Former FDIC Chair: Financial Regulators Haven’t Done Enough
In many analyses, the September 2008 bankruptcy of Lehman Brothers, which was the fourth-largest investment bank in the United States at the time, is often pointed to as the symbolic domino that caused one financial institution after another to begin wobbling. That collective unsteadiness put the industry and the economy as a whole in crisis.
“There is likely to be a domino effect as other firms and individuals who relied on Lehman for financing feel the effects of its meltdown,” Charles Tatelbaum, a bankruptcy lawyer and former editor of the American Bankruptcy Institute Journal, told Bloomberg at the time. “The whole thing is frankly frightening for the U.S. economy.”
Five years have now passed since Lehman Brothers collapsed and the federal government began bailing out institutions like American International Group (NYSE:AIG) and Citigroup (NYSE:C). But whether the financial sector is back on solid footing is a matter much debated on Wall Street and on Capital Hill. Some say new financial regulations have put an undue burden on the industry, while others argue that the government has not gone far enough.