there are plenty of free market advocates who claim the entire bubble was caused by government and that without the encouragement of win prime lending there would have bee no bubble. But the truth is that there was only mild encouragement and it was only responsible for a tiny fraction of the bad loans and the bad loans are only a part of the bigger issue. The bubble was caused by free interprise acting in its own self interest independent of any government influence.
What is "mild encouragement," exactly?
I think the full repeal of the remnants of Glass-Steagal in 1999-2000 was a pretty big fucking sign of encouragement.
The Senate going after and smashing the CFTC/Brooksley Born in the mid 1990's for daring to sound the alarm on derivatives and CDS's was a pretty big 'wink and a nudge' to the financial industry.
The Federal Reserve attempting to play economic God, pumping the banks full of money, artificially low interest rates and the like was a nice little encouragement to blow bubbles.
The actions/words/lies after the financial meltdown was a huge encouragement to the financial entities to continue to fuck us in the ass.
It isn't just some law written on some paper, it's the actions or lack thereof and precedent set by government as well. When you know you can fuck the world, ruin peoples lives, cheat, steal, lie and STILL get a trillion in tax payers dollars, trillions more in Fed printed money, ZERO investigations, no incarcerations, you can write laws and do horrible things with impunity...well, that's a pretty big encouragement by the govt.
Those very institutions were allowed to grow more powerful, for Too Big To Fail, have more influence and gain even more leverage. They weren't punished, they weren't investigated...nothing happened.
It's all you need to know.
