Rick Lowe
This essay, by Professors Steven Horwitz and Peter Boettke for the Foundation of Economic Education (FEE), is a very readable and understandable booklet that explains just what went wrong in the fall of 2008.
It's worth reading page 17 entitled "The Myth of Deregulation" if nothing else.
I really hope you take the time to read this and share it with friends.
Download the essay by clicking here: The House That Uncle Sam Built (pdf)…
An excellent book on this subject is The Sellout by Charles Gasparino “How three decades of Wall Street Greed and Government mismanagement destroyed the gloabal financial system”
Successive Government non action, but Chris Dodd & Barney Franks with the Democrats in particular pushed it over the edge…
Far too much Government action, is the problem. Encouraging bad mortgages with promises to pay the banks off if the mortgage failed was the culprit.
Bad incentives by government beget bad behaviour by those involved.
The housing bubble of 2008 was created by government policies and regulatory pressure put on the nation’s banks and savings & loan associations.. Regulatory authorities, principally the Federal Reserve and the Comptroller of the Currency, pressured financial institutions to make mortgage loans to almost anyone who walked in the door.. This “chicken in every pot” approach promoted by both the Clinton and Bush administrations eventually caused the overextended housing bubble to pop..
As most of these individual mortgages were federal insured through Fannie Mae or Freddie Mac which permitted these mortgages to be pooled into mortgage collateralized securities which were packaged by Wall Street, carried the government’s Triple A rating and were sold to institutional and individual investors.. With the approaching recession many of these mortgages, inside these so called collateralized securities, went into default.. As defaults hit record levels their insurance backing collapsed as well..
To blame Wall Street greed is rather foolhardy as Wall Street was the only means available to bailout the overextended banking system.. Wall Street did not create the real estate mortgage bubble of 2008 as it was only performing its traditional securitization function for financial institutions under the government’s oversight.. Blame should be placed squarely on the government that literally forced the financial industry through regulatory pressure to make imprudent mortgage loans, permitted the leveraging of bank balance sheets and often turned a blind regulatory eye on incompetent management practices.. Put the blame where it truly belongs, the Federal Government..
Bill Clinton started it with great help from Barney Frank & Todd & they turned the blame on Bush when he tried to change it.Now it will only get worse with the great socialist Obama in power.
I think it actually started in President Carter’s years.