Remember the lessons of Lehman’s collapse

Seven years ago today, the investment bank Lehman Brothers filed for bankruptcy. A day later, behemoth insurance conglomerate AIG was bailed out by taxpayers. Together, these actions helped sink our financial markets and push our country’s economy into an abyss. No one could see the bottom.

Lehman’s collapse – the largest corporate bankruptcy in U.S. history – followed a decade of predatory lending, Wall Street recklessness, and lax supervision by regulators. The subsequent meltdown in the financial markets triggered a crisis that left America’s economy hemorrhaging more than 750,000 jobs a month. By the time we hit bottom, nine million jobs vanished, the unemployment rate soared to 10 percent, and five million Americans lost their homes.

{mosads}The crisis – the worst since the Great Depression – took a devastating financial and psychological toll on a generation of working Americans. Families that were struggling to invest in their children’s education or set aside money for retirement saw years of hard work evaporate as $13 trillion in household wealth was extinguished.

Congress responded by passing the most significant financial reforms in generations. The Dodd-Frank Wall Street Reform and Consumer Protection Act put in place new rules to bring stability to the markets, ensure strong consumer protections, and crack down on the reckless and irresponsible behavior that helped fuel the disaster.

Seven years after Lehman’s demise, we have a financial system that is safer, more stable, and that works better for taxpayers, investors, and consumers.

Wall Street reform targeted the risky behavior that rewarded Wall Street executives with multi-million dollar bonuses as our economy spiraled into freefall. The law makes it less likely that taxpayers will once again be left to clean up Wall Street’s mess by footing the bill for another bailout. Its oversight council – supported by industry leaders and regulators appointed by both presidents Bush and Obama – is designed to fill gaps in the regulatory framework and create a forum for agencies to identify risks and resolve issues.

Unfortunately, the Wall Street lobby has changed its tune and is working with its allies in Congress to thwart the council’s ability to do its job. As soon as the bill was signed into law, a top financial services lobbyist said, “Now it’s half-time.” Then they went back to work.

In a May party-line vote, Senate Republicans on the Banking Committee approved a sweeping financial deregulation package that would roll back key provisions of Wall Street reform. It would take us back to a time when no entity was responsible for watching over the entire financial system.

Senate Republicans are now working to move their overreaching bill through the appropriations process, potentially risking a government shutdown in the name of financial industry deregulation. This move – unprecedented in its scale – shows that Republicans will try to slip it through Congress any way possible with as little debate as possible.

In hearing after hearing, Republican members of the Banking Committee and industry lobbyists push for legislation to undermine the new financial rules. In some cases, they argue those safeguards are hurting our economy. It’s stunning how they’ve either forgotten or are oblivious to how much pain the financial meltdown caused to millions of Americans and our economy. Listen to them long enough, and one could be forgiven for thinking we never even had a crisis.

This sort of collective amnesia may reflect just how far we’ve come. Since Wall Street reform’s enactment, the private sector has created 12.8 million new jobs. Household net worth has grown by about $30 trillion, exceeding pre-crisis levels. Business lending is up more than 30 percent. And the banking industry had the highest quarterly earnings ever recorded in the second quarter of 2015.

Wall Street reform isn’t perfect – some believe that it should have been stronger – and I’ve led the charge to fix portions of the law that weren’t working. But that doesn’t mean we should return to the days of Lehman, AIG, and Countrywide.

Seven years after Lehman, Wall Street reform is working and our economy is getting stronger.  Now we need to make sure more Americans feel the benefits of the recovery. Instead of rolling back Wall Street reform we should be working on legislation to create jobs, address low wages, student loan debt burden, and areas where more consumer protections are needed. This will help ensure we won’t repeat the mistakes that almost destroyed the entire economy.

Brown is Ohio’s senior senator, serving since 2007. He sits on the Agriculture, Nutrition and Forestry; the Banking, Housing and Urban Affairs; the Finance; and the Veterans’ Affairs committees.