News / Economy

Financial Crisis Offers Lessons for Future

The Lehman Brothers corporate sign in polished metal is taken into an auction house in London, Friday, Sept. 24, 2010.The Lehman Brothers corporate sign in polished metal is taken into an auction house in London, Friday, Sept. 24, 2010.
x
The Lehman Brothers corporate sign in polished metal is taken into an auction house in London, Friday, Sept. 24, 2010.
The Lehman Brothers corporate sign in polished metal is taken into an auction house in London, Friday, Sept. 24, 2010.
Four years ago, the collapse of Lehman Brothers, a huge financial firm, marked the start of the worst recession in decades.  Frightened investors dumped stocks, banks stopped lending, the economy shrank, and millions of people lost jobs, homes, and savings.  The crisis prompted financial firms and regulators to make changes intended to prevent another financial disaster.  But some experts say it could happen again.
 
Since the crisis, committees investigated what went wrong, regulators demanded that banks take less risk, and Congress passed new laws.  Many of the regulations that spell out the practical details of these laws are still being written, amid intense lobbying by financial firms and other interests. 
 
Prosecutions for alleged fraud have frustrated one key investigator who says they have mostly targeted low-ranking people.  Bart Dzivi, was Special Counsel to the Financial Crisis Inquiry Commission. "They have not really focused on trying to round up the senior officers at the major institutions who may have had criminal culpability," he said. 
 
Dzivi says the investigations have been under-funded and inadequately staffed. 
 
Author John Taft says it will take more than prosecutions and new laws to clean up the financial industry.  He is CEO of RBC Wealth Management and wrote a book titled Stewardship which examines the lessons from the crisis.
 
Taft says Wall Street lost its way when firms stopped focusing on clients and pushed purely for profit. “That’s when we got in trouble.  The culture of Wall Street was broken going into the financial crisis and it has not yet been fixed," he said. 
 
Author and college professor Craig Columbus says Wall Street is still plagued by over-confidence and arrogance. "That’s an element of hubris, that there is this notion that there are no limits, there are no boundaries to human imagination and capabilities, and I think that is clearly wrong," he said. 

In his book God & Man On Wall Street, Columbus says the public still distrusts the financial industry even though stock prices have rebounded from severe losses.  
 
Investors dumped stocks out of fear that more huge financial firms might go bankrupt, including some that were so large that their failure could damage the economy.
 
Boston University finance teacher Mark Williams wrote Uncontrolled Risk, and is still worried about the impact of faltering financial giants. "We are worse off then we were.  From the standpoint that we have concentration risk.  The big banks are just getting bigger," he said. 
 
Larry McDonald is co-author of the best-selling book Colossal Failure of Common Sense.  He says it is time to strengthen regulatory agencies and staff them with courageous people who can match wits with the sophisticated leaders of top financial firms. "You need a risk-taker to manage some of these decisions, because risk-takers know how to manage risk-takers," he said. 
 
McDonald says four years after the Lehman crash, the risks to the economy are "higher than ever."
 

You May Like

Lesotho Faces New Round of Violence, Political Crisis

Brutal killing of military officer has sent former leaders back into S. Africa where they're watching anxiously as regional officials head in to try to restore peace More

Video US Diplomat Expects Adoption of Bosnian Massacre Anniversary Resolution

Samantha Power says there's broad consensus about killings in Bosnia's war, but Russia calls resolution 'divisive,' backs UN countermeasure More

UN Report Exposes Widespread Boko Haram Atrocities

Damning report graphically details pattern of vicious, widespread atrocities committed by Islamist militants More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Olympics Construction Scars Sacred Korean Mountaini
X
July 02, 2015 4:10 AM
Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.

VOA Blogs

World Currencies

EUR
USD
0.9009
JPY
USD
123.09
GBP
USD
0.6387
CAD
USD
1.2524
INR
USD
63.605

Rates may not be current.