I'm curious what specific regulation you believe is responsible. Subprime loans are by definition those which do not qualify for federal guarantees. Banks never had a financial incentive from the government to make subprime loans since they would have been unable to offload those loans to Fannie Mae.
The problem was risk-assessment on the market-level (purchasers of securitized products who were willfully blind or were misled about the levels of risk involved), mortgage providers who were under pressure to create mortgages at scale, and banks which profited from being in a middle-man position bundling and selling mortgage-based products onto private markets.
I'm curious what specific regulation you believe is responsible. Subprime loans are by definition those which do not qualify for federal guarantees. Banks never had a financial incentive from the government to make subprime loans since they would have been unable to offload those loans to Fannie Mae.
The problem was risk-assessment on the market-level (purchasers of securitized products who were willfully blind or were misled about the levels of risk involved), mortgage providers who were under pressure to create mortgages at scale, and banks which profited from being in a middle-man position bundling and selling mortgage-based products onto private markets.