What caused the financial crisis? How can we prevent another one from
happening again? The answers you most often hear to those questions are
(1) greed and deregulation and (2) the Dodd-Frank law.
But they're patently inadequate. Greed -- or the desire for monetary gain -- has always been with us and always will be. And no one has convincingly linked financial deregulation to the crisis. Dodd-Frank, enacted to increase regulation, confers too-big-to-fail status on very large financial institutions, which incentivizes unduly risky behavior and penalizes smaller competitors.
The real problem was housing finance, argues my American Enterprise Institute colleague Peter Wallison in his new book "Hidden in Plain Sight: What Really Caused the World's Worst Financial Crisis and Why It Could Happen Again." Without changes in housing finance policy, he says, there would have been no financial crisis in 2008.
http://townhall.com/columnists/michaelbarone/2015/01/20/government-created-the-housing-bubble-and-financial-crisis--and-could-be-doing-so-again-n1945225
But they're patently inadequate. Greed -- or the desire for monetary gain -- has always been with us and always will be. And no one has convincingly linked financial deregulation to the crisis. Dodd-Frank, enacted to increase regulation, confers too-big-to-fail status on very large financial institutions, which incentivizes unduly risky behavior and penalizes smaller competitors.
The real problem was housing finance, argues my American Enterprise Institute colleague Peter Wallison in his new book "Hidden in Plain Sight: What Really Caused the World's Worst Financial Crisis and Why It Could Happen Again." Without changes in housing finance policy, he says, there would have been no financial crisis in 2008.
http://townhall.com/columnists/michaelbarone/2015/01/20/government-created-the-housing-bubble-and-financial-crisis--and-could-be-doing-so-again-n1945225
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