Reagan, Clinton and the mortgage mess

I was reading Paul Krugman the economist who writes a Op-Ed column for the New York Times this morning. The jist of his column this morning lays out a line of thinking, that the whole mess that the country is in goes back to the Reagan Era bank deregulations. Before Reagan deregulated the banks, People had to put down a nice chunk of money to buy a home. It makes sense that people were required to have some skin in the game before being allowed to make quarter , half, three quarter million dollar purchases. I have no problem with that.

This practice was expanded during the Clinton era, with Freddy Mac and Fanny May. Clinton's famous call to homeownership for all Americans was a percursor for scary things to come Well as a homeowner, I'll use the words of the great wordsmith Jay-Z, "It ain't for everybody." I remember back in 2005-2006, seeing my 21 year old nephew buying a 200,000 piece of property while selling Newspaper subscriptions for the local newspaper, right then I new something was amiss with this whole homeownership thing. Folks who I wouldn't loan 20 dollars were coming up with 300k mortagages like they were buying bikes.
But that's wasn't the worst of it, after they had acquired these loans they were able to pull 10s of thousands of dollars out of the property after only being in them for months, I always thought this is money musical chairs, I was just wondering who was gonna get caught standing with no chair. 99% chance it would be the small guy.

After a bit of research I had found out that the banks were selling these loans as fast as they were making them, so they really were assuming little-to-no-risk in the transaction. Real estate Agents, Mortgage Brokers, Appraisers and the banks were running a much bigger Ponzi scheme than Madoff ever imagined.

What's interesting or criminal to me is if I figured this out within like two days why didn't the govt. regulatators or the banks or the Brokers or the appraisers understand what was going on. I get it now... We... yes we.... not all but a good portion of the American people are greedy. We saw that the Jones were stackin piles of money , putting pools in their back yard, buying new cars and off on exotic vacations and we wanted some of that. And if we had to fudge some numbers, defraud a bank, lie to a loan officer so be it. It's the American way...right.