2o July 2016
Better Markets released an extensive report detailing how the 2008 financial crash and the economic catastrophe it caused will cost the United States more than $20 trillion. The report has been released the day before the fifth anniversary of President Obama signing the historic Dodd-Frank Financial Reform and Consumer Protection Act into law, the most comprehensive financial reform since the Great Depression that’s working to reinstate the layers of protection between Main Street families and Wall Street’s riskiest activities.
“As we mark the fifth anniversary of the Dodd-Frank Financial Reform and Consumer Protection Act being signed into law, it is important to remember that it was necessary because the 2008 financial crash was the worst since the Great Crash of 1929 and it caused the worst economy since the Great Depression of the 1930s. The Cost of the Crisis Report we are releasing today details how that crash and crisis will ultimately cost hardworking American families, workers and communities more than $20 trillion in lost gross domestic product,” said Dennis Kelleher, President and CEO of Better Markets.
“The Report shows those human and economic costs, including 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 more. Although there has been substantial economic recovery since the dark and terrifying days after the collapse of Lehman Brothers in 2008, the Report also outlines the many Americans across the country who are still suffering from the impact of the crisis in lost jobs, homes, security, and so much more,” Mr. Kelleher said.
“The Report also details how Wall Street’s reckless, high-risk, legal and illegal activities caused the crash and crisis. It demonstrates how important it is to fully implement and aggressively police the financial reform law, which is rebuilding the type of protections between Wall Street and Main Street that worked well for more than 70 years after the Great Depression. That’s what the Dodd-Frank law and financial reform are all about: protecting Americans’ jobs, homes, savings, retirements, and standard of living, as well as making sure that public funds are never again diverted from social priorities to bailing out reckless financial activities,” said Mr. Kelleher.
- 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-tofail 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.
- This report is a reminder – and a warning – that implementation of the financial reform law must not only be completed, but also defended against those who would allow Wall Street to return to business as usual and harm Main Street once again. The costs are too high. The American people have suffered enough. They deserve better.