101. What Made the Financial Crisis Systemic?
- Author:
- Patric H. Hendershott and Kevin Villani
- Publication Date:
- 03-2012
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- The current narrative regarding the 2008 systemic financial system collapse is that numerous seemingly unrelated events occurred in unregulated or underregulated markets, requiring widespread bailouts of actors across the financial spectrum, from mortgage borrowers to investors in money market funds. The Financial Crisis Inquiry Commission, created by the U.S. Congress to investigate the causes of the crisis, promotes this politically convenient narrative, and the 2010 Dodd-Frank Act operationalizes it by completing the progressive extension of federal protection and regulation of banking and finance that began in the 1930s so that it now covers virtually all financial activities, including hedge funds and proprietary trading. The Dodd-Frank Act further charges the newly created Financial Stability Oversight Council, made up of politicians, bureaucrats, and university professors, with preventing a subsequent systemic crisis.
- Topic:
- Economics, Government, Markets, Global Recession, and Financial Crisis
- Political Geography:
- United States