DISCUSS QSTNS 2014_FINANCIAL REGS

DISCUSS QSTNS 2014_FINANCIAL REGS - Chandani Harrindranauth...

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Chandani Harrindranauth ECO 1 Dr. DeFreitas DISCUSSION BACKGROUND BRIEF –FINANCIAL REGULATION RIGHT-WING VIEW ( Libertarian): Norbert Michel, “House Highlights Dodd-Frank Deficiencies ,” [E-Reserves on Blackboard & . (7/24/2014)] 1. What roles in the 2008 financial crisis does he assign to government agencies, particularly the Office of Federal Housing Enterprise Oversight and the Federal Reserve? Do you think he supports strengthening their regulatory effectiveness or weakening it in the future? Why? Fannie Mae and Freddie mac issued the Basel capital requirements under the eye of the Office of Federal Housing Enterprise Oversight; this security was a major failure. He explains that the Basel accords induced banks to buy Fannie Mae and Freddie Mac securities to lower their capital, thus having the opposite effect of what was intended. He also explains that the Federal Reserve is also responsible for key regulatory failures. The Fed has resident examiners in the largest firms that failed during the crisis. The Fed also failed to fully understand the severity of the 2008 financial crisis. The author clearly believes that these regulatory agencies are ineffective. I think he supports weakening regulatory policies because he believes that in some cases, regulations produced more of the activities that gave us the crisis. 2. What share of blame for the financial crisis does he assign (explicitly or implicitly) to private sector banking firms?
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