Tag Archives: Regulation

One of the claims of the leftist camp is that the current financial crisis is the result of the lack of government regulation of Wall Street. An objective evaluation of the facts underlying the crisis seems to reject that notion.

Succinctly, government entities–Fannie Mae and Freddie Mac–caused this crisis by creating the impression that they would continue to buy up subprime loans extend both under and outside the Community Reinvestment Act with the implicit guarantee that the government would bail the whole system out if it failed. This impression artificially inflated the value of commodities based on those subprime loans, thereby encouraging investors around the world to buy up assets that had values a fraction of their stated worth. […] Continue reading →