Debunking Deregulation
- Another 'Deregulation' Myth - A cautionary tale about financial rules that failed.
- Most Pundits Are Wrong About the Bubble - The repeal of Glass-Steagall has helped us weather the storm.
Read the above then come back, I'll wait. Ok, these are among the best articles I have seen that address the weird argument that "deregulation" somehow caused the current financial crisis. That assertion is pure rhetorical fluff without any factual basis whatsoever. (Note that all of the Graham-Leach-Bliley institutions survived while the old style investment banks went into the tank.)
There were clearly regulatory failures and regulatory "dead zones." No regulatory agency had responsibility for derivatives or mortgage origination. In fact they never did--through either Democratic or Republican administrations. There was no "deregulation" because there was no "regulation" in the first place. And that was never any great secret. Policymakers have known for almost two decades that there was a lot of risk here. There was simply a lack of foresight and/or a willingness to take on the fight.
But the argument that we were somehow protected from this risk before is wildly misplaced.
If you want to spend a couple hours getting some real excellent information on the crisis, you should check out the two "Giant Pool of Money" episodes on NPR's This American Life.
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