Unintended consequences of earlier public policy choices
The roots of the crisis lie in the unintended consequences of policy choices made with respect to the financial sector over the last 30-40 years—which have allowed the volume of (all kinds of) debt in the global financial system to explode.
CONTEXT(Help)
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The Global Financial Crisis »The Global Financial Crisis
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Long-term causes of the financial crisis? »Long-term causes of the financial crisis?
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Unintended consequences of earlier public policy choices
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Partial repeal of Glass-Steagall act »Partial repeal of Glass-Steagall act
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Investment banks incentivised to move into riskier activities »Investment banks incentivised to move into riskier activities
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Investment banks entirely outside the regulatory net »Investment banks entirely outside the regulatory net
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Meddling with interest rates caused bubble »Meddling with interest rates caused bubble
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Regulatory changes encouraged home ownership »Regulatory changes encouraged home ownership
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US policies to encourage home ownership promoted risky lending »US policies to encourage home ownership promoted risky lending
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US spending funded by credit »US spending funded by credit
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Allowed commercial banks to compete with investment banks »Allowed commercial banks to compete with investment banks
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