The Collapse of Financial Regulation Since 1980 and Its Consequences

[marmar]

from Dissent magazine:



The Collapse of Financial Regulation Since 1980 and Its Consequences: A Nice Summary from Lawrence Lessig
Jeff Weintraub - November 30, 2011 10:20 am


The Boston Review has posted an online interview with Lawrence Lessig about his new book, Republic, Lost: How Money Corrupts Congress—And a Plan to Stop It, which deals with the pervasive plutocratic corruption of our political system over the past several decades. Some of the ideas in the interview strike me as questionable, but most of them are clearly on-target, and it’s worth reading the whole thing. The book sounds worth reading, too.

For the moment, I just want to highlight one very trenchant passage in the interview:

Before 2008, the zeitgeist was deregulation, and Wall Street succeeded in getting deregulation. Frank Partnoy calculated for me that in 1980, 98 percent of financial assets traded in our economy were traded subject to the normal rules of transparency, anti-fraud requirements, basic exchange-based rules of the New Deal. By 2008, 90 percent of the assets traded were traded invisibly because they were not subject to any of these basic requirements of transparency and anti-fraud exchange-based obligations.

This falls in the category of obvious-but-frequently-overlooked-facts that we all need to keep repeating. And the larger context is worth emphasizing, too, even at the cost of further repetition. Every discussion about the economic crash of 2007-2009, which was touched off by a massive financial crisis, should begin with the striking fact that there were no serious financial crises in the United States between the New Deal and the beginning of the Reagan administration. This was no accident. During the 1930s a remarkably intelligent set of regulations was enacted to cover banking and the rest of the financial sector, and it worked. .............(more)

The complete piece is at: http://www.dissentmagazine.org/atw.php?id=619