I would modify your statement that "the Fed is not eager to bail out those who borrowed too much money and now can't pay it back" to include only the small fry. Banks are going to get a bailout from the Federal Reserve System just as they did during the credit crunch of '97 and '98 after the implosion of credit started in Thailand and then spread to much of the rest of the world. The discount rate cut we saw the other day is more than rhetoric, but tangible evidence that banks will be helped to save themselves from their own folly. There's plenty of blame to go around in analyzing the great credit catastrophe that came out of the real estate bubble. But the fact remains that the banks were always in control. No one forced them to lend out money at low teaser rates, or accept "no doc" loan applications.

steve, agree with your comment, however, the small fry is not at fault here
(and at best of terciary concern to the fed), as you state it's the banks that facilitated this crisis and i agree the fed will do it's part to bail em out. this includes lowering of rates on the 18th. the fed is thrilled with the markets reaction today, otherwise they could not act in september. excess must come out of the stock market in my opinion. the housing markets affect on the economy is underestimated.

I agree with steve & curt, the only thing the Fed did because the Banks & Mortgage lenders did'nt do their job was to hurt all those that show responsibility in the handling of their financial matters. This is a tough statement to make but let the chips fall where they may & lets move on.

The banks and the Fed have to stand up and take responsibility for their actions, in that they are very sophisticated, and the people who take out 100% mortgages with teaser rates are not. How about this for anecdotal evidence that the banks knew what was going on: in the industry, these "no doc" loans are called "liar loans." They should NEVER have been allowed, and the Fed had the power to control that. Now they have to rectify their error by lowering rates so as to keep the economy from imploding.

It's simple greed. This all happened because money is a tremendous motivator - greater than sex. Like someone said; these people are sophisticated and knew exactly what was going on and didn't give a damn who got hurt; as long as their greed was satiated! The supidity of it all is that it will happen again and again and again! So unless you were actually injured by this debacle; don't get upset.

Liar loans were created to jump start the economy when "mr bush first was in office if i remember correctly" So it worked, it jump started the economy for a few years, "just like the war"
WE WILL BE PAYING FOR THESE ACTIONS FOR YEARS!!!

ya know, I had to use a No Doc loan because my financial life while perfectly legal is very tangled. I have plenty of money and made a down payment and only accepted a fixed rate which was higher to cover the risk of the no doc loan. I take some of these comments personally because I have never missed a payment and often pay extra on my mortgage. So It is not all or even most people defaulting on these loans. I guess 30% bad apples spoil the bunch :)
I will tell you though the bankers tried to pressure us into an ARM very hard though