Ten years ago, Lehman Brothers collapsed and set off the worst financial crisis since the Great Depression. Over the next few years, millions of Americans who had worked hard and played by the rules lost their homes, millions lost their jobs, and millions lost their savings — all because Wall Street gambled with their families’ futures and lost.
The damage was staggering. Congress put $700 billion publicly on the line and the Federal Reserve shoveled another $13 trillion through the back door to bail out Wall Street. In a single year, homeowners lost about $3 trillion in home equity. Even after the crisis passed, the residue was felt across the country: The financial crisis is estimated to cost the average American $70,000 over their lifetimes.
The story of the financial crisis didn’t just play out in stock exchanges and board rooms – it played out at millions of kitchen tables, where moms and dads stayed up late trying to figure out how to feed their families, send their kids to college, or save their home.
I grew up in a family like that. When I was 12, my father had a heart attack. He couldn’t work for a long time. Every night, I remember my mother would kiss me good night, close my bedroom door, and start to cry. We lost the family station wagon and almost lost our home.
I ran for the Senate because I wanted to fight for families like mine and stop another crisis from ever happening again. But memories in Washington are short. Ten years after the financial crisis, Washington is back to its old tricks, cozying up to big banks and loosening rules just like it did in the run up to the crash.
Even though banks of all sizes are making record profits, Washington is taking orders from bank lobbyists and checking off all the items on banks’ wish lists. For Christmas, giant banks got billions in tax giveaways. About a month after Easter, Congress and President Trump rolled back the rules on the very same giant banks that helped wreck our economy 10 years ago. The nonpartisan Congressional Budget Office said this rollback would increase the risk of another taxpayer bailout — but Washington didn’t care.
That’s not all — federal regulators are also working overtime to roll back critical rules and capital requirements that protect taxpayers and investors. And no wonder — a lot of these regulators used to work for the very banks they’re supposed to be watching. And who knows, maybe some of those regulators are planning to go right back to working for the big banks after their stint in Washington.
At its root, the financial crisis was built one lousy mortgage at a time. Big financial institutions had figured out that they could juice their profits by selling mortgages that tricked, trapped, and outright cheated many people. The Consumer Financial Protection Bureau was created after the crash to end this kind of fraud, and it has already returned more than $12 billion directly to people who were cheated by banks and predatory lenders. But now, political appointees at the CFPB are trying their best to leash up the consumer watchdog and let cheaters off the hook.
Rather than taking away tools that the CFPB uses to hold cheaters accountable, Congress should be expanding its powers so that the agency can do more for seniors, service members, and students. The Senate should also reject the nomination of Kathy Kraninger — an Office of Managment and Budget official who has no experience in consumer protection — to lead the CFPB.
We know what happens when financial rules are rolled back and regulators look the other way: American families pay the price. Back in the early 1980s, the Savings and Loan industry got deregulated and taxpayers had to bail out the industry within a decade. In 1999 and 2000, Congress repealed the Glass-Steagall Act and deregulated derivatives, and the financial crisis hit in less than 10 years. And now Washington is following the same deregulation playbook, even as many families are still struggling to recover from the last crisis.
Washington should be pushing for stricter oversight and more accountability for giant banks. I’ve introduced the bipartisan 21st Century Glass-Steagall Act, which would break up the big banks and separate boring commercial banking from risky investment banking. I’ve also introduced the Ending Too Big To Jail Act, which would ensure that big bank CEOs are held accountable for breaking the law just like anyone else. Together, these bills would reduce the chances of another crisis and taxpayer bailout. I’ll keep fighting to make these bills the law. And I’ll keep fighting every effort to leash up the CFPB.
The financial crisis started 10 years ago, but millions of families still feel its effects. Bank lobbyists are hard at work trying to persuade Congress and regulators to roll back the rules that keep our financial system safe. But I believe the American people won’t stand on the sidelines while giant banks and corporations call the shots for this economy and this Congress. They may have the fancy lobbyists and the big checks, but we have our voices and our votes. We won’t give up until we get a government that works for the people.
Elizabeth Warren is a US senator from Massachusetts.