crash

The financial crash in 2008 was the worst since the Great Crash of 1929 and it caused the worst economy since the Great Depression of the 1930s. A second Great Depression was only avoided due to unprecedented, historic, and very costly government and taxpayer bailouts for too-big-to- fail Wall Street banks and the financial sector.

• The financial crash and its fallout will ultimately cost the hardworking American people more than $20 trillion in lost gross domestic product (GDP).  Those losses include historically high unemployment, underemployment, long-term unemployment, foreclosures, homelessness, underwater mortgages, bankrupt businesses large and small, lost savings, deferred or denied retirements, educations cut short, and so much more.

• A primary cause of the financial crash was the dismantling of regulations that were passed in the aftermath of the 1929 crash to protect Main Street families from Wall Street’s high-risk activities. The protections worked for more than 70 years as there were no catastrophic financial crises, our economy flourished, and there was broad-based prosperity among the middle class.

• Culminating in 2000, Wall Street’s lobbying succeeded in rolling back or weakening many core protections, resulting in deregulation, non-regulation, and so-called self-policing. In the years that followed, Wall Street engaged in a breathtaking spree of high-risk, reckless, and sometimes illegal behavior, which caused the 2008 financial crash and the Great Recession.

• That is why financial reform generally, and the Dodd-Frank Wall Street Reform and Consumer Protection Act in particular, were essential: to rebuild the protections between Wall Street and Main Street; to eliminate or reduce Wall Street’s highest-risk, most dangerous activities that threaten hardworking American families; and to put Wall Street back in the business of traditional banking to support jobs and growth in the real economy, not to threaten them.

• However, just seven years after the crash and only five years since the financial reform law was signed into law, many are forgetting, understating, or misrepresenting the causes and costs of the crisis. This has been abetted by a disingenuous Wall Street public relations campaign to mischaracterize financial reform as a costly burden and a threat to middle class families, jobs, community banks, and the economy.  But these self-serving claims are nothing more than smokescreens to gut financial reforms and enable Wall Street to return to its recklessness, endangering Americans once again.

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