Question by Wtfsthe Deal: Do conservatives really think this recession was caused by regulation?
Deregulation allowed the merger of banks that created banks that would be systemic risks if they failed
Deregulation allowed massive increases in financial liabilities of banks, through relaxed leverage limits, and led to insolvency after capital reserves decreased by just a few percent
Deregulation allowed the bribery of the ratings agencies
Deregulation allowed the fraudulent trading of derivatives
Deregulation allowed the securitization of mortgages, which encourages predatory lending
Deregulation allowed several insurance policies to be taken out on the same derivative, which brought AIG to its knees.
How on earth could anyone think that regulation caused this crisis?
Being forced? Are you really talking about the community reinvestment act? What a joke.
The securitzation of mortgages relieves local and investment banks from the responsibility if loans they make dont get paid. It placed all the responsibility on the investor and on AIG, and eventually became a system than encouraged the signing of sub prime loans, just to increase the volume of collateralized debt obligations being packaged and sold. It encourages predatory lending. Relaxed limits on leveraged allows banks to loan out as much as 30 times as much as they actually owned, as opposed to the normal 7 times before the conservatives had their way. If banks werent allowed to loan out that much money, as they hadnt been for years, a small decrease in their capital wouldnt have equated to a huge drop in their reserves to liabilities ratio, and they would have remained solvent and never even needed a bailout.
“What both sides fail to understand is that none of this would have happened if Congress didn’t change the laws set in place during the Great Depression.”
Republicans repealed those laws!!! Republicans repealed glass steagle, made derivatives illegal to regulate, and relaxed leverage limits!!! democrats understand it perfectly well.
Best answer:
Answer by shea c
its all Obama fault
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