Fed chair Janet Yellen saying that there won’t be another financial crisis in her lifetime is reminiscent of what Alan “The Maestro” Greenspan said before the last 2008 Wall Street meltdown. There’s no giant housing bubble right now, but there’s a combination of big banks being even bigger than when last bailed out, student debt and credit card debt being over a trillion dollars each, high amounts of corporate debt in certain areas, the ongoing and dangerous gambling with financial speculation (notably financial hydrogen bombs, aka derivatives), and a structure of incentives for the destructive financial institutions that is pretty much the same as before 2008. Adding in deregulation through dismantling Dodd-Frank and the length of time it’s been since the last recession only adds to the risk of another economic catastrophe.
The regulations to stop another financial crisis are quite inadequate (missing Glass-Steagall provisions, for instance) and the greedy systemic problem is the same. It’s really only a matter of time before the worst consequences of such an arrangement develop into another explosion.
U.S. Federal Reserve Chair Janet Yellen said on Tuesday that she does not believe that there will be another financial crisis for at least as long as she lives, thanks largely to reforms of the banking system since the 2007-09 crash.
“Would I say there will never, ever be another financial crisis?” Yellen said at a question-and-answer event in London.
“You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be,” she said.
Yellen said it would “not be a good thing” if reforms of the financial services industry since the crisis were unwound, and urged those who had helped manage the fallout at the time to be vocal in preventing such a dilution.
U.S. President Donald Trump has said during his election campaign that he would cut banking regulation. The U.S. Treasury Department earlier this month proposed easing up on restrictions big banks now face in their trading operations.