Growth came down due to exceptional reasons. Firstly, inflation had stayed high for over two years and there is enough theoretical and empirical evidence to suggest that when inflation reaches that high and becomes persistent, the costs of deflation in terms of growth sacrifice turns out to be large.
Regulation complements market discipline – for example, by requiring disclosures that improve the ability of consumers to shop and of investors to evaluate risks, by providing protections to less-sophisticated market participants (such as subprime mortgage borrowers), and by requiring that financial institutions meet high standards in their management of risk.