- Henry Paulson, Timothy Geithner, and Ben Bernanke have warned that the lessons of the 2008 financial crisis are in danger of being forgotten.
- Paulson was head of the Treasury when the crisis struck in 2008, Geithner took over under Obama, and Ben Bernanke was Federal Reserve Chairman during the crisis.
- The trio said that the rising US budget debt, a “dysfunctional” political system, and a drive to loosen reforms put in place after 2008 could combine to endanger the economy.
- “It is important that people focus on the lessons… We are not sure people remember everything they need to remember,” said Paulson.
Three men who played a central role in the US response to the 2008 financial crisis have voiced concern that the country may be forgetting the lessons learned from the crisis.
Former Treasury Secretaries Henry Paulson and Timothy Geithner, and former Federal Reserve Chair Ben Bernanke took part in a roundtable last week to mark the 10th anniversary of the 2008 financial crisis, The New York Times reported. Paulson was head of the Treasury when the crisis struck in 2008, Geithner was head of the New York Fed during the crisis then took over at the Treasury under Obama, and Ben Bernanke was Federal Reserve Chairman during throughout the crisis.
“It is important that people focus on the lessons… We are not sure people remember everything they need to remember,” Paulson said.
President Trump’s administration has been spearheading a loosening of Dodd-Frank, the law passed after the financial crisis to tighten financial regulatory loopholes. The 2010 law was designed to make the US financial system more stable and help avoid another crisis.
The rules dictate that banks with over $50 billion in assets are considered systemically important so became subject to tighter restrictions. In March, Congress voted to expand this limit to $250 billion, complaining that the lower limit had restricted lending. But Paulson, Geithner, and Bernanke warned that loosening this legislation could endanger the economy.
“We let the financial system outgrow the protections we put in place in the Great Depressions and… made the system very fragile and vulnerable to panic,” Geithner said. “One of the most powerful lessons from this crisis should be that you want to work very hard to make sure that your defenses are robust.”
The trio also voiced concern about the large budget deficit in the US and the mounting debt pile, which is projected to reach $33 trillion in 2028. This combined with what they called the US’ “dysfunctional” political system could cause trouble if another financial crisis were to strike, they said.
“We need to find a way politically to bring the same level of overwhelming force and creativity to the range of other daunting challenges facing the American economy,” Geithner said.