In other words, the US itself has become as vulnerable to its lenders as any other subprime borrower. ... The Fed simply ignored this law.

Monday, August 27, 2007 by CommonDreams.org | How the Bush Administration Is Turning the USA into a Subprime Borrower | by Heather Wokusch
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Much in the same way that US investors were “steered” into rip-off mortgage loans, the entire country has been “steered” into an economic crisis. The question is how to get out of it.

In the subprime loan scandal, unscrupulous brokers conned home buyers with poor credit histories into deals designed to profit lenders and bleed borrowers. Contract “teasers” hid ballooning monthly payments while a lack of regulation allowed the scam to continue unabated. Millions more Americans now face losing their homes.
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Bush’s military adventurism, not to mention his administration’s exorbitant tax cuts for the wealthy, gutted the surplus of $128 billion Clinton handed him in 2001 into a deficit of well over $200 billion today. And Bush has simultaneously increased the national debt by over $3 trillion (to roughly $9 trillion), effectively nailing each and every US citizen with a bill for almost $30,000.
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Just weeks ago, Beijing warned that if the Bush administration pushed for a revaluation of the Chinese currency, then Beijing would sell dollars, thereby threatening the greenback’s reserve currency status. Washington backed down. It had little other option.

In other words, the US itself has become as vulnerable to its lenders as any other subprime borrower.

Overall, the US debt situation looks so dire that the non-partisan Government Accountability Office Comptroller recently warned, “ America is on a path toward an explosion of debt. And that indebtedness threatens our country’s, our children’s, and our grandchildren’s futures. With the looming retirement of the baby boomers, spiraling health care costs, plummeting savings rates, and increasing reliance on foreign lenders, we face unprecedented fiscal risks.”
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And as Jim Hightower recently noted, a “hands-off regulatory ideology” is complicit: “There are no less than five financial agencies at the federal level that could have protected people, yet the subprime surge was allowed to proceed …. The Federal Reserve Board, for example, has direct authority under the Home Ownership and Equity Protection Act to ‘prohibit acts or practices in connection with mortgage loans that the board finds to be unfair, deceptive or … associated with abusive lending practices, or that are otherwise not in the interest of the borrower.’ The Fed simply ignored this law.” ...