Financial Deregulations and the 2008 Financial Crisis

This is my interpretation of a timeline consisting of the essential points in financial deregulation history that, complied together, created the 2008 financial crisis that affected global markets. Financial Deregulations defined is “the process of removing government rules controlling the way that banks and other financial organizations operate” and this whole movement began in the 1970’s.

- 1980-1990

Throughout this duration of ten years there were a handful of laws and acts that were passed that I will be reflecting about. Firstly, the Depository Institutions Deregulation and Monetary Control Act. This specific law allowed various institutions to prevent large-scale periodic changes and also allowed the institutions to develop a more stable deposit base. This was an advantage for the financial district as it can help ensure a reliable and steadier flow of credit for productive utilizations. An example for this could be housing, and this certain legislation would increase the deposit insurance from $50’000 to $110’000. This act in addition gives a new expanded authority to thrift institutions, which are more commonly known as a savings and loan association. These institutions would also gain the investment powers to pay quite fair and very competitive interest rates (phasing out interest rate ceilings) enabling them to meet housing credit needs. A couple of examples of services could be automatic transfer services at flagship banks and share drafts at credit unions. The act would assist in keeping financing costs at a minimum and of course alleviate the burdens of inflation. It would also ensure a strong and independent Federal Reserve to deal with the USA’s monetary affairs via supporting bank membership in the Federal Reserve System.