About how I see it. And once government got the ball rolling good ol' greed took over as people forgot about how qualification of loans had been neutered and concentrated only on the returns the mortgage stocks and derivatives were showing. One has to wonder to wonder how true that would have been had the expectation of government protection not been in play.
And of course the removal of the last tired vestiges of Glass-Steagall, signed by Clinton but authored by Republicans, allowed such gambling with federally insured deposits, practically speaking, and together with the widespread "investment" in worthless derivatives ensured that the housing sector crash would take down our whole house of cards. Arguing that one person or one party was responsible for the crash is a fool's game, we all played our parts.
Yes... and No.
As I offered, the statute cited passed in 1977, so referencing that is inaccurate, to say the least. The only way that govt got the ball rolling was through the efforts of the free market self regulated banking cutting red tape so you can buy the house of your dreams with innovative financial products Bush Admin. Really. I've pasted so many links to their complicity in past discussions that it's surprising that anybody who reads this forum could possibly think otherwise.
Of course it was all about greed- greed at the top. W/O Glass Steagal, W/O any sort of watchful presence in Bush Admin regulators, the masters of the universe, Wall St, were free to go hog wild, and they did. It wasn't depository banks per se, but rather investment banks who originated the vast majority of shaky loans & securities. It wasn't about secured deposits, but rather investment in MBS & investors' money in the Repo market that were threatened. And it's not that derivatives are worthless, but rather that applied the way they were made risk systemic rather than mitigating it at all. It's a round robin zero sum game, where money just moves around, but the players lacked the liquidity to cover their bets, everybody depending on the other guy to pay first so that they could pay... impossible since investors backed out of the repo market en masse at the first sign of trouble.
We've seen this before, many times- investment bankers are, by their very natures, reckless when they're on a roll, raking in the big money. 1873. 1929. The S&L debacle to a lesser degree, and 2008, obviously. There are other examples in history. The rewards of such recklessness are so enormous as to dwarf all other considerations. If they ride their corporate steeds into the dirt in the process, so what? They're rich beyond the imagination of the rest of us as a consequence- they got theirs, so the rest of us can go piss up a rope. Yeh, sure, it's even better if the govt steps in to bail them out, prevent collapse- they get right back on the horse, see if they can ride it to death, again.
You're correct to some degree or another about govt rescue as implicit- it has to be, for the sake of the rest of us. There's even a name for it- the Greenspan put, resulting from FRB action in the LTCM fiasco of 1998.
If we're in the position where we can't, as a society, tolerate collapse of the financial sector (and I believe we are) then we need to provide impulsive big money toddlers with a much safer playpen, one they can't get out of, one where we don't have to chase them down every time they run out in traffic. That is, of course, totally incompatible with the idea of free market banking & finance entirely. If they want to play, they need to play by our rules, the rules established by the will of the people in a representative democracy, and none other. You're right that everybody shares some responsibility, but there's a difference between the perps and the chumps that shouldn't be forgotten.
The problem wasn't really in the collapse of the housing bubble, anyway, but rather that it was allowed to occur in the first place, because that made collapse inevitable. The time for corrective action was on the way up, when the Bush Admin was acting as cheerleaders rather than watchdogs. Once that happens, we have to live with the results, as we are today.
Business? The guys at the top o' the heap are doing great- better than ever, which is what Obama referenced. If tickledown economic theory amounted to more than a hat full of warm piss, the rest of us would be doing great, too, but we're not. Why not? Because that theory is a lie, a fairytale, a con game formulated to convince the gullible, and has been all along.
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