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You have already heard the news. Congress passed the controversial $700 Billion
Bailout Bill. This Bill comes with blame and finger-pointing.

Democrats blaming Republicans for deregulation. Republicans blaming Democrats
for failing to reel in Fannie Mae and Freddie Mac. Our nation blaming Wall Street.
So who is really to blame?

Mortgage Lenders. Lenders who made exotic loans to people who shouldn't have
gotten them.

Real estate agents. Agents who sold houses to people who should have been
looking at cheaper homes where they didn't need an interest only loan, adjustable
rate mortgage, or to "state" their income to qualify.

Congress. Democrats and Republicans. Aside from a few warnings from select
members on each side of the aisle that fell on deaf ears, neither side saw this
coming.

Wall Street. Based on historical data that told them that real estate never
depreciates nationally, they created some of the most exotic loan products we have
ever seen. Remember 100% stated-income option ARM's with 1.00% start rates?

Fannie Mae and Freddie Mac. For buying these exotic products in the name of
shareholder profit.

Credit rating agencies. They gave investment-grade ratings to subprime loans.
These high ratings encouraged the flow of investor funds into these securities,
helping finance the housing boom.

Stated income loans. This enabled people to lie about their income to buy more
home than they could afford.

The Government of the 1990's. The government pressured Fannie and Freddie to
lower credit restrictions to create homeownership opportunity for lower income
families and minorities, who were getting bilked by subprime lenders. The
shareholders loved it as they sought more profit.

Is there any need to go on?? I am sure you can add a few more. Someday, there will be a post-disaster Congressional Committee that will hold weeks of hearings. This will culminate in a nice, glossy, table-top, "What Went Wrong?" 800-page report available on Amazon for $29.95. Pre-order now for $24.95. Today, we are being asked to pay a very big price for these mistakes. A $700
Billion bailout Bill that has been promised to save the economy....for now. There is anger. Many people don't understand how we got here. Many more don't understand why we need to do this.

Let me try and explain. These toxic mortgages, in combination with foreclosure
losses, have driven many lenders and financial institutions out of business. For
most that remain, their capital has been dramatically reduced or they are hoarding
their cash in fear of what happens next. Investors who provide capital have had their confidence shattered by these events. They aren't investing their money. This limits capital further.This has created a situation where it is very difficult to get credit. There is a
decrease in money to lend. This means credit is limited.

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