Those who do not learn from history are doomed to repeat it. Sadly, the same might be said of Treasury Secretary Steve Mnuchin, as he seems to have not learned from recent U.S. financial market history.
Despite a history of problems in the nonregulated part of the U.S. financial system – the so-called shadow banks – spilling over to the rest of the financial system and to the real economy, Mnuchin now chose to exempt money management firms from being subject to the sort of stress tests that were introduced for the banks in the aftermath of the 2008-2009 Great Recession. This would seem to underline his lack of concern about the serious risks that the shadow banks might very well now be posing to the U.S. economic recovery.
