“Too big to fail” banks not only leave the country at risk of another crippling financial crisis, but also are holding the country’s political processes hostage because of the outsized power they wield.
That was the consensus among speakers at the release of Reality Check, a book by Public Citizen’s Taylor Lincoln that seeks to remind the public that deregulation caused the economic downturn and to counter the myths that have been propagated about regulations in recent years.
Watch the video (also embedded above) featuring highlights of the discussion.
Speakers included Neil Barofsky, the former inspector general of the Troubled Asset Relief Program, former Commodity Futures Trading Commission (CFTC) Chairperson Brooksley Born, and former Rep. Brad Miller (D-N.C.).
These three former public officials are among the best equipped to evaluate risks to the economy from insufficient regulation. Barofsky went toe-to-toe with the other financial regulators in pursuit of standards to prevent fraud and steps to ensure that loan restructuring programs perform their stated purpose of helping people avoid foreclosure rather than softening the blow to the banks’ balance sheets. Born warned about the risks of financial derivatives in the 1990s, a decade before they nearly brought down the financial system. Miller sought to police subprime lending abuses long before they were widely recognized and was an outspoken champion of the creation of the Consumer Financial Protection Bureau in the 2010 Dodd-Frank Wall Street reform bill.
The panelists’ discussion about the influence of too-big-to-fail banks and the force that industry wields through its ability to offer future employment to agency and congressional staffers was packed with eye-opening – and often appalling – observations.