What laws deregulating the financial industry caused the meltdown?

Bigsky_52: What laws deregulating the financial industry caused the meltdown?
I’ve heard it said that our current mess was caused by deregulation of the financial industry. But I can’t seem to find the actual laws or acts that count as “deregulation”. The only one that is even remotely applicable is the clarification that credit default swaps were not regulated by the CFTC. But that was simply a clarification rather than anything new. So can anyone tell me SPECIFICALLY which laws and acts of deregulation caused these problems? And how?

Answers and Views:

Answer by imaxkr
The repeal of Glass-Steagal act in 1999.
It essentially allowed depository institutions to move into securities activities that are far more risky.
The CFTC and the Community Reinvestment Act were also major contributors.
The Community Reinvestment Act in essence forced lenders to make mortgages to ‘less than fully qualified’ individuals.

Couple all of this with the Federal Reserve keeping interest rates at artificially low levels was a catastrophe in the waiting.

Answer by Helios
You need a job rewriting history…. so… are you now in FAVOR of regulation???

Answer by brutal
GREED is the cause

Answer by gitrdoneobama
The Glass-Steagall Act

The repeal enabled commercial lenders such as Citigroup, which was in 1999 the largest U.S. bank by assets, to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities.

https://en.wikipedia.org/wiki/Glass-Steagall_Act

Answer by John
What are the underlying causes? What prevails is a totally deregulated financial environment characterized by extensive speculative trade.

The history of deregulation goes back to the beginnings of the Reagan administration.

In the wake of the 1987 stock market meltdown, the US Treasury was advised by Wall Street not to meddle in financial markets. Free of government encroachment, the New York and Chicago exchanges were invited to establish their own regulatory procedures.

Answer by Tabasco
Gramm-Leach-Biley is one of them.

This wasn’t the sole cause of the meltdown but it was one of them. Limbaugh listeners love the trot out the Community Reinvestment Act, specifically the revisions made to it in ’94 and ’95 though this had little or nothing to do with what transpired 12 years later. They like to bring up the CRA because it allows them to blame the recession on two things wing nuts hate more than anything else: Bill Clinton and poor people.

George W. Bush asked Congress to limit the size of FNMA/FHLMC’s portfolios, but they wouldn’t. Had they not been so large perhaps they wouldn’t have required the bailout they did.

Barney Frank proposed legislation that would have severely curbed some subprime lending practices, but it got held up in committee.

The second someone tries to blame the Republicans, or the Democrats, the conservatives or the liberals for the crisis, you may as well stick your fingers in your ears because they’re regurgitating propaganda. The truth is there is plenty of blame to assign on both sides of the aisle, as well as Wall Street greed and the American consumer’s thirst for easy credit.

Answer by meg
The risky behavior by the banks caused the melt down, all the government did was not stop them. There is no evidence that anyone in the administration or Congress wanted to because the housing bubble was the engine for growth in our economy since 9/11, The regulatory agencies did not even use the powers they had. However if a regulatory agency had the information about the credit default swaps there is at least some possibility that the would have acted, but the law precluded even that possibility. Basically the problem was the “government should not interfere with markets” ideology and everyone who remembered why the government should,was either dead or retired long ago.

Answer by ugotthat
As was already pointed out it was the repeal of The repeal of Glass-Steagal act in 1999 among others. But deregulation for the most part by it’s very definition means there are no laws. A virtual free for all.
Sadly human beings have a tendency to take a mile as opposed to an inch.
Or as Alan Greeenspan: “acknowledged under questioning that he had made a “mistake” in believing that banks, operating in their own self-interest, would do what was necessary to protect their shareholders and institutions.”

Never underestimate the propensity for human greed, avarice and downright violence.