> Low interest rates were a big part of the problem - the price of money got below the cost of inflation. Except that they didn't. They did get below the pric

> Low interest rates were a big part of the problem - the price of money got below the cost of inflation. Except that they didn't. They did get below the price of housing inflation, but that's in part due to lax lending standards, which were basically forced by regulators. Fannie and Freddie didn't help by lying about the quality of the loans in the pools that they were selling. Not only did that screw folks who bought those pools, it screwed up everyone's market risk evaluation because their lie hid the fact that a huge fraction of the loans were going to folks who didn't have a prayer of paying back. Yes, "everyone knew" that there were a lot of those loans, but the statistics, tainted by Fannie and Freddie's lies, said that things were a lot better than they actually were. Some folks thought that the stats were "optimistic", but few thought that they were as wrong as they actually were. After all, who'd have thought that a GSE would commit fraud.... FWIW, the senior execs at Fannie and Freddie during this time were prominent Dems, some of whom launched Obama. McCain actually tried to rein in Fannie and Freddie during this time, but got his teeth kicked in by Congressional Dems. (One could argue that McCain's efforts, in 2005/2006 were too little too late, but ....)