Lessons We Should Have Learned from the Global Financial Crisis but Didn’t

Levy Economics Institute, Working Papers Series No. 681

23 Pages Posted: 19 Aug 2011

See all articles by L. Randall Wray

L. Randall Wray

University of Missouri at Kansas City; Bard College - The Levy Economics Institute

Date Written: August 18, 2011

Abstract

In this paper, I first quickly recount the causes and consequences of the global financial crisis (GFC). Of course, the triggering event was the unfolding of the subprime crisis; however, I argue that the financial system was already so fragile that just about anything could have caused the collapse. I then move on to an assessment of the lessons we should have learned. Briefly, these include: (a) the GFC was not a liquidity crisis, (b) underwriting matters, (c) unregulated and unsupervised financial institutions naturally evolve into control frauds, and (d) the worst part is the cover-up of the crimes. I argue that we cannot resolve the crisis until we begin going after the fraud. Finally, I outline an agenda for reform, along the lines suggested by the work of Hyman P. Minsky.

Keywords: Global Financial Crisis, Subprime Crisis, Hyman P. Minsky, Galbraith and the Great Crash, Control Fraud, Underwriting, Deregulation, Financial Reform

JEL Classification: E3, E11, E12, E32, E44, G01, G21, G38

Suggested Citation

Wray, L. Randall, Lessons We Should Have Learned from the Global Financial Crisis but Didn’t (August 18, 2011). Levy Economics Institute, Working Papers Series No. 681. Available at SSRN: https://ssrn.com/abstract=1912125 or http://dx.doi.org/10.2139/ssrn.1912125

L. Randall Wray (Contact Author)

University of Missouri at Kansas City ( email )

5100 Rockhill Road
Kansas City, MO 64110-2499
United States

Bard College - The Levy Economics Institute

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

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