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Happy Anniversary Bankruptcy!

Has America learned its lessons? We think not.

September 10th was the one- year anniversary of the collapse of Lehman Brothers. Back then, we suspect you were just treating the day as your ordinary Tuesday – until you noticed Wall Street gamblers shaking their heads and wiping their tired faces, as news of the bank’s demise spread like wildfire. And you weren’t spared by analysts proudly claiming that they predicted Lehman’s fall; and yes, even the bankers who swore they had foreseen the event long ago.

Has America learned its lessons? We think not.

First, major banks have gotten into risky investments once again. They continue to believe their risk-taking is far more important than their social responsibility. They could have forgotten how Lehman leveraged only 5 percent, with very low equity, and then went bust. Even though they aren’t allowed to leverage more than 30 times of their current assets, some are still managing to defy the rule.

Second, high-yielding funds remain attractive to most investors, who still bet in large sums. Although there’s some level of protection, the market is not far from what it was pre-Lehman bankruptcy.

Third, the presence of sub-prime mortgages in banks now repacked into “new” securities is another catastrophe in the making. Who said the bail-out would stop lenders from devising “improved” products, but with the same amount of risk? Since these are anchored on mortgages that are still toxic, it’s no wonder they combine them with low-risk assets to reflect a pseudo-boost.

Finally, CEO and management pays are still at excessive levels. Top-talent retention may be one of its goals, but there’s no point going after these people when your bank has been bailed out by the government. Has any bank capitulated to the media’s probing regarding their TARP use and high executive pay? We’ve seen none so far.

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