Finance

International Trade and finance Law

In a number of ways, the mortgage industry also suffered, culminating in evictions, cancellations of mortgage programs in the pipeline and led to prolonged joblessness. The meltdown contributed immensely towards the closure of important corporations, decreases in buying power, and massive business losses. The ensuing chaos led to a significant slump in economy leading to recession, with lasting ramifications still being felt in Europe as evident in Euro Debt crisis. This paper critically analyses whether or not weak regulations resulted in the crisis. Many factors have been linked to the financial crisis, with differing priorities being attributed to the possible causes. There is consensus, though, that the crisis was the consequence of excessive investment in too risky, intricate financial programs1. Conflicts of interest being kept secret, the ineptitude of credit regulators, and the inability of the market to control the stock market are also other contributing factors linked to the crisis. It is notable that the 1999 amendment of the Glass-Steagall Act by the US Congress, successfully removed the thin line which separated investment and depository financial institutions in the country. As a result, it can be argued that credit regulatory bodies and investors did not provide accurate valuation of the risks that mortgage-related pecuniary products could precipitate on the global economy. Equally, governments failed to modify their regulatory regimes to handle the current neo-modern financial economy. Studies on the origin of the meltdown have also been based on the impact of interest rate. Nonetheless, immediately after the crisis erupted, governments responded by enacting palliative pecuniary policies to control the ripple-effect on different economic sectors. These elaborate self-preservation measures such as the US Dodd-Frank regulatory reforms (2010) point to the laxity of laws as the main cause of the crisis. Poor regulations Out-dated regulatory mechanisms arguably left the financial sector to virtually regulate itself, despite the main aim of business organizations being making profit. It was difficult to verify the intentions of the many citizens who had applied for excess credit in an effort to build their families a decent home. This presumed innocence of the investors has turned the heat on bankers who approved the indiscriminate borrowings2. Banking industry has been an operating under strict laws for a very long time now. but over time and due to the growth of the global economy, the financial services industry may have been operating under lax regulatory regimes that could not handle rapid economic growth and globalization of the economy. This paper will prove that weak regulations and poor policy decisions played an important role in in events that led to the crisis. Institutional policies left oversight authorities with little to do in terms of making effective responses to crises of this magnitude. Regulations are said to have aggravated the negative impacts of the bubble in the value of homes. The laws and policy decisions that arguably contributed toward the crisis will also be considered. If not, new regulatory mechan

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