Editor’s Note: This is an opinion piece by Andrew Quentson ; t he views and opinions expressed are those of the author.
Since their inception, banks have been a systemic risk to the economic well-being of nations. Their crucial role in clearing, processing and creating money, the financial lifeblood of the economy, ensures efficient trade between specialized producers or service providers. Their failure to perform such a role would trigger national and global crisis, if not devastation.
The most recent example of such failure is the bankruptcy of Lehman Brothers in 2008 which triggered a chain of events culminating in some tense 48 hours when nations were “on the brink of catastrophe,” according to Hank Paulson, then treasury secretary, to such extent that “the former head of Goldman Sachs got down on one knee and begged [then-House Speaker Nancy] Pelosi” to support the $700 billion bank bailout known as the Troubled Asset Relief Program (TARP). Meanwhile, Britain was “hours from collapse,” according to then-Chancellor Alistair Darling.
The effects of those fateful days are still reverberating. The cost to the United States is estimated in trillions , according to the U.S. Governmental Accountability Office. Directly or indirectly, the crises led to activist uprisings from both the left in Occupy Wall Street and the right in the Tea Party Movement – as well as riots in London in 2011.
If the West was hurting, the rest of the world was on edge to the point where revolution was underway in the Middle East and North Africa. That revolution, in parts of the world, turned to devastating war. The contagion spread to Europe, which at one point risked full collapse with vultures circling Italy, Spain and even France. Detroit went bankrupt. Greece, in an ongoing drama, was bailed out.
Everyone would like to prevent such systemic […]
