STOP THIS ..... Please

Take a look at the ad presented by Countrywide, it advertises about home loans without a credit report. Is this not what has brought the financial industry to its knees. Lenders ready to lend money to earn the commission and then sell the loan to a bigger Investment bank so that the risk is distributed. Borrowers borrowing more money than what they can afford. This has lead to the sub prime mortgages to turn sour and billions of dollars of securities to be worthless. A simple example of what's happening in the sub prime market here. I feel the Federal Reserve needs to come up with a better regulations to stop this.

Technorati Tags: Economy,Fed,SubPrime

What would you do ?

The current financial crisis resulting from the housing slump in the United Stated can be attributed to the irregular lending practices followed by the lenders and borrowers borrowing more than what they could repay. This has lead to an increasing number of defaults and foreclosures and a massive credit crunch in the global economy. Till now whatever steps have been taken by the Federal Reserve and the US government are aimed at increasing liquidity in the market. If the number of defaults and the foreclosures keep on increasing inducing liquidity in the markets is not going to help too much. Federal Reserve needs to address the root cause of the problem and stop the slump in the housing industry. In doing so, the steps will benefit only the lenders and the borrowers, who in the first place are responsible for this mess. What would you do in such a situation, If you were the Federal Reserve would you take steps to help someone who got you into a difficult situation and do things that are going benefit them .....

BBC on US Fed's Injection

A day after Fed's injection of $200 billion dollars BBC's Business Editor Robert Peston here explains why even $200 billion won't make any sense and on Carlyle Capital which is on the brink of a collapse.

Robert Peston's Blog on BBC