Loan Modification

I'm not normally a government-is-the-problem type, but in this fiasco, it was. Ironically, the government program that many on the right blame for the disaster, the anti-redlining Community Reinvestment Act, was not at fault. Most of the bad subprime loans issued at the height of the frenzy were made by institutions outside CRA rules.

Where conservatives and smart liberals rightly point fingers is at Fannie Mae and Freddie Mac. These privately owned companies had quite a scam going. They would buy and repackage risky loans that the taxpayers, in effect, guaranteed. Their executives spared no expense in lobbying Congress to preserve the deal and in paying themselves.