Fighting the last financial battle
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It is said that generals fight the last war all too often. One has to wonder whether the same might be said of the Federal Reserve in its effort to avert a future economic and financial crisis.
Despite the many warning signs of dangerous financial market vulnerabilities, and the knowledge that the next economic crisis is all too likely to take a different form than the last crisis, the Fed is wrongly taking comfort in the notion that Congress has put in place a more robust system of bank regulation than it had in place on the eve of the 2008-2009 crisis.