An in-depth look at the origins and development of the current financial crisis, from an economist and Washington insider. The author explains how a wide array of financial institutions -- including mortgage banks, commercial banks, and investment banks -- created a credit bubble that supported nonprime mortgage lending and helped to inflate house prices. The near-collapse is shown to be the result of multiple regulatory failures and reckless decisions by financial firms that were less sophisticated than they appeared. The author concludes that significant changes in financial market regulation, especially with respect to firms that are “too big to fail,” will be needed to prevent future crises and the damage they cause.
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