Editing Deregulation (section)

==== Finance ====
The [[financial sector]] in the U.S. has been considerably deregulated in recent decades, which has allowed for greater [[financial risk]]taking. The financial sector used its considerable political sway in [[U.S. Congress|Congress]] and in the political establishment and influenced the ideology of political institutions to press for more and more deregulation.{{sfn|Johnson|Kwak|2010|pp=20, 133, 150}} Among the most important of the regulatory changes was the [[Depository Institutions Deregulation and Monetary Control Act]] of 1980, which repealed the parts of the [[Glass–Steagall Act]] regarding interest rate regulation via retail banking. The [[Financial Services Modernization Act]] of 1999 repealed part of the Glass–Steagall Act of 1933, removing barriers in the market that prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company.

Such deregulation of the financial sector in the United States fostered greater risktaking by finance sector firms through the creation of [[financial innovation|innovative financial]] [[financial instrument|instruments]] and practices, including [[securitization]] of loan obligations of various sorts and [[credit default swap]]s.{{sfn|Johnson|Kwak|2010|pp=88-90}} This caused a series of financial crises, including the [[savings and loan crisis]], the [[Long-Term Capital Management]] (LTCM) crisis, each of which necessitated major bailouts, and the derivatives scandals of 1994.<ref>{{cite news|newspaper=[[Financial Times]]|place=London|date=March 19, 2013|url=https://www.ft.com/content/32cca748-8fe8-11e2-9239-00144feabdc0 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/32cca748-8fe8-11e2-9239-00144feabdc0 |archive-date=2022-12-10 |url-access=subscription|title=Markets: The Ghosts of '94 Veteran bond traders fear the omens point to a repeat of the catastrophic collapse of the mid-nineties}}</ref><ref name="pbs.org">{{cite web|publisher=PBS |series=[[Frontline (U.S. TV program)]]|date=October 20, 2009|url=https://www.pbs.org/wgbh/pages/frontline/warning/etc/warnings.html|title=The Warning: Two Early Derivative Blowups}}</ref> These warning signs were ignored as financial deregulating continued, even in view of the inadequacy of [[industry self-regulation]] as shown by the financial collapses and bailout. The 1998 bailout of LTCM sent the signal to large "[[too-big-to-fail]]" financial firms that they would not have to suffer the [[moral hazard|consequences of the great risks]] they take. Thus, the greater risktaking allowed by deregulation and encouraged by the bailout paved the way for the [[2008 financial crisis]].{{sfn|Johnson|Kwak|2010|pp=147-148}}<ref name="pbs.org"/>