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In the latest issue of the Indianapolis Business Journal, I’ve written an article on how the financial services industry has been altered following the bankruptcy filing of Lehman Brothers five years ago. In terms of progress, very little has changed.
As I state in my article, sufficient safeguards have yet to be put in place to protect consumers and investors in the event of another catastrophic breakdown of our financial system. Excessive risk taking on the part of investment banks and Wall Street are not a thing of the past. And, transparency and oversight of financial markets are still not where they should be.
Yes, Congress did respond to the financial crisis of 2008 with the Dodd-Frank Wall Street Reform and Consumer Act. But instead of creating the fundamental financial reforms that it intended, Dodd-Frank became so watered down by Wall Street lobbyists both at the adoption stage and in the rule-making process its additional wattage would barely power a lava lamp.
Meanwhile, America’s six largest banks now have about 30 percent more assets than they did in 2007. In other words, they’re substantially bigger, yet still lack meaningful regulation over the problems that caused the last financial crisis. At the same time, the government’s chief regulators, led by the Securities and Exchange Commission (SEC), continue to be about 10 steps behind in terms of exerting any meaningful power to avoid the next big financial black-out.
With this as our new reality is there any doubt that the too big to fail are now simply too bigger to fail? The bottom line: How long will it take for the lights to finally go on in this country so that we actually learn from our past mistakes?
You can read my IBJ Viewpoint in its entirety here.