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April 21, 2014

Andrew Silow-Carroll: Passoverkill? Suggestions to make next year's seders even more culturally sensitive

Sara Israelsen Hartley: Seeking the Divine: An ancient connection in a new context

Christine M. Flowers: Priest's execution in Syria should be call to action

Courtnie Erickson: How to help kids accept the poor decisions of others

Lizette Borreli: A Glass Of Milk A Day Keeps Knee Arthritis At Bay

Lizette Borreli: 5 Health Conditions Your Breath Knows Before You Do

The Kosher Gourmet by Betty Rosbottom Coconut Walnut Bars' golden brown morsels are a beautifully balanced delectable delight

April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

Five years after the worst crisis since the 1930s, America has devised safeguards and changed the rules of Wall Street. But could the country really avoid another financial collapse?

By Mark Trumbull




5 lessons of the Great Recession


JewishWorldReview.com |

W ASHINGTON— (TCSM) Christopher Dodd remembers the moment — vividly. Even though he had witnessed a lot of history during his 30 years in the US Senate — wars, impeachment proceedings, terrorist attacks — Mr. Dodd recalls this encounter as one "seared in my memory."

It was Sept. 18, 2008. Lehman Brothers, the New York financial firm, had collapsed three days earlier because of its risky investments and the fall of the housing market. The Federal Reserve had already bailed out Bear Stearns, another investment-banking firm, and AIG, the big insurance company. Other Wall Street firms were tremulous. The stock market was plunging. Credit markets were seizing up nationwide.

Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson Jr. called a meeting with top lawmakers. They met early that evening in House Speaker Nancy Pelosi's Capitol Hill office, where a mural on one hallway wall depicts — perhaps prophetically — a maiden floating in the air with no visible means of support.

It was at this meeting that Dodd, who was in the room as the chair of the Senate Banking Committee, remembers Mr. Bernanke, a man usually as placid as the Federal Reserve's marble exterior, saying flatly: "Unless you act in a matter of days, the entire financial system of this country and a good part of the world will melt down."

A student of the Great Depression, Bernanke explained how such a collapse would affect the economy, from bankruptcy at firms like General Motors to soaring unemployment. The message for Congress was blunt: The Fed and Treasury could no longer prop up companies one by one. A more coordinated — and drastic — approach was needed. They needed a Congress-authorized rescue plan.

Eventually Congress did act, after an acrimonious debate, passing a rescue package that would allow the Treasury to inject billions into troubled firms. During these chaotic days, the full depth of the financial crisis began seeping out of the corridors of power in Washington and into the living rooms and corporate cubicles of America.

Today, five years later, the United States and other nations are still struggling with the task of recovering from the worst financial crisis since the 1930s — and formulating how to prevent a similar disaster from happening in the future. The economy, despite massive revival efforts, is growing only tepidly — a problem due in part to lingering effects of the crisis. For example:


  • One out of 5 mortgage borrowers today remains "under water," with loan balances larger than the home's market value.

  • Unemployment in the US still hovers at a stubbornly high 7.4 percent — significantly higher at this stage than in any other economic recovery since World War II.

  • Four years after the recession's official end, the Fed continues to hold short-term interest rates near zero percent in a bid to revive the economy — a remedy unprecedented in length and magnitude in Fed history.


Such circumstances help explain why, in a new Christian Science Monitor/TIPP poll, 36 percent of Americans say the financial crisis has made the economy permanently weaker. Some 49 percent say the crisis weakened the economy, but that the problems will ultimately fade. Only 11 percent say the economy has already regained the ground lost during the crisis.

The past five years have hardly been all gloomy. The economy has improved, many debt-laden families and firms have cleaned up their books, and both corporations and regulators alike have taken major steps to make the financial system safer for the future.

Yet the task is far from finished. The Dodd-Frank Wall Street Reform and Consumer Protection Act — Congress's major response to the crisis, passed in 2010 — is only starting to be implemented. By one tally, federal agencies have completed less than half of some 398 required rulemakings under that law.

What did the country learn from the crisis? Could a similar collapse happen again? Here are five take-aways from a Great Recession that has indelibly affected a generation, in America and around the world.

1. A HOUSE ISN'T AN ATM.
With his trademark blend of humor and social criticism, Charles Dickens once described credit as a system in which "a person who can't pay, gets another person who can't pay, to guarantee that he can pay."

This ethos got pushed to its limit in the housing market in the early 2000s. Credit was extended far beyond prudent standards, resulting in a boom-and-bust cycle that, in turn, helped trigger a wider crisis. In the process, the credit bubble symbolized a broader lesson that history teaches again and again: The very financial system that helps to fuel growth in good times is also a source of big risk to the wider economy.

The housing market became a realm of now-familiar abuses: Low "teaser" interest rates that would jump sharply after a few years. Loans with no down payment. Mortgages with "negative amortization," in which the balance due on the home would rise over time rather than fall, allowing borrowers to pay less in early years. It all seemed OK because home prices were going to keep rising inexorably.

Fueling this excess at the consumer level was excess in high finance. Home loans were packaged into securities that investors snapped up for their seemingly safe returns — with blithe approval from rating firms like Moody's and Standard & Poor's.

All the while, economists marveled at the moderate but sustained growth of the economy, a seemingly golden era of stability. A period of intense financial innovation was perceived as more than just an economic boon. It represented the next phase of evolution for a capitalist society — a sort of postindustrial Shangri-La.

"We grew up believing that finance was the next level of capitalism," Mohamed El-Erian, who heads the investment firm PIMCO, said at a recent panel discussion in Washington. The idea was that "somehow you go through agriculture and manufacturing, and then you go into services, and then if you're really lucky, you get to finance."



Post-crisis, Mr. El-Erian says the more appropriate mentality for his industry is a humbler one, getting back to its basic role of simply serving businesses and consumers.

Still, the question looms: Why did so many people miss the danger building in the housing market?

"Ever since World War II, due to all of the government policies promoting homeownership, we've never had a major nationwide decline in housing prices," says Mr. Paulson. "If investors own a pool of diversified mortgages, the biggest risk was that they would get their money back too soon if interest rates dropped and homeowners prepaid their mortgages."

As a nation "we were addicted to debt and consumer debt," he says in a telephone interview from his Chicago-based foundation, The Paulson Institute. "Many Americans were using their homes almost like an ATM."

When the housing crash came, it affected communities from the Nevada desert to the sandy beaches of Florida. Stockton, Calif., saw home prices plunge by two-thirds and its city government go bankrupt. But the effects of the bust extended beyond housing, affecting everything from exports to consumer spending.

Since then, safeguards have been put in place, particularly when it comes to mortgages. A Consumer Financial Protection Bureau, created by the Dodd-Frank Act, has issued rules to avoid a repeat of bubble-era lending atrocities. So-called qualified home loans (most mortgages) can no longer have negative amortization, an "interest only" payment plan, or a repayment term longer than 30 years. Lenders have to judge whether the borrower can repay, with payments that don't exceed 43 percent of income. Down payments still aren't required, but they have come back into vogue.

Beyond mortgages, the Dodd-Frank law also aims to constrain the broader risk of financial excess. It calls for tracking "derivatives" (complex financial contracts) and hedge funds. It doesn't regulate banker compensation, but it does require that shareholders have a "say on pay." And the Federal Reserve is nudging the financial sector toward pay incentives that reduce risk-taking.

While all this promises to result in a safer financial system, no one is expecting sudden perfection in the banking industry. Some of the reforms, after all, are akin to fighting "the last war" rather than preparing for the next one. Lobbying by industry and by fair-lending advocacy groups eliminated other potential reforms. Then there is the hard truth of history. "As long as we've had markets and banks, we've had financial crises," says Paulson.

That doesn't mean the efforts to prevent another calamity are hopeless. Rather, in Paulson's view, it means regulators should strive to "address problems before excesses create major speculative bubbles, and [should] have the tools and political will to act with force to minimize the impact of any crisis."

2. THE ONLY WAY TO STEM A PANIC IS WITH ACRONYMS.
For all its complexity, the financial crisis was, at root, a run on banks. The core challenge wasn't simply that the housing market had collapsed. It was the way the collapse triggered wider doubts about the safety of many large financial firms — and finally caused important pipelines of credit to freeze altogether.

In this case, the "run on the bank" wasn't by mom and pop depositors. It was a run largely by financial firms on one another as they backed away from short-term loans that had flowed easily before 2007.

The problem was a basic one. In good times, banks thrive by loaning money long term, at a relatively high interest rate, using short-term funds that they borrow at a lower rate. But in hard times, their short-term funds can disappear if investors or depositors have reason to worry about the bank's solvency.

When such doubts start spreading systemwide, the panic is generally stopped by the entry of a "lender of last resort." In other words, by the government or central bank. It's a lesson that led to the Federal Reserve's creation after a banking panic in 1907. And it's a lesson that proved vital to quelling the panic of 2008.

As the mortgage crisis evolved into a financial crisis, the Fed and later the Treasury swung into action. From late in 2007 through early in 2009, the Fed gradually rolled out a succession of programs designed to provide credit where private-sector confidence had evaporated. They had abbreviations only a banker could love: the TAF, the TSLF, the PDCF, the AMLF, the CPFF, the MMIFF, the TALF.

If the alphabet soup sounds a bit like the New Deal, that's not by accident. The Fed's vice chairman at the time, Donald Kohn, recalls that Bernanke liked to say that although he didn't agree with everything Franklin Roosevelt did to overcome the Great Depression, he did admire the way the president kept trying new ways to strengthen the economy.

When the investment bank Lehman Brothers went bankrupt, financial markets reached their point of maximum uncertainty. Was the crisis spinning out of control? The fear spread into money-market funds, where some 30 million Americans held cash. "When that market dried up and came under pressure," recalls Paulson, "my phone was ringing off the hook."

Corporations relied on money-market investors for short-term borrowing needs, from making payroll to dispensing dividends. Paulson, acting as President George W. Bush's wartime general of finance, tapped a rarely used emergency power to backstop money-market funds, a key step toward containing the post-Lehman panic.

Another giant step — and a highly controversial one — was to win congressional backing for a $700 billion Troubled Asset Relief Program (TARP) at the Treasury's disposal. This was the legislation that was the subject of the Sept. 18 meeting in Ms. Pelosi's office.

By the time the TARP legislation passed, Paulson and other frontline crisis managers were looking to do something quicker and more powerful than buying troubled bank assets. They decided to use TARP to inject capital directly into financial firms — investing taxpayer dollars to give them an added cushion against loan losses.

Despite all this, the crisis — and the flow of money — continued into 2009, as Mr. Bush handed the presidency to Barack Obama.

"At that point, the US government had already provided a mix of guarantees and capital that backstopped between $10 [trillion] and $30 trillion in financial assets. It was the most extraordinary set of broader guarantees and funding commitments deployed ever ... no precedent for it," says one former senior member of the Obama economic team. "But even with all that, the economy was shrinking."

The Obama team, with Timothy Geithner as Treasury secretary and Lawrence Summers as top economic adviser, launched another wave of rescue efforts for the economy. It would include a massive fiscal stimulus from tax cuts and government spending. It also included new efforts within the Group of 20 nations to inject liquidity into banks from Asia to Europe. At the same time, the Treasury announced that major US banks would undergo "stress tests" to see if they needed more capital.

Finally, in March, the stock market hit bottom and — though investors didn't know it at the time — a devastating bear market began to recede. The crisis slowly eased.

Many critics, notably conservatives, thought the Fed and Treasury had spun out of control alongside financial markets. But few finance experts think the economy would be in a better place today without those institutions opening their checkbooks to invest and spend when others wouldn't. Given all that, it's notable that the Dodd-Frank law, if anything, makes it harder for the government to act in the lender role.

The law makes emergency lending by the Fed subject to Treasury secretary approval. The Federal Deposit Insurance Corporation can offer emergency guarantees on bank debts, but this power is conditional on a chain of approval that includes Congress as well as the Treasury. Citing this shift at the FDIC, the former Obama official says that although Dodd-Frank is in general a big step forward, it leaves the nation with a "somewhat diminished firefighting capacity" for a severe crisis.

Still, the "lender of last resort" role will persist.

3. INSTEAD OF BAILOUTS, NEXT TIME PREPARE FOR CORPORATE FUNERALS.
Perhaps the most controversial element of the whole crisis was the bailouts — not the broad efforts to prop up the financial system but the targeted support that went to tottering companies, from Fannie Mae to General Motors.

In these two cases, the rescues helped keep home loans flowing and people on the assembly line in an auto industry suffering more than most businesses. But the bailouts also fanned outrage. Many Americans wondered why, for instance, some of the same people who got insurance giant AIG into trouble were receiving large bonuses while the firm was on the federal dole.

Even people who rolled out these support plans weren't always sanguine about them. Bernanke has said that using Fed resources to save AIG made him angry. Mr. Kohn recalls seeing the Fed chairman on that day look "troubled."

Are some firms literally too big, or too interconnected with others, to be allowed to fail?

Whatever the political and practical answers to that question, under the Dodd-Frank Act it won't be legal for the government to craft firm-specific rescue deals in the future. Instead there's something called "orderly liquidation authority." Top executives would lose their jobs. The firm's investors would be the first to absorb losses. The FDIC would act as a kind of bankruptcy judge, as it already does for failing commercial banks.

In practice, none of these firms that the government calls "systemically important" are going to vanish in a hurry. Their size and complexity would prevent it. But the law tries to map a way for a firm like Lehman Brothers to fail in a controlled way, without sparking wider chaos. "Dodd-Frank ... comes as close as possible to a traditional bankruptcy while acknowledging that the wind-down of a financial institution has to be managed carefully to protect the public," Paulson writes in a new prologue for the latest printing of his book, "On the Brink."

To safeguard the wider system, he notes that the law gives regulators "emergency authorities to avert a disorderly wind-down, including the ability to issue guarantees and make capital injections."

Some critics say such powers will result in backdoor bailouts of politically powerful firms. But even then, the law calls for the financial industry, not taxpayers, to cover any FDIC costs.

Underscoring that "too big to fail" may be passť, the FDIC has been doing "road shows" with a simple message for bond investors, whom it sees as central to curbing excessive risk: Next time around, the government won't rescue you. Dodd-Frank, meanwhile, tells big financial firms to have "funeral plans" ready in advance. Back in 2008, nothing like this dissolution authority existed. Instead, uncertainty roiled markets as investors saw some firms getting government help while others suffered fatal losses.

Given the dire repercussions, some economists say the real question isn't why some firms received bailouts but why Lehman didn't. Bernanke later told a bankruptcy examiner that the firm simply didn't have enough value or assets left to secure any government loan. The Fed and Treasury had no authority to step in. "I speak for myself, and I think I can speak for others, that at no time did we say, 'We could save Lehman, but we won't,' " he said.

Others say the bailouts went too far, even allowing for the need to quell a post-Lehman panic. Sheila Bair, who chaired the FDIC at the time, remembers pushing for a harder line on the troubled banking giant Citigroup.

She urged that regulators at least consider putting the commercial bank portion of the company into FDIC receivership, as occurs with other failed banks. At a minimum, she hoped the government could set up a "bad bank" and force Citi to sell some of its toxic assets.

"We learned this during the Savings and Loan crisis," says Ms. Bair. "Ripping the band-aid off, forcing banks to shed their bad assets, to take their losses, getting them out there lending again — that would generally be much better to support the economy than just propping them up."

In her view, the crisis could still have been stanched, and the economy would be stronger today, if her approach had been tried.

But in early 2009, with the country shedding jobs, the Treasury's overriding goal was emergency support for the financial system — Citi included. The former senior member of the Obama administration says the path to a stronger economy lay in greater fiscal stimulus, not a different approach to mending banks.

"If you look at how our financial system has performed relative to any other major economy caught up in this mess, we went very quickly to a financial system that was able to lend again and support a growing economy," the official says.

To date, most "bailout" money extended by the government has been paid back, but a handful of firms (Fannie Mae, Freddie Mac, the lender GMAC, and General Motors) still owe some $85 billion collectively, according to the investigative website Pro Publica.

One factor that may lessen the need for bailouts in the future is simple prevention. In the end, the biggest problem that got financial firms into trouble was too much leverage — too many loans or investments relative to their capital reserve.

Now, via both Dodd-Frank and evolving global standards, major banking firms are being asked to have less leverage. It's a point both Paulson and Bair view as crucial.

"Very importantly, there are stronger capital and liquidity requirements," Paulson says. "That's the best defense against failure."


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4. WHAT HAPPENS IN AMERICA DOESN'T STAY IN AMERICA.
On Sept. 14, 2007, people in Britain lined up at branches of the Northern Rock bank, desperate to withdraw their savings. It looked like a classic bank run, with people in shirt sleeves carrying satchels. That morning the Bank of England had to swoop in to give the institution emergency funding.

The month before, the German bank IKB Deutsche Industriebank had to be rescued because of its exposure to the collapsed US housing market, while almost simultaneously the big French bank BNP Paribas SA suspended withdrawals from three of its investment funds. Over time, the widening spiral of events included the implosion of Iceland's banking system, a housing crash in Spain, and a public-debt crisis in southern Europe that turned Greece into the iconic mendicant of the West.

Yes, this was a global crisis. Risky actions happened in many nations. One lesson from it all is that if financial instability is often a global affair, then solutions must be global as well.

"AIG nearly brought down the US economy because it guaranteed the losses of a Mayfair Branch operating under a French bank license in London," Gary Gensler, the lead US regulator on derivatives, told a congressional hearing in July. Both Citigroup and Bear Stearns had investment activities set up in the loosely regulated Cayman Islands that got into trouble, he added.

The global nature of economic problems is hardly new. The Great Depression, to cite just one example, was a tragedy that jumped across borders, fueled by challenges with the gold standard, that era's mechanism for setting currency values.

With the lesson of global interconnectedness in mind, regulators are now working to try to coordinate rules to prevent future collapses. A key goal is to reduce the likelihood that big banks will endanger the world economy by taking advantage of weak regulation in some locales. Regulators in the US and European Union recently announced progress toward harmonizing the oversight of cross-border derivatives.

"I'm very pleased to see that we're watching as much harmonization ... of rulemaking" between the European Community and the US, says Dodd, who was the lead architect (along with Rep. Barney Frank of Massachusetts) of the Dodd-Frank financial reforms.

But the effort needs to keep broadening, Dodd and others say. "The next crisis, if it's not contained, not managed better, isn't going to just be a question of Europe and the United States," Dodd says. "It's going to be India, it's going to be Brazil, it's going to be China."

5. PAY ATTENTION TO THAT MAN BEHIND THE CURTAIN.
Bernanke may not be able to pull levers like the great and powerful Oz, but the crisis revealed that the organization he heads can pull off some serious monetary wizardry. The Fed was certainly powerful at times. People still debate whether it was great.

Bernanke's second four-year term ends in January. Amid the buzz of speculation about whom President Obama will pick to replace him, remember this: Bernanke's eight years will go down as a singular period in history that revealed both the Fed's power and limitations in new ways.

The central bank under Bernanke used its lending authority to revive frozen channels of credit. It ushered in the world of ZIRP — the zero interest rate policy — as the crisis deepened. It tried to turn words into money, using pledges to keep rates low for an extended period as a kind of psychological way to encourage consumers and businesses.

All this at a time when another big potential tool of economic revival — fiscal policy — was largely held hostage by a partisan rift between congressional Republicans and Obama.

Many economists applaud the Fed's efforts and say they were largely successful in ending the recession. But the economy's recovery has remained disappointingly slow, and the effectiveness of three rounds of "quantitative easing," in particular, is a matter of heated debate. Bernanke's successor will have to craft a delicate exit from this bond-buying program (intended to keep long-term interest rates low) without unnerving stock markets and stifling the recovery.

The Fed also emerged from the crisis with a bruised reputation. Its bank regulators hadn't intervened to slow the subprime lending surge. Its bailouts were unpopular. And many Americans viewed the central bank as an institution with little accountability, serving bankers more than the general public.

Kohn says Bernanke's role as a leader during the crisis was pivotal. "As a student of the Great Depression, he was quite aware of the downside of not getting it right and stabilizing the situation. He pushed very hard on himself and the people around him" to find creative solutions, the former vice chairman says.

Bernanke's critics range from libertarians with an "end the Fed" mantra to moderates like Bair, who support at least some of his actions.

Bair, now a finance expert at the Pew Charitable Trusts, complains that Bernanke's policy of monetary easing has become "like a narcotics addiction now. We don't know how to function without it."

Still, to many economists, the zero rate remains the obvious thing to do in today's weak economy.

CAN 'NEXT TIME' BE PREVENTED?
In the end, keeping a nation's financial system working well means more than just ensuring an adequate level of competition or putting regulatory bodies in positions of oversight. The years leading up to the crisis, after all, showed how competing financial firms can just follow each other off a cliff. And even a well-intentioned regulator can miss the danger signs.

Finance experts differ in the details of their prescriptions, but many say what's needed is a culture of caution that Dodd-Frank envisions but can't guarantee. It's a finance sector in which markets are disciplined because the pay of bankers is based on their ability to show prudence as well as short-term profits, because investors don't believe they have an insurance policy called "bailout," and because regulators foster vigilance — especially in good times.

The frontline defense against the next crisis is a 10-person body called the FSOC, the Financial Stability Oversight Council. The idea (part of Dodd-Frank) is to put top regulators, led by the Treasury secretary, in one room and with one mission — to take a wide-angle view of whether the financial system is safe.

Their meetings now have none of the crisis drama that overcame Dodd on that September day five years ago. But the economy's fragility persists, and the latest FSOC report points to a number of sources of uncertainty: conditions overseas, chronic federal deficits, and possible shifts in interest rates.

The banks dubbed "too big to fail" are even bigger now than they were in 2008, and they remain a formidable lobbying force in Washington. Bair, who served on the council before leaving the FDIC as her term expired, says her level of confidence that needed financial reforms are in place to prevent another financial collapse is only about 3 on a scale of 1 to 10. One reason for her caution is that many Dodd-Frank provisions haven't been fully implemented.

Despite the ongoing risks, though, a widely held view among finance experts is this: Thanks to Dodd-Frank and other responses since 2008, the nation is better positioned today. No one is expecting a crisis-free future, but with the right vigilance, the risk of a repeat can be mitigated, and the response to a future crisis can be more coherent. Ordinary Americans would enjoy a stronger economy as a result.


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