[Rick Lee]

The subprime implosion was not caused by crooked loan officers. They have always existed and always will. But people getting 100% financing on houses they could ill afford and betting solely on endless appreciation to refinance their way out of their ARM's or using their equity as an ATM is what's bringing the industry to its knees. Investors were racing each other to come up with ever more lenient and creative underwriting guidelines and then telling mortgage brokers to make such loans and they'd buy them from them. The mortgage shops going under are doing so because of liquidity problems stemming from having to buy back so many loans for bad performance. The trickle down effect, aside from stinging the hell out of big investors, is that more foreclosures on the market drive down everyone's values and credit getting more scare cuts into the pool of buyers for those houses on the market. You may find it hard to believe, but a lot of what caused all this was 100% legal and plenty of it was encouraged by the gov't. through constant warnings about not giving enough loans to deadbeats and low income folks - translation: minorities and immigrants, aka government-favored grievance groups. We're all paying for it now.