We’ve ignored the lessons of Lehman Brothers
Five years after the crash, Wall Street's gambling is more dangerous than ever
BY ROBERT B. REICH
While attention is focused on Syria, the gambling addiction of Wall Streets biggest banks is more dangerous than ever.
Five years ago this September, Lehman Brothers went bankrupt, and the Street hurtled toward the worst financial crisis in eighty years. Yet the biggest Wall Street banks are far larger now than they were then. And the Dodd-Frank rules designed to stop them from betting with the insured deposits of ordinary savers are still on the drawing boards courtesy of the banks lobbying prowess. The so-called Volcker Rule has yet to see the light of day.
To be sure, the banks balance sheets are better than they were five years ago. The banks have raised lots of capital and written off many bad loans. (Their risk-weighted capital ratio is now about 60 percent higher than before the crisis.)
But theyre back to too many of their old habits.
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