An Autopsy of the U.S. Financial System: Accident, Suicide, or Negligent Homicide?

34 Pages Posted: 15 Apr 2010 Last revised: 28 Apr 2010

See all articles by Ross Levine

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Date Written: April 13, 2010

Abstract

In this postmortem, I find that the design, application, and maintenance of financial policies during the period from 1996 through 2006 were primary causes of the financial system’s demise. The evidence is inconsistent with the view that the collapse of the financial system was caused only by the popping of the housing bubble (“accident”) and the herding behavior of financiers rushing to create and use increasingly complex and questionable financial products (“suicide”). Rather, the evidence indicates that regulatory agencies were aware of the growing fragility of the financial system associated with their policies and yet chose not to modify those policies, suggesting that “negligent homicide” contributed to the financial system’s collapse.

Keywords: Financial Institutions, Regulation, Policy, Financial Crisis

JEL Classification: G20, G28, H1, E6

Suggested Citation

Levine, Ross Eric, An Autopsy of the U.S. Financial System: Accident, Suicide, or Negligent Homicide? (April 13, 2010). Available at SSRN: https://ssrn.com/abstract=1589027 or http://dx.doi.org/10.2139/ssrn.1589027

Ross Eric Levine (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

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2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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