US officials who helped the country survive the 2008 financial crisis fear the world has forgotten the painful lessons learnt from the banking system’s near-collapse—despite navigating in dangerous waters.
Three financial experts who actively worked to tackle the worst economic crisis since the Great Recession issued a stark warning after gathering for talks ahead of the crisis’ 10th anniversary, erupted in autumn 2008, CNBC reported.
Former US treasury secretary, Henry Paulson, who lead the ministry at the time, Timothy Geithner, who succeeded him in 2009, and Ben Bernanke, the former federal reserve chairman, fear the world’s forgetful attitude could make much harder to face the next economic crisis.
Paulson said: “It is important that people focus on the lessons. “We are not sure people remember everything they need to remember.”
During their meeting, the three experts discussed the reforms implemented upon the breakout of the crisis and whether the world would face in a better way a new economic turmoil.
Geithner said: “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.
“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.”
However, US President Donald Trump announced since his election in 2016 the desire to reverse the Dodd-Frank financial overhaul law, a set of rules approved by the Obama administration in 2010 to tighten regulatory loopholes revealed by the 2008 crisis.
In the last few months, the White House has eased parts of the regulation, exempting smaller banks from the stricter requirements. The officials called the changes made so far “sensible”.
But they warned against getting rid of the defense mechanisms created after 2008, as it would leave the financial world vulnerable once again to a new, devastating, crisis.
They also said Trump’s election was the result of the economic catastrophe, which in the US alone left 8.7 million people out of work.
Bernanke, who believes the last crisis was even worse than the one which hit the world in 1929, said: “Financial crises, particularly big ones, do tend to get followed by a population reaction; that was certainly the case in the 1930s.”
Their warning comes amid a period of financial uncertainty for the world.
The trade war launched by Trump against European allies and China are also having an impact on the worldwide economy.
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