[noreault]

This article does a great job of detailing the lending side of the problem. Public policy tried to drive up home ownership. As it has for decades. What was different was the availability of money. The Fed kept money supply high, it needed to find a place to go. So there was great pressure to loan money. If the money supply is limited, then there is some natural restriction. Then derivatives, CDO and the rest, convinced everyone that risk had disappeared. So risky loans were OK as the risk was understood and distributed to those who could handle it. It wasn't and they couldn't.

IMHO, both better government policy and regulation is needed.