The U.S. Securities and Exchange Commission had no experience in the models that created the leverage that subsidized collateralized loans. So they permitted leverage to get higher and higher. Leverage went up from 10% to over 30%, which made the loan values more volatile.
What can make us now believe that more regulation will help solve the current financial mess we are still in, from that miscalculation? While we are still unsure of the type of loans we are permitting homeowners to have in our weak economy?
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