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When the National Transportation Safety Board investigates a plane crash, they usually find that there isn't just one principal cause. An airliner crash is caused by a "failure cascade," a collection of things that go wrong, one after another, to combine to create a disaster.

I would be very interested to see an investigation a la NTSB of the disaster that is the housing market.

Blaming the Community Reinvestment Act of 1977 is an old exercise, one that I gave up espousing because the people on the other side of the argument just couldn't believe that such well-meaning legislation would trigger the start of such a failure cascade. "What about the greedy banks?" When you mention Fanny Mae and Freddie Mac as some of those "greedy banks" you get push-back of the strongest kind. Also, the people on the other side of the argument have problems understanding why banks repackage loans as investments — to reduce their risk and exposure. Actions that people do retail aren't understandable at all at the wholesale level.

The whole tale won't be told for a number of years yet. The academics won't be able to decouple their own self-interested enough to really see the dominoes until well into the century. Too late to really fix the problem.

Great article. However, it did not mention the repeal of the Glass-Stegall Act. This action alone should implicate Bill Clinton in allowing the derivatives market to get out of control. He, Larry Summers and Alan Greenspan were warned but chose to ignore the warnings. The reason this is never mentioned is because congressional Republicans were implicit in the passage of the repeal. If Bernanke was truly a historian of the Great Deppression he should have lobbied to get something similar on the books.

We are defenitely headed off the cliff.