Yesterday I wrote a post ("The government giveth standards, the government taketh them away") in which I cited economists who see the lowering of banking standards as a major cause of the current economic mess.

Investors Business Daily has an editorial titled "Congress Tries To Fix What It Broke" which notes the prominent role of Democrats (especially Barack Obama) in abandoning "lending standards that had served the banking industry well for centuries."

Everyone in the subprime business -- from brokers to lenders to banks to investment houses -- absolved themselves of responsibility for ensuring the high-risk loans were good.

The mortgage lenders didn't care, because they were going to sell the loans to other banks. The banks didn't care, because they were going to repackage the loans as MBSs. The investors and traders didn't care, because the MBSs were backed by Fannie and Freddie and their implicit government guarantees.

In other words, nobody up and down the line -- from the branch office on main street to the high-rise on Wall Street -- analyzed the risk of such ill-advised loans. But why should they? Everybody was just doing what the regulators in Washington wanted them to do.

So everybody won until everybody lost, including the minorities the government originally mandated the banks to serve.

The original culprits in all this were the social engineers who compelled banks to make the bad loans. The private sector has no business conducting social experiments on behalf of government. Its business is making profit. Period. So it did what it naturally does and turned the subprime social mandate into a lucrative industry.

Of course, it was a Ponzi scheme, because they weren't allowed to play by their rules. The government changed the rules for risk.

In order to put low-income minorities into home loans, they were ordered to suspend lending standards that had served the banking industry well for centuries.

But I don't think the goal here was to help minorities so much as it was to advance socialism.

The more the system fails, the more socialistic things become. Abandonment of lending standards guaranteed that the system would fail.

But in socialist terms, the failure was a success.