You are right, but that is a magnifier downstream from the cause. I'm scouring my memory here so apologies for incompleteness. Also this is a somewhat political

You are right, but that is a magnifier downstream from the cause. I'm scouring my memory here so apologies for incompleteness. Also this is a somewhat political issue and I'm not necessarily throwing my hat into the ring on this one. From [0]: > The meltdown was the consequence of a combination of the easy money and low interest rates engineered by the Federal Reserve and the easy housing engineered by a variety of government agencies and policies. Those agencies include the Department of Housing and Urban Development (HUD) and two nominally private "government-sponsored enterprises" (GSEs), Fannie Mae and Freddie Mac. The agencies — along with laws such as the Community Reinvestment Act (passed in the 1970s, then fortified in the Clinton years), which required banks to make loans to people with poor and nonexistent credit histories — made widespread homeownership a national goal. This all led to a home-buying frenzy and an explosion of subprime and other non-prime mortgages, which banks and GSEs bundled into dubious securities and peddled to investors worldwide. Hovering in the background was the knowledge that the federal government would bail out troubled "too-big-to-fail" financial corporations, including Fannie and Freddie. So the impetus is really the insanely cheap money stemming from US Federal Reserve policy, and the steering of this cheap money into housing by policy. The "variety of actors not understanding their own risky financial products" has a governmental cause: all the ratings agencies (Moody's, S&P, Fitch [1]) are government licensed. And they all said the mortgage-backed securities (at least partially comprising sub-prime mortgages, if not entirely) are AAA premium grade. Some investment managers & other commentators called out the absurdity of these ratings but nobody really listened. [0] Clinton's Legacy: The Financial and Housing Meltdown https://reason.com/2012/10/14/clintons-legacy-the-financial-and-housin/ https://reason.com/2012/10/14/clintons-legacy-the-financial-... [1] Credit rating agencies and the subprime crisis https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the...