To quote Garth Turner:
I just read this article. The ending is best:
Canada isn't really doing much wrt laws about loan originators.
(note, I'm not attacking you here, just trying to show that the point of your post kind of misses the point of why it all happened to begin with)
The housing bubble in the US asymmetrically effected non-whites, but the same housing bubble and collapse happened in many other countries and this pattern does not re-appear.
The fed embraced credit expansion in the face of the dot-com crash, and the factors in the economy were right to manifest itself as a housing bubble. Credit expansion was meant to stave off a major recession/depression, but it resulted in an unsustainable boom.
When you flood a market (such as the credit market itself) with counterfeit money, that segment of the economy will grow quick and fierce. It attracts goons and loose play. Be it irresponsibility in handing out home loans, or creating a "high-tech" company that shuns revenue and will prosper because "technology is the wave of the future! The NASDAQ is at 4000, man!"
During the boom, everyone credits their success as a result of their ingenuity. When the crash happens, they blame their poor circumstances on everyone else.
Who in the US was complaining about "irresponsible lending" that was building the run-up in housing prices in the US? No one. In fact, these lenders were helping in the facilitation of a housing frenzy. Once the prices started plummeting, everyone started blaming everyone else. Where were the "irresponsible lenders" in times past? Why is it that they just suddenly popped up in the US, amongst other nations?
How could the lenders embrace responsibility when every loan they give out is backed 100% by the government? What's the point in being responsible when you have fannie and freddie?
In Canada, we're about to start blaming the banks. People on VRMs (variable rate mortgages) could see their rates double by the end of the year. Everyone here has learned that a 3% mortgage has always been the norm. Everyone has had the price of their house go up and they've given themselves a pat on the back. Once there is a collapse in pricing, everyone will hate the banks and lenders. Right now, these irresponsible lenders are just helping people invest in their future. Tomorrow, they are evil scourge.
Addressing "irresponsible lenders" is just treating a symptom of larger problems:
1) Unbacked increases in the money supply. Money which must be used by the people of the nation, by law.
2) Moral hazard
Have to post this one:
Garth Turner was an MP. He now does (good) personal financial advice, and his blog focuses in on the housing market in Canada.
From your Turner link: