Exactly five years have passed since those images in which employees left the Lehman skyscraper with boxes in hand. It was September 15, 2008, and like this year it was Sunday. Since then nothing is like before. It is not so for the investment bank which, having gone bankrupt, was dismembered by the buyer Nomura (symbolizing a conquest, so often feared in the eighties, by the samurai). But neither is it for the whole world finance. As could be expected, when the crash occurs at the heart of the financial system, the upheaval is gigantic and it is very difficult to find solutions.?
By letting Lehman fail, the darkest fears were unleashed. Markets around the world entered an unprecedented fibrillation. And it took months and months, even after it became clear that no other major intermediary would be allowed to fail, before relative calm returned.
In the meantime, however, the conditions for a massive global recession had set in motion. The shrewdest scholars, such as Eichengreen and O' Rourke (at www.voxeu.org), had also begun monitoring how the current crisis resembled the Great Depression of the XNUMXs. , interventionist economic policies have foiled the continuation of monitoring (a separate chapter should be devoted, as Paul Krugman does in his masterful review in the New York Review of Books last June, to the harmful effects of the liberal regurgitation underlying austerity policies, but that would take us too far from Lehman).
However, five years later, it must be recognized that not enough has been done to solve those problems that led to the Lehman blowout.? Indeed, one gets the impression that much of finance has quickly returned to "business as usual". ?Thus, the great fear induced by the collapse of Lehman was essentially wasted, rather than exploited for a catharsis that, through an appropriate re-regulation, returned finance to the service of the economy (from a perverse arrangement with the economy at the service of finance).
Have you remembered? other times (“To save Europe it would take a Lionheart and a month as a sheep”, on Firstonline of 10 June 2012) the role of the Pecora Commission which, in 1933, revealing the crimes of high finance in the roaring XNUMXs, it generated the public support needed to pass the Glass-Steagall Act and other laws that separated commercial banks (and their deposits) from investment banks (and their risky financial investments). Thus it was that Main Street won then on Wall Street, that is, the separation deflated the rampant finance and brought the financial system back to the service of the real economy, helping in the long run to create employment, reduce inequalities and support the large American middle class. And, in the XNUMXth century, the American century, that then happened pretty much everywhere in the developed world.
At the present stage, those measures have been lacking. Despite the spread of the “Occupy Wall Street” movement, Main Street has failed to prevail over Wall Street. This time there was no Ferdinand Pecora and, as the agile prose of Giuliana Ferraino (Corsera, 12 cm) highlights, the top protagonists of the financial disasters of 2007-09 have not paid and are quietly enjoying the wealth accumulated in a way never questionable.
Moreover, a year after the bankruptcy of Lehman, President Obama himself went to Wall Street as if to exorcise its excesses. But over the years, despite being reconfirmed for a second term, Obama has seen an America that is still fragile, so much so that, in his last speech on the state of the Union, he relaunched the goal of strengthening the middle class. If history teaches us anything, that objective will not be achieved without first bringing finance back to the service of the economy.
In recent weeks, Obama himself then met the main financial regulators at the White House, inviting them to accelerate the implementation of the new rules (Dodd-Frank Act) in order to avoid a new financial crisis of the type experienced in 2008. This does not it's a good sign. In fact, lobbying, obstruction and circumvention of the new rules have slowed down and to some extent emptied their impact.
The leverage of major financial institutions remains too high in the view of many. In fact, between 2007 and today, the main six largest banks (in order: JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley) have indeed doubled their capital but in the meantime also their total liabilities has grown by almost 30%, so that their particularly low initial capital ratio has increased by only half.
Furthermore, it is not only a still insufficient capitalization that is worrying. The further expansion of those financial giants, instead of eliminating the serious risk of Too Big To Fail (ie the bailouts necessary to avoid domino effects on the financial markets) has further expanded it. And, if America is worried, Europe certainly isn't laughing…but that's another story.
