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After
months of living with the coronavirus pandemic, American citizens are
well aware of the toll it has taken
on the economy: broken supply chains, record unemployment, failing
small businesses. All of these factors are serious and could mire the
United States in a deep, prolonged recession. But there’s another threat
to the economy, too. It lurks on the balance sheets
of the big banks, and it could be cataclysmic. Imagine if, in addition
to all the uncertainty surrounding the pandemic, you woke up one morning
to find that the financial sector had collapsed.
You
may think that such a crisis is unlikely, with memories of the 2008
crash still so fresh. But banks learned
few lessons from that calamity, and new laws intended to keep them from
taking on too much risk have failed to do so. As a result, we could be
on the precipice of another crash, one different from 2008 less in kind
than in degree. This one could be worse.
