Assignment:
Recently, it was the 5th year anniversary of the banking and financial crisis of 2008. As noted on page 423, the taxpayers had to bailout many financial firms in order to prevent financial institutions from failing.
The response of Congress was to pass sweeping overhaul reform known as the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Act is categorized into sixteen titles and, by one law firm's count, it requires that regulators create 243 rules, conduct 67 studies, and issue 22 periodic reports.
The stated aim of the legislation is:
- "To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes."
It seems clear that Congress does not blame themselves for the crisis or the public. Where do you come out on this crisis? Do you think the Congress was at fault for agitating the Banks to lend money to those who could not afford the mortgages? Do you think Banks were at fault for underwriting sub-prime mortgages? Do you think Mortgage brokers were at fault for unethically selling and marketing these loans? Do you find fault with the borrowers who were in the best position to understand their own personal finances? Do you blame Wall Street for creating derivative financial products that enabled these mortgages to get financed in volume?