Enforcement of Laws and Regulations
Many existing laws and regulations were not effectively enforced prior to the crisis. The SEC was criticized for relaxing investment bank oversight and requiring inadequate risk disclosures by banks. The FDIC allowed banks to shift large amounts of liabilities off-balance sheet, thereby circumventing depository banking capital requirements. The Federal Reserve was criticized for not properly monitoring the quality of mortgage originations. Once the crisis hit its critical stage in September 2008, the regulators did not consistently apply remedies available to them, thereby increasing uncertainty. A primary example was allowing the demise of investment bank Lehman Brothers in September 2008, despite the Fed and Treasury Department facilitating a rescue/merger for Bear-Stearns in March 2008 and the Merrill-Lynch merger with Bank of America in September 2008.
Read more about this topic: Government Policies And The Subprime Mortgage Crisis
Famous quotes containing the words laws and/or regulations:
“The Laws of Nature are just, but terrible. There is no weak mercy in them. Cause and consequence are inseparable and inevitable. The elements have no forbearance. The fire burns, the water drowns, the air consumes, the earth buries. And perhaps it would be well for our race if the punishment of crimes against the Laws of Man were as inevitable as the punishment of crimes against the Laws of Nature—were Man as unerring in his judgments as Nature.”
—Henry Wadsworth Longfellow (1807–1882)
“The admission of Oriental immigrants who cannot be amalgamated with our people has been made the subject either of prohibitory clauses in our treaties and statutes or of strict administrative regulations secured by diplomatic negotiations. I sincerely hope that we may continue to minimize the evils likely to arise from such immigration without unnecessary friction and by mutual concessions between self-respecting governments.”
—William Howard Taft (1857–1930)