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IV. CONCLUSION

Th is dissenting statement argues that the U.S. government’s housing policies
were the major contributor to the fi nancial crisis of 2008. Th ese policies fostered the
development of a massive housing bubble between 1997 and 2007 and the creation
of 27 million subprime and Alt-A loans, many of which were ready to default
as soon as the housing bubble began to defl ate. Th e losses associated with these
weak and high risk loans caused either the real or apparent weakness of the major
fi nancial institutions around the world that held these mortgages—or PMBS backed
by these mortgages—as investments or as sources of liquidity. Deregulation, lack of
regulation, predatory lending or the other factors that were cited in the report of the
FCIC’s majority were not determinative factors.
Th e policy implications of this conclusion are signifi cant. If the crisis could
have been prevented simply by eliminating or changing the government policies
and programs that were primarily responsible for the fi nancial crisis, then there
was no need for the Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010, adopted by Congress in July 2010 and oft en cited as one of the important
th
achievements of the Obama administration and the 111 Congress.
Th e stringent regulation that the Dodd-Frank Act imposes on the U.S.
economy will almost certainly have a major adverse eff ect on economic growth
and job creation in the United States during the balance of this decade. If this was
the price that had to be paid for preventing another fi nancial crisis then perhaps
it’s one that will have to be borne. But if it was not necessary to prevent another
crisis—and it would not have been necessary if the crisis was caused by actions of
the government itself—then the Dodd-Frank Act seriously overreached.
Finally, if the principal cause of the fi nancial crisis was ultimately the
government’s involvement in the housing fi nance system, housing fi nance policy in
the future should be adjusted accordingly.

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