Boston Review — Lawrence Lessig and David V. Johnson: Reclaiming the Republic
Before 2008, the zeitgeist was deregulation, and Wall Street succeeded in getting deregulation. Frank Partnoy calculated for me that in 1980, 98 percent of financial assets traded in our economy were traded subject to the normal rules of transparency, anti-fraud requirements, basic exchange-based rules of the New Deal. By 2008, 90 percent of the assets traded were traded invisibly because they were not subject to any of these basic requirements of transparency and anti-fraud exchange-based obligations.
But the really astonishing thing is that after 2008, after we suffered the biggest collapse since the Depression, after every independent analyst had said there was a link between the structure of deregulation and the collapse, after the dean of deregulation—Alan Greenspan—confessed he made a mistake in assuming that the self-interest of the banks would lead them to behave virtuously rather than behave in a way that would drive to their maximum profit, after all of that, even then, Wall Street was able to blackmail the Democrats and the Republicans into handing them essentially a “Get Out of Jail Free” card and effect no fundamental change in the architecture of our financial system. That is, frankly, terrifying.
Well put, Professor Lessig.