EDITORIAL: Ten years later, we must heed lessons learned during 2008 financial meltdown
Ten years ago this month, a complete financial meltdown was narrowly averted.
In many ways, however, the devastating pain inflicted by the Great Recession remains seared into the memories, and the pocketbooks, of most Americans, including plenty of folks right here in York County.
That’s because many of us still bear the economic and emotional scars of that terrifying period.
Yes, a decade later, things are better, largely because of huge government bailouts totaling $1.5 trillion over five years.
The stock market has soared and the unemployment rate has plummeted.
Worrisome indicators: Not every indicator, however, is nearly as rosy.
Income inequality has continued to widen, home ownership has dropped markedly, real middle-class wages have stagnated and student loan debt has mushroomed.
Perhaps most worrisome, however, are the efforts by the Trump administration and its Congressional allies to seriously weaken the financial rules that were put in place in the aftermath of the Great Recession.
Following the 2008 financial crisis, it became obvious that federal regulators had allowed banks and mortgage lenders to run amok, with little or no oversight.
The result was predictable — reckless practices that sparked the flame on the recession and nearly sent us tumbling into another depression.
Dodd-Frank law: In 2010, President Barack Obama and the Democratic majority in Congress decided to do something to about it. The Dodd-Frank law gave regulators a number of new tools to protect our markets in order to avoid another economic collapse.
In addition, a new agency, the Consumer Financial Protection Bureau, was created with an edict to protect consumers from abusive and predatory financial practices.
Considering what happened in 2008, both steps seemed prudent and necessary.
Trump has different take: Trump and his Republican allies, however, feel differently. They believe the new laws helped hold back economic growth.
Not surprisingly, the Republican Congress has since eased many of the key rules of the Dodd-Frank legislation. Enforcement of CFPB actions, meanwhile, have been significantly curtailed.
Those moves should be more than a little alarming to all of us.
Lessons of history: If history has taught us anything, it’s this: Allowing unrestrained and unregulated financial giants to operate without proper government oversight is a recipe for economic disaster.
Just because some economic factors are trending in the right direction, we shouldn’t forget the lessons of the past.
We shouldn’t let our growing 401K accounts to blind us to the looming dangers of complacency. We must remain vigilant and make sure that the Dodd-Frank law is not eviscerated.
If we don’t, another economic meltdown could be just around the corner.