Originally Posted by chiefzilla1501
I do not like regulation. I hate Dodd Frank. I hate QE and I am not a fan of the Federal Reserve. I understand their contribution to our economic problems including the economic crisis. But they were bigger problems than that.
The crisis was built around investors riding the mortgage market because they built a flawed calculation and became overconfident in it, and loaded trillions of dollars in derivatives, namely mortgage backed securities. They didn't do these things because the market forced them to with regulation. They did this because they WANTED to and the market allowed them to do it.
To no surprise, when the mortgage market collapsed, then guess what happens to your trillions of dollars of derivatives dependent on gambles made on the housing market? The housing market collapse could easily be blamed on both public and private sector, but it was that collapse that triggered the derivative bomb to go off.
The housing market would have hurt our economy. It was overspeculation in derivatives that wrecking balled the economy.
So yes, it is an unbelievable oversimplification to blame excessive regulation when the primary root cause for the devastation was in private investors taking part in unbelievably risky behaviors and nobody tried to stop them.
Without the federal reserve manipulating interest rates, the GSEs, and the community reinvestment act, the crisis would not have happened. All of those are government interventions into the marketplace. The private investors would not have been able to do what they did, without government.