- What did Wall Street and Congress do specifically that helped increase the size of the housing bubble at the time and decreased the protection of the public?
Bank CEOs and other executives on Wall Street were paid huge salaries to keep the price of their firms’ stock at high level. These executives knew that if their institutions lost money, they would lose money too. As a result, these executives bolstered short-term profits to continue to flow of money into their pockets. These Wall Street executives walked off with multimillion-dollar bonus without thinking about the major risks that could occur in the long run.
The United States Congress did have a significant role in the failing to protect the public from the collapse of the housing bubble. The two major actions that Congress did was to deregulated the financial industry and repealed the Glass-Steagall Act. The Glass-Steagall Act was passed after the US stock market crash in 1929 to protect commercial banking customers from the aggression and extreme risk taking of investment banking cultures. Most of the lack of regulation in the mortgage and investment banking industries was legal even though it caused so much damage.
- In every intellectual age some one style of reflection tends to become a common denominator of cultural life. What is a common denominator and is there a new one emerging?
A common denominator means that men can state their strongest convictions in its terms. Other terms and other styles of reflection seem mere vehicles of escape and obscurity. Although a common denominator does exist, it does not mean that no other styles of thought or modes of sensibility exist. During the modern era, physical and biological science has been the major common denominator of serious reflection in Western societies. According to the author, the sociological imagination is becoming the major common denominator of our cultural life and its signal feature. Although the author believes this, the cultural community as a whole is largely unaware of the sociological imagination and individuals are hesitant to grasp on to it.
- What was the major act that Congress passed as a result of the 2008 financial crisis in order to reform the financial industry?
The major act that Congress passed after the financial crisis was the Dodd-Frank Act in 2010. This bill expanded federal and securities regulation, which subjects a wider range of financial companies to government oversight, and imposed regulation on black markets. The Dodd-Frank Act imposed changes on almost every part of the financial sector. This act brought the most significant changes to the regulation of the financial industry since the Great Depression. Strict restrictions were placed on the financial industry after the Great Depression, but some laws like the Glass-Steagall Act were repealed making the industry deregulated.
The bill created a host of new agencies and the most important agencies include the Financial Stability Oversight Council, the Office of Financial Research and the Bureau of Consumer Financial Protection. The act also created a process for the government to liquidate large, failing financial companies at no cost to taxpayers. Taxpayers were largely responsible for bailing out financial companies that were considered too large to fail before the recession.