| | The financial institutions did not create any mess but did what any prudent person would do when given the chance to provide easy credit which is made possible through the interference of the government. The Clinton administration, for example, instructed Fanny and Freddy to help the poor by lending money at extraordinarily easy terms. Indeed, the whole housing industry has been distorted by government intervention--e.g., mortgage interest deductions! Why this subsidy? Well, the argument was that returning soldiers needed a boost when they tried to buy homes. Perhaps a more cynical explanation is that politicians needed their votes to wield power. Not that the private sector didn't support much of this statism but for that to be possible the politicians must first make it evident that they may be enlisted to engage in wealth redistribution, handing out special favors, etc., etc.
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