The Financial Crisis and Government Pushing Home Ownership

Lately, I have been reading several articles from people trying to blame the sub-prime mess on government mandates to expand home ownership among the poor and minorities.

Maybe the government did strong-arm lenders into making loans to unqualified members of groups that traditionally rented (such as minorities), but I don't think it was the main factor.

I think the main cause was the Federal Reserve trying to cushion the post dot com market crash and slowdown by lowering interest rates and increasing the money supply.

I think they overdid it, and the resultant lower rates and excess money in lenders' hands led to speculation and greed.

Remember all the house flippers and speculators in places like California, Nevada, and Florida?

In fact, Florida was the location of an infamous real estate boom and bust from 1924-1926. The difference is that, back then, Wall Street wasn’t linked up through the repackaging of mortgages as securities, so the real estate bust didn't spread throughout the financial system.