John Atlas and Peter Dreier of the National Housing Institute offer a primer on the sub-prime mortgage crisis:
Since 1998, more than 7 million borrowers bought homes with sub-prime loans. One million of those homeowners have already defaulted on their loans The crisis is likely to get worse. Financial analysts predict that at least a quarter of these people -- over 2 million families -- will default and face the financial pain and psychological grief of losing their homes over the next few years.
Bush, who once touted his administration's goal as creating an "ownership society," may now go down in history as the president on whose watch ownership declined. The nation's homeownership rate has fallen during the last two years and will plummet further next year. Moreover, Bush's unwillingness to take bold steps to regulate lenders, brokers, and investors will guarantee that the next president will inherit a much bigger mortgage mess.
To many Americans, the crisis seems too complex to comprehend. To understand it, we need to know: What is the problem? Who benefited? Who got hurt? Who is to blame? Who should we help? What should be done? Although the immediate cause is the widespread use of sub-prime mortgages, the root cause is a decades old failure of government to adequately regulate the banking industry.
Read the rest (and comment) here.
--The Editors
