what really caused the meltdown....
1. bush signs into law "american dream downpayment act of 2003" which helped the poor buy homes they could not afford.
President Bush signed into law the American Dream Downpayment Act of 2003, which will help approximately 40,000 families a year with their down payment and closing costs, and further strengthen America’s housing market.
The biggest barrier to homeownership is often accumulating funds for a down payment. In June 2002, President Bush proposed the American Dream Downpayment Fund to help low-income families take much-needed steps to own a home of their own, and announced the goal of increasing the number of minority homeowners by at least 5.5 million before the end of the decade.
2. bush appointed s.e.c. deregulates the "net capital rule" in 2004 which allows the top 5 investment banks to take on trillions in bad subprime debt.
In loosening the capital rules, which are supposed to provide a buffer in turbulent times, the agency also decided to rely on the firms’ own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves.
Over the following months and years, each of the firms would take advantage of the looser rules. At Bear Stearns, the leverage ratio — a measurement of how much the firm was borrowing compared to its total assets — rose sharply, to 33 to 1. In other words, for every dollar in equity, it had $33 of debt. The ratios at the other firms also rose significantly.
http://www.nytimes.com/2008/10/03/business/03sec.html