Fiscal Policies to Prevent Future Economic Recessions
How can we prevent another crisis like the 2008 Recession?
For the past couple of decades, steady deregulation of the financial industry has put Americans at the mercy of Wall Street Bankers and their irresponsible investment practices.
How can we protect our homes and savings from another mortgage and credit crash?
Demand Commercial Banks to Be Responsible
The federal government must hold our banks to a higher standard by:
- Increasing Reliability and Transparency.
- Limiting High-risk Investment Practices.
The Three-Part Solution:
Reform Credit Processes
Require proof of collateral for credit ratings.
Increase Reserve Restrictions
Limit banks' loaning and borrowing abilities.
Limit High-Risk Investments
Protect federally-insured deposits from risky investment practices.
Reform Credit Rating Processes
- Require tax forms in order to recieve credit ratings
- Prevent speculative bubbles based on faulty credit ratings
- Increase investment spending by restoring faith in credit/investment industries
Increasing Reserve Requirements
- Prohibit banks from borrowing more than 50% of total reserve
- Helps ensure continuity of banks in the event of failed investments
- Decreases money supply and lowers inflation
Limit High-Risk Investments in Commercial Banks
- Limit amount of proprietary investments that may be made using commercial deposits.
- Protects federally-insured deposits from risky investment practices