Excerpt
JUDY WOODRUFF (Newshour): The signs of strain were evident again today in the U.S. housing market. The latest numbers highlighted how tough it's been to fix a vital economic sector.
Tonight, we look at the housing news as we begin a series, "After the Fall," on how Wall Street, the economy, and financial regulation have changed since the crisis of 2008.
Builders have been cutting back on housing construction, but, in March, there were still more new homes for sale than people wanted to buy. The National Association of Realtors reports sales last month fell over 7 percent, the most in more than a year. Overall, some 328,000 homes sold, less than half the rate in a healthy market.
And a closely watched index found home prices fell 1 percent as well. They have been falling for six months in a row. Overall, the data underscored just how much the housing market continues to struggle four years after the mortgage meltdown.
The Bush and Obama administrations both created programs to stem foreclosures, but they have come up short. One program designed to help four million homeowners refinance has led to just about 900,000 permanent loan modifications so far.
Excerpt from the Frontline's "Money, Power and Wall Street"
NARRATOR: Geithner realized he needed to know how bad Bear's books looked. He dispatched a SWAT team of investigators from the Federal Reserve to Bear's headquarters.
BETHANY MCLEAN, "All the Devils Are Here": Tim Geithner is frantically involved in trying to figure out what's going to happen if Bear melts down and how you need to prevent it from going into freefall and dragging down the rest of the financial sector with it.
BRYAN BURROUGH, Vanity Fair: By midnight, by 1:00, 2:00 in the morning, everybody and their mother has teams at Bear, Morgan, the Fed, the SEC, and they find out Bear is stuffed to the gills with toxic waste.
NARRATOR: Bear was party to complicated financial deals.
BETHANY MCLEAN: Nobody understood how subprime mortgages had proliferated through these things called credit default swaps, and nobody understood how they'd kind of gotten into the blood of the financial system.
I HIGHLY recommend viewing the Frontline series. It gives a detailed explanation on how Wall Street works and the derivative market scheme on toxic loans that put our nation's economy at risk.
HISTORICAL COMMENT: This was brought to my attention by Part-1 of the Frontline series.
Today's home buyer applying for a mortgage lone which is based on the value of the home is likely NOT aware that this was not the practice in the past.
In the past, ALL loans were based on the ability of the borrower being able to make the monthly payments, a "deposit" based loan system as stated in Frontline series Part-1.
Today's loan practices are risky because it essentially ignores the ability of the borrower to make payments.
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