738N1 Institutions in the Global Financial Market Evaluate causes of the 2008 financial crisis.docVIP

738N1 Institutions in the Global Financial Market Evaluate causes of the 2008 financial crisis 　　The global financial crisis of 2008， is considered to be the strongest financial crisis after the 1930 Great Depression by many economists. It leads to the bankruptcy of many large financial institutions， depression in real estate markets and increasing unemployment rate all around the world. The causes might include incomplete housing policies， deregulatory legislation， poor supervise and excessive leverage. This essay will focus on one cause of the 2008 financial crisis： incomplete housing policies， and then analysis the relevant regulatory changes： issue Dodd-Frank Art， finally offer recommendation on future resolutions to incomplete mortgage lending policies. 　　As Peter Wallison points out， US’s housing policies are the main reason of the 2008 financial crisis， and other causes as chain reaction only following the government policy. Actually， since 1990s， government regulations begin to decrease traditional mortgage lending standards. For example， two US’s large public government sponsored enterprise， Freddie Mac and Fannie Mac， are required to improve their holdings of loans for low-and-middle income borrowers， and issue more loans with little or no down-payment by Housing and Urban Development （Valentin， 2010）. It perhaps boost the US housing market， however， the traditional lending standards were decreased to gain these goals， subsequently long-term easy availability of credit trigger a significant depression of risk controls for the credit extension and the housing asset price bubble in the US housing markets. （Folarin， 2010） 　　Furthermore， from 2002 to 2004， Feds prolonged low-interest rate policy contributes to promote the housing demand and housing price， it might aggravate the bubble of housing market. It is absolutely attractive because of lower short-term interest rates and adjustable rate mortgages loans with lower down-payments. Throughout 2002 to