Financial Crisis Cost U.S. $12.8 Trillion Or More: Study

The 2008 financial crisis cost the U.S. economy at least $12.8 trillion, a new study found -- and that's a "very conservative number," according to the authors.

The study, timed to coincide with the fourth anniversary of the Lehman Brothers bankruptcy, is a direct counter to the banking industry's relentless warnings of the potential costs of new financial regulations.

The cost of letting the banks wreck the global economy again is far, far higher.

The crisis-cost estimate, generated by Better Markets, a non-profit group lobbying for financial reform, is only a measure of actual and potential lost economic growth due to the crisis. It does not include many other costs, including the costs of extraordinary government steps taken to avoid "a second Great Depression." It does not include unquantifiable costs like the "human suffering that accompanies unemployment, foreclosure, homelessness and related damage," the authors noted.

The study also does not include figures related to any damage done to American productivity by long-lasting, widespread unemployment, which is eroding the ability of Americans to earn money and posing a threat to future economic growth.

"Lower growth means, among other things, less innovation and, therefore, less technological progress," the study's authors wrote. "The consequences of such losses to a society are indeterminable, but potentially very far-reaching and long-lasting."

The study mentions, but leaves out of its $12.8 trillion estimate, the $11 trillion or so in household wealth that was vaporized by the crisis and an estimated $8 trillion hole that might be blown in the federal budget deficit between 2008 and 2018 as a result of the crisis.

Banks would like you to know that they are suffering, too, of course. The stock prices of the biggest five U.S. banks have lost more than $500 billion in market value since the crisis began. The industry has been docked more than $2 billion in crisis-related penalties.

And the banks constantly warn that new regulations could disrupt financial markets and slow economic growth.

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