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Understanding the Causes of the Financial Crisis

The American Enterprise Institute (AEI) recently held a conference discussing the origins of the 2008 financial crisis, featuring a conversation with Jeb Hensarling (R-Texas), Chairman of the House Financial Services Committee.

"It will take many years for scholars to separate the facts from the politics and draw some widely accepted conclusions about what caused the events of 2007–08," reads the AEI description of the event in part. "Nevertheless, even at this point, it may be possible to judge whether the reforms adopted after the crisis will be effective in preventing another crisis in the future."

The conference featured a morning panel in which five financial scholars discussed what has been determined to be the principal causes of the crisis, followed by the conversation with Hensarling. A second panel discussed the effectiveness of reforms brought about by conceptions about the causes of the crisis.

"At the 10-year anniversary of the financial crisis, the actual cause continues to be largely ignored, but diagnosing it correctly is of vital importance," said Edward Pinto,  Codirector, AEI Center on Housing Markets and Finance. So, what does Pinto pinpoint as the key component of the factors that led up to the crisis? Pinto claims, "The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 was the seminal event of the Financial Crisis." How does Pinto connect those dots? Watch the video below to find out.

About Author: Seth Welborn

Seth Welborn is a contributing writer for DS News. He is a Harding University graduate with a degree in English and a minor in writing, and has studied abroad in Athens, Greece. An East Texas native, he also works part-time as a photographer.

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