Chart of the Day: Another Sign That Dodd-Frank Is Working

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.


Via Matt O’Brien, this chart from JP Morgan shows financial sector leverage over the past few decades. As you can see, leverage skyrocketed during the Bush era, which contributed to the 2008 financial meltdown, and then plummeted shortly thereafter. Then it flattened out for a couple of years, and under normal circumstances it probably would have started to climb again when the economy began to recover. Two things stopped it: Dodd-Frank and Basel III, both of which mandated higher capital requirements and thus lower overall leverage levels. This has reduced Wall Street profits but made the banking system safer for everyone.

In other words: financial regulation FTW. Nothing is perfect, and Wall Street is doing everything it can to undermine Dodd-Frank during the rulemaking process, but if it accomplishes nothing except encouraging less leverage it will have done its most important job.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate