Consumer Protection after the Global Financial Crisis

A full decade has passed since the Global Financial Crisis (GFC) triggered a flood of foreclosures, crushed real estate and stock market valuations, and destroyed a number of leading financial service corporations. Freezing credit flows throughout North America and beyond, the GFC prompted a sharp eco-nomic slowdown, with the unemployment rate in the United States ticking up over ten percent. Crisis events that generate such substantial economic harms and attendant social pain typically prompt wide-ranging policy responses from legislators, regulators, and other governmental officials. The GFC was no exception. In the parlance of political science, the GFC represents a "focusing event" or a "policy shock," as described by one of us in a recent volume, along with Lori Bennear, Kim Krawiec, and Jonathan Wiener.1 Attracting attention from the press, experts, politicians, and voters, a policy shock prompts "policy autopsies," governmental explanations of what went wrong. Official investigations are undertaken by legis-lative committees, administrative agencies, interagency task forces, and/or inde-pendent commissions of inquiry, supplemented by the work of nongovernmental organizations and academics. Often, such endeavors involve extensive fact-finding and pursue careful analysis; always, they bear the mark of prior beliefs and political calculations.2 In some cases, policy autopsies lead policymakers to adjust their views about the nature of risks and revise their sense of how to bal-ance conflicting policy goals. In others, decisionmakers perceive the benefits of attempts to prevent future reoccurrences to be outweighed by the costs associated with proposed reforms. Crises, and the policy autopsies they produce, may also generate significant shifts in public opinion and influence stakeholders' under-standing of their longer term interests. All such aftershocks contribute to the na-ture of post-crisis policy responses.

Duke Scholars

Author Edward J. Balleisen History