Three big lessons we didn’t learn from economic crisis

Ten years ago, after making piles of money gambling with other people’s money, Wall Street nearly imploded, and the outgoing George W. Bush and incoming Obama administrations bailed out the bankers.

America should have learned three big lessons from the crisis. We didn’t, to our continuing peril.

First unlearned lesson: Banking is a risky business with huge upsides for the few who gamble in it, but bigger downsides for the public if those bets go bad.

Which means safeguards are necessary. The safeguards created after Wall Street’s 1929 crash worked for more than four decades. They made banking boring.

But starting in the 1980s, they were watered down or repealed due to Wall Street’s growing thirst for profits and its rising political clout. As politicians in both parties grew dependent on the Street for campaign cash, a rush to deregulate became a stampede.

It began in 1982, when Congress and the Reagan administration deregulated savings and loan banks, allowing them to engage in risky commercial lending while continuing to guarantee them against major losses. Not surprisingly, the banks got into big trouble, necessitating a taxpayer-funded bailout.

The coup de grace came in 2004, when George W. Bush’s Securities and Exchange Commission let investment banks hold less capital in reserve.

All of this ushered in the 2008 near-meltdown — which was followed by another attempt to impose safeguards, the DoddFrank Act of 2010.

And now? The Street’s political clout is as great as ever, which explains why Dodd-Frank safeguards are being eased, clearing the way for a new crisis.

The second lesson we should have learned but didn’t is how widening inequality makes our economy susceptible to financial disaster. In the decades leading up to 2008, stagnant wages caused many Americans to go deep into debt, and they used rising values of their homes as collateral. Much the same thing had happened in the years leading up to 1929.

Wall Street banks were happy to accommodate, lending willy-nilly and often in predatory ways, until the housing and debt bubbles burst.

The third big lesson we didn’t learn concerned the rigging of American politics. After the crisis, many Americans realized Wall Street, big corporations and the wealthy had essentially bought up our democracy.

Americans saw the Street get bailed out as homeowners, suddenly owing more on their homes than the homes were worth, got little or nothing. Millions lost their jobs, savings, pensions and homes, but bankers and big investors came out richer than before. Bankers who committed serious fraud escaped accountability. No executive went to jail.

Outrage at all this fueled the tea party on the right and the brief “Occupy” movement on the left. Both eventually morphed into the two anti-establishment candidacies of 2016: authoritarian populist Donald Trump and democratic populist Bernie Sanders.

And now? Anti-establishment fury remains the strongest force in American politics. Trump has been using it to conjure up racist and xenophobic conspiracies and to create the most authoritarian regime in modern American history. He promised to “drain the swamp” but has made it bigger and filthier.

Sad to say, 10 years after the near-meltdown of Wall Street, we seem to have learned little. Only worse: We now have Trump.