Who murdered the Financial System?

Today, as I was going through the pages of Indian English Daily Times of India, I came across an article, the heading of the article was "Who murdered the Financial System? The article discussed about the people responsible for the such a financial mayhem.

Here find the synopsis of the article.

According to TOI, everyone from makers to consumers to regulators were responsible , but they narrow down there list to 10 murderers of US financial system.

1. Federal Reserve Board : They were responsible for forming bubble economy, and did not notice it when the bubble was on the verge of a bust.

2. US Politicians : They envisioned a house for every American, regardless of their income, and formed unregulated govt. agencies Freddie Mac and Fannie Mae, which disbursed loans like anything.

3. Fannie Mae and Freddie Mac : They resisted regulation, and spent over 2million$ lobbying legislators against any tightening of rules.

4. Financial Innovators : Financial Engineers working at the Wall street, created new structured products backed by subprime mortgages and sold to investors.

5. Regulators : Everybody in the financial markets were sleeping and no body cared to check the worthiness of the CDO's.

6. Banks and mortgage lenders : Instead of keeping the mortgages at their own books, lenders packaged it into security and sold it to other financial players and increase their liquidity, which results in more lending and vice versa. Besides, banks were busy on giving loans to people without checking their financial capabilities, which added fuel to fire in the financial crisis.

7. Investment Banks : Once these financial institutions provided services like underwriting, M&A, IPOs etc. But recently they started borrowing money to trade into their accounts.

8. Rating Agency : They offered ratings which were inappropriate for some of the financial instruments available in the market.

9. Basel Rule for Banks :

10. US consumers : Some times ago, US households savings were 6% of the disposable income, but now its either zero or negative. They have gone on a borrowing spree to spend far more than they earn.

10. Asian and Opec Counties : They undervalued their currency to simulate exports to US markets. They accumulated billions of forex US dollar reserves and put them into dollar securites, thus depressing the US interest rates and increased borrowing.

source, TOI

Thanks&Regards,
Mohit