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December 1, 2008 8:23:10 AM CST



Mortgage Mess Was 100% Avoidable

Posted Aug 29, 07 7:39 PM CDT in Business Arts & Living US 

(Newser) – Blame for the current economic disaster should be placed squarely on the shoulders of the US government, for deregulation that allowed speculators to cash in, writes the American Prospect’s Robert Kuttner. Helping boost "ordinary people" into the "propertied class" has fallen out of favor in Washington, with the savings and loan crisis a precursor to the current mess.

Deregulation under Ronald Reagan gave us today's ill-fated, laissez-faire mortgage industry, in which some lenders "loosened credit standards far beyond the point of prudence." Lest the perverse system belch up more disaster, Kuttner urges, the government must re-regulate lenders and get back into the business of subsidizing mortgages—making sure "mortgage lenders serve as responsible creditors, not predators."

Source American Prospect

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Exterior of a World Savings branch in Oakland, Calif., Thursday, Aug. 23, 2007. Golden West Financial Corp. operates 285 retail banking facilities under the World Saving Bank name in California and nine...   (Associated Press)
Countrywide customer Ruben Krakauer, 68, jokingly shows an empty wallet and pockets outside a Los Angeles branch, Monday, August 20, 2007. Countrywide Financial Corp. tries to reassure customers that...   (Associated Press)
A sign promotes the availability of a new home in the east Denver suburb of Aurora, Colo., on Sunday, Aug. 19, 2007. As the credit crisis has deepened in recent weeks and stock markets convulsed, spurring...   (Associated Press)
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