It is not for lack of regulation that lending institutions are in deep doo-doo, but rather too much "guidance" from such as HUD and its subordinate agencies, in a misguided attempt to make every American part of the "ownership society." This delusion is bipartisan, race-neutral and totally against every sound economic principle.
As Ludwig von Mises observed way before the welfare state became the American way of life, each government intervention has unintended consequences which eventually leads to a demand for more intervention. The first intervention was creation of the pseudo-private mortgage guarantee corporations, Fannie Mae and Freddie Mac, which all along have been run by political hacks. Now we see both Obama and McCain proposing additional regulations -- and new regulatory agencies to match -- in answer to the unfolding crisis.
The only lasting solution to the banking/real estate/debt morass we're in is for the government to butt the heck out of it and let the dominoes fall.
Here’s what I posted yesterday re the proposed bailout:
The “cure” appears to be worse than the disease. Let ‘em die. They’re rotten to the core anyway. We may suffer in the short term but we’ll survive and be stronger for it. Long live the Republic!
http://www.freerepublic.com/focus/news/2086601/posts?page=59#59
Not now. The default of most major securities guaranteers would make 50 trillion of securities worthless. The MBS are small potatoes and have mostly been written off by most banks. The CDS and other derivatives cannot be written off without destroying the financial portion of the economy.