I've always thought that the credit cycle is an interesting phenomenon. From too loose to too tight then back all over again. Why do they do it? Of course in the case of these sub-prime / predatory lenders, the answer is easy- as some here have stated. But it happens with more 'respectable ' lenders, too- as we may be about to see with Wall St repercussions, etc. I guess greed is universal- shocking, huh? I've wondered, though, if some bank couldn't realise higher long term profits by being more sensible- these excesses do cost, after all. Sort of like a Warren Buffett approach. Probably could work, however: people in these organisations make decisions to further their careers. During the loose part of the cycle, the cautious one looks like a fool, may not get that promotion, the opposite during the over-tightening- better to follow the party line, ride the waves surfer- style than be right- like Adlai Stevenson was, but not president. Does seem to apply to politics, too, BTW and not only in Red China.