September 15th marks the ten-year anniversary of the Lehman Brothers investment firm collapse, symbolizing the onset of the 2008 global financial crisis.
"The financial crisis drove 100 million people, mostly women and children, into extreme poverty around the world," noted Eric LeCompte, the head of the religious development group Jubilee USA. "Too many around the world are still feeling the effects of the last crisis and we are not prepared to stop the next crisis."
In the Spring, the International Monetary Fund and the UN Conference on Trade and Development released reports warning of new debt and financial crises. Last week the head of the IMF, Christine LaGarde, warned that the financial system was still not safe enough and economic recovery around the globe was uneven.
"While we made progress on diagnosing the risky behavior and debt problems that lead to financial crisis, we still don't have a prescription in place to prevent or solve the next crisis," said LeCompte, who consulted on a United Nations bankruptcy plan to prevent future crises and advocates for Congressional action on the issue. "In Washington, we are worried about attempts to role back financial crisis prevention measures. Overall, the financial system still lacks adequate responsible lending laws and predictable processes to resolve debt problems."
Jubilee USA Network is an alliance of more than 75 US organizations and 650 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA wins critical global financial reforms and won more than 0 billion in debt relief to benefit the world's poorest people.
The chance for structural reform was missed in 2008. Under current conditions, it is utopian to imagine a government conference à la Bretton Woods ordering the creation of a new global currency system. We will have to live with a dollar-based oligopoly of giant banks. What we must aim to do is tighten regulations, further raise capital requirements and bolster liquidity buffers to minimize the risk of a bank run. Furthermore, me must extend regulation to non-banks, such as the major asset managers. These are technical matters, but as the fate of Dodd-Frank shows, they cannot be separated from politics. And that is also true for Europe, where the issue of banking union has become trapped in quicksand. The endless bickering over technicalities is the opposite of what we need: namely a real and powerful banking supervision that does not shy away from fundamental questions and public debate.
Unfortunately, no one with political authority on either side of the Atlantic seems prepared to pose these questions, let alone to take action. After 2008, we know what that means. When things get serious, we are all on the hook.