Jeremy Scott
Forbes
The financial meltdown in 2008 was supposed to change how banks and
Wall Street were regulated and taxed. The idea that trading was too volatile and that banks were engaged in numerous risky transactions caught hold. There was a growing belief that financial institutions and investment firms should help fund the cost of future bailouts. However, five years later little has changed. The United States got the Dodd-Frank Act, a heavily watered-down regulation package, and some of the European Union pushed ahead with a financial transaction tax. But Treasury and the SEC are struggling to implement the former, and the latter has run afoul of the complicated European legal framework.
The United States’ efforts to re-regulate the financial sector have been largely nonexistent. President Obama’s attempt to tax excess risk (incorrectly referred to as a bank tax in most press coverage) never went anywhere. The Dodd-Frank Act was largely drafted by two lawmakers with strong ties to investment firms, banks, and Wall Street, and thus isn’t exactly a return of Glass-Steagall. A financial transaction or financial activities tax has never made much headway in Congress despite being proposed (the latest effort by Sen. Tom Harkin and Rep. Peter DeFazio hasn’t even been considered in a committee). In short, the United States has declined to take the lead in reacting to the 2008 crisis, either through new regulation or new taxes.
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