One of the more consequential moments for the future of the U.S. economy happened off the campaign trail Monday, at a ballroom in the Mandalay Bay Hotel in Las Vegas. At the annual conference of the Mortgage Bankers Association, Mel Watt, chairman of the Federal Housing Finance Agency (FHFA)—the conservator for Fannie Mae and Freddie Mac—delivered a speech that will matter to anyone who wants to buy a home or even hold down a steady job in the next few years.

As expected, Watt signaled to mortgage bankers that they can loosen their underwriting standards, and that Fannie and Freddie will purchase the loans anyway, without much recourse if they turn sour. The lending industry welcomed the announcement as a way to ease uncertainty and boost home purchases, a key indicator for the economy. But it’s actually a surrender to the incorrect idea that expanding risky lending can create economic growth.

Watt’s remarks come amid a concerted effort by the mortgage industry to roll back regulations meant to prevent the type of housing market that nearly obliterated the economy in 2008. Bankers have complained to the media that the oppressive hand of government prevents them from lending to anyone with less-than-perfect credit. Average borrower credit scores are historically high, and lenders make even eligible borrowers jump through enough hoops to garner publicity. Why, even Ben Bernanke can’t get a refinance done! (Actually, he could, and fairly easily, but the anecdote serves the industry’s argument.)

It’s important to separate the truth about housing regulations from the industry’s propaganda. Doing so reveals the mortgage industry's effort to strangle the housing market in the short term and cull regulations in the long term.

After the financial crisis, Congress did enact a series of changes designed to prevent another epidemic of predatory lending. The most important rules force lenders to actually consider a borrower’s ability to repay the loan—something that ought to be self-evident, but wasn’t during the bubble.