re: #426 garhighway

A regulatory scheme that does what exactly - that prevents prices of real estate to rise according to market pressure?

That’s exactly what’s implied by your statements.

Prices rise and fall - and the risk of loss on any business decision is to be borne by the parties to the decision - the banks and the individuals.

Since the banks have more exposure - they’re lending to more people while the borrower only has to worry about their particular instance, it behooves the banks to be more conservative in lending practices.

That’s where the government gets involved - because they want to expand lending to meet social policy agendas - increased homeownership, minority homeownership, etc.

And by dumbing down the lending standards, we got people incapable of repaying borrowing vast sums that could never conceivably be repaid even in flush times - and the moment the real estate market corrected, threw vast portions of bank portfolios into the crapper. In fact, banks that were more conservative in their lending managed to survive the crisis alright (and bought up those that didn’t).