I got a few calls from some members of the House of Representatives last week, most of them complaining that I have been too hard and critical of the lower chamber of the National Assembly in the recent past. I chuckled inwardly at this summation, wondering what their reaction would have been if I had been at my vintage best. But what the complainants did not understand is that my last couples of articles, especially the first part of this series, could have been a lot worse. Even I admit that I pulled my punches. However, unlike the House, my intention was not to cause conflagration in the financial system, as we have had enough of that. My goal was to assess the report of the House into the "near collapse of the capital market", which I intend to continue this week:
Lest the ad hoc committee of the House of Representatives mandated to ascertain the causes of the crash of the stock market forgets, the Nigerian financial system in 2008 was reeling in crisis. Regulatory capture, resulting in lax regulation; the unprecedented creation of risk assets on banks' balance sheets; manipulation of stock prices by stockbrokers and subsidiaries of banks, which at the time accounted for 65 percent of market capitalisation; mismanagement of some of the banks and insider lending, all combined to create an asset bubble in the stock market. These, and to a lesser extent the global financial meltdown, was what led to the stock market's collapse.
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