A libertarian told me that part of the blame was the Democrats complaining that financing was difficult for middle class or minority groups, so the Federal government urged easier credit. Is this true?It is true to the extent that many sub-prime mortgages were made in part because the federal government not only urged banks to make them but also threatened many banks with Civil Rights lawsuits because on a percentage basis not enough of their loans were being made to members of minority groups. So it was a cause, that certainly isn't the same as saying it was the cause.
Frankly, to me, it's not easier credit, but the promotion or marketing of derivatives that were undervalued in the first place. There was not enough regulatory controls to prevent this.