Sick of that one? Me too. Here’s the quick note I sent someone who asked Professor Walter Block this very thing.
“I cover this in detail in my forthcoming (February 7) book Rollback. For now, I’d ask your friends for specific examples of deregulation that led to the present crisis. They can’t name one. There isn’t a repealed regulation that would have prevented the securitization of mortgages, or prevented banks from holding such securitized mortgages as investments. Banks were allowed to do this all along. If they cite the so-called repeal of Glass-Steagall they are even more clueless. The partial lifting of barriers between commercial and investment banking had exactly zero to do with the financial crisis. (Much more on this in my book.)
“Moreover, who could possibly look at banking and think this was a deregulated industry? Regulation is absolutely everywhere. No one seems willing to consider the possibility that regulation may simply have failed, that regulators may be human beings rather than demigods, etc. Walter is right: banking is the most heavily regulated industry in America. There are already 115 agencies regulating the U.S. financial sector. Your friends think things would improve if there were 116. They are stuck in an interventionist worldview they cannot break free of. The thought never occurs to them that the very institutions that are supposed to provide stability may be the sources of instability — beginning with the Federal Reserve. This story is told in my book Meltdown, which Walter recommended.”
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