Saw quite a bit of inaccurate "facts" here..... thought I'd throw in my 2 cents.....
Earlier a poster blamed the housing prices and defaults on the CRA act. The high prices were because Wall Street found a way to invest in Mortgages. This is a bad thing, because it dramatically increased the pool of money available to borrow to buy a home, but it did not dramatically increase the pool of available homes to purchase.
Sure, new home building increased, but not enough, so basically a huge pool of new money was used to bid on the same homes, resulting in a predictably huge increase in home prices.
Ordinary people bought homes anyway, despite having to pay way too much for them. It's a classic bubble, with the entirely predictable outcome, that a great many people are trying to pay for homes they not only not afford, but that aren't worth as much as they paid, and that they can't sell without taking a huge loss. The only unpredictable part of the equation was WHEN reality would strike back. Now we know.
Don't get confused. This didn't happen because the Government tried to force banks to make bad loans. This happened because rich blokes on Wall Street wanted a chance to charge a working stiff 3X the standard rate for lending him money for a house.
When the shit hit the fan, the poor working stiff lost his house, money, and his credit score.
The Wall Street types had throw them 800 BILLION and gave themselves a bonus too.
It's not supposed to work this way. If you choose to risk your money foolishly, you are supposed to lose it. Congress is yet again rewarding poor choices, but only those of the rich.
They are doing exactly the same thing with the car companies.
When a company is run that badly, it's supposed to go out of business. When they make such bad deals with Unions that combined with other poor decisions run the company under, the investors who chose those clowns, (same clowns running the Detroit Lions), are supposed to lose their money.
They, like the bankers, are being protected from the consequences of their own actions. The ordinary guy is not.