In  January  I mentioned the law that pushed US banks into lending to uncreditworthy borrowers.

Since then received wisdom in US liberal circles has held it that free market greed is the culprit for their woes.

So an Op Ed piece in the New York Times on 11 December, by a Manhattan Institute researcher (Howard Husock) is a welcome sign of balance intruding.

"There’s little doubt that the rating agencies helped inflate the housing bubble. But when we round up all the culprits, we shouldn’t ignore the regulators and affordable-housing advocates who pushed lenders to make loans in low-income neighborhoods for reasons other than the only one that makes sense: likely repayment."

The details are compelling:

"…under the past two administrations the Department of Housing and Urban Development pushed the secondary mortgage market to buy loans based on criteria other than the creditworthiness of borrowers. These affordable-housing goals became more demanding over time. By 2005, HUD required that 45 percent of all the loans bought by Fannie Mae and Freddie Mac be loans to borrowers with low and moderate incomes. HUD required further that Fannie and Freddie buy 32 percent of the loans in their portfolios from people in central cities and other underserved areas and that 22 percent of the loans they buy be to “very low income families or families living in low-income neighborhoods.”

And the conclusion:

"One cannot say with any certainty whether the more important cause of the current housing crisis was affordable-housing mandates or the actions of investment banks and ratings agencies. There can be no doubt, however, that both contributed"