Paul Leonard, Director of the California Office at the Center for Responsible Lending, just gave his initial remarks on the root causes of the mortgage crisis. According to Leonard, the root cause was not the Community Reinvestment Act or the actions of Fannie Mae and Freddie Mac. Rather, the problem was the evolution of the mortgage market to a free market system of lending in which banks were able to detach their portfolios from the underlying risk associated with their lending. This resulted in a shift from stable, fixed-rate, long-term mortgages to more short-term adjustable loans, often to high default risk recipients. Moreover, explained Leonard, regulators, despite ample warning, were asleep at the switch. The combination proved disastrous.