Crisis may create opportunity, but Congress completely flubbed its opportunity to enact meaningful financial reform in the aftermath of the worst crisis since the Great Depression, says the former chairman of the FDIC, Bill Isaac.
The Dodd-Frank reform bill–the one major piece of legislation to emerge since the financial crisis–is mostly meaningless, says Isaac, who is also the chairman of regional bank Fifth Third. Dodd-Frank does nothing to address the root causes of the financial crisis, Isaac says, and it won’t prevent the next one.
Specifically, Dodd-Frank will just create more bureaucracy and red tape. Meanwhile, our biggest banks are still “Too Big To Fail.” Our commercial banks are still allowed to take way too much risk. Our regulators are still balkanized and political. And we still haven’t addressed Fannie Mae and Freddie Mac.
Isaac suggests the sure may be to re-implement the Glass-Steagall Act which separated commercial and investment banking. But, at this stage of the game, that’s not likely, considering the size and scope of the bank lobby in Washington.
In other words, it’s fair to say that Wall Street won the financial crisis.
And it’s no mystery who lost.