The Causes and Consequences of the Subprime Mortgage Financial Crisis

Look, you’ve gotta stop writing about things you don’t have a clue about. You’re going to get alot of people hurt. At least do your homework. Outside of generalities you’ve shown no evidence that you can even define ’subprime’ in a meaningful way.
You are in the bottom of the first as far as this credit problem goes. I am one to know having written over 1 billion of the loans you purport to understand. The deck is stacked against the debt-market until well beyond 2011. The extremely sharp rises in the CPI indexes should be cluing you in about now but you aren’t really watching. Like most ‘journalists’ nowdays you are more inflated with hot air than the phenomenon you attempt to describe.
This is no normal bubble. This is so unlike the correction of 2000 that it likens your attempted analogy to that of a kindergarten child sticking square blocks in round holes. Other than gross mechanics there is NO SIMILAIRITY. The Dot-com correction is a historical footnote to this credit contraction: the actual historical event. It will be difficult to begin your introductory course here but here I will try for what it is worth.
The global financial system is predicated on legal tender than derives its value from faith in data integrity and faith in data analysis: both have been lost almost completely. Is it so difficult to understand that value of intangibles will also plummet? Or that there will be a corresponding sky-rocketting in the evaluation of tangibles? Wake up! This is catastrophe.
You should be advising people to get real and to go long on things that are real instead of consoling the frog in the boiling water to stay the course and be brave. You are the shepherd of death Mr. Digital and you will reap the blind stupidity you sow along with all those who follow your blind lead.

Yes, I second Silicon Valley Blogger and would also like to hear something concrete from John Locke. Do you recommend selling all our stocks and putting all our money in FDIC insured accounts, treasuries and maybe gold? Is that what you are doing? Since most of us aren’t in a loan business, could you also talk in plain English?

Forget about internet bubble, I am curious how you compare today with the 90s. As I remember – and I actually lived through it – the prices started going down in late 80s, went down for many years until they started to slowly go up in late 90s. It took over a decade for the real estate prices to reach 80s levels. When I was “upgrading” in mid-90s, a family who sold me their townhouse had to add money to pay off their mortgage. It hasn’t been nearly as long yet, nor have the prices dropped nearly as low yet, at least not around here (Westchester county, NY). Around here the prices are still several times higher than in the 90s, I cannot talk about other areas. Do you think we’ll drop back to the 90s levels?

Sillicon Valley Blogger, it wouldn’t really affect me personally, except for when I perceive the “bottom”, I might consider investing or repeating “upgrade at the bottom/rent out old place/sell for more” thing that worked for me in the 90s (easiest money I’ve ever made) or just investing part of 401K in REIT. I’d probably wait until there are some signs of recovery.

Then there is also stock market… Nobody wants to loose money. With all the predicted gloom and doom, maybe we’ll see next Great Depression. Just kidding.

I do believe we are a few years far from the bottom, but I was curious what our “expert” here thought. I don’t remember the reasons for the 90s downturn, by the way, does anybody?

Of course if we all could predict the future, we’d all be rich.

The personal effects of sub-prime is what bothers me. Social Mobility and the American dream are at threat. There will be no more flipping and less avenues for the lower middle class and working class to better themselves. Credit will become tight and a recession will lead to a reduction in jobs. The consequences of the subprime collapse are marked.

I thoroughly researched the causes of the subprime crisis and was surprised at the paper trail that I found. Although the crisis has its roots in 1999, it was really the policies that were put in place between 2001 and 2006 that caused this crisis. I reviewed White House, HUD, and Fannie Mae and Freddie Mac press releases and fact statements as well as many Acts that were passed during that time period. If you read down through this, I cite to and quote many of the important documents as well as include links to many of the documents at the end.

Republican Phil Gramm was the sponsor of the 1999 Gramm-Leach-Bliley Act which removed depression-era Glass-Steagall Act requiring a separation between banking, investment, insurance, and brokerage activities. Bush considered appointing Gramm as the Secretary of Treasury and now Gramm is considered as McCain’s frontrunner for the post. Gramm’s and the Republican Congress’ Act was the first key piece of de-regulation that put into place this economic crisis.

How did the repeal of this Act have a role in the current crisis? The Act allowed, for the first time since the Great Depression, banks to deal in securities which allowed them to purchase mortgage-backed securities. If not for the Gramm-Leach-Bliley Act being passed by the Republican Congress, banks could not have dealt in mortgage-backed securities.

Did Clinton have a role in this deregulation? Clinton did initially threaten to veto this Act, but eventually signed it into law. At that time, the Republicans had the majority in Congress, it was a Republican-authored Bill, and the Republicans had enough votes to override a veto by Clinton.

Nonetheless, the Gramm-Leach-Bliley Act was only the first step that was taken to create this mess. In addition to the Gramm-Leach-Bliley Act, the Republican Administration and Congress furthered this mess between 2001 and 2006. In order to stimulate the economy, stave off a recession, and feed the market’s huge demand for more mortgage-backed securities, Bush aggressively pushed the lending industry to make massive amounts of mortgage loans. To do so, he called for the most massive increase minority and low income homeownership in our history as part of his “Ownership Society” plan.

In 2001/2002, Bush created “America’s Home Ownership Challenge” in which he challenged the private lending sector as well as Fannie Mae and Freddie Mac to make more than 5.5 million new minority and low income mortgage loans. To meet his challenge to the private lending industry, 24 of our largest banking and lending companies pledged to make 1.1 trillion dollars in low income and minority loans. You can find all of the official documents in the White House Press Releases if you use “America’s Home Ownership Challenge” as your search term in the White House archives.

Bush aggressively pushed the private lending industry to make over 1.1 trillion in low income and minority lows and to “create more creative” loan products to do it. He pushed them to “loosen credit standards” and pushed them to make the most risky loan products available to the riskiest buyers. Then, he turned to Fannie Mae and Freddie Mac and threatened to not rewrite their regulatory charters.

The government-sponsored corporations created to increase the liquidity of mortgage markets, so more capital would be available for mortgage loans, are supposed to lead the market in reaching underserved populations. While these corporations have increased their commitments to these efforts, they lag behind private lenders in this regard, according to government studies. The Administration will revisit the regulatory goals for these corporations’ purchases of affordable housing loans, which are set to expire in 2003. The federal government should demand more and should hold such publicly-chartered corporations accountable for better performance.
(From Bush’s Press Release entitled “A Home of Your Own EXPANDING OPPORTUNITIES FOR ALL AMERICANS, PRESIDENT GEORGE W. BUSH JUNE 2002” regarding his “America’s Homeownership Challenge).
The Bush Administration issued the following press release hailing its successes in pushing the private lending industry and Fannie Mae and Freddie Mac into making more low income and minority loans:
Under President Bush’s leadership, overall U.S. homeownership in the second quarter of 2004 reached an all-time high of 69.2 percent. Single-family housing affordability is at its highest level in 30 years, and minority homeownership set a new record-high of 51 percent in the second quarter.
The President has called on Congress to work with him on additional steps to promote homeownership in America. He has set bold goals for homeownership, including his challenge to the Nation to create 5.5 million new minority homeowners by the end of the decade – and he has now set an additional goal of 7 million new affordable homes.
(White House Press Release — “Increasing Affordable Housing & Expanding Homeownership).

Through the Republican Congress in 2003 and the Bush Administration’s work through HUD and the FHA, the Bush Administration forced Fannie Mae and Freddie Mac to, for the first time, make available riskier loan products to minority and low income buyers.

The Federal Housing Administration Mortgage Program. In 2002, the President issued America’s Homeownership Challenge to increase first-time minority homeowners by 5.5 million through 2010. The Federal Housing Administration (FHA) mortgage program is an important tool for reaching that goal. In 2006, 31 percent of those using FHA mortgages were minorities purchasing their first home. The 2008 Budget continues Administration efforts to modernize FHA by improving its ability to reach traditionally underserved homebuyers (aka those who do not normally qualify for loans), such as low- and moderate-income families, individuals with blemished credit, and families who have little savings for a down payment.

(From Bush Administration’s White House Press Release entitled, “Focusing on the Nation’s Priorities — Meeting America’s Housing Needs”).

The Bush Administration through HUD, also required Fannie and Freddie to give a higher percentage of their loans to loan-income and minorities that otherwise would not qualify for the loans.

That’s why I’ve challenged the industry leaders all across the country to get after it for this goal, to stay focused, to make sure that we achieve a more secure America, by achieving the goal of 5.5 million new minority home owners. I call it America’s home ownership challenge.
And let me talk about some of the progress which we have made to date, as an example for others to follow. First of all, government sponsored corporations that help create our mortgage system — I introduced two of the leaders here today — they call those people Fannie May and Freddie Mac, as well as the federal home loan banks, will increase their commitment to minority markets by more than $440 billion. (Applause.) I want to thank Leland and Franklin for that commitment. It’s a commitment that conforms to their charters, as well, and also conforms to their hearts.
(From White House Speech archives — “President calls for Expanding Opportunities to Homeowners” at St. Paul AME Church in Atlanta, Georgia).

Franklin Raines, the head of Fannie Mae at the time, also responded to Bush’s “Challenge” in a letter, stating:

June 13, 2002
President George W. Bush
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President:

As America’s largest source of private capital for affordable housing, Fannie Mae applauds your call for “broader homeownership, especially for minorities.” We accept your challenge to the private sector to join in partnership to address America’s housing needs. And we are proud to step up to your challenge by launching an even greater commitment of private capital and creative strategies to expand minority homeownership. * * * (the full letter can be found online).

Then, the following press release was sent out:
Fannie Mae Chairman and CEO, Franklin D. Raines today joined President Bush and U.S. Department of Housing and Urban Development (HUD) Secretary Mel Martinez, and other industry leaders and non-profit organizations, for a housing summit to promote the Administration’s proposal to expand minority homeownership.
* * *
Fannie Mae’s ten-point plan to help advance the Bush Administration’s homeownership proposals was included in the Blueprint for the American Dream document released by HUD today.
The Blueprint for the American Dream that we unveiled today is the response to the `homeownership challenge’ President Bush issued in June to increase minority homeownership,” said HUD Secretary Mel Martinez. “Our partners, representing every segment of the affordable housing industry, are committed to working together to achieve the President’s goal of adding 5.5 million new minority homeowners by the end of the decade.”
In his February State of the Union address President Bush called for “broader homeownership, especially among minorities.” In June, President Bush challenged both the public and private sector to be a partner in his crusade to create 5.5 million new minority homeowners by the end of the decade.
Fannie Mae responded by committing $700 billion in home financing to 4.6 million minority households through 2009. This increases by 66 percent the specific pledge Fannie Mae made in 2000 to minority families through it’s American Dream Commitment plan to provide $420 billion for three million minority families.
(quotes from Fannie Mae and Freddie Mac in Business Wire “President Bush’s Nationwide Effort to Increase Minority Homeownership” — October 15, 2002).

Fannie Mae responding to Bush’s aggressive push by committing $700 billion for low income and minority loans, a 66 percent increase in its previous pledge made in 2000.

In 2003, the following article was on Washington Business Wire:

WASHINGTON–(BUSINESS WIRE)–March 18, 2003–On the third anniversary of its “American Dream Commitment(R),” Fannie Mae and its lender partners already have fulfilled over half of its ten-year pledge to provide $2 trillion in home financing for 18 million historically underserved families, Fannie Mae Chairman and CEO Franklin D. Raines announced today.
To date, Fannie Mae has provided more than $1.3 trillion for nearly 12 million targeted families, completing two-thirds of the American Dream Commitment in about 30 percent of the time, and leading the market in serving minorities and the nation’s affordable housing needs.

Joining with representatives from 11 leading mortgage lenders and Fannie Mae partners, Raines applauded the mortgage finance industry for its extraordinary efforts to reach and serve “emerging markets” of historically underserved families and communities, deliver Fannie Mae’s $2 trillion in targeted capital, and extend the benefits of the nation’s housing boom.

Lender partners participating in today’s announcement include: Bank of America; Bank One Corporation; Charter One Bank; Countrywide Financial Corporation; Doral Financial Corporation; First Horizon Home Loan Corporation; Fleet Boston Bank; Huntington Mortgage Company; Irwin Mortgage; J.P. Morgan Chase & Co.; and Standard Mortgage Corporation.

“Together, America’s top lenders and Fannie Mae have made terrific progress in bringing the nation’s housing boom to overlooked Americans and addressing the gaps in housing opportunity,” Raines said. “Fannie Mae applauds our lender partners for helping us surpass the halfway mark in our $2 trillion commitment to underserved families so quickly. Together, we lead the market in serving Americans of color and modest means.”

The Administration and Republican Congress also passed the “American Dream Downpayment Act of 2003” to allow low income and minorities with blemished credit and no ability to come up with a downpayment to have the government cover their downpayment and closing costs. The Act gave 161.5 million dollars in taxpayer money to cover the downpayment and closing costs of minorities and low income individuals that would not be able to afford a downpayment and/or had “blemished credit.”

On December 16, 2003, President Bush signed into law the American Dream Downpayment Act of 2003, which will help approximately 40,000 families a year with their down payment and closing costs, and further strengthen America’s housing market. This legislation complements the President’s aggressive housing agenda announced in 2002 to dismantle the barriers to homeownership.
(From White House Press Release “American Dream Downpayment Act of 2003 — Expanding Homeownership Opportunities for All).

Bush also pushed and passed a “Zero-down Payment” initiative.

BUSH ADMINISTRATION ANNOUNCES NEW HUD “ZERO DOWN PAYMENT” MORTGAGE Initiative Aimed at Removing Major Barrier to Homeownership
LAS VEGAS – As part of President Bush’s ongoing effort to help American families achieve the dream of homeownership, Federal Housing Commissioner John C. Weicher today announced that HUD is proposing to offer a “zero down payment” mortgage, the most significant initiative by the Federal Housing Administration in over a decade. This action would help remove the greatest barrier facing first-time homebuyers – the lack of funds for a down payment on a mortgage.
Speaking at the National Association of Home Builders’ annual convention, Commissioner Weicher indicated that the proposal, part of HUD’s Fiscal Year 2005 budget request, would eliminate the statutory requirement of a minimum three percent down payment for FHA-insured single-family mortgages for first-time homebuyers.

“Offering FHA mortgages with no down payment will unlock the door to homeownership for hundreds of thousands of American families, particularly minorities,” said HUD’s Acting Secretary Alphonso Jackson. “President Bush has pledged to create 5.5 million new minority homeowners this decade, and this historic initiative will help meet this goal.”
Preliminary projections indicate that the new FHA mortgage product would generate about 150,000 homebuyers in the first year alone.
“This initiative would not only address a major hurdle to homeownership and allow many renters to afford their own home, it would help these families build wealth and become true stakeholders in their communities,” said Commissioner Weicher. “In addition, it would help spur the production of new housing in this country.”

The Administration, through HUD, further forced Fannie Mae and Freddie Mac to offer riskier 3, 5, and 7 year arm loan products to low income and minorities.

BUSH ADMINISTRATION ANNOUNCES NEW ADJUSTABLE-RATE MORTGAGE PRODUCTS TO ENHANCE HOMEBUYING OPPORTUNITIES

40,000 More Families Expected To Benefit From New Offerings
WASHINGTON — The Department of Housing and Urban Development is proposing to enhance homebuying opportunities by expanding its offerings of adjustable-rate mortgage (ARM) products on FHA-insured mortgages. Potential homebuyers would be able to choose mortgages with periods of three, five, seven or ten years, depending on their needs, during which time the interest rate would be fixed. “By offering additional types of FHA-insured ARMs tailored to the financial conditions and desires of the borrowers, we are creating more homeownership opportunities,” said HUD Secretary Mel Martinez today in a speech to America’s Community Bankers. “We estimate that as many as 40,000 families a year will choose these new adjustable-rate mortgages as their way of financing their home purchase.”

(HUD Press Release).

Bush and the Republican Congress forced Fannie Mae and Freddie Mac to make zero-down loans and adjustable rate 3, 5, and 7 year arms available to the riskiest buyers. Fannie Mae and Freddie Mac were forced to effectively finance 103 percent of the mortgage (including closing costs).

The Administration often pointed to the huge increase in housing as one of its greatest successes.

[The Administration has] Helped Americans buy homes, expanding the homeownership rate to nearly 70 percent and the minority homeownership rate to over 51 percent nationwide. With approximately three million minorities owning a home for the first time, the Nation now has the highest minority homeownership rate in its history. Furthermore, the Administration is ahead of schedule in achieving the Presidential goal of adding 5.5 million new minority homeowners by 2010.

(From Bush Administration’s press release entitled “Expanding Home Ownership” under section entitled “Accomplishments”).

It was between 2001-2005 that most of these loans that have gone bad were made. You can find all of the official documents at the White House, HUD, and Fannie Mae and Freddie Mac press release websites. You can also find the head of Fannie Mae’s letter (Raines) back to Bush (after Bush threatened to not renew their charter) saying that he would meet his aggressive challenge online.

So why did Bush and the Republican Congress push minority and low income loans? They pushed it for two main reasons. First, the economy was facing a recession and they looked to stimulate economy by stimulating the housing market. In fact, the Administration pointed to the huge increase in housing numbers under his “leadership” to show that he stimulated the economy to keep us out of a recession. Second, there was a huge demand in the securities market for mortgage-backed securities and there were not enough of them to keep up with demand.

Mortgage-backed securities were in such demand because it allowed banks and lenders to turn an illiquid asset – mortgages– into a liquid asset by bundling the mortgages and selling them as securities. Also, many thought that they were great securities to buy because they were further secured by collateral — the homes — and if they debt went bad, the collateral could be sold. They also thought that the mortgage-backed securities bundled from loans made through Fannie and Freddie were government guaranteed because they are quasi-government agencies.

In any event, there was a huge demand for these in the market and not enough supply. To increase supply for mortgage-backed securities, more loans had to be made. The only way to get more loans made was to come up with more creative loan products to get people into homes that otherwise would not qualify. So the Bush Administration and Republican Congress aggressively came up with ways to allow individuals who normally could not get loans to get loans.

The problem was the housing “bubble” started to burst and home values started to fall. At the same time, many of the 3 and 5 year arm loans were set to adjust to higher interest rates. Homeowners went to re-finance, but were unable to re-finance their mortgages because their homes were now were less than what they owed on their mortgages. Their interest rates shot up incredibly high rates, like 15.9%. Homeowners saw their mortgage payments triple and could no longer afford their homes. The cause of the foreclosures in most cases were “creative loan products” with low introductory rates that were scheduled to shoot up or adjustable rates that shot up to unconscionable rates that left individuals unable to pay their very high mortgages as well as the loss in home value that left individuals unable to refinance their mortgages at reasonable fixed rates.

Here is a list of some of the White House Press Releases on the subject.
Homeownership Policy Book – Chapter 2
Establish a national goal of at least 5. Challenge the private sector real estate and mortgage finance industries to dramatically increase their ..
http://www.whitehouse.gov/infocus/homeownership/ homeownership-policy-book-ch2.html – 9.8KB
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Fact Sheet: Expanding Homeownership Opportunities and Strengthening Our Economy
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http://www.whitehouse.gov/news/releases/2003/10/20031015-6.html – 21.9KB
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15 Oct 03
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Homeownership Policy Book – Executive Summary
Buying a home is the biggest single investment most people will make in their lives. But sadly, homeownership is out of reach for many Americans -..
http://www.whitehouse.gov/infocus/homeownership/ homeownership-policy-book-execsum.html – 9.5KB
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FINAL Homeownership Policy Book 6-14-02.doc
CHAPTER 2 MOBILIZING THE PRIVATE SECTOR: AMERICA’ S HOMEOWNERSHIP CHALLENGE • Establish a national goal of at least 5.5 million new minority ..
http://www.whitehouse.gov/infocus/homeownership/ homeownership-policy-book-ch2.pdf – 37.8KB
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FINAL Homeownership Policy Book 6-14-02.doc
EXECUTIVE SUMMARY EXECUTIVE SUMMARY Buying a home is the biggest single investment most people will make in their lives. Homeownership is a ..
http://www.whitehouse.gov/infocus/homeownership/ homeownership-policy-book-execsum.pdf – 36.9KB
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Fact Sheet: Expanding Homeownership Opportunities for All Americans
Issues Budget Management Education Energy Health Care Homeland Security Hurricane Recovery Immigration ..
http://www.whitehouse.gov/news/releases/2003/12/20031216-7.html – 22.2KB
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FINAL Homeownership Policy Book 6-14-02.doc
A Home of Your Own EXPANDING OPPORTUNITIES FOR ALL AMERICANS P R E S I D E N T G E O R G E W . B U S H J U N E 2002 EXECUTIVE SUMMARY EXECUTIVE …
http://www.whitehouse.gov/infocus/homeownership/ homeownership-policy-book-whole.pdf – 175.0KB
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Fact Sheet: Dismantling the Barriers to Homeownership
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http://www.whitehouse.gov/news/releases/2004/03/20040326-5.html – 23.1KB
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Fact Sheet: Expanding Homeownership for All Americans
Issues Budget Management Education Energy Health Care Homeland Security Hurricane Recovery Immigration Jobs & Economy Medicare National ..
http://www.whitehouse.gov/news/releases/2004/03/20040315-3.html – 22.5KB
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Increasing Affordable Housing and Expanding Homeownership
President Bush supports homeownership, which gives Americans a greater stake in their communities.
http://www.whitehouse.gov/news/releases/2004/09/20040902-5.html – 29.1KB
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President Hosts Conference on Minority Homeownership
President Bush Tuesday hosted the White House Conference on Minority Homeownership to discuss public and private sector efforts …
http://www.whitehouse.gov/news/releases/2002/10/20021015.html – 25.4KB
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Fact Sheet: President Bush Calls for Expanding Opportunities to Homeownership
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Homeownership Policy Book – Background
American Dream. It is a key to upward mobility for low- and middle-income Americans. It is an anchor for families and a source of stability for ..
http://www.whitehouse.gov/infocus/homeownership/ homeownership-policy-book-background.html – 12.7KB
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A Home of Your Own: Expanding Opportunities for All Americans
Table of contents for “A Home of Your Own,” President Bush’s home-ownership plan
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Homeownership Continues to Increase in 2002
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FINAL Homeownership Policy Book 6-14-02.doc
BACKGROUND “[ H] omeownership lies at the heart of the American Dream. It is a key to upward mobility for low-and middle-income Americans. …
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Fact Sheet: America’s Ownership Society: Expanding Opportunities
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Fact Sheet: A Record of Accomplishment for America
Fact Sheet on a Record of Accomplishment for America
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Budget of the United States Government, FY 2008
Skip Main Navigation OMB Home White House Website DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Since 2001, the Administration: Helped Americans buy homes, …
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Record of Achievement – Expanding Home Ownership
Home > News & Policies > Policies in Focus Printer-Friendly Version Email This Page Expanding Home Ownership “This Administration will constantly strive to ..
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So Rachel blames the Republicans. Michael blames the Democrats. Personally I would like to blame them both for their greed.

Sure a Republican sponsored the bill, but has anyone actually seen the original AND the revision made by the Democrats? Despite what Rachel says the Republicans did not have enough power in the Senate to overcome a veto by Bill Clinton. You need a 2/3’s majority. The original bill was passed with 54 votes. One of which was a Democratic vote. The House shot it down, made another bill revised mostly along Democratic lines, and then it was voted in 241-132. They then revised both bills and made a final bill. That’s just how Congress works. Very rarely can a bill be pushed through without a Congress and Presidency controlled by the same party.

The new bill contained provisions for increasing the power of the Community Reinvestment Act. This basically allowed for even looser standards on giving loans to low income families.

As I said before I blame greed and I blame these two for fueling that greed:
Billionaire Travelers boss Sanford Weill and Citibank CEO John Reed. It was they who spent nearly 300 million in lobbying efforts to get Congress and the President to repeal Glass-Steagall. Yes Michael, the repeal of Glass-Steagall does matter. Yes you guys, it was bi-partisan. “The final bipartisan bill resolving the differences was passed in the Senate 90-8-1 and in the House: 362-57-15. Without forcing a veto vote, this bipartisan, veto proof legislation was signed into law by President Bill Clinton on November 12, 1999.”
Source: http://en.wikipedia.org/wiki/Glass-Steagall_Act

Most of this mess wouldn’t have happened if this new bill didn’t give banks so much power. To the Republicans I say we do need regulation. To the Democrats I say not everyone should own a house. They are both to blame for the mess we are in and until someone steps up and opposes the special interests then nothing will change. It will only get worse.

The banks as well as the government are now buying up other banks to create some really huge nasty super banks. That much power should not be in anyone’s hands. Our government no longer serves the American people. It serves itself and its special interest groups. It is a sad state we are in. More government programs are not the answer, they are simply an expense. We need more integrity in government. I am not sure how we can get it, but I know it is what we need.

Cheers,
Jeremy

It seems to me that it would have been smarter for the government to refinance all the “bad” loans into 40 year loans at a decent interest rate. Most people want to keep their homes if they can and it would certainly been cheaper then the bailout which hasn’t worked as the PTB’s are hording the money. And as always the little guy gets shafted. They need to make it so that if you borrow money from x he can’t sell the loan to y (this is an incentive to make good loans). They also need to make the language of loans easier to understand. And when the 1st S&L mess up happened way back when (Remember the Bush brothers getting bailed out?) they should have hung them. I’m sick of a government that isn’t for the people only for the rich. There are a lot more of us then there of are them and they should remember the lessons of the French Revolution. When people feel they have nothing else to lose they will revolt.

Everyone is doing their best to pull through in these hard times.