Sen. Elizabeth Warren, D-Mass., who attended GW, spoke about financial regulation five years after the collapse of the Lehman Brothers during the George Washington University Law School’s event, “Five Years On, Learning Lehman’s Lessons from the Panic of 2008: Are We Better Prepared for the Next Financial Crisis?” The event was held on Thursday and sponsored by the GW Law School’s Center for Law, Economics and Finance (C-LEAF) and advocacy group Better Markets Inc.
A panel discussion followed, featuring Neil Barofsky, partner at Jenner & Block; John C. Coffee Jr., professor at Columbia Law School and director of its Center on Corporate Governance; James K. Galbraith, the Lloyd M. Bensten Jr. chair of government/business relations at the University of Texas at Austin; and Ted Kaufman, former U.S. senator from Delaware and visiting professor at Duke University Law School. Jennifer Taub, associate professor at Vermont Law School, moderated the discussion.
Interim Dean of the GW Law School Gregory E. Maggs provided a welcome address. Director of C-LEAF Arthur E. Wilmarth Jr. and President and CEO of Better Markets Inc. Dennis Kelleher gave introductory remarks before inviting Sen. Warren to the stage.
Sen. Warren said that even after 2008’s crisis, financial institutions have continued to become too big to fail. Banks quickly reemerged from the disaster, but ordinary Americans continue to suffer, she said. She described strategies Congress must employ to eliminate “too big to fail” and prevent a future crisis, citing a new version of the 1933 Glass-Steagall Act that will improve financial protections and regulations.
“What we need is a system that puts an end to the boom and bust. A system that recognizes we don’t grow this country from the financial sector, we grow this country from the middle class,” Sen. Warren said.
Sen. Warren described financial reform as a “battlefield” filled with powerful Wall Street stakeholders who will fight to hamstring regulation. But, she insisted, the battle can be won if regulators and Congress use all the tools at their disposal, including provisions from the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“I am confident David can beat Goliath on too big to fail. We just have to pick up our sling shots again,” she said.
A brief question-and-answer session followed her speech. Afterward, Mr. Kellleher provided a comprehensive background of the fiasco that ensued after Lehman Brothers, the fourth largest investment bank in the U.S., filed for bankruptcy five years ago—and how this impacts Americans and the economy today.
“Too much has been forgotten and obscured, partly due to the passage of time, but it is also a concerted in effort by a certain part of the financial industry, mostly Wall Street’s too-dangerous-to-fail mega banks,” Mr. Kelleher said.
During the panel, Dr. Gailbraith, Mr. Coffee, Mr. Barofsky, Ms. Taub and Mr. Kaufman exchanged ideas about the problems present in today’s financial systems: lack of accountability among business leaders, easily manipulated regulatory policies and “substituted compliance” that allows institutions to avoid U.S. regulations by conducting business overseas. The group also discussed what can be done in the 21st century to fix the system.
William D. Cohan, a New York Times bestselling author and former investment banker at Lazard Frères & Co., provided final remarks. He challenged the efficacy of regulation policy and said he believes what will fix the financial system is changing incentives for business leaders.
Mr. Kelleher and Mr. Wilmarth ended the event with a call to action, asking all audience members to find a way to get involved in changing financial policy.
“Each of us has the ability to take action and let our voices be heard... Don’t be cynical. Don’t give up. The only way to make change is to get involved,” Mr. Wilmarth said.