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Thursday, 18 December 2014

Memories of Financial Crisis Fading as Risks Rise


From ABC News

“Six years after the collapse of Lehman Brothers, the lessons of the financial crisis may already be fading from collective memory.

Just last week:
  • Congress acted to loosen the regulation of the high-risk investments that ignited the 2008 crisis. 
  • Housing regulators cut minimum down payments on home loans.
  • The Institute of International Finance declared it "worrisome" that global indebtedness, as a share of world economic output, has reached record levels.

All this comes as subprime auto loans for financially stretched buyers are surging. And the so-called too-big-to-fail banks that needed a taxpayer bailout in 2008 now loom even larger than before the crisis: America's five biggest banks account for 44 percent of bank assets, up from 38 percent in 2007, according to SNL Financial.

The trend toward pre-crisis lending practices worries analysts who favored far-reaching reforms to safeguard the system.

"We're on a very dangerous trajectory," said Simon Johnson, professor of global economics at the Massachusetts Institute of Technology.”

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