Laws, Sausages and Bailouts: Testing the Populist View of the Causes of the Economic Crisis

Brooklyn Journal of Corporate, Financial & Commercial Law, Vol. 4, p. 175, 2010

Hofstra Univ. Legal Studies Research Paper No. 10-36

46 Pages Posted: 5 Nov 2010

See all articles by J. Scott Colesanti

J. Scott Colesanti

Hofstra University - Maurice A. Deane School of Law

Abstract

While the lingering economic crisis has drawn much attention to individual products and private sector villains thought to have caused the market meltdown, a pointed study of the full range of government causes (and their attendant depth) has to date proven less attractive to authors and critics. It is now axiomatic - even among the financial survivors and victors of the crisis - that Wall Street fell victim to an unprecedented myopia. It is equally accepted that regulation was flawed, but the exact degree to which any one public sector can be blamed has, like the corresponding remedies that languished for so long in Congress, been seemingly postponed until a consensus can be reached on the ultimate means of ending the downturn.

Moreover, such a direct allocation of culpability may just be a condition precedent to our economy’s recovery. Mindful of the pressing need for such resolute finger-pointing, this Article seeks to provide a cross-boundary analysis of the statutes, initiatives, cases, agency decisions, and regulatory reporting lines that either paved the way or aggravated the economic crisis of 2007-2010.

Accordingly, the Article seeks to test postulates of blame in four distinct categories: the enactments of the federal legislature, the decisions by the federal judiciary, the mortgage policy of the Department of Housing and Urban Development (HUD) (as steered by the White House), and the actions/omissions by the Securities and Exchange Commission. To that end, this Article identifies the popular wisdom concerning the culpability of each government sector, locates predating trends in the underlying "law," and compares the two for a variance.

Keywords: economic crisis, financial crisis, markets, financial regulation, mortgage meltdown, mortgage policy, HUD

JEL Classification: K22, H53, P11, K23, G24

Suggested Citation

Colesanti, J. Scott, Laws, Sausages and Bailouts: Testing the Populist View of the Causes of the Economic Crisis. Brooklyn Journal of Corporate, Financial & Commercial Law, Vol. 4, p. 175, 2010, Hofstra Univ. Legal Studies Research Paper No. 10-36, Available at SSRN: https://ssrn.com/abstract=1702972

J. Scott Colesanti (Contact Author)

Hofstra University - Maurice A. Deane School of Law ( email )

121 Hofstra University
Hempstead, NY 11549
United States
5164636413 (Phone)

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