Reining in Wall Street Reports

For years leading up to the 2008 financial collapse, federal bank regulators ignored numerous warnings of increasingly predatory mortgage practices, credit card tricks and unfair overdraft policies used by banks. The banks were earning billions from “gotcha” practices. Incredibly, bank regulators actively encouraged this behavior, arguing it was profitable and kept banks safe. No regulator cared about its other (and, to them, secondary) job: enforcing consumer laws. Some regulators rejected the role and even actively worked to prevent states from carrying it out. Worse, firms were able to pick and choose among regulators, encouraging a “race-to-the-regulatory-bottom.” That is the system that failed to protect us.