And for what it's worth, I wasn't in favor of the Bear Stearns bailout. So, apparently, we are going to bail people out for being naive. This was a top-to-bottom screwup.

Quoting Teresa:
'"You can move in with little or no down payment" wasn't presented as a scam people could get away with'
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That's what our built-in BS detectors are for. Such ads sets my alarm bells ringing.
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Quoting again:
'I'm betting you didn't see this coming either. I sure haven't heard you talking about it.'
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My wife and I did. Like, hairs on the back of the neck, "We need to sell the house cuz this is crazy"-kind-of-feeling. And we did sell. A couple of years ago when prices were still going up.
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Again:
'They didn't know. Long-term money management hasn't been a feature of their lives. Most of them live from paycheck to paycheck.'
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All I can say to them is welcome to the real world. Are we going to bail people out for being naive?

"...something that went all the way up to the big trading houses and their regulators."

Maybe so, but it also went all the way to the bottom. *Everyone* was taking advantage. I experienced the insanity myself watching mine and my neighbors' houses being bid to incredible levels, and that wasn't done by the "big trading houses". That was done by the people who were speculating that what was cheap now would be worth a lot in the future. They got easy loans (and they knew it) and expected phenomenal returns.

They got hammered, and so did the lenders. It takes two to tango.