Three financial experts who actively worked to tackle the worst economic crisis since the Great Recession issued a stark warning after gathering for talks ahead of the crisis’ 10th anniversary.
Former US Treasury Secretary Henry Paulson, who was leading the ministry at the time, Timothy Geithner, who succeeded him in 2009, and Ben Bernanke, the former Federal Reserve chairman, fear the world’s forgetful attitude could make it much harder to face the next economic crisis.
Reflecting on the 2008 crisis, Mr Paulson said: “What we were trying to do was to prevent Armageddon.
“We were looking at a situation where if we felt we had one more big institution go down, it would have taken the whole system down.”
The trio warned a new economic downturn is inevitable and will meet with finance chiefs in the US in September to discuss what should be done to prepare for the next crisis.
Mr Bernanke said: “We hope to provide some useful guidance — perhaps more than the three of us had.”
Mr Paulson said: “It is important that people focus on the lessons.
“We are not sure people remember everything they need to remember.”
The three experts discussed the reforms implemented upon the breakout of the crisis and whether the world would fare better if faced with new economic turmoil.
Mr Geithner said: “We let the financial system outgrow the protections we put in place in the Great Depressions and made the system very fragile and vulnerable to panic.
“One of the most powerful lessons from this crisis should be that you want to work very hard to make sure that your defences are robust.”
However, US President Donald Trump announced since his election in 2016 the desire to reverse the Dodd-Frank financial overhaul law, a set of rules approved by the Obama administration in 2010 to tighten regulatory loopholes revealed by the 2008 crisis.
In the last few months, the White House has eased parts of the regulation, exempting smaller banks from the stricter requirements.
The officials called the changes made so far “sensible”.
But they warned against getting rid of the defence mechanisms created after 2008, as it would leave the financial world vulnerable once again to a new, devastating, crisis.
The trio added Mr Trump’s election was the result of the economic catastrophe, which in the US alone left 8.7 million people out of work.
Mr Bernanke, who believes the last crisis was even worse than the one who hit the world in 1929, said: “Financial crises, particularly big ones, do tend to get followed by a population reaction; that was certainly the case in the 1930s.”
Their warning comes amid a period of financial uncertainty for the world.
The International Monetary Fund (IMF) recently downgraded the forecasted growth of leading economies such as France and Germany.
The trade war launched by Mr Trump against European allies and China are also having an impact on the worldwide economy.
And, the economists noted, US politicians currently do not consider tackling the state’s deficit a priority.
Letting it grow out of proportion, they say, would make more difficult for officials to approve new spending to help the economy pull out of a possible next recession.