Out of Control Policy Blog

Getting the Crisis History Right

The administration has proposed its financial sector regulation plan, but it's based on a faulty view of the financial crisis. One aspect of this is the myth of deregulation. In a Reason.com piece today I've outlined why this view is wrong and what the Obama administration is missing in its development of regulation:

The core problem of the regulatory proposal is its view of the causes of the crisis. Everything is built on a belief that the market failed and that deregulation created a system of excessive risk and irresponsibility. Ironically, it was government action that created incentives for financial firms to be less risk adverse, not a lack of regulation. As Washington prepares to debate regulatory overhaul this summer, it is more important than ever to wrestle the myth of deregulation to the ground.

Also see this breakdown of the President's financial sector regulation overhaul.

Anthony Randazzo is Director of Economic Research

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Comments to "Getting the Crisis History Right":

Randall Scott | June 22, 2009, 8:21am | #

So true. This was created by Congress in the push for more people to own homes, even those who cannot the mortgage on 30% of their income.

The sad thing is, that if builders were allowed to proceed w/construction faster, in the ~10 urban areas which had the rapid price appreciation, that price rise & thus bubble would not have happened. Urban policymakers in a few markets played a big role too.

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