But then, once the boat hits rough waters, everyone wants to find someone to blame. Seriously, it’s like blaming the bartender for your hangover. Sarbanes-Oxley is a prime example of legislating activities that people turned a blind eye to during the bull market.

In the latest illustration of such a dynamic, the Attorney Generals of Illinois and California are suing Countrywide for issuing mortgage loans that people can’t afford. Lisa Madigan, Attorney General for Illinois said…

“Countrywide’s unfair lending practices have harmed tens of thousands of borrowers who’ve been placed in unaffordable loans and, as a result, our communities are now being destabilized by a skyrocketing number of home foreclosures.”

“Countrywide repeatedly qualified borrowers for mortgage loans based on salaries that were significantly higher than what they really made. As a result, Countrywide put borrowers into loans that they could never afford, leading to high failure rates.”