States. Securitization has also spread to various other sectors apart from the housing (Adrian, 2011). To close doors for any financial crisis, there is a need for proper regulation of all financial institutions primarily mortgage firms. The passing of the Dodd-Frank Wall Street Reform Act was helpful in ensuring banks only take enough risk. It also gave the Fed authority to reduce the size of the large banks i.e. if they become too big to fail (Baily et al., 2008). The major challenge that the government is currently experiencing is the continuous growth of banks who are also threatening to do away with the regulation that prevents their expansion. The rule also left many measures to the regulators of Fed to try in sorting the details (Adrian, 2011). Summing up the discussion leaving banks to regulate themselves is impossible. The global financial tsunami of 2008 has helped in giving details as to why banks should never be allowed to regulate themselves. Government intervention is, therefore, necessary for blocking any future financial crisis.
2008 FINANCIAL CRISIS 5 References Phillips, P. C., & Yu, J. (2010). Dating the timeline of financial bubbles during the subprime crisis. Adrian, T. (2011). Changing Nature of Financial Intermediation and the Financial Crisis of 2007-09 . DIANE Publishing. Baily, M. N., Litan, R. E., & Johnson, M. S. (2008). The origins of the financial crisis . Initiative on Business and Public Policy at Brookings.
- Summer '15
- Subprime mortgage crisis