GOP Is Brilliant at Blaming the Victim: Frank

Complex implosion could take far longer to untangle, experts say

(NEWSER) - How does the current mortgage debacle measure up to the savings-and-loan meltdown of the 1980s and the tech crash of 2000? Losses look manageable, the Wall Street Journal reports in a detailed analysis of how this crisis differs from other crashes, and how likely it is to spin the economy into a recession. But it could be exacerbated and prolonged by complex differences. More»

(NEWSER) - Until the day Lehman Brothers declared bankruptcy, all three of the major credit-ratings agencies swore its debt was safe, rating it A or better. They rated AIG at AA. And they gave 75% of the $3.2 trillion of subprime mortgage securities iron-clad AAA ratings. Moody’s, S&P and Fitch were, in short, at the center of the credit crisis. Yet all are still profitable—and regulators aren’t touching them, Bloomberg reports. More»

Fed lifelines preserve banks that, frankly, are better off dead

(NEWSER) - The Federal Reserve’s aggressive lending to banks has helped avert financial collapse, but it may have created some monsters as well, the Wall Street Journal reports. A research paper from the University of Chicago suggests that while federal aid has succeeded some in thawing frozen credit markets, it has also sustained weak banks laden with toxic assets. These “zombie' banks otherwise would have died, allowing stronger institutions to absorb their bad assets. More»

Undercapitalized banks stand to benefit from $1T infusion

(NEWSER) - Banks aren’t lending, and to change that the government is propping up not just the banks but also the vast, largely unseen financial system that fuels them, the New York Times reports. Banks rarely keep the loans they make anymore; instead, debt is packaged into securities and sold, generating capital that funds more lending. The market for those securities has collapsed, but the Obama administration has a $1 trillion plan to revive it. More»

Analyst gives four signs of sanity to scan your tea leaves for

(NEWSER) - The main thing ailing the credit markets is a crisis of information, writes L. Gordon Crovitz in the Wall Street Journal, so it’ll probably end when we have some. Things may be looking up when…

• Prices are discovered: Right now, there’s no demand for mortgage-backed securities, and hence no price. When we see some transactions that don’t involve the government, the picture will be clearer.