Great responsibility comes with power. Financial insitutions have the power to create prosperity and opportunity or financial ruin. In the past if one wants to apply for a loan to buy a house, the income and debt ratios that he/she must meet were established to protect the bank, and the stringent standards unintentionally protected the applicant from him/herself. Banks understood their responsibilities while making money. Today there are many in the financial ranks (and some in the Free Republic) think that because there are consumers that are foolish or reckless in applying for loans to buy a house, it is okay for banks to take advantage of this stupidity to make a buck by marketing these loans to them. Many of these new loans have such high debt ratios, and approximately 1/4 may face default indicates that these new products are detrimental to the society as a whole because the practice of pushing these loans on dumb consumers will cost the taxpayers and good consumers money while the lenders made their money on the points and fees and bundled the risky loans into a portfolio and sold it to a mortgage reinsurer.
In the late 1970's and into the 1980's the industry was taken over by short run maximizers who budget from quarter to quarter. The industry IMHO, has long since sacrificed its core values on the blood soaked altar of "profit expedience" espoused by the evil high priest of "conventional wisdom".
I have spent over thirty years in this business and am very glad that I am closer to the end than the beginning.