Raghuram Rajan is an economist...

...at the University of Chicago and the author of Fault Lines, which seeks to explain the factors that led to the financial crisis. While Rajan concedes that the housing boom and bust was at the center of the crisis, he maintains that rising income inequality was also a contributor to the problem.

In an interesting Q&A, Rajan says:

The everyday consequence for the middle class [has been] a stagnant paycheck as well as growing job insecurity...Thus politicians have looked for other, quicker ways to mollify their constituents. We have long understood that it is not income that matters, but consumption. A smart or cynical politician knows that if somehow the consumption of middle-class householders keeps up, if they can afford a new car every few years and the occasional exotic holiday, perhaps they will pay less attention to their stagnant monthly paychecks.

Therefore, the political response to rising inequality — whether carefully planned or the path of least resistance — was to expand lending to households, especially low-income ones. The benefits — growing consumption and more jobs — were immediate, whereas paying the inevitable bill could be postponed into the future. Cynical as it may seem, easy credit has been used as a palliative throughout history by governments that are unable to address the deeper anxieties of the middle class directly.