Why did the recent subprime mortgage meltdown undermine financial-market stability notwithstanding the protections provided by market norms and financial regulation? This Essay attempts to answer that question by identifying anomalies and obvious protections that failed by examining hypotheses that might explain the anomalies and failures. Although some of the anomalies and failures result from a type of tragedy of the commons (in which the benefits of exploiting finite capital resources accrue to individual market participants, whereas the costs of exploitation are distributed among an even wider class of persons), most result from three sources: conflicts, complacency, and complexity, all exacerbated by a possible fourth source known as cupidity. This framework of understanding provides critical insights into protecting financial markets.
Volume 93 - No. 2
- Note: Toward Definition, Not Discord: Why Congress Should Amend the Family and Medical Leave Act To Preclude Individual Liability for Supervisors
- Note: Tweeting the Police: Balancing Free Speech and Decency on Government-Sponsored Social Media Pages
- Note: Guardians of Your Galaxy S7: Encryption Backdoors and the First Amendment
- Tie Votes in the Supreme Court
- Knowledge Goods and Nation-States
© 2011-2016 Minnesota Law Review. All Rights Reserved.