Capital New York

Pfw51 commented on Bloomberg: 'Plain and simple,' Congress caused the mortgage crisis, not the banks

The banks created the "shady financial instruments" solely BECAUSE Congress passed laws that forced them to take high risks that they knew would result in massive losses. The left side of the political spectrum is so stuck on "static accounting" that they have no understanding that many (if not most) regulations they pass have a direct and immediate effect on the balance sheets of business by increasing the costs that are required to do the business they exist to do. The banks did what any business would do (albeit in a deceptive, but legal, way): they protected their profits. Granted, their methods SHOULD have been illegal, but that's what happens when Congress and bureaucrats start dictating policies to businesses... the businesses consult with their lawyers and they start to get creative. The fact is that there are always consequences and loopholes that no one even imagined when the regulations were written, so government tends to do far more damage than good when they try to regulate the economy.

Posted on November 1st, 2011 3:04pm