How much of the current economic crisis is due to conservative values? That's not easy to answer. There are 2 primary conservative mantras: de-regulation and states' rights. What happens when these collide? Which one wins? It's clear. Getting what you want trumps states' rights every time. (See, for example, Bush v.Gore.)
That's where the current economic crisis started. When George W. Bush took office, one of the first things he did was have the Office of the Comptroller of the Currency issue an edict saying that states no longer had the right to enforce or impose consumer fraud laws against banks. Of course, the feds didn't enforce them either. So, it's de-regulation without going through the messy process of having Congress approve de-regulation. Just don't enforce the laws and, voila, you have de facto de-regulation.
A case was brought by Wachovia Bank against the Michigan bank regulator, stating that Michigan had no right to regulate its mortgage lending division. Supporting the state's decision and joining in the suit were all 50 states plus several consumer groups. They argued that "a decision upholding the federal agency's claimed power of pre-emption would displace state oversight at a time when the mortgage lending industry urgently needed close supervision. The case eventually reached the U.S. Supreme Court where the justices affirmed the federal government's pre-emptive right. (NY Times)
Frustrated with the predatory lending that was running rampant, many states attempted to regulate loan processors -- those people who took the information from borrowers, wrote the paperwork, and made arrangements for the loans. There were many shady things going on, some of them downright fraud, but the processors wanted to push through these loans because they got paid. Also, many people who qualified for perfectly good, conforming loans, were steered into the sub-prime market. Why? Because a conforming loan would pay the processor $750. The sub-prime loans paid the processor $4,000 to $5,000. States were unable to pass laws regulating these people because they only had control over a small percentage of processors. Most are employed by the banks and, according to the edict, the states couldn't regulate them.
So, it appears that the conservative mantra of de-regulation was the starting point for the mortgage crisis. Let me remind you, the loan processors, the real estate agents, the lenders who then bundled the mortgages and sold them as "assets," and all the sales of the bundles through the whole process, made money. The people steered into bad loans have lost their socks. And now we taxpayers are bailing out the financial institutions. The CEOs from these institutions are going to do just fine. The investors in these institutions, most of whom are us little guys who invested through retirement and money market funds, are taking it in the shorts. The employees of these companies, normal working people, are taking it in the shorts. Once again, the wealthy get off scot-free (like Enron), the little people are screwed, and the few citizens still making enough money to pay taxes will have to pay for the whole damned mess.
Yup. De-regulation. A great idea -- if you're a multi-millionaire.