Fifteen Years after Lehman Bros. Collapse, Major Banking Overhaul is Still Needed, Former Treasury Advisors Warn

Vanderbilt Policy Accelerator for Political Economy and Regulation (VPA)
Grace May, Executive Director, VPA

NASHVILLE, TN — On the fifteenth anniversary of the collapse of Lehman Brothers, which ignited the acute phase of the 2008 financial crisis, two former Treasury Department senior advisors and prominent banking law experts warn that without an overhaul of banking laws, the country will continue to see bank failures like SVB and federal government bailouts of big banks. In a new academic paper and policy brief, released today by the Vanderbilt Policy Accelerator, Morgan Ricks and Lev Menand propose reforms that would instead treat banks like public utilities.

“America’s system of money and banking is broken,” said Morgan Ricks, the Herman O. Loewenstein Professor of Law at Vanderbilt University and a former senior advisor and financial restructuring expert at the Treasury Department who worked on the response to the 2008 crisis. “On four occasions in the last fifteen years, the federal government has intervened to prevent a financial collapse. This should not be necessary in a well-designed system.”

Ricks and Lev Menand, an Associate Professor of Law at Columbia University and former senior advisor in the Treasury Department, argue that the recent events show that the immediate post-2008 banking reforms were insufficient.

“It should now be clear to everyone that we need fundamental reform,” said Menand. “Both the COVID panic in March 2020 and the SVB failure earlier this year proved that without a structural solution, we will continue to face financial crises that require government bailouts.”

In the new academic paper, released today, Ricks and Menand argue that banks should be treated as public utilities, like electricity and other essential services, and that this was, in fact, the original design of the banking laws – until they were watered down or repealed starting in the 1980s. They argue that a public utilities approach would simplify regulations, reduce complexity, expand access and inclusion, promote economic equality, right-size the financial sector, and dramatically decrease the likelihood of future acute macroeconomic disasters.

“Ricks and Menand’s paper is one of the most important in the field of banking law in years. They provide a new framework for thinking about financial regulation–and they offer an off-the-shelf blueprint for how policymakers can reform the system,” said Ganesh Sitaraman, director of the Vanderbilt Policy Accelerator.

In their accompanying policy brief, also released today, Ricks and Menand detail a ten-point plan for policymakers to move toward a public utility framework for banking law. Highlights include:

  • Requiring All Depository Institutions to be Insured Member Banks.
  • Reinstating Utility-Style Chartering for Banks.
  • Restoring Separations between Banking and other Financial and Commercial Activities.
  • Closing the Unauthorized Banking Loophole and the Bank Powers Loophole.
  • Insuring all Deposits–and Requiring Banks to Pay for Deposit Insurance.

Read the Policy Brief Here

Read the Full Paper Here

Read the Washington Post Oped Here

“Barring structural reform, the country is likely to continue to roll from crisis to crisis,” said Ricks and Menand. “It is time for a different approach.”

The white paper by Ricks and Menand is the first policy proposal released by the Vanderbilt Policy Accelerator for Political Economy and Regulation (VPA), at Vanderbilt University. VPA focuses on cutting-edge topics in political economy and regulation to swiftly bring research, education, and policy proposals from infancy to maturity.

More information is available at

For media inquiries, contact Grace May, Executive Director of VPA, at


Explore Story Topics