Not really the point I want to make, but Reagan most certainly did not inherit a bigger disaster than the current one. Pretty much everyone agrees that the calamity of 08-09 was the worst since the Depression. There's an interesting caveat to the mortgage crisis that you don't hear brought up too much, and it transcends party. In the early 2000s Greenspan gave a policy speech where he basically vowed that the US wasn't going to raise interest rates any time soon (for who knows what reason). At the same time, we were seeing the leading edge of a booming economy in China, India and the Mid-East. As it isn't very lucrative to invest cash in the stock markets of those countries, and investing in Treasuries (the most normal safe bet for large investments) wasn't going to pay anything, the largest amount of capital started flowing into housing, which was largely unregulated and had new found financial products that seemed to be cash cows. As wealth begets wealth the capital kept on coming, until you know, everyone realized that in fact that 1200 sq ft house in the burbs isn't really worth $300,000 and the house of cards collapsed. Except for Glass-Steagall, I'm not sure what would have stopped this. Maybe not even G-S, because these were new financial products and therefore no regulations had been written yet. The thing that drives me crazy is not that this happened, but that we don't seem to have learned our lesson. No one is even entertaining the idea of re-instituting G-S. The finance industry has grown too big in the last 30 years, and they have both parties over a barrel.
The Glass-Steagall regulatory provisions that were changed, and signed by President Clinton, was the Gramm-Leach-Bailey (all Republicans). http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act To blame it all on Reagan is an over-reach of reasoning. Also, Obama did not inherit 21 % interest rates and 13% inflation with no job growth. Reagan also inherited a Middle East Crisis (the Iranian Islamic revolt and the hostage crisis) and a declining economy. The term "worst recession since the Great Depression" is "sound byte" jargon and an over-reach as well. Reagan also had created 7 million jobs, without corresponding declines in the structural labor force, by the end of his third year of the Presidency. There are business cycles, and almost every president has one; even Bill Clinton had a recession by the year 2000; then we had 9-11.
Just said he was the father of financial deregulation didn't blame him for everything bad that ever happened, planted the seeds for S&L and some other bank misery. The 1st Reagan Recession was the 2nd biggest recession since the great depression (just a fact didn't even say worst since the great depression but it was until the latest). It wasn't going to be the worst until he got his hands on it (until Volcker got his hands on it actually), it had nothing to do with the business cycle (or almost nothing). Thanks for the business cycle reminder but I hadn't forgotten that they exist. I'm a big fan of Schumpeter, so the business cycle is near and dear to my heart.