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After all, they aren't the ones who'll pay when it all comes tumbling down.

This is the root of the problem. Gretchen Morgenson hit on it in her interview with Moyers last year.
From the interview:

GRETCHEN MORGENSON: We had a situation where they would give money to people who could not document their income, who could not provide a down payment. Then you would have second loans on top of those loans which they call silent seconds or piggy-backs. There was so much money around, Bill, that seeking, you know-- looking for a way to be deployed--

BILL MOYERS: To earn interest.

GRETCHEN MORGENSON: --to earn interest.

BILL MOYERS: Yeah, to earn inter-- right.

GRETCHEN MORGENSON: There was so much money around that they just threw it at anybody.

BILL MOYERS: The chairman of the House Financial Services Committee, Barney Frank said on television this week that it's a pretty simple matter. Don't lend money beyond what they can expect to pay and don't lend money without verifying what people can pay back. That's pretty good advice, isn't it? Why don't they follow it?

GRETCHEN MORGENSON: Sounds pretty simple, right? Well, why didn't they follow it? Because there was so much money to be made in fees by not following it. Throw money at people who can't pay their loan back. It won't matter. I'm not going to own the loan. I'm not going to have it. It'll be somebody else's problem by the time it comes a cropper.

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