I think he's confusing several issues. Markets are self regulating, normally. But when the government intervenes with pressure to loan to people who can't afford the loans, then has Fannie Mae and Freddie Mac guarantee the securities (so the lender is not directly at risk), they become much less self regulating. Funny that people think this crisis is a reason for more government intervention. Conservatism has had a lot of bad press for the last 40 years, but maybe those old conservative bankers weren't such a bad thing.