While I agree with the overall premise, an important factor is constantly left out of the discussion. The astounding rate of increase in property values over the last decade.

Lending standards worked fine for middle class families when my parents purchased a home in 1997 for $79K. 20% down is approximately $16K which is reasonable for the average middle class family. That same home last year was selling for over 300K, 20% of which would be $60K.

Without considering that property values have to fall drastically to even allow homes to be within the reach of the average blue collar American is to oversimplify the issue.

Just think that this part of the equation should be given a little more consideration in the sub prime discussion.

It cannot go back to business as usual if South Florida is to recover..Home prices in South Florida do not reflect salaries and whether we like it or not we need a scale of classes, from lower middle to upper to keep going. You cannot only have the rich or poor...A guy working at Publix should have a chance to buy a home just as easily as a CEO of a corporation...if business goes back to usual, home prices will again increase beyond supporting the Florida economy...

Also the kind of nonsense that went on with lender bribing Mortgage Brokers with back door payoffs cannot return..Brokers were suppose to be the financial advisor to let borrowers end up in homes they could afford..instead they turned to greed and put borrowers into loans that were unaffordable and toxic...thanks to the lenders who held out the back door payments like carrots..If you used lender A you got 2 points, if you used lender B you got 3 point..well which lender would you put your clients with?

If taxpayer money is going to guarantee Freddie and Fannie ..then lending should be a straight shoot..with the banks doing it...hey if you are a higher credit risk you pay a higher rate..simple..

The government should not bail out any public corporation. We the tax payers end up paying the price. As for as I am concerned if people who bought homes who shouldnt have gotten mortgages, too bad, and the people who invested in the mortgage paper and took hair cuts, too bad so sad. What really bothers me is they wiped out the common shareholders but not the bond holders and I believe the preferred also, Shouldnt they be wiped out also before these public companies receive any tax dollars money.

I have heard so much outrage about this bailout. People are angry that the shareholders are practically wiped out, that the taxpayers are on the hook. THey're angry at the lenders, the regulators and at Fannie and Freddie .

being one of those subprime loans i frequently wonder why the political candidates continue to skirt the issue, the solution to this problem is simple. turn sub prime to prime by lowering the interest rates, if this is ever thought of and implemened by the genuises we have blindly put in office our economy would drasticly improve. the problem no one is willing to discuss is greed by the banking industry as a whole, to wit the financial genocide going on as i'm writing this blog. our subprime market is traded sold and bought at amazing speed by these vultures. if the govt would step up and make them lower these outlandish interest rates people would not lose their homes, how many out there can afford 4400.00 house payments? they all espouse these people are risky and might default on their loans thats why their interest rates are higher, well bankers take a look at the total disaster you thinking and greed has made of our economy! news flash you are only seeing the beginning of your mess the best is yet to come, see you all on the breadlines.

Today's economic troubles, ... "were caused in part by insufficient regulation and lack of transparency regarding the latest financial instruments".

the Commodity Futures Modernization Act -- (Phill Gramm's bill) prohibited federal agencies from regulating financial products called SWAPS, which have been used to back up the risky mortgaged-based securities that caused the subprime crisis.
Michael Greenberger, who directed the Commodity Futures Trading Commission's division of trading and markets in the 1990s, says these unregulated SWAPS have been at "the heart of the subprime meltdown." He and others point to Gramm as being chiefly culpable for their deregulation. ...
it also contained a provision - lobbied for by Enron, a generous contributor to Gramm - that exempted energy trading from regulatory oversight, allowing Enron to run rampant, wreck the California electricity market, and cost consumers billions before it collapsed.

If Washington does not put on the brakes with re-instituted regulations and controls, then this crises will not be over.
Blaming the banks and etc. is of no value if Washington Republicans are un-willing to set up and maintain any rules!