My perspective is as a builder. I have always hated outside players ballooning speculation to the breaking point. There is always a time when speculators jump into the market. It’s human nature. Freddie & Fannie were exposed with their bonds. They in fact got hit by the bubble bursting. The recession is because of credit drying up. Because of so many layoffs to construction and manufacturing. Had Born been successful the foreclosures would have been much less in number. I would have hoped that someone would have done something about ARMs. So this is what we got.
We have to restore a traditional mortgage lending market or we are going to have more boom and bust cycles that are driven by derivatives trading of mortgage paper in the financial markets. The financial markets are turning the real economy into a casino instead of supporting it. At this point nothing has been done to remove the “innovations” that generated the bubble. The only thing preventing its return is that the damage done is too fresh in everyone’s mind. We need something like the Glass Steagall act that was scrapped in 1997. It’s not a coincidence that the bubble followed the repeal of GS.