The Lure of Leveraging: Wall Street, Congress and the Invisible Government

James A. Leach

No 2010-PB-04, NFI Policy Briefs from Indiana State University, Scott College of Business, Networks Financial Institute

Abstract: The author reviews the legislative framework of financial regulation, assesses public and private sector accountability for the economic trauma loosed in 2008, and appraises the legislative aftermath. His thesis is that the economy and the financial security of the country were unnecessarily jeopardized by the unchecked greed of a few; that at critical moments politics and ideology dominated regulatory decision-making; that the regulators, the invisible government, allowed excess leveraging out of excess confidence in risk-based mathematical modeling; that a conflicted Congress emboldened risk-taking at Fannie Me and Freddie Mac; and that problems in commercial bank regulation related less to what Congress did than what it didn’t do. As both a participant and observer in the legislative process, he has designed this review in part as a chronicle of Congressional interactions between the parties and with the Executive branch and in part as a take on regulation itself.

Pages: 37 pages
Date: 2010-08
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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