Government Intervention, Regulatory Policy, and the Financial Crisis

The housing bubble is probably the biggest reason why America now faces a financial crisis. But what caused the bubble, and why are there now so many foreclosures causing so much damage in the rest of the financial sector? In this Center for Freedom and Prosperity Foundation video, Peter J. Wallison of the American Enterprise Institute explains how government policy mistakes are responsible and he specifically highlights the destructive impact of two government-created entities known as Fannie Mae and Freddie Mac. The video concludes with four key lessons that explain how to avoid similar mistakes in the future.

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[carcabe]

Government interference in the free interactions of people(the market) is ALWAYS an attempt to cheat reality. Insane and childish. It's a game of let's pretend. Let's pretend that everyone has earned and can afford a house. Let's pretend that everyone is equally credit worthy. Let's take money from some people and give it to others so we all can pretend that they are prosperous.

You can fool reality only for so long. Then it all comes crashing down. Reality always wins. Game Over.

[robertcgage]

Mr. Wallison name's many of the vehicles that led to our current standings, but omits the true cause the central FED bank. By making "cheep" money has taken a large part in the mess we are in now. Government has been spending like drunken sailors from 1980 onward. The FED has been their to provide all the fiat money that they needed without any restrictions. The FED bank is a privet bank an has never payed taxes or been audited in 97 years. Support HR1207 to audit the FED.

[sphires]

Fannie and Freddie are pure garbage, just like this video. They are tools of the banks that use these organizations and 501s as dumping grounds to hide the crazy amounts of leverage from their balance sheets. The cause of the crisis was credit default swaps and not the CDOs (although they didn't help).

Just wait for the Fed's balance sheet: bit.ly / cjzcYl

[MotesTV]

@carcabe "Whether we and our politicians know it or not, Nature is party to all our deals and decisions, and she has more votes, a longer memory, and a sterner sense of justice than we do." - Wendell Berry

[wyominghusker]

I agree Robert, the FED needs to be abolished (pipe dream). It's only one of the many symptoms that has created this financial mess.The FED is one piece of a larger puzzle of a few elitists planning a global monetary system. Nothing happens by chance. This has been in the works for nearly 100 yrs. and the fruits of their labor will soon come to bear. These economic tremors we are witnessing are merely birth pangs to a global economic collapse.

[eurohim]

Because the media tells them what to think and they don't know any better and are lead to believe that they know everything about everything because they identify with a specific political party.

[chopngratty]

And now Obama has Given ACORN a larger role in government and a sizable chunk of our tax dollars, quid pro quo perhaps? CRA is the ultimate root to the real estate crisis, and those responsible have been once again rewarded at the cost of so many of us who played by the rules.

Moral of this story, success and responsibility are a waste of time ?Just learn to work the system.

[ChaoticSouls]

swank if you have a open mind you will understand that government intervention has always led to more problems.

[swankrecords]

This is same tired old BS.

[order9066]

I agree. Only the government sponsored entities were dumb enough to buy sub-prime debt. If a third party was dumb enough to buy sub-prime debt from the GSE stooges, too bad for them. The GSEs bought sub-prime debt because they knew Congress would bail them out. Implicit guarantee or not. The GSEs should be abolished. FDRs nightmare has come home to roost. Can't afford a home without a sub-prime mortgage? THEN RENT!