The regulatory intervention that took place in the US post 2008 crisis Assignment

The regulatory intervention that took place in the US suffer 2008 crisis - Assignment ExampleThere is a dichotomy between investor protection on one hand, and the imply to have a g everyplacenment that does not interfere too much with the economy. The President Obama ended the duration of investor protection enacted by President Roosevelt. As a result, uncertainty in the markets is created. Moreover, foreign companies bear the brunt of their aim in the United States. However, this act focuses more on systemic risk than its equivalents in different countries, much(prenominal) as Japan and Germany. As a result, the United States complies more rigidly with some of the G20 recommendations than other countries. portal Until 2007, the world experienced low inflation levels, high growth and an increase in international wad and movements of capital.1 Then in 2007, the housing markets started to collapse, as lenders began to default on their mortgages. However, soon defaults rotate across other parts of the financial industry and in 2008, the United States entered a crisis whose consequences are still felt today. The crisis spread globally, as many foreign banks invested in the American financial industry. 2 Consequences of the crisis were enormous. ... f the causes of the crisis being in the housing market and the ability of the housing market collapse to spread to other markets, and eventually excise the real economy as well. In short, due to such interconnectedness, at that place are multiple explanations of causes of the crisis over borrowing and securitization of mortgages, inadequate financial regulatory structure and failure to properly foresee possible problems that ability arise from recent financial innovations are main causes of the 2008 crisis. Though the Dodd Frank Act (Act) was passed to address the 2008 crisis and nix a future crisis of such a magnitude, the Act creates instability on the markets, and fails to address properly the internati onal nature of the crisis, which will be further elaborated on in the paper. Causes of the 2008 Crisis As Reinhart and Rogoff put it, there was a lull in defaults, globally and domestically, before the 2008 crisis took place.4 However, the two authors note that the last lull was the deepest in the last two centuries of the American history. 5 The regulators created a weak regulatory system. Between 1990 and 2006, housing prices increase to an average of four times the yearly income of an average family two or three times previously.6 noble housing prices led to high demand for construction workers, remodelling and real estate services. Moreover, the repeal of the Glass-Steagall Act in 1999 enabled banks to engage in investment banking, while banks could also act as insurers. Mortgage backed securities were invented and interchange freely. 7 In 2000, the Commodity Futures Modernization Act deregulated the derivatives market, which was used by banks to increase liquidity. 8 defect ive homeowners were encouraged by the Clinton administration to acquire expensive homes, despite