You decide. And why aren't all of these people in prison for fraud? This comment nails it:
This is a big part of why the anti-capitalist, anti-Wall-Street screechers are so wrong. Besides the pesky problem of predatory borrowers is the added failure of greed-damning malcontents to distinguish between regulation and criminal justice.
If I go out and kill someone, does that suggest that the penal code
"failed" or that the police "failed"? If I go out and rob a bank, does
that mean that the Federal Reserve or the FDIC "failed"? Of course not.
All the government can do is make sure I know the consequences of my
actions. If I accept those consequences and commit the crime anyway,
then what more is the state supposed to do exactly, except assign a
prosecutor and empanel a jury? It cannot possibly be the responsibility of regulatory bureaucracies such as the SEC to prevent criminal conduct a priori.
The government can only provide the framework to help people avoid
being victims, and to punish malefactors afterwards. The pre-bubble
apparatus did exactly that. The fact that people went ahead and allowed
themselves to be victimized after the fact doesn't mean the system was
somehow "broken."
Enron's collapse, which was nothing, led to task forces and prosecutions. Why aren't the mortgage scammers - borrowers, appraisers, mortgage brokers, lenders, and ratings-agencies - being brought to justice?
