Financial Deregulation In The United States: An Economic Analysis

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in order to earn high profit or commission. Once the borrowers were no longer paying their mortgages, it would lead to the home foreclosures and the default of CDS and MBS. Krippner adds that the expansion of financial sectors can make the economy more vulnerable. “Once expectations turn negative, the same self-fulfilling prophecies that fueled the boom on the way up can quickly give way to panic on the way down.” The financial market can easily turn sour if there is the news on bankruptcy or political conflicts. It is exactly what happened in the U.S. economy. Financial assets were turning to junk bonds and securities, and the unworthy borrowers could not pay back their loans. After three decades of financial deregulation in the U.S., the

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