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4 good things that came out of the financial crisis

APTOPIX Lehman Brothers BankruptcyAPTOPIX Lehman Brothers Bankruptcy
A man is surrounded by photographers after leaving the Lehman Brothers headquarters carrying a box Monday, Sept. 15, 2008, in New York. Lehman Brothers, a 158-year-old investment bank choked by the credit crisis and falling real estate values, filed for Chapter 11 bankruptcy protection from its creditors on Monday and said it was trying to sell off key business units. (AP Photo/Mary Altaffer)Photograph by Mary Altaffer — AP

Tuesday marks the seven-year anniversary of the bankruptcy of Lehman Brothers, and the official start of the financial crisis.

A lot has happened since then. Barack Obama entered the White House and stayed there. Washington has put in place a whole new set of rules to govern Wall Street. Silicon Valley has supplanted Wall Street as the place to get rich. A mortgage is a lot harder to get than it used to be. (Although a car loan has become a bit easier.) Stock prices plunged, and then rebounded, and are now higher than they were before the financial crisis, though look a little rocky lately. The U.S. again looks to have one of the most stable economies in the world, and our unemployment is nearly as low as it once was.

Given the recovery, and seven years of perspective, one might be tempted to ask, “Was the Financial Crisis was really all that bad?” The answer, of course, is, “Yes.” Yes, it was a horrific mess of epic proportions that started with millions facing the prospect of losing their homes, and caused an economic meltdown that put many more millions of people out of work.

That being said, not everything about the financial crisis, or what has come out of it, was bad. Here are a few things you can be grateful for on the anniversary of the start of the financial crisis.

Financial education for all

Harvard again produced the most startups on this year’s list.

Before the financial crisis, only a few people on Wall Street and economists knew what a collateralized debt obligation was, or the fact that Americans, in general, were deep in debt. Then suddenly we all did. Most importantly, we learned that bad loans are not just bad for borrowers but can bring down the entire economy, if left unchecked. Now regulators and watchdogs are on the lookout for the next debt bomb, whether it’s student loans or auto lending that could take down the economy.

And it wasn’t just non-financial types that learned something in the financial crisis. Even former Fed Chairman Alan Greenspan said he learned something from the financial crisis. Prior to the financial crisis, he said he believe that Wall Streeters acting in their own self interest could police themselves from doing colossally stupid things. How wrong he was.

We dealt with our (personal) debt problem

In the run-up to the financial crisis, the percentage of household debt to GDP nearly reached 100%. That’s what broke the system. Yes, it was painful for the banks, and everyone else. But the financial crisis, at least for now appears to have gotten the nation’s household debt problems as a whole under control. Household debt now as a percentage of GDP has fallen back to around 80%.

Yes, a good deal of the personal debt was shifted to the government in the form of spending on stimulus to get the economy out of the recession. Of course, eventually we will have to deal with that. But government debt is less of a drag on the economy than out of control household debt. So at least for now, we are in better economic shape.

Wall Street no longer the center of economy

In the mid-2000s, especially in the wake of the dot.com bust, Wall Street, it seemed, was the place to be. Not only for people who were just looking to make money, but also for math wizards who were looking to innovate. All of that innovation only made financial markets more complicated and risky.

Today, the technology sector and Silicon Valley seem the most vibrant parts of our economy. And Wall Street is a lot less profitable then it used to be. That’s a good thing. Many studies have shown that economies that are dominated by their financial sector do not do well in the long haul.

Bank stress tests

Federal Reserve Building, Washington D.C.

When Timothy Geithner announced the bank stress test a few months into the financial crisis, many people dismissed it as just another band-aid, something that might cover up our problems for a bit, but not heal us. Many called for a much bolder move, like nationalizing the banking sector or something like that. But the stress tests totally worked. After the government gave the largest banks in America a thorough and somewhat public examination, and a clean bill of health, things started to get better. And the Fed made the stress tests an annual thing, which has been a big factor in eliminating the worst lending practices, and risky behavior, at the biggest banks.