“The 2007-2009 financial crisis, like past
financial crises, was associated with not only a steep decline in output
but also the most severe economic downturn since the Great Depression
of the 1930s,” the report read. The toll on economic output may be as
much a $13 trillion—an amount equal to a year’s GDP. Paper wealth lost
by homeowners equaled $9.1 billion.
The report was published as part of a
cost-benefit analysis of the Dodd-Frank financial reform law of 2010.
The office tried to determine whether the costs of implementing that law
would be greater or lesser than that of another economic crisis.
“If the cost of a future crisis is expected
to be in the trillions of dollars, then the act likely would need to
reduce the probability of a future financial crisis by only a small
percent for its expected benefit to equal the act’s expected cost,” the
GAO concluded.
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