2008 Housing Bubble was a failure of government not markets

The 2008 Housing Bubble started with the Federal Reserve lowering interest rates. The Fed is a quasi private bank created by the government, with no accountability to either government oversight or market forces. Nothing about artificially lowering interest rates is capitalistic.

The lowering of interest rates, combined with HUD regulations, incentivized approving loans; especially to risky borrowers who would otherwise be rejected.

Then Fannie Mae and Freddie Mac (government sponsored entities) backed these risky loans by taking advantage of new regulations that permitted the purchase of bundled loans.

So the housing bubble swells as more and more people purchase loans they can’t pay off, and more financial institutions bundle loans that won’t pay up.

And when the bubble inevitably burst, all these loans and mortgage backed securities were worthless. There wasn’t enough liquidity to cover the losses, so the federal government intervened with tax payer money and new regulations that permitted stable banks to buy up failing ones.

Privatizing the gains while socializing the losses isn’t capitalism. Government created financial institutions manipulating interest rates and guaranteeing loans isn’t capitalism. Replacing one set of regulations with another isn’t deregulation.