The current housing/lending crisis in America; the trigger for the following global economic crash/ depression since 2008; an economic analysis of what we should do now

Economic Analysis of Law

Seminar paper from the year 2008 in the subject Law - Civil / Private / Trade / Anti Trust Law / Business Law, grade: 13 Punkte, University of Augsburg (Uni-Augsburg / Pepperdine University (Malibu, Kalifornien)), course: Seminar Frauenchiemsee July 18. 2008 to July 20. 2008, language: English, abstract: The work is about the current subprime and financial crisis in Amerika being the trigger for the following global economic crash/depression since 2008. It answeres the questions on: why did it happen (and finally who is to be blamed for mostly); how it could have been averted; and what has to be done, in the predominant part concerning legislation, to averting such a disaster in the future. A. Introduction The question, on the current housing / lending crisis in America, what should we do now?, can only be answered when it is figured out why it got so far; in especially, why existing legislation did not work, what role predatory lending played and how far high finance on the secondary market, with Collateralized Debt Obligations ( CDOs ) and the selling /purchasing of so called high-risk junior tranches played a role, and last not least on this level: how it could have been possible, that almost an avalanche of class actions has been rolling over courts grounded on the alleged breaching of acts that were implemented straight on the experience of The Great Depression of the 1930´s; like Securities Exchange Commissions ( SEC ) Rule 10b-5, having its basis at least in the 1934 Exchange Act Were 'bad' subprime loans that were doomed from the beginning to default, given because of unscrupulous predatory lenders / loan brokers making immoral profits out of extremely high interest rates , so they are to be blamed. Were states like Georgia (and Mew Mexico, New Jersey) forced, for these predatory lending methods, to implement borrowers protection acts, long before the crisis became vivid, like the 2001 Georgia Fair Lending Act (GFLA), but those efforts were stopped through the intervention of the Feds before the Officer of the Comptroller of the Currency (OCC) who pre-empted those laws as far as it was in conflict with federal banking law , making them that way worthless. Are the Feds and the OCC, and so far United States governmental institutions, to be blamed, for pre-empting laws that could have at least mitigated the effects of the crisis? (...)