Did 2008 US financial crisis (which became global crisis later) happen due to lack of financial regulation?

This post by Thaya Brook Knight points to this 150-page report from US Treasury on US financial system.

It picks the section on US Financial Regulation Structure:

On Monday, the Treasury Department released the first of four planned reports on the U.S. financial system. While the 150-page report, focusing on banks and credit unions, includes a number of observations and recommendations worth discussing, there is one page I’d like to highlight here. It’s a single chart. And yet it speaks volumes about the current state of regulation in the financial sector. Here’s the chart:

Those in Washington often talk about the “alphabet soup” of federal agencies. We do love our acronyms here. But this chart shows that the financial sector has a complete soup all of its own. There are nine federal regulators who oversee the financial sector. Additionally, each state has its own regulators, typically one each for securities, insurance, and banking. Plus, there are the self-regulatory organizations—quasi-private bodies whose decisions can have the effect of law on the companies and individuals they oversee. A single organization can be subject to as many as six regulators. An organization that does business in multiple states can potentially be subject to regulation in each of them, in addition to regulation at the federal level.

Phew! Just looking at the chart you get a headache, can’t even imagine how there would be any coordination if at all amidst them. Not surprisingly, this is highlighted as one of the major problems in US.

This is not just mockery of US financial regulation structure bu also the economic advisory which tells other countries to develop financial system like that of US (though these voices have dimmed somewhat). Infact, there was a lot of research post 2008 crisis which suggested the reason for the crisis was lack of regulation in US. This obviously flowed from both image of Greenspan and his ideology which was of this free market variety.

However, not many looked at how regulated the system already was. There are players across the curve making it really difficult to figure who does what..In the end, it was more of a case of haphazard regulation rather than too little..The left hand did not know what the right hand was doing. Instead of correcting this, we have added more hands to the regulation God..

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