by Peter Gorenstein for Yahoo Finance

White House chief of staff Rahm Emanuel once said the administration “should never let a serious crisis go to waste.” But that’s exactly what they’ve done, says former FDIC chairman William Isaac.

Two years after the failure of Lehman Brothers created the greatest financial crisis since the Great Depression, the banking system is “safer in the sense things have calmed down and the banking industry has raised a lot more capital,” says Isaac, author of Senseless Panic. However, “we have not changed anything, material, in terms, of how we regulate banks and none of the things that have led to this crisis have been fixed.”

For the most part, Isaac believes the government’s reaction to the crisis has been futile, describing the 2,300 page financial reform bill as a “campaign document; this was not serious reform.”

President Obama says Dodd-Frank ends the ‘too big to fail’ policy. Isaac doesn’t buy it. In fact, Isaac is willing to “bet my house” that “when the next crisis comes none of the major banks in this country will be allowed to go under.”

When asked why the government wasted this opportunity, Isaac has no answer; only to say he hopes midterm elections in November will create government gridlock.

“Divided government is probably the best approach where people really do have to agree on something,” he says. “I wish we had divided government over the past couple of years so we wouldn’t have some of the, I think, terrible bills that we had.”

Click Here to see why Isaac thinks government created the financial panic when it let Lehman Brothers fail.

Original Article Located Here.