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I remember reading in the Wall Street Journal last year of the family in California with a $90,000 household income who was given a $560,000 interest only variable rate loan. The interest payment alone was $3,500 a month...
The root of this problem though, isn't the size of Fannie and Freddie...nor Barny Frank I'm sorry to have to tell you, but rather how the financial companies gamed the system so they wouldn't have to keep capitol on hand to cover these debts if they defaulted, and the frenzy that followed as everyone wanted to cash in on this hot commodity.
These "credit default swaps" as I've come to learn were completely unregulated by the us government and had grown to a $60+ TRILLION market.
The lenders that are crashing first were heavily invested in this scheme, and they probably deserve to die, but not at the expense of our entire economy.
-spence
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