| In my opinion government regulations could have prevented the 2008 crisis by increasing standards of who was getting home loans and putting stricter limitations on what people could be approved for. There was to much risk taking that could have been avoided. It is
important for banks to hold more capital for cushion in case of losses. The government has our
society’s best interest at heart, and we must pout faith in this. Seaquist (2012) states that “since
1930 the federal government has been steadily increasing and expanding their regulatory
powers over business and individuals through the creation of agencies such s the Federal Trade Commission, Internal Revenue Service, and Food and Drug Administration.”
Although to much or too little government regulation can be dangerous, it is essential
to have a happy medium. I feel that to little government regulation of businesses present
the greater danger. We have already seen that from our history how bad it can be
when there is to little government regulation. Implementing an early warning system of currency crisis is an excellent idea to help maintain the happy medium so that future disaster will not happen.
It is essential for government to regulate businesses to prevent risky and borrowing practices.
Government Regulations are implemented to protect the public and in return also protects businesses from growing out of control. It is so vital to have the happy medium of government regulation because to much would damage businesses and prevent them from
growing and put a major hold on society growing which would lead to great danger
for us as a whole. Research has found that we find that “better governance mitigates
the disruption caused by the bank credit supply shock to firms’ financing and investment activities” (Nguyen, Nguyen, & Yin, 2015).
Nguyen, T., Nguyen, H. (., & Yin, X. (2015). Corporate Governance and Corporate Financing and Investment during the 2007-2008 Financial Crisis. Financial Management (Wiley-Blackwell), 44(1), 115-146. doi:10.1111/fima.12071
Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc. |
