"It" is, of course, the 2007 financial crash followed by a long, deep recession --all set off by failures within the financial system.
Times economic analyst Eduardo Porter comes up with several answers. The Federal Reserve Bank of Dallas gave the "cautious" response of a "minimum" of $20,000 for every American. That's lowballing it. Porter finds other, no less reliable, responses heading towards $120,000 per person. Not family or adult, just person. As Porter says, we wouldn't want that to happen again.
At a bare minimum the crisis cost nearly $20,000 for each American. Adding in broader impacts on workers’ well-being — an admittedly speculative exercise — could raise the price tag to as much as $120,000 for every man, woman and child in the United States. With this kind of money we could pay back the federal debt or pay for a top-notch college education for everyone. ...NYT
Well, we've learned our lesson. Haven't we? No. It's bound to happen again because we're doing nothing to change the way creditors do business.
The portrait of loss, tentative as it is, suggests that even the most far-reaching measures might be justified to ensure it never happens again. But you wouldn’t know that from the current debate.
In December, the American Bankers Association sued to stop a provision of the Volcker Rule, part of the Dodd-Frank financial reform law, and intended to stop banks from engaging in risky trading on their own account.
It pretty much won, convincing regulators that forcing banks to get rid of a complex debt security used by smaller institutions to raise capital would impose immediate and unnecessary costs on small community banks.
Separately, the Securities and Exchange Commission has taken a legal battering at the hand of business-friendly judges arguing that the agency has not adequately assessed whether the benefits of its rules justify the costs. This has largely stopped the agency’s rule-making.
Regulators creating international banking standards in Basel, Switzerland, have also faced a drumbeat of criticism from bankers who argue that proposed rules to increase the capital cushion international banks must amass to buffer against losses would slice 3.5 percent from the world’s economic output and cost 7.5 million jobs.
Financial institutions are simply refusing to comply. They complain they'll take losses. Wait! That's as it should be. Losses should be confined to the bettors. You go to a race track and bet on the ponies. Sure, it'd be swell if you could hand your losses along to others but keep the wins for yourself.
Go ahead! See if you can find a sucker to guarantee a bail-out for you every time you lose. But that's not what banks should be doing to their customers.
The losses resulting from the profligacy of banks in 2007 passed huge costs along to the rest of us.
Better Markets estimated that the crisis cost $12.8 trillion in lost output. Last year, the Government Accountability Office estimated that the price tag could range from a few trillion dollars to over $10 trillion. ...NYT