Bloomberg, March 19, 2018: What we didn’t learn from the Bear Stearns collapse
This weekend marked the 10th anniversary of the collapse of Bear Stearns Cos. The proximate cause of the disaster was a combination of excessive, subprime mortgage-concentrated leverage and poor risk controls. But the overall economic, monetary and regulatory environment were the broader reasons.
Perhaps the most startling lessons from the crisis are those that stubbornly refuse to be learned. There is a long and not very distinguished list of what did not cause the meltdown. Some of these explanations are tortured examples of cognitive dissonance: a stubborn refusal to accept a fact that directly contradicts a belief system or ideology in which you have invested a lot of time, effort and energy. Other factors are what I called “The Big Lie” — a false narrative blaming people and issues that had nothing to do with the crisis, but make for convenient scapegoats.
Let’s state this unequivocally: Poor brown and black people did not cause the financial crisis. There have been numerous attempts to claim they did, but each is so easily dispatched as to be laughable.
