Who to blame for housing bubble

Right-wing radio host Heidi Harris claims that the housing bubble was caused by people trying to engage in "social engineering." That is, the "engineers" put everybody in houses even though not everyone could afford to keep paying their mortgages.

First, that suggests that the "social engineers" were incredibly incompetent as there was quite obviously no back-up plan if the homeowners couldn't keep up their payments.

Also, the causes of the housing bubble were pretty clearly more complex than that. Most importantly, the major banks did pretty well out of the collapse of that  bubble. If the bubble was the result of a plot by a particular group of people, it stands to reason that those who benefited by the bubble were most likely the ones behind it.

All of the big four U.S. megabanks—Bank of America, Citigroup, Chase, and Wells Fargo—reported either decreases or very modest increases in their massive profitability during 2010. But this surprisingly weak performance would have been even more disappointing without a pair of accounting maneuvers.

[...]

...traders’ pay is also rebounding into the $200,000-to-$500,000 range, while tens of millions of Americans struggle to keep food on the table.

[...]

... compensation has rocketed back into seven figures in spite of these circumstances.

As another piece puts it:

The Bush and Obama administrations have made an already critically flawed financial system even worse. The result is that the banking industry’s future is bad for banking, terrible for the real economy, horrific for the public—and wonderful for the top executives at the largest banks. This is significantly insane, especially given that over the past 30 years, the savings-and-loan fiasco and other crises provided ample opportunity to learn about those flaws.

If one is looking for villains in the housing bubble, I'd suggest that former homeowners who were foreclosed upon are most likely not the problem.