The TRUTH is,

1. The dems wanted no gov’t interference so that low-income families could “qualify” for a home loan, ANY home loan,
2. The republicans wanted no gov’t interference so they could make money loaning, then brokering these thousands upon thousands of loans,
3. The people getting the loans didn’t want the gov’t interferring, telling them they couldn’t afford a mortgage loan (even if they couldn’t) so,
4. Along with all of the debt the whole damn country already had, the whole damn house of cards finally came tumbling down. The End.

P.S. The moral to this story is what our grandparents TRIED TO TELL US…SAVE your pennies for a rainy day, and don’t buy it if you can’t afford it! Old fashioned yet SOUND advice…

Agreed on the point about taking personal responsibility for your actions, but I think this is over done. What you’re forgetting about is the final straw that broke the back of the financial institutions, and that is the “insurance” that the lenders used to mitigate their risk factor; that being the Credit Default Swaps and those other little creative devises they used to manipulate the markets on the enormous but ignored risk they taking on with these bad loans.

They bundled these mortgages with the good, the bad, and the ugly, all under the title of Mortgage Backed Securities, and sold them around the world to “spread the wealth” and the RISK to cataclysmic levels. When the air came out of the housing bubble and the ’spigot stopped flowing’, then the true nature of the deception in lending practices began to be revealed.

These things that seemed to cause the crisis such as over extended credit and poorly designed mortgages, I believe, were simply the symptoms of what was at the root of the problem, which were: Too much concern for inflation which kept the Fed lowering interest rates beyond what was prudent, and too little concern from our Gov officials on Regulators being urged to do their jobs and insist on simple, common sense lending procedures, or watch rates increase to force compliance. The proof, for me, was the words of the local regulators and the FDIC during their recent testimonies to Congress. They were calling for these changes and couldn’t believe there was no action being taken.

Most folks wanted to believe that we could keep going on and on and everything would be fine. The root story here should be about the negative side effects that came from far too long a period of too-low interest rates….bad signals, perverse motivations, corruption, and on and on.

For example, people who were, comparatively speaking, poorer credit risks made out really well for some substantial period of time (prior to recent events) with ARMs because these mortgages didn’t work the way they should have. Rates stayed low, meaning there was little actual risk in failing to acquire a fixed-rate mortgage. Speculators flowed in, people with cheaply acquired capital chased the high returns coming from a distorted market, and poorly-understood investment schemes were cooked up and traded blithely. Lather, rinse, repeat.

Sensible folks who understand only the basics of economics know that a market doesn’t work right when it fails to substantially raise the bar for credit on bad risks, and that loaning money to bad risks is a tale that always has an unhappy ending for someone.

We won’t know just how unhappy a story this is for taxpayers until we really find out just what fraction of Americans has been spending grossly beyond their means. And as things get more and more unhappy, let’s not forget to notice that for these folks spending beyond their means, no one was twisting your arms. You talked yourselves into it with a blithe “I’m sure it will be fine.”

You really can’t blame President Bush or greedy corporations for this part of the story. It’s simply not the case that, if only we had better regulations, we as a nation could have continued to keep spending further and further beyond the bounds of our means. It has always been a question of when and how, not if.

It’s a set of things people said in the past. Sure, people say a lot of things. It fails to name the regulators and it fails to name the sets of regulations. Are they talking about Basel 2? Basel 2 didn’t help European banks who implemented it a year earlier. AIG’s actions weren’t prevented by Basel 2. And Basel 2 was implemented, finally, pre-crisis, so WTF? “They don’t like regulation.” Yet they DID regulate, apparently in the face of –

“The administration’s… philosophy that trusted market forces and discounted the need for government intervention in the economy.”

Well Mr. AP Writer, if they DID regulate, how do you get to throw that mighty generalization into the middle of your article? This isn’t an op-ed. This article, Mr. AP Writer, is going to be in the hard news section.

I didn’t vote for W. But it’s easy to see, once you start to dig into the article, that there’s nothing there. It’s a non-story. It contains just enough information to formulate a narrative — and not enough information to look up the facts, to back up that narrative.

Don’t get taken every time. Ignore AP stories about the economy. They are morons.

Don’t believe me. Google Paris Welch, called out in the very second paragraph of the story. Why is this person the basis of the story? Who TF is she? Whom did she write to? Why should she have been taken seriously?