The mortgage sector, which caused the financial sector, is the most heavily manipulated sector in the economy. Fannie/Freddie own 50% of the $12 trillion worth of mortgages in the US. This is an unprecedented level of government intervention in a sector of the economy.It was two government interventions, Fannie Mae and the CRA, that created the subprime bubble:Fannie Mae:http://www.nytimes.com/1999/09/30/business/fannie- ...Fannie Mae Eases Credit To Aid Mortgage LendingBy STEVEN A. HOLMESPublished: September 30, 1999In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.--The Community Reinvestment Act:http://www.city-journal.org/html/10_1_the_trillion ...The Trillion-Dollar Bank Shakedown That Bodes Ill for CitiesHoward HusockWinter 2000The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.--The only institutions that needed regulations were Fannie/Freddie, since they were government sponsored enterprises, but congress blocked oversight for them:Don't blame FreeMarket when it was state intervention that destroyed the financial sector.