The United States does have a central bank; it's the Federal Reserve. They kept interest rates abnormally low for much of the last decade which meant that borrowing was incredibly cheap causing many consumers to overextend themselves. Regulation, government intervention they're the same thing. It is undeniable the government intervened in the housing market and this was discussed earlier in this thread[1].
> They kept interest rates abnormally low for much of the last decade which meant that borrowing was incredibly cheap causing many consumers to overextend themselves
The federal reserve manages the cash rate. The don't directly specify the risk premium spread associated with risky loans.
If someone offers a no-recourse billion dollar loan with no obligation for collateral, the rational financial decision is to take the loan, and invest the money. If the investment appreciates pocket the money. If it goes south return the investment and say "your problem" to the lender.
The federal reserve said they thought self interest would ensure the banks would not invest stupidly.
I don't see how this argument changes if overnight rate is 10% or 1%.
>Again. This subthread is not about turning your brain off.
I'd appreciate it if you quieted your condescension. For someone who didn't even know that the United States had a central bank, you are extremely vocal about the topic of finance. We're all here to learn and exchange.
Even if actions of The Fed are not necessarily regulations themselves, the fact that The Fed exists at all and is able to exert influence is certainly the result of law. Understanding this, I don't have a problem with conflating the actions of The Fed and the regulation that enables The Fed-- "regulation".
There is healthy debate regarding the cause of the 2008 crash. Economics is not a science proper, and the data is noisy. You cannot simply write-off the argument wholesale by latching on to the debatable causal link between "de-regulation" and the crash. Unless, of course, you turn off your brain.
The Fed isn't responsible for regulation and isn't a central bank like the bank of france or something. I immediately said, in that thread "if you mean the fed.." and explained why they have nothing to do with the noun regulation.
Thanks for the counter-condescension.
To the original point, they don't write regulation and it's hard to call a fixture of the last 80 years "regulation responsible for a recent incident", due to the fact that at some point there was a law.
"The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States.
Its duties today, according to official Federal Reserve documentation, are to conduct the nation's monetary policy, supervise and regulate banking institutions, maintain the stability of the financial system and provide financial services to depository institutions, the U.S. government, and foreign official institutions."
"Mission...
supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers..."
[1] http://news.ycombinator.com/item?id=2896728