The problem we are in is a combination or the public, the banks & regulatories agencies. Customers refused to take no as an acceptable answer from the banks even though the banks were tellling them they couldnt' afford to borrow any more so they shopped around until they could find lenders who would approve their high risk loans. This become so common that the banks risked losing a lot of business so bought into this high risk high level lending to keep up with the market and the regulatory authorities although unconvinced it was the right way to go allowed it as the public were saying that they deserved the loans they wanted. The banks kept lending & the people kept borrowing higher & higher levels against their properties until second mortgages & 100% leveraging became foreign place & although those in the banking world were cringing it carried on. I have worked in banking for over 15 years & spent 10 years in the mortgage industry & got abused more than once from a customer who I declined a mortgage for because they clearly couldn't afford it & were overextending themselves but they told me that I didn't know what I was talking about & shopped around till they found someone who said yes and borrowed the money & inevitably ended up strife & often losing their house then suddenly started blaming the banks.
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