Five years on from the height of the global financial crisis, the shock of that time has faded. Unfortunately, so has the determination to reform the financial system.

It’s both trite and cynical to recycle the trope that it’s a mistake to “let a good crisis go to waste.” But, at the same time, it’s hard not to conclude that not nearly enough has been done to avoid a repeat of the crisis.

On the positive side, global banking regulators have agreed to raise both the quantity and quality of capital that banks must hold. Regulators also introduced liquidity and leverage requirements. However, it’s not clear that these measures go nearly far enough. There’s not much confidence that the failure of a large, global financial services institution – let alone a series of failures (as happened back in October 2008) – could be handled any more cleanly today than it was back then.

Some industry-watchers argue that policy-makers haven’t done nearly enough to prevent failures in the first place. According to this view, capital requirements should be much higher than the new Basel III system demands and, there should be greater divisions between traditional utility banking and the riskier trading and investment-banking businesses. On the securities side, the credit-rating agencies are now under greater oversight, but it seems there still is too much reliance on ratings.

In Canada, the regulators seem to have forgotten all about the seizure of the non-bank-sponsored asset-backed commercial paper (ABCP) market, and the fact that millions of dollars worth of ABCP was sold without brokers understanding what they were selling or ensuring that it was suitable for the clients to whom they sold it.

Now, regulators seem to have pivoted away from concern about the real risks in the exempt market that were exposed by that aspect of the crisis; instead, the regulators looking for ways to increase exempt-market investing. It remains to be seen if the regulators still believe that suitability is an adequate standard of care, even while it is violated so routinely.

Five years on, it’s hard to say that we’ve learned much from the crisis – or that we’ve done enough to avert the next one.

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