This is in response to Thomas Sowell's comment on the economic crisis, in which he lays the blame on federal regulations ["Blowing a bubble brought us to our knees," Oct. 21].
Another explanation is lack of regulations.
In 1999 and 2000, federal laws were overturned after decades of lobbying by the financial industry so that banks and Wall Street could again take the kind of risks that had led to the Great Depression.
This set off a mad scramble for new money-making investments and was the real start of the financial crisis.
Far from being forced to grant bad loans, banks were now eager to do so because that was where the big money could be made.
The subprime loans generated the highest interest rates and were the most desirable to investors.
Wall Street firms bought these mortgages as fast as they were created, and demanded more. The banks got commissions and fees, which they then invested in high-risk and leveraged securities.
The financial industry can't control itself, because making money is its priority. It was lack of regulation and lack of enforcement that helped generate this crisis.
Barbara Perry
Spotsylvania