The Political, Regulatory and Market Failures That Caused the US Financial Crisis

Tarr, David G.

关键词: ACCESS TO CREDIT;    ACCOUNTING;    ACCOUNTING STANDARDS;    AFFORDABLE HOUSING;    ASSET MANAGER;   

DOI  :  10.1596/1813-9450-5324
RP-ID  :  WPS5324

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper discusses the key regulatory,market and political failures that led to the 2008-2009United States financial crisis. While Congress was fixingthe Savings and Loan crisis, it failed to give the regulatorof Fannie Mae and Freddie Mac normal bank supervisory power.This was a political failure as Congress was appealing tonarrow constituencies. In the mid-1990s, to encourage homeownership, the Administration changed enforcement of theCommunity Reinvestment Act, effectively requiring banks tolower bank mortgage standards to underserved areas.Crucially, the risky mortgage standards then spread to othersectors of the market. Market failure problems ensued asbanks, mortgage brokers, securitizers, credit ratingagencies, and asset managers were all plagued by problemssuch as moral hazard or conflicts of interest. The authorexplains that financial deregulation of the past threedecades is unrelated to the financial crisis, and makesseveral recommendations for regulatory reform.