In 1988, as he was about to step down as president, Ronald Reagan received the Francis Boyer Award, AEI's highest honor. He chose for the theme of his speech that December evening, eleven months before the Berlin Wall fell, the struggle of people everywhere for freedom. In his speech, he anticipated the momentous events that would occur in 1989: "So while our hopes today are for a new era, let us remember that if that new era is indeed upon us, there was nothing inevitable about it. It was the result of hard work--and of resolve and sacrifice on the part of those who love freedom and dare to strive for it." Freedom works, he said. He saluted the Solzhenitsyns, the Sakharovs, and the Sharanskys, saying, "We have seen the thrilling spectacle of mankind refusing to accept the shackles placed upon us." As we recall the events of November 1989, it is important to remember the struggle and to recommit ourselves to the hard work of extending freedom to those who have yet to enjoy its blessings.

AEI senior fellow Irving Kristol--godfather of the neoconservative movement and one of the towering intellectual figures of the twentieth century--died peacefully on September 18 at the age of eighty-nine. Mr. Kristol's connection to AEI began long before he became a full-time scholar at the Institute in 1988. In 1973, he gave the first of AEI's Distinguished Lectures on the Bicentennial of the United States. The lectures were delivered at historic sites around the country, and Mr. Kristol's lecture, "The American Revolution as a Successful Revolution," was given at St. John's Church in Washington, where many of the nation's presidents have worshipped. We reprint excerpts from it below after a tribute to him written by Christopher DeMuth, the D. C. Searle Senior Fellow at AEI.

One year ago, on September 14, Lehman Brothers declared bankruptcy. The next day the Dow fell five hundred points. Soon thereafter, the government essentially nationalized AIG, made Goldman Sachs and Morgan Stanley into bank-holding companies, and petitioned Congress for aid. In early September, Fannie Mae and Freddie Mac had been placed in government conservatorship. These events followed the bursting of the housing bubble. We present here three essays written by AEI scholars in the spring and summer of 2009 on the origins of the financial crisis whose reverberations we continue to feel today. Vincent R. Reinhart sets the stage by reminding us of the importance of getting the story of what happened right, as policy recommendations flow from our understanding of what occurred. He also tells us that "the narrative first written about the Great Depression was wrong in many important respects." John H. Makin and Peter J. Wallison focus on the misguided policies that contributed to the crisis. In a new Economic Outlook, Makin discusses three important lessons of the financial crisis that should be understood in order to enable a faster, more effective policy response to future crises.

Key points in this On the Issues:

• Determining the true causes of the financial crisis has significant impact on America's response to it.
• Distorted explanations of the financial crisis are pervasive and destructive.
• Government policies, not market failure, were the main causes of the financial crisis.

AEI scholars have been examining the Obama administration's recently proposed creation of a Consumer Financial Protection Agency (CFPA) as part of its package of new financial regulations. Peter J. Wallison discusses the dangers to consumers, saying that if the CFPA is adopted, many consumers may be told they cannot have certain financial products or services because they are not deemed sophisticated enough. Alex J. Pollock testified before the House Financial Services Committee about other ills in the CFPA. While he says it is a good idea to ensure "clear, simple, straightforward, informative disclosures," the CFPA would be an unnecessary bureaucracy likely to put undue pressure on small financial firms while ignoring important issues, like how to deal with Fannie Mae and Freddie Mac. The CFPA may also make it difficult for the government to attract the capital it needs for the banking system.

Key points in this On the Issues:

• The proposed Consumer Financial Protection Agency could deny financial products and services to a portion of the population because they are not sophisticated enough to understand what they are offered.
  
• If enacted, the CFPA will put undue burden on smaller financial companies, just as Sarbanes-Oxley put great burdens on small firms.
• The CFPA fails to address the future of Fannie Mae and Freddie Mac, weakening its ability to address the issues of the mortgage finance system.
• The increased regulatory burden the CFPA would create may make it difficult for the government to attract the large amounts of private equity capital needed in the banking system.
  

AEI's Peter J. Wallison is one of four Republican appointees to serve on the Financial Crisis Inquiry Commission, which will investigate the causes of the financial crisis. In this On the Issues, he examines some of the policies that have been proposed in response to the financial crisis. He argues that although President Barack Obama claims to support free markets, his recently released plan for financial regulation reform reveals his fear of the creative destruction that inevitably accompanies free market economies. The details of his plan, including a proposal to regulate firms designated as systemically important and to create a bailout mechanism for these companies, will devastate innovation and competition. The economic future under this regulatory regime looks bleak: big government will protect big companies--whether they are productive, efficient, responsive, or not--from competition and failure.

Key points in this On the Issues:

• Although the president says he supports free markets, his recent plan for financial regulation reveals a preference for stability over change and progress.
• This preference extends beyond the financial sector: it is reflected in the choices regarding Chrysler and GM and in the Justice Department's new antitrust policy.
• The proposed financial regulations will lead to big government protecting big companies, effective or not, and leaving small companies at a competitive disadvantage.