Over the past couple of years, one of the most troubling aspects of the economy has been the ailing housing market, and in particular the large volumes of homes that have fallen victim to the foreclosure crisis. Finally we get some evidence that things may be moving in the right direction again.

While no one will argue that we are out of the woods just yet, it does appear as things are at least starting to recovery slightly.

If you're wondering why Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) have been bombarded by selling pressure today, look no further than this Wall Street Journal article (subscription required). The newspaper reports that the Mortgage Bankers Association (MBA) is pushing for the government to split up Fannie and Freddie "into several smaller privately held companies that would issue mortgage related securities carrying an explicit government guarantee."

Under the terms of the proposal, Fannie and Freddie's offspring would no longer be permitted to sit on massive mortgage portfolios. Additionally, all mortgage-backed securities created by the duo would be backed by a federal insurance fund, replacing the rather abstract implied government guarantee that's currently in place.

During times of economic distress, it's common for people to go back to school. But when it comes to MBA programs, things may be still be gloomy.

Bear in mind that these programs rely heavily on endowments. And when the investment market was bubbly, the returns were lush -- and so were the MBA programs.

In its weekly report on the state of mortgage-application demand in the U.S., the Mortgage Bankers Association (MBA) said its purchase index dropped 8.5% to 360.8, while refinancing activity slid 15.4% lower to 1,620.9. The purchase index hasn't been this low since the week of October 10, 2003.

The group's index of overall mortgage-application activity declined for the third straight week, losing 11.6% to 533.9, hitting the lowest point since July 2006. These numbers were in the red even though borrowing costs have moved lower. Fixed 30-year mortgage rates averaged 6.05% in the latest reporting period, down 5 basis points to hit their lowest point since late November.

The MBA's smoothed-out four-week averages for its trio of indices also pulled lower. The overall market index lost 9%, the purchase index was down 5.9%, and the refinancing index was 11.8% lower on four-week moving average basis.

If you were hoping that the mortgage crisis was nearing an end, you need to readjust your thinking. The Mortgage Bankers Association believes that mortgage originations will drop another 18% in 2008 and fall a bit more slowly, by just 6% in 2009, and it will say so in a forecast to be released today at its annual convention, according to today's Wall Street Journal [subscription required].

So unless something really significant happens between now and then to change the marketplace, don't expect to see an increase in mortgage originations until 2010. Yikes, that's a long time to wait, for people desperately needing to get out of a bad situation and avoid foreclosure. Home builders will need to ride out the storm for a much longer period too. Expect to see continuing bad news from the housing industry through at least next year.

Why do things look so bad? Investors are more risk-averse and are not providing the levels of cash lenders had become used to before the subprime crisis and the housing bubble burst. Doug Duncan, MBA's chief economist, told The Journal: "We have not yet seen fully the impact of the credit shock to the U.S. and world economies, and the severity of that impact will depend on how long it takes for the markets to return to normal functioning ..." More details will become clear in his speech today to the convention.

The MBA predicts total mortgages written will decline about 15% this year to $2.31 trillion from $2.73 trillion last year. Originations will fall a steeper 18% next year and then in 2009 we'll finally see a slowing of the fall to 6% in 2009. In 2009 as the market begins a turnaround, the MBA does expect mortgages for people buying homes will increase by 5%, but refinances will decrease by 18%. The MBA also expects to see some increase in homes sales and prices in 2009. We'll hit bottom in the third quarter of 2009, according to MBA predictions. Duncan told the Journal that "any significant increase in homebuilding is probably years off."

Lita Epstein is the author of more than 20 books including, "The 250 Questions You Should Ask to Avoid Foreclosure" and "Reading Financial Reports for Dummies."

Given that George W. Bush, our country's first MBA President, has been an experience most of us would like to forget, is Mitt Romney's background, including co-founder of Bain Capital, something that voters should celebrate?

According to a piece in Portfolio, it isn't: "... does a successful business career equal a good presidency? No. Most presidents have been lawyers, generals, and professional officeholders. Only a few have had big business careers, and this cadre of executives does not exactly inspire confidence. By contrast, the most successful presidents never ran big businesses."

It looks like business schools may be catching up with the idea of Ben and Jerry's and other successful business ventures that combined profits with a concern for the planet. According to a piece in today's Wall Street Journal (subscription required), "Environmentalism is finding its way onto the agenda in M.B.A. programs across Europe, as students and faculty -- like Europeans more broadly -- are growing increasingly worried about the threat of global warming... As many have begun to do in the U.S., schools across Europe are adding environmental electives, supporting student research projects on warming topics, integrating talk of the issue into core courses, inviting speakers to address it, and, in some cases trying to make their campuses or communities more energy efficient."

This is terrific news. With emerging concerns about the future of the planet, tomorrow's CEOs will need to equipped with the knowledge to confront these issues and seek solutions. This is as good an indication as you will ever see of environmentalism going mainstream.

Having business leaders educated on the dangers of global warming might do more to protect the environment than increased regulation.

Fortune is out with its list of top 100 MBA employers -- where MBAs say they want to work. Based on my analysis of the top 10 on the list, you should consider investing where MBAs want to work. Unfortunately, based on valuations the market may have already figured this out.

Of the top 10 -- the companies below are ranked by MBA popularity -- three are privately held consulting firms in which you can't invest. (As a consultant myself, I am intrigued by the uninterrupted appeal of these particular firms over some three decades. I think MBAs like them for the prestige, intellectual challenge, variety of work, smart colleagues, good pay, and potential to step into top corporate management.) In the last year, the remaining seven companies have seen their stock prices rise an average of 23.5%, compared to 11% for the S&P 500.

1. Google Inc. (NASDAQ: GOOG)
2. McKinsey & Co.
3. The Goldman Sachs Group (NYSE: GS)
4. Bain & Company
5. Boston Consulting Group
6. Apple Inc. (NASDAQ: AAPL)
7. Microsoft Corp. (NASDAQ: MSFT)
8. General Electric (NYSE: GE)
9. Nike, Inc. (NYSE: NKE)
10. Bank of America (NYSE: BAC)
    

The rumor is that Carlyle is paying MBA graduate students salaries of $350K+. Given the action in the space -- with billions going to buy mega companies like TXU Corp. (NYSE: TXU) and First Data Corp. (NYSE: FDC) -- I'm not surprised.

I guess the question is: What do private equity firms look for in an MBA?

I had a chance to talk to Charley Polachi, who is a seasoned recruiter and founding partner of Polachi & Company. He has conducted a variety of searches for CEOs, partners and board members for private equity clients.

Polachi says that recruiting for the private equity world is changing quickly. "The traditional model was that a new recruit would be mentored for seven years or so," he said. "This transferred the knowledge and the protégé would eventually become a partner. It was essentially an apprenticeship."

Should one wish to start a fight in an American board room, Time Warner Inc.'s (NYSE:TWX) Fortune magazine offers a wonderful tool -- its recent rating of the 50 business schools that best lead to employment.

Schools finishing at the top of the heap are no surprises: 1-5 are Wharton, Harvard, Sloan at MIT, Stanford, and Kellogg at Northwestern. Of the top 10, only Kellogg and Stanford are not on the east coast.

Finishing at the bottom of the elite 50 were the U. of Illinois, Babcock at Wake Forest, U. Mass, and the Terry Program at U. of Georgia.

Leading in average post-MBA salaries was Stanford at $104,917, followed by grads from Wharton and the Tuck School at Dartmouth at $100K. Students of the Eller School at the U. of Arizona pulled in a measly $64,609, slightly less than the Moore School at U. of South Carolina.

Fortune constructed its ratings based on interviews with recruiters and placement stats. The Wall Street Journal ran an excellent article recently on the fickle nature of corporate recruiters. From the statements of several corporate representatives, it seemed clear that graduates are to some degree at the mercy of fellow degree holders from the same school that precede them into the workforce. If a company recruits a couple of duds from Bozo U., subsequent Bozo grads won't get much consideration.

The lesson here? Same as the stock market. Don't listen to the sellers, listen to the buyers if you want good decision-making information. Talk to the corporation recruiters, and see what schools they are hiring from.

Kaplan University, which is a long-time provider of education, is launching a new MBA program. It's called Kaplan University/Newsweek M.B.A.

That's right. It's not a mistake.

You see, The Washington Post Company (NYSE:WPO) owns both Kaplan and Newsweek. So, why not make an attempt at synergy and combine the two?

OK, the big question is: What does Newsweek have to do with business?

I'm not sure. In fact, MBA students are probably puzzled, too. It's impossible to know how many business professors assign Newsweek as required reading, but it is probably a low number. Also, it's probably safe to say there have been few Nobel prize winners in Economics from Newsweek – much less articles that have changed the landscape of business, even considering the magazine's recent juicy story on the boardroom drama at HP.

In fact, it would probably be embarrassing to say to friends and potential employers that you spent lots of money getting your MBA at Kaplan University/Newsweek.

We received this completely unfounded rumor in our tip line. I hardly knew whether to laugh or weep at the elegance. [Update: as far as we know, it's not based on anything but speculations; it was posted on an AOL message board and also sent to us. It immediately charmed us with its perfect solutions to a raft of divergent problems.]

You see, seven years ago, Warren Buffett visited Wharton, where I was getting my MBA. Buffett attended, but didn't graduate from Wharton, and occasionally returns for a speech. This was a doozy and I (with my best finance geek buddies, hi Jaime!) stood in line for hours for the much-coveted seats.

When he opened the floor for questions, I jumped at the chance, and asked him about his succession plans; both he and his partner and buddy, Charlie Munger, were getting on in years. He joked about the fact that he was coming to Wharton to scope out candidates. I said, "I'd love to!" and the audience, and Buffett, laughed. I almost fainted from the brush with greatness. He said something about living forever, and that was that.

Then last week, I wrote a post wondering if Meg Whitman was about to move on, having accomplished so much as CEO of eBay. Had she outstayed her welcome? I mused. About the same time, Buffett announced in his annual meeting that he might be spending a large chunk of cash -- $13 billion -- on a long shot and everyone wondered what it might be.

Why not eBay?