The document discusses the need for government regulations to prevent financial crises like the 2008 credit crisis, arguing against the belief that the financial sector can self-regulate. It highlights past failures of financial institutions and emphasizes the importance of strict government oversight to maintain ethical practices and protect the economy. The author believes that while regulations should avoid overreach, they are essential for balancing the interests of businesses and society.

1. 1. Interestingly enough, while I won't stake a claim to any
political party on this post, I have stood by one claim since I've
been old enough to vote. I may not approve of the President or
his actions; one thing is sure; I don't want his job either. I will
take the same approach here. I believe government regulations
could've helped prevent the major credit crisis of 2008 in many
ways. However, as I have suggested, I don't necessarily have
any full-proof ideas either. Regardless of the company, group,
or entity, almost every organization has a series of checks and
balances. For example, I can't help but wonder what condition
people might be in without the formation of the FDA to regulate
food and drugs to keep businesses in line (Seaquist, 2012). If
you contemplate communist Germany during the rule of Hitler,
aside from the mass genocide that spread through the area like
wildfire, one more thing stands out. There was little to no
freedom.
We, as humans, have proven that we are cyclical
people. As mentioned, during WWII, many people had no
freedom. From the opposite perspective, why do I need a
babysitter when my wife and I go out to dinner? Primarily
because the freedom otherwise given to a three and one-year-old
would enable naive and creative minds to endanger themselves.
There must be a balance, and there must be a group or entity
with the power to prevent catastrophic issues like the credit
crisis from happening. Having regulations in place would help
both the greater good and businesses, although, at times, it may
not seem like it. Looking back, I would be interested to learn if
the investors and bankers that wanted a huge return on their
money would do it all again had they known the impact of their
actions prior to investing. Regardless of the situation, there
must be a balance in all things. How do I know? Every single
time I lose my balance, I fall.
2. I recall the time when everyone seemed to be living above
their means, purchasing homes that they could not afford,

2. cashing in equity on said home, and then using the money to
purchase additional items. This type of greed and unwise
financial dealings gave birth to the destruction of financial
markets. The credit crisis of 2008 often referred to as the Great
Recession is by far one of the worst economic down turns of our
time. “Excessive borrowing, lending, and investment were
inextricably interconnected through a range of transaction
structures derived from well understood techniques of
securitization. Essentially, securitization is a transaction
structure in which loans (such as loans secured by residential
real estate, i.e., mortgages) are pooled together ("repackaged")
as collateral underlying the issuance of securities,
predominantly debt securities”. The event caused great financial
lost and caused homes to decrease greatly in value. However,
after every crisis, the question is posed “what can be done to
prevent this from happening again?”
The government is usually the entity called upon to identify
specific root causes and implement stringent guidelines that
prevent similar situations. Could the government have prevented
the issue? The answer I believe at its core is yes. As the old
adage goes “Hind sight is 20/20”. The markets “were not
adequately addressed either by market participants or
regulators” (Douglas, 2009). The problem with injecting the
government is that usually over regulation starts which hampers
financial growth. To solve this issue, 20 countries came
together (G-20) and released their Declaration of the Summit on
Financial Markets and the World Economy. “The most
significant aspects of the proposed remedies relate to reform of
financial regulation while at the same time avoiding over-
regulation” (Douglas, 2009). I believe taken a collective
approach helped make the financial problem better as wells as
add much needed regulation. The structure provided added what
could have prevented the Debt Crisis in the first place.
3. The link between the financial sector and economic growth is
vital; therefore, the government must maintain strict economic
policies to encourage growth and protect the interest of its

3. citizens. Some analysts believe the financial sector is self-
regulatory; hence, they require less control from the
government. I object to such beliefs- the financial industry has
had numerous opportunities to hold themselves accountable for
responsible business practices, but have failed on multiple
occasions. Typical examples of such situations include the 2008
financial crisis, which was the results of corrupt subprime
lending practices that involved almost all of the important
financial institutions. Another example was the fake account
scandal that engulfed Wells Fargo, one of the major financial
giants in the country (Egan 2018, CNN Business). Also, HSBC
was caught laundering money for Mexican drug cartels in 2018.
These are examples that prove that such institutions cannot be
left unregulated, as their appetite for profit will always trump
the stakeholder's interest.
Increased government scrutiny is significant in maintaining
balance and ethical practices in the financial sector. The various
agencies that oversee the financial industry must work in
collaboration with the leaders of all the major financial
institutions. A good relationship will ensure the government
adopts a more balanced approach towards oversights that are not
overreaching to promote and maintain overall investors'
confidence. Even though such controls typically mean more
work for the institution, it will help increase internal scrutiny’s,
and self-control, protecting these companies, and the public
from fraud in the long-term. In 2007, the Securities and
Exchange Commission relaxed financial regulations such as net
capital investment for investment banks like Wells Fargo, Bank
of America, Lehman Brothers, and Goldman Sachs. Meaning
they could take on more debt than they could afford. Quick
returns were valued over sound business practices leading to
most of them issuing predatory loans to the customer without
the required stipulations. In the end, such negligent practices
brought the entire economy down (Investopedia 2019).

4. Also, if the financial sector wishes to be self-regulatory, they
should not turn to the government to bail them out when they
get in trouble. The industry plays a vital role in the economy;
failure can bring the entire economy to its knees. Hence, the
government must maintain constant oversight to ensure
organizations are acting within regulations without compromise.
In 2008, the government spent $700 billion of taxpayers' money
to bail out the financial sector to avert an economic meltdown
(Collins, 2018, Forbes Money). Major financial institutions are
too big to fail. Meaning government assistance is needed during
a crisis. If that is the case, then they should welcome strong
government oversight to ensure such a situation is prevented
continuously.
4. Agencies have two main purposes: assisting in carrying out
vital government functions and exerting regulatory control.The
government does need to increase its regulation of business for
the good of society. No I don’t believe the marketplace is self-
regulating because the marketplace goes into a financial burden
to a point of going into default or bankruptcy. The government
does not place an unfair costs in regulating ethical conduct. For
instance, at the airline to which I am employed, the government
does not allow anyone to work for an airline or in the airport
without a SIDA badge. It is a government issue badge that you
will receive once you pass a background check. This is to
ensure that all businesses have a certain type of people working
for them. People who have not been convicted of a crime and
can respect others at their job. This type of regulation is helpful
because ever since 9/11 the airport security as been high. Either
the airlines or other businesses in the airport wants a honest,
loyal, and trustworthy person working for them.
An independent federal agency is created through Congress that
establishes the agency and allows it to perform its duties. The
creation of the agency and its authority are detailed in the
enabling legislation—the act of Congress that creates the

5. agency. The details of the agency's operation are left to the
agency, which creates its own rules in accordance with the
guidelines set forth in the 1946 Administrative Procedure Act
(APA). Agencies are allowed to have broad rule making powers,
as long as they are within guidelines according to The APA.
Reference
Seaquist, G. (2012). Business law for managers. San Diego,
CA: Bridgepoint Education, In