We sent a letter to regulators on Friday urging them to proceed expeditiously with the Dodd Frank rulemaking and rejecting industry attempts to re-write history and the banks role in the financial crisis:
“Industry’s claims that the Volcker Rule will ‘reduce market liquidity, capital formation and credit availability, and thereby hamper economic growth and job creation’ disregard the fact that the financial crisis did more damage to those concerns than any rule or reform possibly could. In September 2008, there was no ‘market liquidity, capital formation [or] credit availability’ and, since then, there has been little ‘economic growth’ and even less ‘job creation.’ Industry amnesia more broadly must be also be rejected: for example, it must be remembered that, but for the extraordinary actions of the U.S. government in the Fall of 2008, every single bank now lobbying to delay and defeat the Volcker Rule and financial reform more broadly would have ended up in bankruptcy, as their unrestrained conduct pushed the financial system and the economy to the brink of collapse.”
That’s the bottom line: none of the banks fighting reform today would even exist but for the extraordinary actions by the US government in the fall of 2008, which cost taxpayers trillions of dollars. Their reckless conduct in the decade before the 2008 crisis caused the crisis and the efforts now to put in place reasonable regulations to prevent them from doing it again must succeed for the sake of taxpayers and the US treasury. Telling the truth about what really happened before, during and after the financial crisis is essential if those efforts are going to succeed.