Did Deregulation and Capitalism Cause the Financial Crisis?
Michael T. Griffith
The chief cause of the financial crisis was neither capitalism nor a lack of regulation; rather, it was unwise government intervention. Beginning in 1995, the federal government began pressuring banks to make more home loans to low-income people in an effort to increase home ownership among the poor. Prior to 1995, such subprime home loans constituted less than 2% of new home loans, but by 2000 they were over 9% of new home loans, and by 2008 they were 20% of new home loans. To make matters worse, Freddie Mac and Fannie Mae began to buy and/or guarantee more and more of these risky subprime loans. Freddie and Fannie, along with some private banks, then took these mortgages, bundled them, and sold them as mortgage-backed securities. To make a long story short, if the government had not meddled in the mortgage industry, there would have been far fewer subprime loans to bundle into toxic assets in the first place, and the damage to our economy would have been vastly reduced. Government intervention was not the only cause of the financial crisis, but it was the primary cause.
How Government Housing Policy Led to the Financial Crisis
The Real Culprits in This Meltdown
Let the Inquisition Start with Frank
The Culprit is All of Us: The Government’s Meddling Got Us Into This Mess
Blame Fannie Mae and Congress for the Credit Mess
Stop Covering Up and Kill the CRA
The Government Did It
The Financial Crisis and the CRA
The CRA Scam and Its Defenders
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