In mid-September, a secret party is scheduled to take place in London. The participants will be hundreds of alumni from the defunct global investment bank Lehman Brothers. The occasion? The 10-year anniversary of the bank’s collapse in the midst of the Great Financial Crisis.
For many Americans, the sight of those very same bankers walking out into the streets of New York City in 2008, with cardboard boxes containing their belongings and shocked looks on their faces, was the first sign that something was truly wrong.
But the subsequent publicly funded rescue of America’s giant financial corporations and the “1 percent” demonstrated how unable and unwilling the nation’s political leadership was to address that wrong by fundamentally reshaping the industry responsible for the crisis in the first place. A decade later, we are still experiencing the political, economic and social ramifications of that failure.
There will be another financial crisis. That much is certain. Only when and how destructive it will be is up for serious debate. The financial industry is more consolidated that it was in 2007—dominated by banks still too big to fail. Bank lobbyists and their congressional allies have systematically undermined the weak regulatory reforms put in place after the crisis, demonstrating again that the tremendous political and economic power these financial institutions wield makes strong regulatory and institutional reforms (such as “breaking up the banks”) improbable, if not impossible.
These realities make it likely that when the next crisis hits, the public will once again be called upon to step in and bail out Wall Street. We need to start seriously preparing an alternative response. One option is to push for legislation that would require a public ownership stake, with full voting rights, in any financial institution that has to be bailed out due to its own fraudulent or speculative activities.