Mr. Bernanke may be correct that lax oversight was responsible for the housing bubble (Lax Oversight Caused Bubble, Bernanke Says, New York Times, January 4, 2010: A1, A11).
But what caused the lax oversight? It was a lack of political will. The Clinton and Bush administrations were uninterested in regulation and did not ensure that the regulators did their jobs properly. As a result we have had economic collapse and the destruction of several asset classes.
Given the shilly-shallying going on in Congress with respect to developing a better regulatory regime and the presence of two former deregulators in high level economic positions in the Obama administration (Geithner and Summers), I despair that we will find the necessary political will any time soon.
Sent to New York Times