Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief.
|--Alan Greenspan, Senate testimony, October 22, 2008|
How the United States ended up a Bailout Nation is more than the work of just one man. Sure, Alan Greenspan looms large in this story, and in more ways than one. But it took the creative irresponsibility and misguided philosophy of many players to create the massive debacle that has enveloped the global economy. Presidents, senators, Securities and Exchange Commission (SEC) chairmen, Treasury secretaries, and members of Congress all contributed.
A brief review of modern U.S. regulatory history shows where the United States made its wrong turn, and the consequences of those errors.
Following World War II, the world set about righting itself. The Marshall Plan was helping to rebuild Europe; Japan became a cheap source of industrial manufacturing. Millions of GIs returned home to the land of opportunity. Returning veterans had the benefit of the GI Bill, which meant free college or vocational school and low-cost loans to buy homes or start businesses. The nascent growth of suburbia also contributed to economic activity. The U.S. economy was expanding, and it led the rest of the world into a period of rapid growth.
Along the way, the government's bureaucracy also began expanding. Twenty years after the war, complying with U.S. regulatory ...