Samuel, who works at a Bank of America branch in New Jersey where I do my banking, does not seem so comfortable these days. The never-ending news in the media about Bank of America’s human resource restructuring reminds him of his previous pain of losing his job and spending months without a job. To me, he acted as if everything was alright and said, “Since I have experienced this type of situation before, I can probably deal with it better even if I am put on the restructuring list.” However, he could not quite hide his fear. Yet, he acknowledged that the Bank of America’s current struggle to cut back stems from past financial wrongdoings. “Before the 2008 Lehman Brothers bankruptcy, there was a huge growth in mortgage loans. Everyone was caught up in increasing profit, and all financial companies did it.”

Even though three years has passed, the U.S. banking industry still suffers from nasty fallout due to the Lehman Brothers bankruptcy. Financial regulators and prosecutors are still investigating financial companies, through various lawsuits, for offering stocks to investors and not informing the investors of the management risks. Investors, prosecutors and financial regulators are taking turns filing lawsuits, and the situation looks as if the dead and buried banks were dug back up and punished again.

Consequently, the U.S. financial industry that appeared to be recovering is receiving heavy blows. Huge compensations to settle lawsuits, not operation losses, have become the cause for crisis at the Bank of America, the U.S.’s largest bank. The Bank of America tried to escape from “the ghost of the Lehman Brothers” by compensating investors $12 billion for mismanaging mortgage stock offerings, but realized that that was a mistake. The Federal Housing Finance Agency’s huge lawsuit followed AIG’s $10 billion lawsuit. Although the Bank of America received $5 billion in emergency funds from Warren Buffett, sold off assets and is currently going through a huge labor reduction, it is unclear when the bank will recover. Currently, other large financial companies face the same fate.

The market is urging the end of lawsuits, claiming that lawsuits may have extreme consequences; pushing for accountability in mismanaged mortgages, which brought the Lehman Brothers bankruptcy, may instigate economic crisis.

A flood of lawsuits against financial corporations was expected since President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010. President Obama formally pledged that he would end the “too big to fail” mentality toward financial corporations. However, the unexpected economic downturn and the spread of the European financial crisis forced the Obama administration to balance financial reform and reality. A report even came out alleging that government officials clandestinely demanded that prosecutors terminate lawsuits, putting the Obama administration in a bind.

Through the Lehman Brothers bankruptcy, we realized that the American financial industry that staged the world was part of Wall Street’s greed packaged with advanced financial laws. The U.S. has since tried to recover its reputation through financial reforms, but not without side effects. President Obama, who faces reelection next year, now has to achieve two conflicting goals: economic recovery and re-establishing an honest, stable financial system.

Financial corporations are founded on trust and are an economy’s most basic infrastructure. Therefore, trust is difficult to recover once it is lost. The bankruptcies of the Tomato Savings Bank and seven other savings banks are enough to make us envision a Korean version of the Lehman Brothers bankruptcy. I only hope that the dragging of the U.S. economy, caused by the incompetent government watchdogs controlling financial corporations, will not also happen in Korea.