Ten years have passed since 2008 when the U.S., and the whole world, were hit by the worst financial crisis since 1929. According to the former FDIC chair, the threat of another meltdown is looming.  

September marks the 10th anniversary of the 2008 crisis.

But according to a number of experts, nothing much has changed and similar practices that led to the 2008 global recession are still going on.

As the hinge on which swings the world economy, the United States may have learned nothing much from the lessons of the crisis triggered by subprime mortgage speculations.

Sheila Bair has been busy giving talks around her experience as the former chair of the Federal Deposit Insurance Corporation at one of its most challenging periods.

Read More: 8 Recession-Proof Businesses and Methods to Beat Tough Markets

The Next Great Recession is Around the Corner

The 1929 Great Depression caused thousands of banks in the U.S. to fail by the early 1930s.

The Banking Act of 1933 initiated measures to protect deposits, mainly through the establishment of the state agency Federal Deposit Insurance Corporation (FDIC).

When the next major recession hit in 2007-2008, the U.S. FDIC found itself facing its toughest challenge since its creation.

At the time, the FDIC was headed by Sheila Bair (2006-2011).

Looking back on her time as the FDIC chair when it was at the center of a financial turmoil, Bair thinks they did the best they could, and expresses doubts as to the U.S. ability to protect its banking system once again.

Last month, at the Yahoo Finance All Market Summit (September 20th, in New York); Sheila Bair addressed the evolving role of regulations.

Bair said she believed that given “the tools” they had in 2008, they did the best they could. She also said that not bailing out homeowners like banks was a huge mistake.

In a phone call with CNBC, Bair said that banks should be preparing for the next downturn that will come in the next few years and that the warning signs are already here.

According to Bair, regulations should be tightened to force banks to increase their capital reserve but “unfortunately, in Washington, we’re going the opposite direction right now.”

The U.S. Can’t Bail Itself out of Another Market Crash

It looks as if the U.S. government keeps shooting itself in the foot by allowing its banking system to feel “safe” knowing it can rely on its help in the form of bailouts.

In an interview with NPR news station WBUR-FM, Bair admitted that the American financial system is “more resilient now” but expressed her concerns over the way the government could be going with bailout tools.

“I’m very concerned about all this recent rhetoric. And [former Treasury Secretary] Tim Geithner, obviously, he and I have had our disagreements, and they’re policy disagreements, but here’s another one, because his emphasis right now is all about expanding the government’s bailout tools… And I think that’s absolutely the wrong system. That’s the system we still have and we don’t want to save that system,” said Bair.

The ex-head of the FDIC critiqued her fellow Republicans who she thought “are market-oriented”, and forewarns that the U.S. democracy may not be able to survive another market crash. Said Bair:

“A lot of Republicans are trying to pressure the Fed to reduce capital even more. So that’s the political environment. Big banks are back in charge. That’s the political environment in D.C. right now. I don’t see that there’s any political will to break them up or do anything else. And my fear is that we’re going to have to have another disaster before that finally happens. But yeah, I mean, if they needed another bailout again, I think our democracy cannot survive that. Our democracy could not survive another round of bailouts.”

Do you think banks need to be subjected to tighter regulation?

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