Slow Learners


Joe Nocera reflects on the lack of accountability over the financial crash of 2008. You’d have thought we might have learned from the Savings & Loan scandal of the 1980s, but no.

In some ways, the legislators who deregulated the S.&L. industry felt that they had no choice — if they didn’t act, the S.&L.’s would have been in terrible trouble, just of a different kind. Seventeen years later, when Congress repealed the Glass-Steagall Act — thus deregulating the entire financial services industry — it didn’t have that excuse. The drive to abolish Glass-Steagall was ideologically inspired, the core belief being that the market would keep the industry honest. But the S.&L. crisis had proved that wasn’t true.

About 1,100 were prosecuted in the wake of the S&L scandal. Federal prosecutions in the wake of the 2008 economic collapse have been a joke, writes Nocera, wondering if when it repealed the Glass-Steagall Act, government had failed to learn its lesson from the S&L deregulation.

Or, perhaps, in the intervening years Wall Street learned that capturing government regulators more fully would allow them to commit financial crimes without fear of prosecution?

Categories : Corruption, Recession

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