It's Not About Ben! - The Housing Meltdown Explained (by David White)

Fed Chariman Ben Bernanke recently inferred that the Fed's policy of low interest rates was not a major factor in the mortgage meltdown. That's right and wrong, and he's taking some heat for it. Let's sort it out:

He's RIGHT because low rates targeted by the Fed and endorsed by the originators (lenders) and backers (Freddy, Fannie, AIG, etc.) of those mortgages certainly improved the affordability of housing and homebuilding, a strong positive, contributing to the housing boom and a great deal of desirable new construction. Prudent capital investment by the private sector is a good thing, and it is encouraged by low costs of borrowing.