Mike Marlow wrote:

He reversed it in light of very recent circumstances that nobody predicted,
or could predict.

[1] I think the only people who could have failed to predict it are
those who believed that the housing "bubble" would continue indefinitely.

In Des Moines, an average person earns 30-40K. The average price of a
new home here passed the quarter-million mark a year or two ago, and
homes were sold as quickly as banks could process mortgage applications.

[2] The legislature recognized that lenders had become too greedy and
that credit card debt had become a serious problem for many cardholders.
It was interesting to note that in the course of the congressional
hearings, it was the lenders' predatory practices that were identified
as the most significant part of the problem.

[3] Under pressure from lobbyists representing lenders who recognized
that borrowers were over-extending, the legislature tightened up the
bankruptcy laws to protect the lenders - a clear departure from the
principle that bankruptcy laws were to protect honest debtors.

[4] With the bankruptcy legislation in place, lenders exercised their
options to raise rates on ARM's - and foreclosure rates skyrocketed.
Unfortunately for the lenders, they had made mortages for homes whose
actual values were considerably less than the amount of the loan and,
following foreclosure, could not recover the principal by selling the
property in a rapidly disintegrating market.

IMO, any one (and certainly all) of these things was sufficient to make
a crystal ball unnecessary. YMMV.

--
Morris Dovey
DeSoto Solar
DeSoto, Iowa USA
http://www.iedu.com/DeSoto/