We’ve all been subject to countless articles and opinion pieces on the fifth anniversary of the collapse of Lehman Brothers. Everyone wants to know what we’ve learned since the nation’s fourth-largest investment bank declared bankruptcy on Sept. 15, 2008, and there has been no shortage of ink and computer pixels dedicated to the subject.
So I’ll spare you. I’m not particularly interested in speculating about what we’ve learned or how we’ve changed at the arbitrary five-year mark—I don’t know that it matters much. I’m more interested in results, in what we’ve done to address the problem of financial-services firms that are so big and so unmanageable that they put our entire economy at risk. And the fact remains that the largest financial firms are, by all accounts, larger and more concentrated than they were five years ago. So we still have work to do, don’t we?
My real concern is that, lo these many years later, our opportunities for fundamental change are going up in smoke just like Lehman. For instance, take this week’s announcement that JPMorgan Chase agreed to pay $920 million to U.S. and British regulators for violating securities laws. Lest we forget, the fine was due to the “London Whale” fiasco, in which high-risk trades funded partly by federally insured deposits cost the megabank $6 billion, which it promptly hid from financial regulators.
What was the impact of this announcement? A collective yawn. It’s widely viewed as just another in a long line of penalties. Another day, another fine. And that is dangerous. We cannot become desensitized to Wall Street’s failures and complacent about our need for further change.
The cover of the latest
Time magazine posits that, five years after Lehman, Wall Street has won. My first instinct was to ask a question: Won what? Wall Street hasn’t even had to get its hands dirty engaging in a street scrap. It hasn’t won anything because it hasn’t had to. Wall Street was guided through the financial crisis it created with a multi-trillion-dollar, taxpayer-funded safety net. Some battle.
You want to see Wall Street pull out the big guns? You want to see what it’s really capable of? Let’s make some headway on really taking on the too-big-to-fail issue by breaking up these enormous financial institutions into more manageable parts. Let’s get some support behind the TBTF Act (S. 798), which would require these firms to put their money where their mouth is and hold upwards of 15 percent capital on their books to help offset the massive amount of risk they pose to our economy. But, then, maybe that’s the whole point. Wall Street won because it never had to put up its dukes. It never even entered the ring, and the crowd has all gone home.
Well, I’m still ready for the fight. If we want to prevent another crisis like the one we woke up to five years ago, we can’t just go back to bed.
I’m ready to see what Wall Street’s really got. Are you?
