The Global Financial Crisis according to Robert Hardaway

Global Financial Crisis Survey

Robert Hardaway is a Professor at the University of Denver College of Law and is the author of The Great American Housing Bubble: The Road to Collapse. He has published books on law and public policy, law review articles, articles in professional journals, and traditional media including Why Low Home Prices Can Be Good For the Economy at FoxNews (7/25/2011).

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


Dissenting Views By Wallison

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?


It was the fault of the government.

3. I believe The Global Financial Crisis is ongoing and will

continue for the next 3-5 years depending on future policies.

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

In each chapter of my book I focused on government policies as the primary cause of the housing bubble: the CRA (which not only affected those financial institutions directly regulated by CRA, but set the example for other institutions not directly regulated by it); Clinton regulations promulgated in the 1990's threatening to punish banks which did not lend to subprime borrowers; securitization of mortgages by Fannie Fae and Freddie Mac, setting the example for private financial institutions to follow suit by devising increasingly complex and risky investment vehicles; mortgage subsidies to the richest one third of Americans via the mortgage tax deduction; local exclusionary rules and zoning regulations which cause housing prices to skyrocket, particularly in California; federal reserve interest rate policies designed to perpetuate the housing bubble; the decision to delete housing prices from the CPI in an effort to camouflage the effects or rising housing prices on the CPI. While other causes were discussed (banking, realtor, appraisal, and accounting policies), they were discussed in the context of reaction to byzantine government regulations.

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

  1. promulgate one critical regulation--namely that loans backed by government entities require a 20% down payment
  2. repeal the home mortgage deduction
  3. include housing prices in the CPI
  4. repeal all provisions punishing banks for not lending to uncreditworthy buyers
  5. restrict power of local communities to jack up home prices by exclusionary rules and zoning restrictions on development

Compiled by Gary Karz, CFA
Host of InvestorHome

Global Financial Crisis Survey

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