Publication:
The Political, Regulatory and Market Failures That Caused the US Financial Crisis

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dc.contributor.authorTarr, David G.
dc.date.accessioned2012-03-19T18:40:13Z
dc.date.available2012-03-19T18:40:13Z
dc.date.issued2010-05-01
dc.description.abstractThis paper discusses the key regulatory, market and political failures that led to the 2008-2009 United States financial crisis. While Congress was fixing the Savings and Loan crisis, it failed to give the regulator of Fannie Mae and Freddie Mac normal bank supervisory power. This was a political failure as Congress was appealing to narrow constituencies. In the mid-1990s, to encourage home ownership, the Administration changed enforcement of the Community Reinvestment Act, effectively requiring banks to lower bank mortgage standards to underserved areas. Crucially, the risky mortgage standards then spread to other sectors of the market. Market failure problems ensued as banks, mortgage brokers, securitizers, credit rating agencies, and asset managers were all plagued by problems such as moral hazard or conflicts of interest. The author explains that financial deregulation of the past three decades is unrelated to the financial crisis, and makes several recommendations for regulatory reform.en
dc.identifierhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100527154732
dc.identifier.doi10.1596/1813-9450-5324
dc.identifier.urihttps://hdl.handle.net/10986/3810
dc.languageEnglish
dc.relation.ispartofseriesPolicy Research working paper ; no. WPS 5324
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCESS TO CREDIT
dc.subjectACCOUNTING
dc.subjectACCOUNTING STANDARDS
dc.subjectAFFORDABLE HOUSING
dc.subjectASSET MANAGER
dc.subjectASSET MANAGERS
dc.subjectASYMMETRIC INFORMATION
dc.subjectBACKED SECURITIES
dc.subjectBAILOUT
dc.subjectBAILOUTS
dc.subjectBALANCE SHEET
dc.subjectBALANCE SHEETS
dc.subjectBANK HOLDING
dc.subjectBANK LENDING
dc.subjectBANK POLICY
dc.subjectBANK SUPERVISION
dc.subjectBANKING REGULATION
dc.subjectBANKING SUPERVISION
dc.subjectBANKING SYSTEM
dc.subjectBANKRUPTCIES
dc.subjectBANKRUPTCY
dc.subjectBARRIER TO HOMEOWNERSHIP
dc.subjectBASIS POINTS
dc.subjectBOND
dc.subjectBONDHOLDERS
dc.subjectBORROWER
dc.subjectBORROWING
dc.subjectBROKERS
dc.subjectCAPITAL MARKET
dc.subjectCAPITAL MARKETS
dc.subjectCAPITAL REQUIREMENTS
dc.subjectCASH FLOW
dc.subjectCASH FLOWS
dc.subjectCLEARING CORPORATION
dc.subjectCOLLATERAL
dc.subjectCOLLATERAL POOLS
dc.subjectCOLLECTIVE ACTION
dc.subjectCOMMERCIAL BANKS
dc.subjectCOMMERCIAL LOANS
dc.subjectCOMMERCIAL MORTGAGE
dc.subjectCOMMUNITY LENDING
dc.subjectCOMMUNITY REINVESTMENT
dc.subjectCONFLICT OF INTEREST
dc.subjectCONFLICTS OF INTEREST
dc.subjectCONSUMER EXPENDITURES
dc.subjectCONSUMER LOANS
dc.subjectCONVENTIONAL MORTGAGES
dc.subjectCREDIT DEFAULT
dc.subjectCREDIT DEFAULT SWAP
dc.subjectCREDIT DEFAULT SWAPS
dc.subjectCREDIT HISTORY
dc.subjectCREDIT MARKETS
dc.subjectCREDIT NEEDS
dc.subjectCREDIT OFFICER
dc.subjectCREDIT QUALITY
dc.subjectCREDIT RATING
dc.subjectCREDIT RATING AGENCIES
dc.subjectCREDIT RATINGS
dc.subjectCURRENCY
dc.subjectDEBT
dc.subjectDEBT INSTRUMENT
dc.subjectDEBT OBLIGATIONS
dc.subjectDEBTS
dc.subjectDEDUCTIBLE
dc.subjectDEFAULT RATE
dc.subjectDEFAULTS
dc.subjectDEFICITS
dc.subjectDEPOSIT
dc.subjectDEVELOPING COUNTRIES
dc.subjectDOWN PAYMENT
dc.subjectDOWN PAYMENTS
dc.subjectEFFICIENT MARKET
dc.subjectEXCHANGE COMMISSION
dc.subjectFAIR VALUE
dc.subjectFAIR VALUES
dc.subjectFAMILIES
dc.subjectFEDERAL BUDGET
dc.subjectFEDERAL DEPOSIT INSURANCE
dc.subjectFEDERAL HOUSING
dc.subjectFEDERAL HOUSING ENTERPRISES
dc.subjectFEDERAL INCOME TAX
dc.subjectFEDERAL RESERVE
dc.subjectFEDERAL RESERVE BANK
dc.subjectFINANCIAL CRISES
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL DEREGULATION
dc.subjectFINANCIAL INSTITUTION
dc.subjectFINANCIAL INSTITUTIONS
dc.subjectFINANCIAL INSTRUMENT
dc.subjectFINANCIAL INSTRUMENTS
dc.subjectFINANCIAL MARKET
dc.subjectFINANCIAL MARKET PARTICIPANTS
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL OBLIGATIONS
dc.subjectFINANCIAL REGULATORS
dc.subjectFINANCIAL SAFETY
dc.subjectFINANCIAL SERVICES
dc.subjectFINANCIAL SYSTEM
dc.subjectFIRST TIME HOME BUYERS
dc.subjectFIXED RATE
dc.subjectFRAUD
dc.subjectFREE LOANS
dc.subjectGLOBAL BANKING
dc.subjectGLOBALIZATION
dc.subjectGOVERNMENT GUARANTEES
dc.subjectGOVERNMENT POLICIES
dc.subjectHOLDINGS
dc.subjectHOME BUYERS
dc.subjectHOME EQUITY
dc.subjectHOME EQUITY LOAN
dc.subjectHOME MORTGAGE
dc.subjectHOME MORTGAGES
dc.subjectHOME OWNERSHIP
dc.subjectHOMEOWNER
dc.subjectHOMEOWNERS
dc.subjectHOMEOWNERSHIP
dc.subjectHOUSEHOLDS
dc.subjectHOUSING FINANCE
dc.subjectILLIQUID MARKETS
dc.subjectIMPLICIT GOVERNMENT GUARANTEE
dc.subjectIMPLICIT GOVERNMENT GUARANTEES
dc.subjectINCOME TAX
dc.subjectINCOME TAXES
dc.subjectINSTRUMENT
dc.subjectINSURANCE COMPANIES
dc.subjectINSURANCE CORPORATION
dc.subjectINTEREST PAYMENTS
dc.subjectINTEREST RATE
dc.subjectINTEREST RATE POLICIES
dc.subjectINTEREST RATE RISK
dc.subjectINTEREST RATES
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL FINANCE
dc.subjectINVESTING
dc.subjectINVESTMENT BANKING
dc.subjectINVESTMENT BANKS
dc.subjectINVESTMENT FUNDS
dc.subjectLENDERS
dc.subjectLIQUIDITY
dc.subjectLIQUIDITY CRISIS
dc.subjectLIQUIDITY PROBLEMS
dc.subjectLOAN
dc.subjectLOAN GUARANTEES
dc.subjectLOAN PERFORMANCE
dc.subjectLOW INTEREST RATE
dc.subjectLOW INTEREST RATES
dc.subjectLOW-INCOME FAMILIES
dc.subjectMARK TO MARKET
dc.subjectMARK TO MARKET ACCOUNTING
dc.subjectMARKET FAILURE
dc.subjectMARKET FAILURES
dc.subjectMARKET MAKER
dc.subjectMARKET PARTICIPANTS
dc.subjectMARKET PRICE
dc.subjectMARKET STABILITY
dc.subjectMARKET VALUE
dc.subjectMARKET VALUES
dc.subjectMINIMUM CAPITAL REQUIREMENTS
dc.subjectMONETARY FUND
dc.subjectMONETARY POLICY
dc.subjectMONEY MANAGERS
dc.subjectMONEY SUPPLY
dc.subjectMORAL HAZARD
dc.subjectMORTGAGE
dc.subjectMORTGAGE BROKERS
dc.subjectMORTGAGE INDUSTRY
dc.subjectMORTGAGE INTEREST
dc.subjectMORTGAGE INTEREST RATES
dc.subjectMORTGAGE MARKET
dc.subjectMORTGAGE RATES
dc.subjectMUTUAL FUND
dc.subjectMUTUAL FUNDS
dc.subjectNO CREDIT HISTORY
dc.subjectORIGINAL CONTRACTS
dc.subjectPENSION
dc.subjectPENSION FUNDS
dc.subjectPOLITICAL ECONOMY
dc.subjectPORTFOLIO
dc.subjectPORTFOLIOS
dc.subjectPOTENTIAL INVESTORS
dc.subjectPRICE STABILITY
dc.subjectPRINCIPAL-AGENT PROBLEM
dc.subjectPRIVATE BANKS
dc.subjectPRIVATE ENTERPRISES
dc.subjectPRIVATE FINANCIAL INSTITUTIONS
dc.subjectPRIVATE FINANCIAL MARKET
dc.subjectPRUDENTIAL REGULATION
dc.subjectPRUDENTIAL SUPERVISION
dc.subjectPUBLIC FUNDS
dc.subjectPUBLIC POLICY
dc.subjectRATE OF RETURN
dc.subjectRATES OF INTEREST
dc.subjectREGULATORY STANDARDS
dc.subjectREINVESTMENT
dc.subjectRESERVES
dc.subjectRESIDENTIAL MORTGAGES
dc.subjectRETURN
dc.subjectRETURNS
dc.subjectRISKY ASSETS
dc.subjectRISKY LOANS
dc.subjectRISKY SECURITIES
dc.subjectSAFETY NET
dc.subjectSAVINGS
dc.subjectSAVINGS ACCOUNTS
dc.subjectSECONDARY MARKET
dc.subjectSECONDARY MARKETS
dc.subjectSOLVENCY
dc.subjectSOURCE OF INCOME
dc.subjectSUBORDINATED BONDS
dc.subjectSUBORDINATED DEBT
dc.subjectSUPERVISORY AUTHORITY
dc.subjectSUPERVISORY POWER
dc.subjectSUPERVISORY POWERS
dc.subjectTAX
dc.subjectTAX CREDIT
dc.subjectTAX POLICIES
dc.subjectTAX RETURNS
dc.subjectTRADING
dc.subjectTRANCHE
dc.subjectTRANCHES
dc.subjectTREASURY
dc.subjectUNDERLYING MORTGAGE
dc.subjectURBAN AREAS
dc.subjectURBAN DEVELOPMENT
dc.subjectVALUATION
dc.titleThe Political, Regulatory and Market Failures That Caused the US Financial Crisisen
dspace.entity.typePublication
okr.crossref.titleThe Political, Regulatory And Market Failures That Caused The US Financial Crisis
okr.date.doiregistration2025-04-10T11:49:38.883465Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100527154732
okr.guid507991468143062722
okr.identifier.doi10.1596/1813-9450-5324
okr.identifier.externaldocumentum000158349_20100527154732
okr.identifier.internaldocumentum12334595
okr.identifier.reportWPS5324
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2010/05/27/000158349_20100527154732/Rendered/PDF/WPS5324.pdfen
okr.region.countryUnited States
okr.region.geographicalNorth America
okr.unitDevelopment Research Group (DECRG)
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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