to take on enough speculative risk to threaten the entire economy.
Note: 22 years after the 1907 crisis, and 16 years after the Federal Reserve Bank was created, the stock market crash that led to the Great Depression occurred.
In 1996, the Fed struck a major blow for deregulation, allowing bank subsidiaries to earn up to 25 percent of their revenues from securities operations, up from 10 percent.33
Note: Why did the Fed do this?
In 1999, the North Carolina Predatory Lending Law subjected high-cost (subprime) loans to a number of constraints, such as limits on loan flipping (refinancing a borrower into a new loan after only a few years) and prepayment penalties; in 2002, the Georgia Fair Lending Act introduced similar restrictions.71 Standard & Poor’s responded by announcing that it would not allow any loans governed by the Georgia Fair Lending Act into securitizations that it rated; if similar laws had been enacted throughout the country, this would have brought the subprime mortgage securitization assembly line to...
Note: Especially ironic since 25% of bank failures last year were in Georgia. So how did that happen, given Georgia's laws?
The financial crisis was not primarily due to Fannie and Freddie.77
Note: Carmen would like this assertion.