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In the fall of 2008, the financial crisis crushed the U.S. economy and plunged the country into the Great Recession. The crisis shuttered American businesses, cost millions of Americans their jobs, and wiped out home values and household savings. The macro effects hit hardest and were the longest lasting for those least able to bear the brunt of the crisis. It was devastating to middle-income families and perhaps even more so to low- and moderate-income households, who had little financial buffer (Barr 2012a). Financial stability, never robust for these families, dropped precipitously (Barr and Schaffa 2016). Both in the United States and globally, the crisis has led to a series of fundamental reforms. (For an early analysis, see Barr 2012b). At the same time, more needs to be done to make the financial system safer, fairer, and better harnessed to the needs of the real economy. This essay first describes the origins of the financial crisis and then outlines domestic reforms. It then turns to the need for global coordination in financial reform, and analyzes steps taken thus far, while highlighting some of the key remaining challenges ahead. Finally, it introduces other articles in this volume, produced as part of a 2014 conference on financial reform organized by the University of Michigan’s Center on Finance, Law and Policy, sponsored by the Russell Sage Foundation.


Posted with permission of the Russell Sage Foundation.