In February, then-governor of New York Eliot Spitzer wrote this piece, attacking previous federal efforts to regulate the mortgage business - specifically, controlling "predatory lending", or mortgage lending at deceptively low initial rates to unsuspecting or unsophisticated buyers. Over the opposition of every state, he says, the federal government blocked these efforts:

Some [lenders] were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers....
...Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye...

...for the first time in its history, the OCC was used as a tool against consumers. In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks... when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Ironically, of course, lending money to people unable to repay it turned out not to be such a great business plan after all. Now one has to wonder whether, given its track record, the US federal government is the right entity to have power over mortgage origination standards.