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CF&P  Press Release, March 24, 2009

Center for Freedom and Prosperity Foundation

For Immediate Release
Tuesday, March 24, 2009
202-285-0244
www.freedomandprosperity.org

New Video Highlights Government's Role in
Creating the Financial Crisis

(Washington, DC, March 24, 2009) The Center for Freedom and Prosperity Foundation today released a new mini-documentary discussing how misguided government policies helped to create the housing bubble, which eventually led to the current financial crisis. Entitled "Government Intervention, Regulatory Policy, and the Financial Crisis," the video focuses on the role of two government-sponsored enterprises, Fannie Mae and Freddie Mac, and explains how government mandates for affordable housing drove the market toward junk and sub-prime mortgages. The video's narrator, Peter J. Wallison of the American Enterprise Institute, also notes that banking is one of the most heavily-regulated sectors of the American economy, puncturing the unsubstantiated claim that deregulation deserves the blame.

Youtube Link: 
http://www.youtube.com/watch?v=xWqouBvy2sM

"Government intervention inevitably leads to many terrible unintended consequences," said Andrew Quinlan the president of CF&P Foundation. "The politicians in Washington who mandated so-called affordable housing requirements are the same ones that were in bed with Fannie and Freddie, and the rest of us are paying a high price for their foolish and often corrupt actions," added Quinlan.

The video concludes with a set of four lessons, including a warning against a global regulatory cartel. This lesson is especially important since politicians from Europe are pushing for such as scheme as part of April's G-20 summit. As noted by the Cato Institute's Dan Mitchell, "Peter Wallison correctly explains that governments should not be allowed to conspire in favor of a regulatory cartel that inevitably will further expand the destructive power of government."

Lessons from the Financial Crisis

    1. Government should not distort markets.
    2. Excess regulation is not the  answer.
    3. "Too big to fail" is bad policy.
    4. A global regulatory cartel is terrible policy.
     

Executive Summary for the Government Intervention, Regulatory Policy, and the Financial Crisis video: 

"The housing bubble is probably the biggest reason why America now faces a financial crisis. But what caused the bubble, and why are there now so many foreclosures causing so much damage in the rest of the financial sector? In this Center for Freedom and Prosperity, Peter J. Wallison of the American Enterprise Institute explains how government policy mistakes are responsible and he specifically highlights the destructive impact of two government-created entities known as Fannie Mae and Freddie Mac. The video concludes with four key lessons that explain how to avoid similar mistakes in the future."

The following are the links to other CF&P Foundation videos including Tax Competition Primer, Global Flat Tax Revolution, Cutting the U.S. Corporate Income Tax., Promoting Prosperity, Obama's So-Called Stimulus, a three part series on the Benefits of Tax Havens and a another three-part series on the Laffer Curve.
Link: http://www.freedomandprosperity.org/videos/videos.shtml

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Web Links Government Intervention, Regulatory Policy, and the Financial Crisis:

YouTube
http://www.youtube.com/watch?v=xWqouBvy2sM

Google
http://video.google.com/videoplay?docid=-931896574518710697

Yahoo
http://video.yahoo.com/watch/4729269/12632048


For additional comments:
Andrew Quinlan can be reached at 202-285-0244, andy@freedomandprosperity.org
Peter J. Wallison can be reached at 202-862-5864, Pwallison@aei.org
Dan Mitchell can be reached at 202-218-4615, dmitchell@cato.org

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