Can we now conclude that deregulation as a cause of the financial crisis is a complete myth?

Asked by: DavidMGold
  • Yes: It was expansion of GFP's Freddie and Fannie

    Ask anyone who says that "it's the policies of the Bush administration that caused the financial crisis", what policy(s) specifically and they'll have no answer...TRUTH: Bill Clinton with his expansion of Freddie and Fannie is what caused it...I mean, J. Reno even threatened some banks if they didn't meet minority quotas...That's what you call REGULATION..NOT DEREGULATION...If you allow banks to loan according to their criteria, it would have never happened.

  • A myth no doubt.

    A lot of Democrats attribute the financial crisis to Deregulation and mores specifically under Bush's 8 years in office. When pressed for examples you find many scratch their heads. A few, however, offer only two examples - the repeal of Glass-Stegall & GLB. As for the repeal of Glass-Stegall, this a myth and only two provisions were repealed that prevented an investment bank from crossing into commercial banking. If you look at the institutions at the heart of the crisis, none of the actors crossed the line or it wasn't the cause. Furthermore, Canada and European countries had no Glass-Stegall provision either. The bigger problem is that this was signed by Clinton and supported by the likes of Rubin and Summers. As for GLB, it didn't deregulate anything; it established the Federal Reserve as a super-regulator of all financial services holding companies. All financial activities were regulated after as they had been before. And again, Clinton signed this into law and defended it. After shooting down these two you might happen on a third, the Commodity Futures Modernization Act. All this did was define that credit swaps are not futures and was still subject to regulation as an underlying asset. The people raising the points don't understand what they're talking about and repeat the oft heard charge, which Obama raises to this day. The number of regulations, regulators, and budgets were all increased under Bush, not just in the heavily regulated financial industry, but in other areas.

  • The banks must be regulated

    The banks have been given to much power for to long. It's an extraordinary power to be able to create money and that power needs to be carefully controlled.

    One of the reasons you guys (and yes we have the same problems here in NZ) have had a financial meltdown is because the banks ability to lend what ever they want into the housing market created a massive bubble.

    Banks lend money which they print of out thin air. Supposedly restricted to a 10 to 1 ratio. You deposit $1 and they lend out $10.
    However some banks where found to be leveraged over 300 to 1 at the point of collapse.
    They then charge interest on this money. Which is hardly fair since they did not earn that money and bigger banks take no risk. If they go belly up the government “socializes the debt”.

    Consider that the banks support a debt based monitory system. Every dollar is a borrowed dollar. It can never be payed back because we only have borrowed dollars. You might be debt free but every dollar you have is a dollar someone somewhere is paying interest on.

    The lack of control over the banking sector is the single biggest problem we have today. They are taxing the population in the form of inflation and interest.
    It's not a fair system.

    If banks couldn't land into the property market people would have a lot less money to play with but house prices to be equally less expensive. Owning a property wouldn't be any more difficult but the population would be paying a lot less in interest on their heavily reduced mortgages.

    Unfortunately the banks have a big influence on governments. To much influence. Banks need to be pulled back to banking and stay out of governing countries.

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