Hank Paulson's proposals to tighten the regulation of mortgage lenders and brokers are OK as far as they go. The US Treasury Secretary is right to point out failings that allowed billions of dollars to be lent to vulnerable people incapable of paying it back.

But to focus the regulatory crackdown primarily on brokers and lenders is a bit like attributing the drugs problem purely to the small-time pedlars at the end of the street.

There were pressures all the way along the food chain. There was the appetite for mortgages from investment banks wanting to package them up into complex products yielding fabulous profits. There was the appetite for business from credit rating agencies that gave their worthless seals of approval. There was the appetite of institutional investors, hungry for yield and not prepared properly to research and understand what they were buying.

The FBI is conducting its own parallel investigation. It may need a crime-busting agency, rather than a former investment banker, to get to the root of the scandal.

patrick.hosking@thetimes.co.uk

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