John Carney at The Business Insider republishes an essay by Fed economist Yuliya Demyanykon on 10 Myths About the Subprime Crisis. This is absolutely worth reading!
Among the myths that Ms. Demyanykon busts are the belief that Subprime loans went only to borrowers with impaired credit, and that subprime borrowers were offered low"teaser rates."
Mr. Carney correctly points out that this is a good "reminder that many of the popular explanations for our mess are way too simple," but he seems to have missed the part that the 108Warren Commission finds so troubling. A significant portion of the new regulatory framework that is being debated on Capital Hill is based on exactly these same myths.
When we legislate and regulate based on an inaccurate understanding of what happened, how can we even hope that this legislation or regulation will do any good?
Knee-jerk legislation and regulation is very dangerous...
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