# Economic Meltdown/Correcting the Bush Legacy **URL:** \ **Category:** Great Debates\ **Created:** [November 5, 2008, 11:06pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370 "2008-11-05T23:06:24Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![The\_Flying\_Dutchman](https://avatars.discourse-cdn.com/v4/letter/t/9fc348/32.png) [@The\_Flying\_Dutchman](https://boards.straightdope.com/u/The_Flying_Dutchman)\ **Post date:** [November 5, 2008, 11:06pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/1 "2008-11-05T23:06:24Z")
The election is over, Bush was a shitty president. I get that. But there’s still going to be the belief that Bush was somehow responsible for the economic meltdown resulting from the collapse of Freddie Mac and Fannie May. Now I present an article by [Glen Beck](http://www.glennbeck.com/content/articles/article/198/15484/) where he outlines the Bush Administration’s warnings to congress and seeking oversight and control over GSEs throughout his administration. Before I continue, I appologize for using Beck as a reference as I know full well how he’s regarded here. But lets stick to the facts, are they true or not and/or if Bush could have done more. From the link, April 2001: warning of potential for problem with large GSEs May 2002: calls for the disclosure and corporate governance principles to apply to GSEs February 2003: warning of risks from GSEs spreading into other economic sectors. September 2003: call for supervision and regulation including minimal capital requirements for GSEs. And repeated warnings and requests for a regulator right up until July 08 when congress finally acts but only to late. So would you agree that it is congress(Republican and Democrat), not the Bush administration which is responsible for the economic meltdown. ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [November 6, 2008, 2:09am UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/2 "2008-11-06T02:09:18Z")
It seems strange to me that the Bush defenders seem to frame the issue as you have, namely “the economic meltdown resulting from the collapse of Freddie Mac and Fannie May.” In fact, as near as I can tell from the actual non-partisan commentary that I have read, Fanny May and Freddie Mac are not the major part of the problem (although it was clearly not a very good idea to create an institution where the profits were privatized and the risks were socialized). This idea to put all the blame on them for the subprime mortgage crisis / collapse of the housing bubble and all that seems to stem solely from the fact that it gives Republicans an opportunity to pin the blame on Democrats. So, first, I would say that you need to support your thesis that the major problem was with Fannie May and Freddie Mac and that this could all have been avoided if we had just followed the advice on oversight of them from the Administration. ---
**Author:** ![ShibbOleth](https://avatars.discourse-cdn.com/v4/letter/s/848f3c/32.png) [@ShibbOleth](https://boards.straightdope.com/u/ShibbOleth)\ **Post date:** [November 6, 2008, 2:29am UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/3 "2008-11-06T02:29:29Z")
Let’s just, for the sake of argument, assume that GSEs are the sole cause of the problem. During the first warning indicated, on April 1, 2001, the Republicans controlled the Presidency and both houses of Congress. Bush was probably at an all time high in power and approval rating. If they had wanted to correct this that would have been the time. Why didn’t they? ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [November 6, 2008, 2:49am UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/4 "2008-11-06T02:49:48Z")
And don’t forget that the Bush administration was directly responsible for (re)appointing the Treasury Secretaries and Federal Reserve Chairmen who enabled the deregulatory excesses that got us where we are. The Bush folks were pushing looser controls on financial markets throughout their reign. As [this article](http://www.iht.com/articles/2008/09/20/business/prexy.php) notes, > [@](#): > > These experts, from both political parties, say Bush’s early personnel choices and overarching antipathy toward regulation created a climate that, if it did not trigger the turmoil, almost certainly aggravated it. The president’s first two Treasury secretaries, for instance, lacked the kind of Wall Street expertise that might have helped them raise red flags about the use of complex financial instruments at the heart of the crisis. > > To his credit, Bush accurately foresaw the danger posed by Freddie Mac and Fannie Mae, and began calling as early as 2002 for greater regulation of the mortgage giants. But experts say the administration could have done even more to curb excesses in the housing market, and much more to police Wall Street, which transmitted those problems around the world. > > In retrospect, “it would have helped for the Bush administration to empower the folks at Treasury and the Federal Reserve and the comptroller of the currency and the FDIC to look at these issues more closely,” said Vince Reinhardt, a former Federal Reserve economist now at the American Enterprise Institute, a conservative-leaning research organization here. Reinhardt said it would also have helped “for Congress to have held hearings.” > > Instead, voices inside the administration who favored tougher policing of Wall Street found themselves with few supporters. […] > > Today, even those sympathetic to Bush say he cannot disentangle himself from a home-lending industry run amok or a banking industry that mortgaged its future on toxic loans. […] > > To some extent, Bush was simply following a deregulatory pattern set by Clinton. Perhaps the most significant recent deregulation of the banking industry - the landmark act that allowed commercial banks to expand into other financial activities, like investment banking and insurance - was signed into law by Clinton in 1999. […] > > Still, the White House, in the view of critics, fostered a free-market hothouse in which these excesses were able to flower. It avoided regulation of banks and mortgage brokers, leaving much of that work to the Federal Reserve, which, under Alan Greenspan, showed little appetite for regulation. By the time Bush’s current Treasury secretary, Henry Paulson Jr., proposed an overhaul of regulations governing the financial sector in April, the storm was already brewing. […] > > Beyond its deregulatory bent, some economists argue that the administration’s fiscal and tax policies made the United States more dependent on foreign capital, which fueled the bubble in housing prices. […] > > Critics, including McCain, say the SEC has been less active under its current chairman, Christopher Cox, a former Republican congressman from California. It has spent less on enforcement and levied less in fines on wrongdoers, according to the Government Accountability Office. > > “You can’t overestimate what happens when you encourage regulators to believe that the goal of regulation is not to regulate,” said Joseph Stiglitz, a Nobel Prize-winning economist at Columbia University. > > In other areas, the Bush administration’s failures seem more a case of inaction. The administration, economists said, did little to curb the practices of mortgage brokers, who are regulated by the states. But Democrats in Congress were equally to blame for this, these economists said. ---
**Author:** ![Carmady](https://avatars.discourse-cdn.com/v4/letter/c/f04885/32.png) [@Carmady](https://boards.straightdope.com/u/Carmady)\ **Post date:** [November 6, 2008, 3:36am UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/5 "2008-11-06T03:36:10Z")
> [@The\_Flying\_Dutchman](#): > > So would you agree that it is congress(Republican and Democrat), not the Bush administration which is responsible for the economic meltdown. No. You are starting your argument based on the myth that Freddie Mac and Fannie May are the cause of the problem. Banks were rushing to make bad mortgages precisely because there was no regulation, so they could package them in complex, opaque forms and lie about their worth. Because there was no regulation, banks were rushing to become casinos, and taking bets on whether the mortgages would go into default. They were allowed to use their own models (in which every bank assumed the bets would go their way) to report enormous pretend profits. Freddie and Fannie were not the problem. AIG was allowed to make terrible bets, they lost, and now they are using our money to pay up. The problem was the completely unregulated derivatives market. Bad mortgages are a drop in the bucket. The ridiculous casino wagers placed on them, however, are huge. Most likely, Greenspan is the single person most responsible. He thought banks would police themselves, and everybody would be nice and not lie or make dangerous bets. He has now changed his mind. We will never know if a democratic administration would have avoided the crisis. But personally, I think a democratic administration would have gotten suspicious when banks suddenly descended on Washington, begging for new laws making it harder to declare bankruptcy. That should have been a tip-off about the nefarious activity going on. If the Bush administration had not capitulated to every demand, maybe banks would have hesitated to continue down their disastrous road. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [November 6, 2008, 3:49am UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/6 "2008-11-06T03:49:29Z")
> [@Carmady](#): > > Most likely, Greenspan is the single person most responsible. He thought banks would police themselves, and everybody would be nice and not lie or make dangerous bets. He has now changed his mind. Yeah, it seems to have been a real [crisis-of-faith](http://www.trueblueliberal.com/2008/10/24/greenspan-%E2%80%9Cshocked-disbelief%E2%80%9D/) moment for him. I could feel sorry for the guy, if he hadn’t been so willfully blind: > [@](#): > > Alan Greenspan, the maestro, defender of the market fundamentalist faith, champion of deregulation, celebrator of exotic banking inventions, admitted Thursday in a hearing before Rep. Henry Waxman’s House Committee and Oversight and Government Reform that he got it wrong. > > “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he said. > As to the fantasy that banks could regulate themselves, that markets self-correct, that modern risk management enforced prudence: “The whole intellectual edifice, however, collapsed in the summer of last year.” […] > > “The evidence now suggests, but only in retrospect, that this market evolved in a manner which if there were no securitization, it would have been a much smaller problem and, indeed, very unlikely to have taken on the dimensions that it did. It wasn’t until the securitization became a significant factor, which doesn’t occur until 2005, that you got this huge increase in demand for subprime loans, because remember that without securitization, there would not have been a single subprime mortgage held outside of the United States, that it’s the opening up of this market which created a huge demand from abroad for subprime mortgages as embodied in mortgage-backed securities.” ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [November 6, 2008, 4:14pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/7 "2008-11-06T16:14:59Z")
I agree the GSEs were not the cause of the problem. But, they certainly did exasperate the situation. They also certainly did not provide the release valve that would have stemmed the bubble (or brought the problem to attention before it was too late). Through their very basic function of examining and securing loans, the GSEs should have seen how shaky the CDOs are, but they kept buying/insuring and making their own derivatives off of them. There’s plenty of blame to go around, but putting this squarely on Bush is a partisan hack job. No one wanted to kill the golden goose that was FNM, no one wanted to end cheap money, no one wanted to end easy home buying, no one wanted to end the speculation. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [November 6, 2008, 4:35pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/8 "2008-11-06T16:35:08Z")
> [@mazinger\_z](#): > > There’s plenty of blame to go around, but putting this squarely on Bush is a partisan hack job. Who’s attempting to put the blame solely (squarely?) on Bush? All the responses here have merely been making the point that the Bush administration bears a significant **share** of the blame, not **all** of the blame. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 6, 2008, 4:43pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/9 "2008-11-06T16:43:55Z")
Much of the problem came from the atmosphere of deregulation. Bush certainly supported that, but he isn’t the originator if it. Greenspan is far more to blame than Bush, since he had the authority to rein in some of the problems and certainly had more credibility. ---
**Author:** ![The\_Flying\_Dutchman](https://avatars.discourse-cdn.com/v4/letter/t/9fc348/32.png) [@The\_Flying\_Dutchman](https://boards.straightdope.com/u/The_Flying_Dutchman)\ **Post date:** [November 6, 2008, 4:49pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/10 "2008-11-06T16:49:11Z")
> [@ShibbOleth](#): > > Let’s just, for the sake of argument, assume that GSEs are the sole cause of the problem. During the first warning indicated, on April 1, 2001, the Republicans controlled the Presidency and both houses of Congress. Bush was probably at an all time high in power and approval rating. If they had wanted to correct this that would have been the time. Why didn’t they? Yes, but as I’ve clearly pointed out, I’m blaming Congress both Republican and Democrat. Both wanted to see easy home buying. The Administration is on the record for calling for oversight powers from Congress. ---
**Author:** ![tagos](https://avatars.discourse-cdn.com/v4/letter/t/bbe5ce/32.png) [@tagos](https://boards.straightdope.com/u/tagos)\ **Post date:** [November 6, 2008, 4:56pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/11 "2008-11-06T16:56:06Z")
> [@The\_Flying\_Dutchman](#): > > Yes, but as I’ve clearly pointed out, I’m blaming Congress both Republican and Democrat. Both wanted to see easy home buying. The Administration is on the record for calling for oversight powers from Congress. Yes - but compare the effort they made to get Congressional action on the problem compared to the ‘extreme’ lengths they went to to finagle the Iraq War. If they’d made half the effort they did about the Weapons of Mass Financial Destruction something would have been done. ---
**Author:** ![The\_Flying\_Dutchman](https://avatars.discourse-cdn.com/v4/letter/t/9fc348/32.png) [@The\_Flying\_Dutchman](https://boards.straightdope.com/u/The_Flying_Dutchman)\ **Post date:** [November 6, 2008, 5:08pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/12 "2008-11-06T17:08:32Z")
> [@jshore](#): > > It seems strange to me that the Bush defenders seem to frame the issue as you have, namely “the economic meltdown resulting from the collapse of Freddie Mac and Fannie May.” In fact, as near as I can tell from the actual non-partisan commentary that I have read, Fanny May and Freddie Mac are not the major part of the problem (although it was clearly not a very good idea to create an institution where the profits were privatized and the risks were socialized). This idea to put all the blame on them for the subprime mortgage crisis / collapse of the housing bubble and all that seems to stem solely from the fact that it gives Republicans an opportunity to pin the blame on Democrats. I don’t think anyone would argue that improper mortgage lending to facilitate high risk lending was at the root of the problem. I don’t think any one would argue that GSEs were created to facilitate and encourage home buying. Everything else like CDSs fed off the persistant false perception of government backing. The simplist, most effective means of regulation and oversight of this economic sector is to focus on the main valve rather than the myriad of components between the front line mortgage lenders and the GSEs. ---
**Author:** ![The\_Flying\_Dutchman](https://avatars.discourse-cdn.com/v4/letter/t/9fc348/32.png) [@The\_Flying\_Dutchman](https://boards.straightdope.com/u/The_Flying_Dutchman)\ **Post date:** [November 6, 2008, 5:22pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/13 "2008-11-06T17:22:31Z")
> [@Kimstu](#): > > And don’t forget that the Bush administration was directly responsible for (re)appointing the Treasury Secretaries and Federal Reserve Chairmen who enabled the deregulatory excesses that got us where we are. The Bush folks were pushing looser controls on financial markets throughout their reign. Lots of commentary but no facts.Your link even ignores the fact that early in 2001 Bush warned about the dangers of GSEs. Can you give me evidence of “The Bush folks were pushing looser controls on financial markets throughout their reign.” ---
**Author:** ![The\_Flying\_Dutchman](https://avatars.discourse-cdn.com/v4/letter/t/9fc348/32.png) [@The\_Flying\_Dutchman](https://boards.straightdope.com/u/The_Flying_Dutchman)\ **Post date:** [November 6, 2008, 5:28pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/14 "2008-11-06T17:28:10Z")
> [@tagos](#): > > Yes - but compare the effort they made to get Congressional action on the problem compared to the ‘extreme’ lengths they went to to finagle the Iraq War. If they’d made half the effort they did about the Weapons of Mass Financial Destruction something would have been done. Yes, I can imagine Bush on television warning about a looming financial crises to hit the nation say in 2002. How do you think the financial markets would have reacted? ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [November 6, 2008, 6:09pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/15 "2008-11-06T18:09:38Z")
> [@The Flying Dutchman](#): > > Everything else like CDSs fed off the persistant false perception of government backing. The simplist, most effective means of regulation and oversight of this economic sector is to focus on the main valve rather than the myriad of components between the front line mortgage lenders and the GSEs. Saying that credit default swaps “fed off” the perception of government backing is extremely misleading. CDS’s rapidly ballooned into a sixty-odd trillion-dollar market, of which only $1.4 trillion consisted of CDS contracts on Fannie Mae and Freddie Mac. The completely unregulated and untransparent CDS market went crazy with all kinds of dubious horse trades on all sorts of debts. Government-backed mortgages quickly became just a drop in the bucket for the CDS market. > [@The Flying Dutchman](#): > > Yes, I can imagine Bush on television warning about a looming financial crises to hit the nation say in 2002. How do you think the financial markets would have reacted? So according to you, when the Bush administration does issue a warning about dangers in the market, they get credit for having tried to deal with the situation. When they fail to issue a warning or advocate regulation, they get a free pass because the markets would have panicked. Very convenient, if your goal is to excuse the Bush administration from all censure. ---
**Author:** ![Rysto](https://avatars.discourse-cdn.com/v4/letter/r/ecccb3/32.png) [@Rysto](https://boards.straightdope.com/u/Rysto)\ **Post date:** [November 6, 2008, 6:51pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/16 "2008-11-06T18:51:15Z")
If Freddie Mac and Fannie Mae were the sole problem, then why didn’t the US government takeover of them solve it? What made the bailout necessary? ---
**Author:** ![The\_Flying\_Dutchman](https://avatars.discourse-cdn.com/v4/letter/t/9fc348/32.png) [@The\_Flying\_Dutchman](https://boards.straightdope.com/u/The_Flying_Dutchman)\ **Post date:** [November 6, 2008, 7:31pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/17 "2008-11-06T19:31:13Z")
> [@Kimstu](#): > > Saying that credit default swaps “fed off” the perception of government backing is extremely misleading. CDS’s rapidly ballooned into a sixty-odd trillion-dollar market, of which only $1.4 trillion consisted of CDS contracts on Fannie Mae and Freddie Mac. As to the numbers, well I’ll take your word for it. And I have to wonder if the CDSs would not have been a problem if the bank failures due to sub prime loans hadn’t occurred. But it was the bank failures that precipitated the stock market crash and exposed the vulnerability of the financial sector to CDSs. [Wikipedia](http://en.wikipedia.org/wiki/Stock_market_crash#The_Crash_of_2008) > [@Wikipedia](#): > > Beginning on September 16, failures of large financial institutions in the United States, due primarily to exposure to securities of\*\* packaged subprime loans and credit default swaps issued to insure these loans\*\* and their issuers, rapidly evolved into a global crisis > [@](#): > > So according to you, when the Bush administration does issue a warning about dangers in the market, they get credit for having tried to deal with the situation. When they fail to issue a warning or advocate regulation, they get a free pass because the markets would have panicked. Very convenient, if your goal is to excuse the Bush administration from all censure. Very convenient to mispresent my statement. I’m not here to win an argument. I want the facts. The truth. And wish you could answer my request for the facts regarding Bush pushing for deregulation. ---
**Author:** ![The\_Flying\_Dutchman](https://avatars.discourse-cdn.com/v4/letter/t/9fc348/32.png) [@The\_Flying\_Dutchman](https://boards.straightdope.com/u/The_Flying_Dutchman)\ **Post date:** [November 6, 2008, 7:32pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/18 "2008-11-06T19:32:18Z")
> [@Rysto](#): > > If Freddie Mac and Fannie Mae were the sole problem, then why didn’t the US government takeover of them solve it? What made the bailout necessary? Too late. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [November 6, 2008, 8:55pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/19 "2008-11-06T20:55:24Z")
> [@The Flying Dutchman](#): > > As to the numbers, well I’ll take your word for it. You certainly don’t have to. If you don’t want to google “CDS market” and related topics, you can read about the figures for credit default swaps versus FNMA/FDMC mortgages [here](http://www.bloggingstocks.com/2008/09/15/100-year-crash-mccain-advisor-spurred-62-trillion-derivatives/), for instance. > [@The Flying Dutchman](#): > > And wish you could answer my request for the facts regarding Bush pushing for deregulation. Sure. You’ve already seen the information about the deregulation-friendly Treasury Secretaries and Federal Reserve Chairmen whose appointments and reappointments Bush supported. Specific deregulation-friendly measures that these Administration members advocated are too numerous to list, but for starters, consider Treasury Secretary Paulson’s endorsement of the 2006 Committee on Capital Markets Regulation, whose report on capital markets reform was strongly anti-regulatory. And have you forgotten the Enron debacle? The Bush “business-friendly” mantra was constantly decrying government “interference” in markets and pushing for a more “hands-off” approach to let markets police themselves. Even the official Treasury plan in March 2008 nominally advocating regulatory reform of financial markets was more about [removing regulatory pressures](http://www.mcclatchydc.com/100/story/32050.html): > [@](#): > > Only in mid-2007 did the Securities and Exchange Commission (SEC), which regulates the stock market, obtain the powers to regulate the rating agencies. Despite the shortfalls in regulation, Paulson’s report recommends that the SEC streamline self-regulatory provisions and make it possible for even more self regulation to increase “product innovation and investor choice.” ---
**Author:** ![Carmady](https://avatars.discourse-cdn.com/v4/letter/c/f04885/32.png) [@Carmady](https://boards.straightdope.com/u/Carmady)\ **Post date:** [November 6, 2008, 9:04pm UTC](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370/20 "2008-11-06T21:04:56Z")
> [@The\_Flying\_Dutchman](#): > > I don’t think anyone would argue that improper mortgage lending to facilitate high risk lending was at the root of the problem. I don’t think any one would argue that GSEs were created to facilitate and encourage home buying. Everything else like CDSs fed off the persistant false perception of government backing. Banks made bad mortgages because they were making money off of them. They were making money off of them because they were allowed to package them in forms that hid their real value and predatory nature. Casino style bets were allowed to be placed on the mortgages, and banks were allowed to claim huge pretend profits based on the bets going their way in the future. Money is the only incentive needed for this to take place, and lack of regulation is the necessary condition for it to be possible. GSEs actually had higher lending standards than the banks making predatory loans. GSEs were not the ones making bad loans and then packaging them in a deceitful way. GSEs were not the ones betting on the default of the bad mortgages. Only a tiny percentage of CDSs were based on GSE mortgages. The major cause of the crisis was the systemic dishonesty, wild betting, and complete lack of regulation of the enormous derivatives market. There was tons of money to be made by doing bad stuff, and nobody to stop them, so people did bad stuff. GSEs are part of the problem mainly because they took part in this market as a buyer. The idea was that they would only buy non-predatory mortgage packages, but the packages were too opaque to be completely successful. Worse, they simply added more fuel to the market. [Next page](https://boards.straightdope.com/t/economic-meltdown-correcting-the-bush-legacy/471370.md?page=2)