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How Long Is The Feds Pay To The Stock Market

533 Words3 Pages

Brooksley Born was right about everything that was going on behind the walls of the “black box.” The Bankers Trust, who are the innovators, and according to the book innovators are people with a vision who take a risk to improve processes or invent new ways to do things, and the risk is uncertain. The people selling the over the counter derivatives created complicated formulas and took a risk selling them to companies, which Bankers Trust got away with doing until they were sued. The reason for doing this is because of profit and losses; the bank is motivated to make a profit and take a risk to improve the system that benefits themselves. Even though the bankers trust was sued and the word got out about the OTC derivatives the government did …show more content…

This brings up the question of how much attention the Feds should pay to the stock market and the housing prices. From the movie according to Born, the Feds should devote more attention to the economy because due to the lack of attention is what brought the crisis on. According to the book the Feds are always checking for inflation or growing satisfactory. The Feds decide to what extent to loosen or tighten money. Because of this even economist believe the Feds should pay attention to the stock marking and housing prices. They need to regulate the stock market and the housing prices even if the stock market is doing extremely well because it may tempt companies to over-invest. The overinvestment can be a set up for recession, due to the over borrowing and not having the money to pay back debts, which the United States seen in 2008. Before the crisis in 08-2009, the Feds did not believe they need to play a huge role in the economy because of the free market. Greenspan raised concerns about the housing market because the Feds were keeping the interest rates low for too long. The interest rates were raised, but it was too late. The crisis in 2008-2009 is a perfect example of why the Feds need to pay more attention to the housing market and the economy. Born makes this clear in “The Warning” with the hands-on approach and her beliefs that the government needs to play a role in economic

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