One other quote from Jefferson is applicable.
“My reading of history convinces me that most bad government results from too much government”

This probably plays in most of the current debacles we are currently facing.

It was the responsibility of the GSEs (i.e. Fannie Mae) to make sure the loans were solid. Why? Because of the implicit government guarantee to support the GSEs.

We the taxpayers are now on the hook.

Had Fannie/Freddie standards been solid enough, including sufficient down payments to prevent the moral hazard which has unfolded, the GSEs would never have purchased these mortgages in the first place.

And within about 60 milliseconds, the primary lending institutions would have stopped making subprime loans, knowing that they would have to keep them on their books. All of which would have prevented the problem in the first place.

The moral hazard of borrowers and GSEs with nothing to lose, have created the largest financial problem since the 1930s.

Greed has always existed and always will. Focusing on it is a gigantic waste of time and effort. Greed, fear, sloth and stupidity can not be legislated or litigated against.

Instead, it found a willing partner in GSEs and loosened lending standards pushed by government.

This mess is not the fault of capitalism. It is completely the fault of government.

Now I understand what “Community Organizing” really means: “lifting up the poor by tearing down the middle class”.

Someone who made little or no down payment and now walks away from their responsibility, has not lost anything. They got to live in a house at a cost less than the equivalent rent. On the flip side, the middle class has lost greatly.

For the first time in my adult lifetime, I am really disappointed in my country.

God help us.

First of all, it would probably be best if you knew the subject you were taking about before spouting off. If the brokerage firms and FDIC banks had sold all this stuff to Fannie and Freddie as you say….. they wouldn’t be collapsing…now would they? If they had sold all this garbage to fannie and freddie they would be sitting pretty. Next, it is not the subprime default rate that has driven the banking system, wall street or fannie and freddie to the brink of utter collapse. Your post says that… and that is utterly false. Default rates are still actually pretty low. What has cuased most if not all of the banking, brokerage and fannie and freddie failures has been a lack of funding from investors. Fannie, and Freddie as well as many other insitutions are dependent on investors lending them money for the short term at lower rates and tehn lending that money for teh long term at highe rrates. Thats how they make/made their money. If all of a sudden teh shortr term investors providing the money for Freddie or Fannie or wall stret or an FDIC bank…if all of a sudden those short term investors don’t want to laon that institution shor tterm mone hythen the institution has to sell off chucks of its portfolio. And as we all know….if everyone knows you are being forced to sell off your stuff…. you don’t get a very good price for it…and you wind up selling thinsg at fire sale prices and …chances are…. you take a honkin losss.

Specifically, with fannie and freddie… the chinese and a bunch of other foreign governments who are some of teh main financers of fnma and fhlmc….said one day, “thats enough …we aren’t going to lend to you gusy anymore…its too risky.” That is what forced the gvot to steo in and take over. It had nothing to do with subprime losses being so large that they could not handle it. FHLMCand FNMA were siting on tons of cash to cover obligations the day the govt decided it was best to take over.