Two years after the start of the crash, Americans are still coping with the fallout from the most significant financial crisis since the Great Depression. Millions of people are still out of work. Many others are in danger of losing their homes or have had to deplete their retirement savings to stay afloat. At the same time, the crisis has produced another casualty, less tangible perhaps, but nonetheless profound: a loss of confidence in our economy and in the ability of our nation’s leaders to get it back on track.
[IMGCAP(1)]The damage from the old system that imploded in the autumn of 2008 was tremendous: A recent Pew Financial Reform Project report estimated that the cost of the financial crisis to American workers and families was close to $650 billion in wages, corporate profits, interest and other income, from September 2008 through 2009 alone. But there is opportunity in the face of all this adversity.
After the crisis hit, the American people demanded financial reform, and Congress acted, holding more than 100 hearings and engaging in a vigorous debate. As lawmakers hammer out the final details of major financial reform legislation, we have the chance to create a better financial system, one strong enough to prevent future meltdowns. Both the House and Senate have approved legislation with significant new safeguards. And after several painstaking weeks, a conference committee worked into the early morning hours to approve a compromise that completes this work.
The full Congress is now preparing a vote on a final bill, which at a minimum should achieve the following goals: create a strong early warning system by standardizing, collecting, analyzing and reporting data on the stability of the financial system as a whole; address “too big to fail” by requiring systemically important financial institutions to maintain regulator-approved “living wills” that will resolve failures at no cost to taxpayers and ensure careful and continuous monitoring of the new law.
Lawmakers must not allow election-year politics to weaken this vital legislation. They — and we — should remain vigilant even after President Barack Obama signs it. The new law won’t be meaningful unless the regulatory agencies charged with implementing it act vigorously in the months and years ahead to enforce it.
Congress is working to meet the challenges of passing real reform. In time, our confidence will be renewed and we will all move toward a brighter, smarter and more stable economic future. We deserve nothing less.
John E. Morton is managing director of the Pew Economic Policy Group at the Pew Charitable Trusts.