The financial crisis and its lingering aftermath have revealed serious vulnerabilities in our financial system. The challenges are comparable to those posed by the great depression of the 1930s. Yet the approaches taken to date to fix the problems have been fitful, fragmented and frenzied, rather than deliberate and thoughtful. That’s what makes me think we need a financial commission to sort things out.
Of course, the political process is most receptive to reform while memories of the crisis remain strong and its aftereffects are still being felt. But there is a serious downside to legislating reform while we are so close to what happened. Reform proposals tend to focus on preventing the same sequence of events that we very recently lived through. This is reminiscent of the old adage about generals preparing to fight the last war. The next potential financial crisis is going to be different from the last one, just as that one was very different from the savings-and-loan crisis of the early 1980s.