> If the banks were the ultimate underwriter of these mortgages and thus defaulters would impact the banks, then the banks would've been way more diligent and r

> If the banks were the ultimate underwriter of these mortgages and thus defaulters would impact the banks, then the banks would've been way more diligent and restrictive about loaning out the money. With government and without, the business cycle has always oscillated between irrational exuberance and irrational stinginess, even as most of the individual players in the market continue to insist that they are simultaneously entrepreneurial and prudent, ambitious and responsible. It's just a positive-feedback system all on its own.