What caused the worldwide banking crisis seven years ago? How did the crisis differ across the globe? Could it happen again? The book, “The First Great Financial Crisis of the 21^st Century: A Retrospective,” co-edited by Jim Barth, Lowder Eminent Scholar in Finance in Auburn University’s Raymond J. Harbert College of Business,” draws on the expertise of 30 international financial experts to explain what went awry from 2007 to 2010 and examines what conditions might set the stage for another banking crisis. “We waited until the crisis was over and we had a chance to look back and reassess what happened rather than assess what’s happening in the midst of the crisis,” Barth said of the panel. George Kaufman, Professor of Finance and Economics at Loyola-Chicago, also served as co-editor. Even 2016 presidential candidates continue to grapple with issues explored in the book, as witnessed by the most recent Democratic and Republican party debates. “Every one of those candidates have a view about ‘Too Big to Fail’,” Barth said. “So much money was spent bailing out these people. Guess what? Banks are coming back. And guess what? Their (executives) pay is going up again. There’s a bigger gap between the haves and the have-nots. After bailing out banks, some of the same people who ran the banks into the ground are still at those banks getting big pay checks and they’re laying off lower-level people. So once again, who do we bail out? Not mainstream people, but Wall Street people. That’s why it’s an issue.” Barth’s co-edited book points out that the U.S. banking crisis began in the “housing sector” with sub-prime mortgages. As the pool of credit-worthy borrowers shrank, mortgage lenders fought for revenue and market share by relaxing underwriting practices and offering riskier mortgages that would not have been extended previously. “It turns out that there were a lot of mortgages made available to a lot of individuals without requiring much, if any, down payment,” said Barth, who wrote the book’s introduction and two of its chapters. “As more people purchased homes, housing prices rose, peaked and then turned downward, with many persons finding themselves owing more than their homes were worth. Financial institutions and individuals who held mortgages or securities backed by mortgages suffered losses when home prices crashed and people began defaulting on those mortgages. That contributed to the worst recession since the Great Depression.” But the banking industry wasn’t entirely at fault, according to Barth. “The regulatory authorities could have required banks to not make excessively risky loans,” he said. “They could have told banks, ‘If you’re going to take on more risks, you’ve got to hold more capital.’ Instead, they allowed banks to operate with too little capital and make too many risky loans, despite the fact that it was their job to prevent that from happening. It is the responsibility of the regulators to oversee what the banks are doing and then prevent any excessively risky activity.” Barth noted that Europe’s financial crisis resulted from a different set of factors. Take Greece, for example. “Greece was a country in which the government had issued a lot of the debt and banks were buying a lot of that debt,” he said. “When the government got into trouble and couldn’t pay its obligations in full, the banks obviously got into trouble too.” Barth said a similar crisis in some countries in the near future was still “a distinct possibility,” even though there have been significant regulatory reforms. “Unfortunately,” he said, “it might take the start of another potential crisis to know if the reforms will work.”