Ivan Seeking said:
He has been President for a year, and I see someone who has governed from the middle. The real liberals, including many economists, argued that he must nationalize the banks. He didn't. He has been forced to take drastic action due to the damage done by the Republicans and the ideology of minimum regulation.
I think you are over-simplifying this issue. Minimum regulation in some quarters might have played a part, as many of the new asset-backed securities were not regulated, and many very smart people couldn't even understand them, but let us also remember that a big problem is simply the SEC has too much information to deal with from all the regulations there are already in existence.
One can regulate until they are blue in the face, but it means nothing if the regulatory agency that must review the information from the regulations is overwhelmed and can't keep up.
Big corporations tend to be pretty risk-averse. Prior to the crises, it was believed by many we had achieved a state of being able to allocate risk very efficiently. So if these big corporations thought they were allocating risk very well, when in fact they were taking on massive risks, but did not realize it, then why would we think under-paid government regulators would have been able to spot the risk?
Also remember that Fannie Mae and Freddie Mac, the big quasi-government institutions, played a huge role in this crises. The Bush administration tried multiple times to bring them under the same regulations and oversight as banks, savings & loan institutions, and credit unions, but the Congress (in particular Democrats) stopped this every time, because Fannie/Freddie for years have been run by Democrats and were large sources of campaign contributions to Democrats.
I believe Barack Obama was among those in Congress who voted against increasing such regulation.
There was also the real-estate bubble itself that played a problem, and among this, California. A real-estate bubble is a hardcore blow to an economy, and California is the 6th or 7th largest economy in the world. How California goes affects the whole nation.
Unfortunately, California also has some of the most restrictive zoning laws, which artificially drove up real-estate prices. So while real-estate prices soared nationwide, they went sky-high in California. Then they crashed, dealing a terrible blow to the California economy.
The big problem is this thus dealt a huge blow to the national economy as a whole too.
So there are lots of problems that contributed to this crises.