Financial Deregulation Essay

President Ronald Reagan once stated that “Government exists to protect us from each other. Where government has gone beyond its limits is in deciding to protect us from ourselves.” To many, this statement might infer that government is watching over its constituents and institutions by implementing systems of checks and balances so that moral, physical and financial harm are not done to one another. Unfortunately, Reagan’s administration is credited with beginning a 30-year period of financial deregulation which began with allowing savings and loan institutions to invest deposits into risky securities. The result of such deregulation was a 124 billion dollar bailout for these institutions funded by the American taxpayers. Notwithstanding

Deregulation involves the reduction or elimination of government power from an industry with the goal to promote competition; however, doing so also eliminates government’s oversight and ability to respond to impending harm. Deregulation of the financial industry, which began with Reagan’s administration and carried through both Bush eras, has shown to be complex and lacking moral imagination. Had the government been morally imaginative, it would have realized the potential for financial institutions to take on astonishing amounts of risk, which would become unmanageable as has been seen during every financial crisis. Instead of taking away oversight and allowing risks to accumulate to toxic levels, government could have reformulated its ideas of deregulation to allow enough oversight for financial institutions to take calculated and monitored risks. This would have allowed government the ability to react sooner to prevent the financial crisis while allowing these organizations to flourish. Yet, the form of deregulation that took place is similar to a scenario where most speed limits for public roads were eliminated. As one can imagine, there would be grave consequences in the forms of automotive accidents and related fatalities. Understandably, public concern over the resounding safety

Society looks upon academia to guide future leaders in morally sound behavior. As part of this, academic instructors are expected to exhibit the behaviors they teach. Further, as President Reagan noted, government exists to protect; however, the documentary exposes the roles academia and government rendered in service to the very financial institutions that caused the economic crises that the world is recovering from. For example, Frederic Mishkin served on the Board of Governors of the Federal Reserve from 2006 to 2008. After resigning his Governorship in August 2008, he returned to Columbia's Graduate School of Business where he instructs primarily in the study of economics. As part of his role at the Federal Reserve, Mishkin was required to disclose his net worth which ranged from six million to seventeen million, much of which the film portrays was earned from consulting fees. Another case presented by the film is that of Martin Feldstein, who is a Professor of Economics at Harvard, served as President Reagan’s economic advisor and was a major proponent of deregulation. Feldstein earned millions of dollars from his role on the board of directors of failed insurance and financial products giant AIG. What these and other individuals did was use the public’s trust to influence policy and economically benefit from the powerful roles they had obtained due to