Deregulation and Financial crisis
The Deregulation Movement and Financial Crisis
Beginning in the late 1970s and continuing through the
2000s, the business environment moved toward relying less on government
regulation and more on the marketplace to achieve desired economic objectives
Consensus successes in deregulation have come in airlines, railroads,
telephones, and natural gas pipelines However, reduced regulatory supervision
has at times proven problematic Several large investment banks, commercial
banks, and insurance companies (eg Bear Stearns, Lehman Brothers, Wachovia,
and AIG) failed or were bailed out at taxpayer expense during the financial
crisis of 2007-2009 when excessive leverage exposed these firms to massive
default risk
(Questions)
1 Please analyze the backgrounds and impacts of deregulation
wave? Please use examples to support your arguments
2 What are the possible causes for Financial Crisis during
2007-2009? Give examples if necessary
3 Please comment on the impact of Financial Crisis from the
perspective of firms, and investors, and social perspectives Do you think the
government should bail out the large financial companies like AIG? Please be
concise about your answers and mark them accordingly