The Federal Reserve System & Financial Crisis

5929 Words May 9th, 2015 24 Pages
The Federal Reserve System & Financial Crisis
Alejandro Cuervo
Wilmington University

Abstract
As we go into our research on the financial crisis of 2007, we will try to answer some questions about what actually cause of the failure of our financial system, which almost collapse the dollar. While there are plenty of faults to go around on what cause this crisis, there was never a clear path on how to reverse the demand that was cause by repealing the Glass-Steagall Act of 1933. Although there has been other regulations and acts pass since the repeal of the Act of 1933, the ability to restore and strength our dollar has been an uphill battle to take control of it. What was known within our economic system to readjust and rebuilt
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Chris Cox the ex-security exchange commission chief, with his inability to enforce the rules, especially in the Madoff scandal, as if he did have the power to go after investment banks like Lehman Brothers, which was a product of the repeal of the Glass-Steagall act and Merrill Lynch for better disclosure, he simply chose to turn a blind eye to it. Interesting enough, the American consumer was fifth on this list, and that is because of the constant borrowing and living above the means of their income. So once the bubble burst, we realize that we had less money to backup all bills as stated within the article. The money we owed per individual increased to more than 130% of income in 2007, up from about 60% in 1982. As we continue through this article, we see Hank Paulson’s name, he was the treasury secretary in 2006, and Joe Cassano, the founding member of AIG financial products unit, which used the credit default swap (CDS) for companies to pay their debts was at the center of the downfall of AIG and as stated before costing the American public billions of dollars in bailouts. Ian McCarthy as the CEO of Beazer homes was exposed in the Charlotte Observer in 2007 for aggressive sale tactics, which included lying about borrower qualification in gaining loans
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