Many astute observers believe that regulatory failure was largely responsible for the housing bubble and subsequent financial crisis in this country that came very close to causing a major depression. While there has been considerable debate over what the root cause of the financial crisis actually was, I believe lax regulation was the main cause. Some say low interest rates and others opine that the cause was plain old greed that led to massive corporate frauds. Had the federal and state governments exercised stronger regulation and supervision over the financial institutions, I am convinced that our nation’s problems would never have gotten to the crisis stage. Problems with underwriting practices and lenders’ risk management would have been detected at any early stage and corrective action taken. The Federal Reserve has to share some of the blame since it could have raised interest rates to put a curb on the out-of-control market.
Our firm was handling cases against financial institutions that involved such things as bogus appraisals and the like for years before the housing bubble burst. How could our lawyers know about these problems and the government not know? Hopefully, this Administration and Congress have learned from the mistakes of the past and will work hard to put our financial affairs in order. The National Republican Party and its political cry of “too much government regulation” has contributed to and been a large part in causing many of the overall problems. You can’t let any industry – and certainly not our financial institutions – run loose and be poorly regulated, and not face bad consequences as a result.
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