Lawmakers on both sides of the Atlantic are betting that by forcing banks to shun leverage and take on more capital they can break the industry’s dangerous habits, once and for all. There’s a lot riding on the fulfillment of those goals. In the U.S., anger over bank bailouts fueled populist movements ranging from Occupy Wall Street and the Tea Party to the campaigns of Bernie Sanders and Donald Trump. In Europe, the events of 2008 exposed the fiscal weaknesses of the 28-nation EU and ushered in a period of austerity and popular revolt that appears to be intensifying.
Even with all the changes, four of the six biggest banks in the U.S. are larger than they were in 2008. In Britain, the assets of the top four banks are more than twice the size of the nation’s economy.
“The industry is less complex than it was, it does have less leverage, and it is tamer,” says Sallie Krawcheck, president of Bank of America’s global wealth-management division from 2009 to 2011 and now head of Ellevest, a digital-investment platform for women. “But is that enough? If a similar crisis were to happen again, would any of these institutions remain standing? I would guess the answer is no.”