The Political Economy of the Subprime Crisis: Why Subprime Was So Attractive to Its Creators

25 Pages Posted: 29 Dec 2008

See all articles by Peter L. Swan

Peter L. Swan

University of New South Wales (UNSW Sydney; Financial Research Network (FIRN)

Date Written: December 8, 2008

Abstract

Examination of the origins of the 2008 subprime crisis reveals that what occurred was no accident. All the major parties responsible for the crisis appear to have gained something from what transpired, at least in the short-run. Moreover, it seems to have been as much, if not more, a failure of government and its agencies inclusive of regulators as much as any failure of capitalism. Finally, the apparently arbitrary, if not self-interested, bank bailouts seem to indicate that governments are likely to directing bank policy for some time.

Keywords: Subprime crisis, Government bailouts, Vested interests, Regulatory failure

JEL Classification: G28, G32, G33, G34, G38, H81

Suggested Citation

Swan, Peter Lawrence, The Political Economy of the Subprime Crisis: Why Subprime Was So Attractive to Its Creators (December 8, 2008). European Journal of Political Economy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1320783

Peter Lawrence Swan (Contact Author)

University of New South Wales (UNSW Sydney ( email )

School of Banking and Finance
UNSW Business School
Sydney NSW, NSW 2052
Australia
+61 2 9385 5871 (Phone)
+61 2 9385 6347 (Fax)

HOME PAGE: http://https://www.business.unsw.edu.au/our-people/peterswan

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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