What Created The 2008 Financial Meltdown?
Greedy Wall Street Investment Bankers /Deregulation of the financial industry
Barney Frank, Chris Dodd and the CRA
Poor people buying houses they can’t afford.
Other
I think it can be traced back directly to the repeal of the the Glass-Steagall Act, and helped along by lax/non regulation of our other banking-oversight laws at the time.
Not too surprising, it is at the top of the list of demands of the OWS protesters across the country, to get the Glass-Steagall Act reinstated.
"Glass-Steagall was passed under the Roosevelt administration in 1933 in direct response to the Wall Street shenanigans that ushered in the Great Depression where banks shoved their own depositors into buying the stocks the banks were dealing. The basic idea was to keep banks from speculating with the savings that American citizens were entrusting within their vaults.
Its repeal, under the Gramm-Leach-Bliley Act, drafted and passed by a Republican congress, and signed by William Jefferson Clinton, allowed commercial banks to merge with investment banks. For instance, Citigroup merged with Traveler's Insurance (although this merger was announced in 1998, before the act was passed, at the time Citigroup CEO Sanford I. Weill said that he spoke with the Feds and, "that over that time the legislation will change...we have had enough discussions to believe this will not be a problem.").
Now, on the one side they could sell mortgages to homeowners, and then invent fancy investment structures which they sold on Wall Street. Because they were "covered" on both ends, banks felt free to sell increasingly dicey mortgages, just so long as another sucker was picking up the garbage. This sucker was picking it up because he had a plan to repackage it and sell it to another sucker, and so on. Eventually we end up with no-doc stated income interest-only option-ARM no money down mortgages being repackaged as "sound investments" being sold as "stable assets" for city pension plans to park their money in. (See "Subprime Meltdown As Told By Stick Figures").
We can only imagine the level of machination exerted over those 30 years, but we do know this. Robert Rubin was Secretary of Treasury, which had oversight over Glass-Steagall regulation. Days before he resigned, Glass-Steagall was repealed. Just over a year later, he became chairman of the Citi executive committee, with an annual compensation of $40 million, a position he still holds, despite Citigroup's $24 billion in subprime-related losses."
Blame The Subprime Meltdown On The Repeal Of Glass-Steagall - The Consumerist