Government Needs to Take Steps to Ensure That Current Wall Street Trouble Doesn't Happen Again

I've been holding off commenting on the current Wall Street crisis until I could understand what was happening and why. Here's how it breaks down:

1. People wanted to buy houses that were too expensive for them.
2. Mortgage companies wanted people to buy expensive houses too.
3. Banks lowered their standards to a point that people didn't even have to show that they had a job or could afford the monthly payments.
4. People got the loans and "bought" their houses with a mortgage.
   
5. Investment banks used a system referred to as "leveraging", which means that they borrowed money from other banks and countries to buy up the mortgages so that they would receive the income from the borrower. Since the interest rate on the mortgage was higher than the interest rate on the loan that the investment bank took out to purchase the mortgage, a profit would be made by the investment bank.
6. Some banks kept borrowing money to buy up more mortgages and make more money. Several of the big banks accumulated debt more than thirty times their TOTAL value.
7. Housing collapse began; people began to default on their mortgages.
8. So many people defaulted that the banks couldn't pay back their own debts that they had accumulated.
9. "Toxic debt" was the term coined to describe the debts that the investment banks accumulated to buy up mortgages.
10. On Friday, President Bush announced that the government would buy up the "toxic debt" to shore up the faltering financial sector. The U.S. taxpayer gets stuck with the trillion-dollar bailout. Some people need to go to JAIL.
    

That's it in a nutshell.

And I am not in favor of this move until we're told EXACTLY how much this is going to cost.

There's plenty of blame to go around:

• People shouldn't have taken out loans that were beyond their ability to pay back.
• The banks should NEVER have allowed these loans to be authorized.
• The government should NEVER have eased the leverage restrictions that were in place until the late 1990s. This was a total screw-up.
• Both parties are to blame as well. The party that SHOULD have seen this crisis coming DIDN'T, and the party that did didn't do ANYTHING about it.
  
• In addition, the Fed should have done much more to keep the dollar strong, which is their MANDATE.
• The government should have been cutting expenses at the same rate as their tax cuts. $1 of tax cuts should have translated into at least $1 of spending cuts. They should have been cutting our $10 trillion debt load up to a week ago, before committing the government to an additional $1.5 trillion (minimum) that they've taken up to save Fannie May, Freddie Mac, and all the banks that have failed in 2008. Put another way, this week has been the most expensive government spending surge in HISTORY.

The Federal Deposit Insurance Corporation (FDIC) has spent $600 billion in 2008. It has $30 to $45 billion left in reserves, which is approaching the minimum mandated by federal law. What happens if another 10-20 banks go under and they each have $3 billion in covered deposits?

Who's leveraging the GOVERNMENT??!