The crash was caused by the collapse of the housing bubble. The housing bubble was caused by the government (yes, including some liberal Republicans like Bush) forcing lenders to make politically-correct loans to "eliminate the racial gap in housing".
Oh, come on. You can't honestly believe that the banks weren't happy to make those loans. Housing prices were always going up. It was win-win.
Housing prices rose because of artificially high demand created by "closetheracialgap" loan requirements of the federal government.
It was indeed a "win-win" for the borrowers and lenders because the bad loans were guaranteed by the taxpayers. For the taxpayers, it was "lose-lose-lose-lose-lose-lose-lose-lose-lose".
I've seen a lot of people say that "the credit ratings agencies were at fault for overrating the mortgage-backed securities (MBS)". But by ignoring the taxpaper guarantees, these people mistake what the ratings meant. The credit rating agents were not saying, "These securities are full of great, sound mortgages!"; what they were saying was, "These securities are full of crappy mortgages, but they're guaranteed by the taxpayers, so they're golden!"
It's not that complex. The government had a policy: "Close the racial gap in home ownership". In pursuit of this policy the government had a stick: Quotas on mortages. See the Housing Act of 1992 that imposed progressively higher quotas on non-CRA lenders like Fannie Mae. More importantly, it had a carrot: Taxpayer guarantees for bad mortgages. The lenders said, "Hmmm, these are horrible loans but they're no skin off our noses; if the borrowers can't pay us back, then the taxpayers will!"
Paraphrasing JFK, "Success has a thousand fathers; failure is an orphan." All the "fathers" of the 2008 Financial Crash want to claim that it's an orphan.
HOLD UP! Idk if you realized but it was the bubble like nature of the housing prices had little to do with quotas and much more to do with speculative buying. The regionality of the housing boom and bust is basically relegated to CA, FL, AZ, NV and GA. When you have tens of shows about flipping houses and people using their house as a wallet rather than a homestead this happens.
Also regarding your 1929 suicidal bankers comment, I guess another Great Depression woulda been the solution too, right!? Honestly, bailing out the banks was the only thing we could have done.
