improved as a result of the 2008 crisis. That happened because of roughly two years of work by congressional and senate oversight committees. Other things (ie - derivatives) were not properly regulated. If you’re interested in what one form of regulation could have looked like, you should look up Brooksley Born. Most specifically, what happened to her when she proposed regulation. Ben Bernanke spent so much time testifying and was so bothered by his experience that he used to be a registered Republican. Now he’s independent.

deleted 3y ago
[deleted]
no_wizard 3y ago
For anyone interested, here's a good summation of the Brooksley Born story[0]. Its a tragedy through and through. She faced harassment from all sides and her expertise was brushed off carelessly. Its really truly sad. The same thing happened to Raghuram Rajan from the IMF. He delivered a paper criticizing the financial sector entitled "Has Financial Development Made the World Riskier" which argued that disaster loomed. The paper, which proved accurate, was aggressively criticized by Larry Summers, who served as the director of the National Economic Council in the Obama Administration. He was also ostracized for expressing a legitimately dissenting opinion on how financial markets in their then current form were a great risk the global financial system [0]: https://www.sfgate.com/business/bottomline/article/Brooksley-Born-foresaw-disaster-but-was-silenced-2454453.php https://www.sfgate.com/business/bottomline/article/Brooksley...
- hluska 3y ago
  That link is an excellent summary! It’s quite interesting because we can look back in time and find some excellent people who sounded the alarm bells. They all got trounced. I think if we can take any solace, it’s that Larry Summers did not serve as Obama’s Secretary of the Treasury. It went to Tim Geithner instead.