“I think that Utopian government policies stopped normal market forces from working properly. “
How did a government policy result is some schmuck fabricating his income on a loan application?
Perhaps lack of some regulation prevented oversight of senior bank managers that would have caught the rampant corruption, but they didn’t cause it.
I think that these alternative income loans were also encouraged by home ownership mandates. The lax reporting requirements and yield spread policies facilitated this behavior. Government Utopian policies were contributing factors for the mess.
Financial institutions were punished if not meeting the subprime and alternative income mandates. The yield spread policies provided the green light to shady lending practices that pulled in the mandated loans. The ultimate note holder was left in the dark given these practices and the lax reporting requirements.
Greed is a natural human condition. The marketplace controls greed when properly working with full information and competition. Greed is not the cause of the crisis. Market breakdowns are the cause because normal constraints on greed were removed.