One of the key ways Wall Street is trying to kill financial reform is to subject all of the new rules to what it calls “cost-benefit analyses.” This seductively sounding concept is, however, a sham; the industry only wants its costs considered and nothing else. When they say “cost benefit analysis,” they mean a one-sided, biased “industry cost only” analysis. The cost to the country of Wall Street’s reckless trading and investments and the benefit to the country of avoiding another Wall Street caused financial collapse are never mentioned by the industry and its allies. Better Markets has been fighting Wall Street on this in the regulatory agencies as well as the courts.
This Wall Street tactic raises the question of why so much time and energy is spent on worrying about the costs of regulation to the very industry that caused the worst financial crisis since the Great Crash of 1929 and the worst economy since the Great Depression of the 1930s? It is because Wall Street and its many allies have been engaged in a comprehensive misinformation campaign that attempts to refocus the public debate away from the crisis and Wall Street’s role in creating it to the new financial reform law and the rules being put in place to prevent another crisis and protect the American people, taxpayers, investors, and the economy.
To rebut that strategy, Better Markets published the first full and thorough account of the cost of the financial crisis and subsequent economic crisis caused by Wall Street. The report was released on the fourth anniversary of Lehman Brother’s bankruptcy last September. It demonstrated that those costs will amount to more than $12.8 trillion. This number is conservative since the toll of the crisis on everyday Americans can’t be quantified and because so much data on the damage done is still unavailable.
From our report, consider what is quantifiable:
For millions of Americans struggling with the economic wreckage caused by the financial collapse, it’s been a painful and interminable four years since Lehman Brother’s collapse. At the same time, Wall Street and its powerful allies have been carrying out a massive project to deny the costs of the crisis and to kill reform intended to prevent another one.
Fighting against Wall Street and for financial reform to protect the American people is a monumental but essential task. The only way to prevent a recurrence of the financial and economic crises is to implement meaningful financial reform. The best and only way to counter industry muscle and ultimately save the reform from defeat is to remember, in comprehensive and vivid terms, the past, present, and future costs of the financial crisis.
Remember that number: $12.8 trillion. That is what is really at stake in financial reform.
This entry is part of the series New Rules for Wall Street, where Demos analysts and members of the Coalition for Sensible Safeguards make the case for what should be on the financial-reform agenda in the next four years. Read all the entries here.