Still wanting to know what is your prescription. ARMs aren't illegal, so locking them up won't work.
So, what do you propose? Make subprime loans illegal? Torch loan offices?
I'm not being (too) facetious. What do you propose?
I think lenders should be forced to disclose the dangers associated with ARMs (that is, be required to disclose worst case ARM adjustment scenarios where the borrower initials line by line). I think shady mortgage lenders should be fined and/or prosecuted. I think GSEs need to be closely regulated, and slowly decrease their acquisition of new mortgages over time to reduce the risk to the economy and Joe Taxpayer. In the end, we should be looking to completley privatize GSEs. And I think Greenspan should be tarred and feathered for encouraging ARMs in the first place.
http://www.businessweek.com/investor/content/sep2006/pi20060920_615117.htm?campaign_id=rss_null