This is my understanding of how the credit bubble grew:
1. The passage of the Taxpayer Relief Act of 1997 …
2. The passage of the Gramm–Leach–Bliley Act in 1999 …
3. Greenspan’s lowering of interest rates to historically low levels, then keeping them there for an extended period of time (we’re still there!!!). …
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It is interesting to note that ALL of these factors are still in play today, nearly 5 years into the burst of the bubble.[/quote]
Yes, and then some (tax credits, trillions of dollars going to MBS and Treasury purchases and bank debt guarantees, etc., etc.). Can you imagine what the market would look like without all these disastrous policies? We might actually have affordable housing! 😉
