The Lure of Leveraging: Wall Street, Congress, and the Invisible Government



It is my intent to review the legislative framework of financial regulation, assess public and private sector accountability for the economic trauma loosed in 2008, and appraise the legislative aftermath. 1My thesis is that the economy and the financial security of the country were unnecessarily jeopardized by the unchecked greed of a few; that, at critical moments, politics and ideology dominated regulatory decision making; that the regulators, the invisible government, allowed excess leveraging out of excess confidence in risk-based mathematical modeling; that a conflicted Congress emboldened risk taking at Fannie Mae and Freddie Mac; and that problems in commercial bank regulation related less to what Congress did than what it didn’t do. As both a participant and observer in the legislative process, I have designed this review in part as a chronicle of Congressional interactions between the parties and with the Executive branch, and in part as a take on regulation itself. Accordingly, I apologize for presumptuous overuse of the “I” word and the presentation of an unavoidable personal perspective


Federal Reserve Credit Default Swap Internet Gambling Community Bank Federal Deposit Insurance Corporation 
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Copyright information

© Networks Financial Institute 2011

Authors and Affiliations

  1. 1.National Endowment for the HumanitiesWashingtonUSA

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