Many Deadbeat Dads to This Crisis

Barry Ritholtz opines on the financial crisis, basically declaring that if you don't think that the problem was entirely lax lending standards, you don't know what you're talking about. And if you mention the political goals imposed on Fannie and Freddie, the CRA, etc, you are an idiot or dishonest. I agree with him that lax standards were a huge part of the problem. But what he seems insistent on not seeing is that many of the causes of the mess are interrelated. For instance, Congress required that 12% of Frannie's mortgages go to low-income borrowers in 1996. And upped that to 20% in 2000. And 22% in 2005. And 28% in 2008. The only way they could keep pace with that ridiculous requirement was to reduce lending standards, more and more. This doesn't excuse the investment banks and others who investing in securities based on these loans, securities they didn't really understand. And it doesn't mean that it's all the fault of teh poor blacks and hispanics, far from it. It should be a warning to stop monkeying around in markets. The consequences will nearly always boomerang two (or more) fold back on you when you try to advance political goals in this way.