The Governance Revolution

Chapter 11 The Aftermath of the Abyss

The climb out of the abyss, exacerbated by a new and complex capital market, left an unsuspecting public feeling victimized. With echoes of the early 1930s in his ears, President Obama created the Troubled Asset Relief Program (TARP), which bought not only assets but equity stakes in the banks, a temporary “nationalization” that unsettled Wall Street. In 2011, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. Among many other provisions, Dodd-Frank permanently raised the FDIC deposit insurance limit to $250,000 per account and expanded the FDIC’s responsibilities to include regular risk assessments of all FDIC-insured institutions.

These actions, though helpful, ...