Part 4/9:
The Myth of a Post-Crisis Financial System
Many believe that the 2008 financial crisis prompted a thorough cleanup of the banking system; that balance sheets are now stronger, and protections tighter. However, experts argue that this optimism is misplaced. While on-balance sheet risk appears reduced—banks are holding excess liquidity and returning cash—the real danger lurks off their balance sheets.
Off-balance sheet exposures, complex client transactions, and heavily levered borrowers remain vulnerabilities. The recent years of aggressive deal-making have exacerbated these risks, and as the market moves forward, it remains uncertain whether the safeguards are sufficient to prevent another systemic shock.