all very true. The bad loans in and of themselves didn’t seem to bring the whole house of cards crashing down though, it seems that the straw that broke the camel’s back was the leverage based on the credit default swaps.

Financial institutions are fairly heavily regulated, though the specific problem that has brought things crashing down (i.e. credit default swaps) were largely unregulated.

Fannie and Freddie were clearly prohibited from buying anything but the lowest risk paper, but that didn’t stop them.

Also, all those people who applied for the “liar’s loans”[1] and lied on the application broke laws. All the brokers that looked the other way broke laws. All the law enforcer people who were asleep at the switch acted as they did because the vast majority of people who vote, also had an interest in seeing the housing bubble continue to inflate forever without bursting.

[1] NINJA loans = No Income, No Job, (and) no Assets

That was the story, “firearms industry = largely unregulated” when the Protection of Lawful Commerce in Arms Act got passed. Some real epsilon minuses spouting that crap.

“Unregulated” business do everything they can to protect their assets.

No, people, the problem we’re having is due to an unregulated Congress. Too bad they’re the only ones we look to to solve the problem.

The only real reason most lenders booked these crappy loans is because the GSEs were absolving lenders of all the risk for them at the direction of Congress’ social experiment. (‘Affordable Housing’ is a euphamism for ‘Bad Credit Decision in pursuit of votes.’)