It has been eight years now since the collapse of Lehman Brothers, a bankruptcy that a recent report from the U.S. Department of the Treasury states aided in pushing the American economy into the worst recession since the Great Depression. The report, written by Rob Friedlander, spokesperson for the Treasury Department, stated this collapse in the system was brought on by slapdash mortgage practices, low underwriting standards, and a financial system that had become increasingly divorced from the business of serving everyday Americans.
The report states though that looking back eight years later, clear economic recovery has been seen as well as enormous progress creating a more stable and secure financial system. Friedlander states that American businesses have added more than 15 million jobs since early 2010 and the unemployment rate has decreased down to 4.9 percent. Additionally, wages have risen at an annual rate of 2.8 percent this year. The report shares that after taking a look at the recent Census report, it was found that in 2015, real median household income grew 5.2 percent. This is reported to be the fastest rate on record.
Friedlander states that a key factor behind the recovered strength in the financial system since the crisis is the Dodd-Frank Wall Street Reform and Consumer Protection Act. The report says that these are the most sweeping set of reforms to the financial system since the Great Depression. Specifically, the report notes that today, banks have added more than $700 billion in capital in order to better guard themselves against unanticipated losses and the derivatives market has been put more into the spotlight. Friedlander also states that the Consumer Financial Protection Bureau (CFPB) likewise, has put in place new safeguards in order to save consumers billions of dollars. In addition to this, the Financial Stability Oversight Council (FSOC) is now watching the system to respond to emerging threats to financial stability.
Friedlander states that these enforcements and enhancements to the system are clear markers of progress, the report notes though that more work remains. Friedlander shares that enacting Wall Street Reform wasn’t simply an accomplishment but even more so was a commitment and as recent enforcement actions made by the CFPB clearly show, it is imperative to remain vigilant and continue to guard against efforts to reduce the reforms and protections that have been put into place.
The report states that as this anniversary passes, the Treasury will continue to defend against any measures that would leave the country more vulnerable to another financial crisis, and they remain focused on creating a strong and safe financial system that supports economic growth.