We got into this mess because the law pretty much said that financial institutions had to give everyone a mortgage no matter how risky they seemed. That was a bad idea. So, tighten the lending rules. What's wrong with that?
Note: My preferred method is not government regulation (of which we have too much) but sound lending practices by companies that fully understand that they will go bankrupt if they make bad loans. No bailouts. No rescues. Just sound business practices.
I disagree with the premise here. Not everyone deserves to own a house. Not everyone can afford a house. Lenders should not lend to people who may not be able to repay the loan.
According to Dodd, Frank, Clinton and the others, applying this rock solid logic is racist. Unbelievable, isn’t it?
The reason sound lending practices went out the window, is that risk was eliminated for the lenders.
They knew they could sell any loan they made to Fannie Mae. And Fannie Mae was willing to buy those loans, because it had a government safety net.