Never Again?

The New York Times’ Sewell Chan think that the final judgment of the official inquiry into the 2008 financial crisis — that it was an avoidable disaster, brought about by regulatory neglect and Wall Street recklessness — was an admonition to the government never to let it happen again. Most experts aren’t holding their breath.
J.P. Morgan, left, with his counsel at the Pecora commission hearings in 1933. The hearings brought a new climate for financial regulation, unlikely with the most recent inquiry, experts say.

Bubbles and manias, followed by crashes and hangovers, seem endemic to capitalism. The Wall Street overhaul enacted last year hopes to blunt the impact of such boom-and-bust cycles — by reining in the use of exotic financial instruments, better supervising big banks and limiting the damage if one of them fails.

But the first two efforts are under attack by the new Republican majority in the House, and the new process for containing the fallout from a giant bank’s collapse is untested. Meanwhile, the financial sector’s outsized role in the economy hasn’t changed; the giant banks that were considered “too big to fail” have only gotten bigger.

It was not the same the last time around.

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