The current narrative regarding the 2008 systemic financial system collapse is that numerous seemingly unrelated events occurred in unregulated markets, requiring widespread bailouts of the financial system. 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 extending federal protection and regulation of banking and finance to cover virtually all financial activities, including hedge funds and proprietary trading. Markets can become unbalanced, but they generally correct themselves before crises become systemic. Because of the accumulation of past political reactions to previous crises, this did not occur with the most recent crisis. Public enterprises had crowded out private enterprises, and public protection and the associated prudential regulation had trumped market discipline. Prudential regulation created moral hazard, and public protection invited mission regulation, both of which undermined prudential regulation itself and eventually led to systemic failure. Join us for a discussion of this issue with Kevin Villani, co-author of the new paper, “What Made the Financial Crisis Systemic?”
Featuring Holly Bell, Associate Professor (Business), University of Alaska Anchorage; and Hester Peirce, Senior Research Fellow, Mercatus Center; moderated by Louise C. Bennetts, Associate Director, Financial Regulation Studies, Cato Institute.
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In this issue of Regulation, Jonathan H. Adler and Nathaniel Stewart make the case for property-based fishery management, utilizing territorial or catch-share allocation among fishery participants. Also in this issue, Michael L. Wachter explores the relationship between the much-maligned National Labor Relations Act and the decline in union membership.
April 17, 2014
Robert A. Levy discusses the Hobby Lobby case and the contraception insurance mandate on The Bob Harden Show
April 16, 2014
Latest CommentaryThe president is literally forcing taxpayers, without any legal authorization, to subsidize two out of every three Exchange enrollments.
Timothy Sandefur’s insightful new book documents a vital, forgotten truth: our Constitution was written to secure liberty, not to empower democracy.