Today marks the one year anniversary of Lehman Brothers’ failure, the largest bankruptcy in US history, which began the acceleration of the chain of events which led to Wall Street’s worst crash since the Great Depression (so far).
At this point we can look around and see if any lessons have been learned by the banks…..
….and the current answer looks like….NO.
We still see the same uber $$$ salary structures in places that reward risk-taking over performance with safety. The surviving banks are now even larger and have an even bigger claim to being “too big to fail”. We shouldn’t really be shocked at this, since the banks have shown us that they can’t be trusted to govern themselves to the point of near suicidal risk taking were it not for the government rescue.
Now the government has begun discussing how to unwind itself from these institutions as well as creating new regulations to keep banks from taking on excessive risk.
Of course the banks don’t want any new regulations as that would mean less profits, so they will push back. Expect to see banks start barraging the airwaves with anti-government commercials trying to stop any changes from happening beyond the most superficial.
Their task won’t be easy since the effects of their risk taking are still being felt all around, but they will try. I sincerely hope we’re smart enough to let let them succeed in keeping the status quo in place.