Six Reasons Another Financial Crisis Is Inevitable

[R. Daneel Olivaw]

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5. Nobody Was Punished for the Last Crisis

Despite a vast array of financial abuses and trillions of dollars in lost wealth, not a single high-level executive of any financial firm faced accountability in the form of criminal charges and prison time. At least after the last meltdown, involving Enron and Worldcom, some of the top miscreants actually went to jail. Not this time. And that reduces deterrence of future wrongdoing.

6. Government Regulators Are Still Outgunned

Regulating some of the wealthiest and most powerful business entities in the world is not easy under any circumstances. But it's especially hard when government oversight agencies don't have the resources they need to do their job. The Securities and Exchange Commission and the Commodities Futures Trading Commission have faced a multi-pronged assault over recent years. The powers of these agencies have been battered by budget cuts in Congress (and now through the sequester), legal challenges to new rules, and a blizzard of lobbying—often by ex-officials from these very same agencies. The fact that so many rules required by Dodd-Frank remain un-implemented is telling evidence of the weakness of these agencies and the pushback they have faced to financial reform.

To be sure, some good things have happened over the past five years, particularly the creation the Consumer Financial Protection Bureau. Yet many of the most dangerous features of a casino-like financial system remain in place.