Trying to pin the blame on one particular party or administration is a fool’s errand. Arguably, this crisis was set in motion with the formation of the FDIC (and, no, I’m not blaming Roosevelt – just making a point).
Here’s the problem. Eventually our financial system was going to blow up. It was just a matter of “when”. Each party and administration over the last many decades has played some small role and the cumulative errors finally produced the straws that broke the camel’s back.
It’s not unlike the Peter Principle that, “in a hierarchy every employee tends to rise to their level of incompetence”. Folks keep rising up the ladder until they finally fail, such that in time, every position tends to be occupied by an employee who is incompetent to carry out their duties.
In our financial system, folks kept arguing for less regulation and more “freedom” (and more leverage) until things finally blew up. Because prior to the blow up, they would all point to the system’s “success” and say, “See, no problems… so, why don’t you just let us do just a *smidge* more of [insert systemically dangerous activity here]”. And finally the straw broke the camel’s back.
Now we have to figure out ways to ensure that it doesn’t happen again until after we’re all dead. Because it WILL happen again. No doubt about that. (Recall that knowledge in science and engineering may be cumulative, but in finance it’s cyclical.) All we’re doing now is hoping to push it off so far into the future that we’re not affected (again). But, again, trying to pin the blame on one administration or party is just ridiculous. There’s plenty of blame to go around.
