Responsible regulation of the financial sector is essential to prevent abuses that led to the collapse of our economy in 2007.
The Associated Press reported last week that the United States has finally replaced the 8.8 million private-sector jobs we lost during the Great Recession.
That downturn was at least the second financial crisis caused by irresponsibility and risky behavior by the financial sector since we started deregulation.
In both cases, the Great Recession and the savings and loan crisis of the late ’80s and early ’90s, lax regulation allowed manipulation, fraud and risky behavior that made a lot of money for a few. Their behavior resulted in great cost to the economy as a whole. In both cases, the government stepped in and taxpayers absorbed huge costs.
The economy is still sluggish. It took us seven years to replace the jobs lost. The population has grown, so we still are not back to where we were.
Our economy is vulnerable to the financial sector. Many who caused the damage made money and suffered little, while the rest of us bore the cost.
Excessive regulation stifles growth. We were clearly overregulated in the ’70s and do not want to return to those days. But good financial governance is necessary to limit the industry’s ability to crash the whole economy.
Responsible regulation is needed to ensure the soundness of the system.