The Glass Steagall Act And New Deal Regulation Of The Housing Market

1384 WordsOct 25, 20146 Pages
The Great recession occurred in America in 2007 when the economy began to decline. The cause of the recession can be contributed to many different sources, but it is clear that the main causes of the recession were deregulation, the “housing bubble”, corruption of “gatekeepers”, derivatives, the strategies of K street markets, and private debt. The first factor that contributed to the Great Recession was deregulation. During Reagan 's presidency, many of the New Deal regulations were removed. It was thought at the time that the market could “handle itself” and that the government did not need to intervene or regulate the processes. This led to policies such as the Glass-Steagall Act and New Deal regulation of the housing market to be repealed. This allowed many banks to make risky investments which ultimately resulted in a large amount of loss. The Glass-Steagall Act was a bill which essentially made it so that banks could not be involved in both investment and commercial banking. When this act was removed, it allowed banks to make risky investments with their clients’ money. Once these risky investments did not pay off, millions of Americans’ savings were lost, leading to mass amounts of debts and The New Deal regulation that was removed during the Reagan Administration was the regulation that made it so that people could not buy houses without first putting down a significant amount of money. The removal of this regulation made it so that many people could now buy homes
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