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University of Michigan Law School

2012

Law and Society

Series

Financial crisis

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Full-Text Articles in Law

The Financial Crisis And The Path Of Reform, Michael S. Barr Jan 2012

The Financial Crisis And The Path Of Reform, Michael S. Barr

Articles

In the lead-up to the financial crisis, the U.S. financial sector was overleveraged, short-funded, risky, and opaque. "Shadow banking" permitted institutions to avoid comprehensive supervision and capital requirements. Innovation outpaced the ability or willingness of private- and public-sector guardians to rein in risks. An asset bubble fed the system, until the market imploded in the fall of 2008. When the crisis hit, our society found itself illequipped to deal with the failure of leading financial firms. In the wake of the crisis, the Obama Administration proposed a set of reforms that were eventually embodied, in large part, in the ...