There are some great, sobering thoughts at Business Week on the subprime mini-meltdowns at HSBC (NYSE:HBC) and New Century (NYSE:NEW), as well as speculation on what might be to come for others, like Countrywide Financial (NYSE:CFC), Washington Mutual (NYSE:WM), Novastar Financial (NYSE:NFI), and Accredited Home Lenders (NASDAQ:LEND). Thanks to an alert Motley Fool CAPS player -- a homebuilder, by the way -- for pointing this out.

Here's a key quote from S&P's Stuart Plesser that I believe explains what happened with the whole low-rent loan gold rush: "They are writing whatever loans just to write loans, thinking they will worry about it later. But now it's later."

Remember, of course, that months ago, when I suggested this might be the case, I got plenty of hate mail from people in the biz, making their usual claims that they were just trying to help the buyers -- just enhancing "affordability" -- or childishly suggesting that I was just jealous because I wasn't working the "lucrative housing market."

Then came rebuttals from ethical longtime lenders who were ashamed at the corners being cut in their business. Who was right?

I believe the record is only just beginning to show that "affordability" was an excuse. Enabling a dysfunctional economic bubble in order to stuff their own pockets with easy money, that's what the low-rent lenders were doing. Except now, the money's not so easy to get back. And you can't squeeze blood out of all those turnips who signed up for no-doc loans.

Will the likely dry-up of "liar loans," and other exotic financing, in the absence (so far) of price drops depress demand even further and spur an even wider shakeout? Time will tell.

Washington Mutual is an Income Investor selection.

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At the time of publication, Seth Jayson had no positions in any company mentioned here. See his latest blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.