The point in question the IBD editorial was making was that the Clinton Administration was penalizing companies that did not lend money to minority and low-income families under the Community Reinvestment Act. Basically, the government was considering it discrimination if the lenders did not lend. So fearful of facing financial penalties, the banks loosened up their lending standards so that they essentially lent to anyone who could "stand up straight" as Robert B. Reich put it.
Whenever government distorts the free market, there is a real danger of economic bubbles forming. Just like the real estate bubble in 1990, that was government induced due to tax loopholes that encouraged bad investments in commercial real estate. When those loopholes were removed, that bubble burst.
The government was not responsible for the dot com bubble. That was mostly due to the "irrational exuberance" people had, feeling we were in a "new economy" where earnings and revenue didn't matter. Eventually the lack of revenue by any of these dot com companies caught up to them, causing them to die. Even companies with large revenue streams were caught in the fallout. The company I worked for, for example, lost 2/3 of its stock value despite record profits each quarter and has only recovered about half of its lost value over these eight years since the collapse of the NASDAQ.
