The Global Financial Crisis according to John Wasik

Global Financial Crisis Survey

John Wasik is an award winning author of 13 books including The Cul-de-Sac Syndrome: Turning Around the Unsustainable American Dream published in 2009 (book web site) and released in paperback in 2011. Wasik blogs for Reuters on personal finance, investing, and investor protection.

1. Which FCIC View best represents the causes of the Financial Crisis?

Majority Conclusions

2. Which narrative presented by Douglas Elliott and Martin Baily of the Brookings Institute in Telling the Narrative of the Financial Crisis: Not Just a Housing Bubble best represents the causes of the Financial Crisis?

Everyone except those who could afford the mortgages they signed up for.

3. I believe the Global Financial Crisis is ongoing and

we'll keep paying for a generation.

4. What were the primary causes of the Global Financial Crisis?

Greed, deregulation, securitization, loose regulation of mortgage brokers/real estate agents, no regulation of ratings agencies, compensation tied to packaging mortgages, false belief in real estate as an investment, false belief in real estate as a secure asset, corruption by banks, Freddie/Fannie with Lobbyists, removal of Glass-Steagall protections.

5. What still should change as a result of the crisis?

  1. Fannie/Freddie need to be re-organized or sold off, along with their portfolios while the government sets up a new guarantee system for mortgages without excessive securitization
  2. Homeowners should be allowed to refinance at federal funds rate
  3. Homeowners who are jobless or insolvent should be able to write down mortgage principal in Bankruptcy
  4. The excess inventory of REOs should be sold off in large lots
  5. Those who wish to stay in their homes should be offered refinancing or rent to buy options.

Compiled by Gary Karz, CFA
Host of InvestorHome

Global Financial Crisis Survey

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