Deregulation Is The Underlying Cause Of The 2007 / 08 Financial Crisis

1382 Words6 Pages
Deregulation is a process that removing or reducing the regulations and allowing banks to invest (MBA lib, 2015). It allows banks to collaborate, and there’s no regulations of derivatives. The Financial crisis in 2007-2008 brought the massive hurt to everyone in the world. The worldwide financial problem affected thirty million people loosing their jobs and cause many countries getting close to go bankrupt (Peah, 2014). This is the global issue that everyone should be consider of. The purpose of this essay is to determine if the deregulation was the underlying cause of the 2007/08 financial crisis. The essay argues the deregulation was the underlying cause of the 2007/08 financial crisis in the US, because of it causes financial innovations with no regulations, subprime mortgages increasing and lead quite a few competitions among banks. I will discuss these three parts in the following essay. Firstly, I would focus on how deregulation causes more and more financial innovations be made and how they resulted the financial crisis. Then I will argue that deregulation leads to the numbers of subprime mortgages increased in the market. Due to deregulation the subprime mortgages markets started to lose control, the market failed and caused the financial crisis in 2007/08. Finally, I will state deregulation causes banks began multiple competitions among them and raised the amount of subprime mortgages thus the financial crisis occurred. Deregulation, as the beginning of the essay

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