Lessons Not Learned: 10 Steps to Stable Financial Markets

Much has been written and spoken about the lessons learned from the financial crisis of 2009. In this book, we list the lessons not learned before the financial crisis.

The purpose of this book is to demonstrate that the theoretical and intellectual frameworks for regulating financial systems that had been available since at least 2001 could have prevented the systemic failure in the United States that led to the collapse of global credit markets in 2007-2009.

Step by step the book will guide you through what we can do right now and what could have been done before 2008 or Dodd-Frank. The book concludes with a key idea for how to make your financial services business stand out from the crowd and be successful in the coming decades.

The list of 10 Steps is quite straight-forward and simple:-

• Have private, independent rating agencies.
• Provide some government safety net but not so much that banks are not held accountable (“Too Big to Fail”)
• Allow very little government ownership and control of national financial assets.
• Allow banks to reduce the volatility of returns by offering a wide-range of services.
• Require financial market players to register and be authorized.
• Provide information, including setting standards, to enhance market transparency.
• Routinely examine financial institutions to ensure that the regulatory code is obeyed.
• Enforce the code and discipline transgressors.
• Develop policies that keep the regulatory code up to date.
• Encourage the creation of specialized financial institutions.

For each step the reader will find:

• Legislative/regulatory background on the existing rules plus what academic work is available on the theory.
• The facts and data showing where it was not implemented/enforced in the US (with examples of countries that did get it right), where applicable.
• The facts and data supporting the connection between this step and the events of 2008.