President Obama will try to revive an overhaul of US financial institutions today – a year after the collapse of one the oldest US banks, Lehman Brothers. Its demise triggered a rapid downward spiral in shares as confidence, trust and lending between banks evaporated and spread worldwide.
As a result of the firm going bust many of its investors lost their money, despite some apparent assurances that their investment was 100% safe. Gaps in the regulation of U.S. banks and capital markets have been blamed for the subprime mortgage crisis and global financial chaos triggered after Lehman filed for bankruptcy. To stop the slide, the US government invested heavily in the financial sector and US President Barack Obama condemned what he described as “reckless behaviour” – which included bank’s paying their bosses massive bonuses. In a wide-ranging speech, Obama will discuss the winding down of the government’s involvement and try to reinvigorate stalled legislation on regulatory reform. He is also expected to call for global coordination to prevent future financial crises.