Posted on 05/18/2021 2:22:42 PM PDT by Jan_Sobieski
AEI scholar Peter J. Wallison has a new book out today titled “Hidden in Plain Sight: What Really Caused the World’s Worst Financial Crisis and Why It Could Happen Again.” Though the standard narrative is that the 2008 financial crisis was caused by Wall Street greed and insufficient regulation, Wallison argues that US government housing policies played a crucial role.
On January 14th, AEI is hosting an event on “Hidden in Plain Sight” — more details here. Below, Wallison answers questions on the future of Fannie and Freddie, the effect of government involvement in the financial crisis, the bankruptcy of Lehman Brothers, and more.
Dodd-Frank was passed in 2010 in an effort to prevent another 2008 crisis. Do you think it will accomplish that goal, or are we in danger of repeating history?
Legislation can only be effective if it is drawn up by a Congress that understands the nature of the problem it is supposed to solve. Dodd-Frank was based on the false idea that the 2008 financial crisis was caused by insufficient regulation of the private sector…
(Excerpt) Read more at aei.org ...
It was the government’s housing policies, and not the risk-taking and greed of the private sector, that caused the 2008 financial crisis. With that understood, we can have a genuine national debate on whether the US should continue a government role in the housing finance system. At the moment, the signs are not good. The enormous amount of media attention that Senator Elizabeth Warren was able to attract with her fallacious argument that it would be dangerous to release banks from a relatively modest but burdensome restriction imposed by the Dodd-Frank Act, shows that there is still widespread belief that it was the banks and the private sector that caused the financial crisis. It is to combat this myth that I wrote “Hidden In Plain Sight.”
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.” —The Sun Also Rises.
Dodd-Frank act.
A solution to a problem written by two of the principle individuals responsible for the crash in the first place.
BRILLIANT!!
Partly true, but those banks didn’t fail because they were making clever decisions.
Alan Greenspan was COMPLICIT in that 2008 panic/collapse. He had the authority to prevent all that Collateralization of Mortgage Debt. He later told Congress that he didn’t realize that the big banks would not control themselves.
I got my information on this from a book about Five Stock Market Crashes in the USA.
It’s happening now. I expect a major market sell off any day. Housing is in such short supply for those leaving NY CA etc that we may not see a crash as we did then. But inflation pressure is building and gas prices will soar soon.
Flick’s Rule 7: The more the government fixes something, the more it breaks.
I’ve read Wallison’s previous book, and I will buy this one!
The catalyst for the financial crisis of 2008 was none other the the United States Congress.
More specifically, Clinton’s housing policies.
The collapse of the the 2007 subprime mortgage financial market and the financial collapse in the fall of 2008, with the decline and collapse of the U.S. and global economy is the situation we have today.
What did the Obama Administration do to further the collapse? They initiated Keynesian economic tactics with bank bailouts that flooded the economy with money. This is the absolute wrong thing to do as history has consistently proved. The impact on the economy by the Obama Regime had its intended purpose: high unemployment, market decline, and economic stagnation, as we saw through two terms of office. And the Democrats with, their socialist/Marxist objectives, furthered their war on Capitalism as they are doing today.
Freddy and Fannie were mandated by statute to buy up primes and sub-primes taking all risk off the mortgage lenders. The Government created a perverse incentive
We saw in the fall of 2006, the media and associated public culture celebrate the election of Zer0 and the landslide win of Democrats in congressional elections that brought strong majorities in both the House and Senate. Under the leadership of Chris Dodd in the Senate and Barney Frank in the House, the speculative housing market was deregulated for the government-sponsored enterprises such as Fannie Mae and Freddie Mac that controlled trillions of dollars in American mortgage equity. The regulation that was eliminated was specifically intended to protect the free market from government interference. Good regulation was destroyed for its intended purpose: Causing the housing market in the U.S. to devolve into a dangerous leveraged global gambling operation that financed a vulnerable house of cards over European banks.
The leadership of Fannie Mae and Freddie Mac knew that the election of Democrats in the House and Senate would prevent any further calls by the Bush administration holdovers to tighten the regulations on these dangerous GSEs. This enabled the Democrats to orchestrate the collapse, which we saw in the fall of 2008, with the decline and collapse of the U.S. and global economy. The financing of American homes saw the evaporation of 6 trillion dollars in values. The house of cards fell just like it was orchestrated.
Looks like the actual date of the linked article is 01/13/2015...
Good catch. I messed up
Obama wasn’t elected until 2008. Bush was president when it collapsed.
Never mind...should have read the entire comment.
Thanks for correcting my mistake.
Amazingly they changed the bankruptcy laws just before the collapse. Guess who husband was working for MasterCard? Mr Nancy pelosi
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.