Villains in the Mortgage Mess? Start at Wall Street. Keep Going.

But what he does deserve blame for -- big, big blame -- is failing to exercise his power as rule-maker for the mortgage industry. Subprime lending could have continued, but with a few safety rules, such as "Don't cheat people." During a go-go free-for-all, Greenspan could have been the adult at the party.

Reckless speculators, with special mention for Angelo R. Mozilo. No lender better epitomizes bad behavior than Mozilo, the always tan and dapper chief executive of Countrywide. He continued to sell abusive subprime loans last year, even as the market unraveled. The Justice Department recently launched an investigation into his company's lending practices. Under public pressure, Mozilo agreed earlier this year to forgo at least $37.5 million in severance pay triggered when the company agreed to be sold to Bank of America. Still, he left with a pension and retirement package worth tens of millions.

Congress. Why, with all this outrageous behavior under its nose, did the Senate last month overwhelmingly approve billions of dollars in tax breaks to industry but offer little to folks facing foreclosure? The answer: money. The financial services and real estate industries are far and away the largest federal campaign donors, giving more than $247 million in the 2007-08 cycle alone. Between 1999 and the end of 2006, as the subprime mess festered, the mortgage industry and its trade groups spent $187 million lobbying Congress, effectively blocking any efforts to ban abusive practices at the national level.

Fannie and Freddie. For the most part, they didn't buy the most abusive subprime mortgages from lenders because the loans didn't meet their standards. But they did buy private-label subprime bonds for their own investment portfolios to boost profits. From 2004 through 2006, these congressionally chartered companies bought a third of the $1.6 trillion in private-label bonds that Wall Street firms issued. This helped legitimize the market, giving pension funds and foreign governments additional (albeit false) comfort that these securities were safe.

Bush regulators have also allowed Fannie and Freddie to count these securities toward federally set goals for encouraging mortgage lending to low-income borrowers. As it turns out, the increase in home ownership, especially among minorities, that Bush has repeatedly touted as one of his presidency's main goals has been a bust: Yale economics professor Robert J. Shiller points out that foreclosures have pushed the national home ownership rate back to nearly the 67.5 percent it was when Bush took office, and it's likely to fall further. Minority families, which received a disproportionate share of subprime loans, will bear the brunt.

The enablers. The story would be incomplete without special mention of the credit-rating agencies, especially Standard & Poor's, Moody's and, to a lesser extent, Fitch. The firms, which had a conflict of interest because they were paid by the same folks who were issuing the securities, okayed subprime deals without sufficiently kicking the tires to make sure they held at least a little air. Wall Street didn't guarantee the mortgages it bought against default, so buyers of private-label mortgage-backed securities bought private insurance, which insurers sold based on the credit-rating agencies' stamp of approval.

Clearly, some of the so-called credit crunch we now find ourselves in isn't a crunch at all but a return to sobriety. It means that money's not so cheap and won't be available at all for reality-defying investments, at least until this debacle fades from memory.

Meanwhile, the Bush administration, which has repeatedly balked at the idea of any government help for borrowers facing foreclosure, has let the Fed underwrite a $30 billion bailout of Bear Stearns and extend an open-ended line of credit to the other investment banks that created the subprime bubble. Among the collateral it said it would accept are . . . private-label mortgage-backed securities.

Yes, we taxpayers now own this stuff.

dkathleen30@yahoo.com

Kathleen Day, a former Washington Post reporter, is spokeswoman for the nonprofit Center for Responsible Lending. The views expressed in this article are her own.