I see your point, but does the fed actually dictate what loans can and can't be offered? I thought they just set key rates and assume that other rates will track upward and downward with those. Aren't banks free to lend at any rate they choose, outside of those few rates the fed specifically sets? (I'm admitting my ignorance here; feel free to help me out.)
you are right, i am using the fed as a blanket term describing the intertwined checks on our financial system (which i am ignorant to)...i have heard greenspan admitting his error on leaving the sub-prime problem to fester, but do not know if he could have used his position to take direct action or if he would have had to use his influence to pressure congress to step up and do something or if he would have simply warned the public of the fact that there were people out there giving loans but leaving out the fine print. the banks are not free to lend at any rate they want, which is governed at the state level...hence why your credit card probably comes from south dakota or delaware.
http://www.nhpr.org/node/3139
