“This is the seventh in an 11-part series on the failed promises of the Dodd-Frank financial reform package and the continued, dangerous imbalances in our financial system.
“Your tax dollars still provide FDIC insurance to banks that have the best deal a gambler ever dreamed of. When they take big risks and win, they win big. When they take big risks and lose, they can count on both the FDIC safety net and, in a worst-case scenario, a too-big-to-fail government bailout.
“The 2011 Financial Crisis Inquiry Commission report made it clear that high-risk investments by financial firms were at the heart of the financial meltdown: “We conclude dramatic failures of corporate governance and risk managementat many systemically important financial institutions were a key cause of this crisis…Too many of these institutions acted recklessly, taking on too much risk, with too little capital, and with toomuch dependence on short-term funding. In many respects, this reflected a fundamental change in these institutions, particularly the large investment banks and bank holding companies, which focused their activities increasingly on risky trading activities that produced hefty profits. They took on enormous exposures in acquiring and supporting subprime lenders and creating, packaging, repackaging, and selling trillions of dollars in mortgage-related securities, including synthetic financial products. Like Icarus, they never feared flying ever closer to the sun…”
Read Ted Kaufman’s full Forbes op ed here