Originally Posted by WhiplashDug

Actually, PMI (primary mortgage insurance) is required for non-conforming loans below a minimum LTV. Hence, the AIG problems.

But your observations are correct - the lending practices are bad. But, that's the direct result of the influence of the US CONGRESS forcing funding companies to offer those types of loans.

It should not be the government that sets lending standards. That's the right of private business. If some business choose to take that risk - then they reap the spoils and the spoilage. That's business.

Where the regulations come into play - is that the government has the right to force PUBLICLY traded companies to release TRUE and CORRECT financial statements listing their complete holdings and the RISK LEVEL of those holdings. But thats it! And that should ONLY apply to PUBLICLY traded companies - as the general shareholders need to be protected. But that't it! It shoudl stop there!