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This essay was published as part of a law review symposium that evaluated my work on the regulation of large, complex financial institutions. Part I of my essay discusses the other articles published in the symposium issue and describes their relationship to my own work. Part II analyzes the global financial crisis that began in March 2020, following the outbreak and rapid spread of the COVID-19 virus. Part II also reviews the extraordinary actions taken by governments and central banks in response to that crisis. Part II argues that the pandemic- induced financial crisis and its aftermath confirm two lessons we should have learned from the global financial crisis of 2007-09. First, “universal banks” (financial holding companies that conduct a wide range of banking and capital markets activities) and “shadow banks” (large nonbank financial institutions that engage in bank-like activities) pose unacceptable risks to the stability of financial markets and economies around the globe.

Second, the world remains trapped in a “global doom loop,” despite the financial reforms adopted by many countries after 2009. The “global doom loop” is a toxic web of mutual dependence that connects universal banks and shadow banks to governments and central banks. The “global doom loop” produces continually rising levels of private and public debts, which in turn promote dangerous boom-and-bust cycles. Those boom-and-bust cycles require ever-larger bailouts when significant financial or economic disruptions occur. In view of the massive debt burdens that many nations have assumed since 2007, it is highly doubtful whether their governments and central banks could arrange similar rescues in the near future without triggering sovereign debt crises.

Accordingly, the goal of “taming the megabanks” – of both “universal” and “shadow” varieties – must remain at the top of the agenda for financial regulators and policymakers. A new Glass- Steagall Act would provide the most direct and effective way to (1) greatly reduce the risks posed by universal and shadow banks, and (2) end the destructive boom-and-bust cycles generated by the “global doom loop.”

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