The bubble has to be over when Congress starts to get involved.

Connecticut Democrat Christopher Dodd – Chairman of the Senate Banking Committee - would like to ask a few questions to the Fed and other agencies. He was certainly onto something when he said there was “a pattern of neglect by federal bank regulators (that) precipitated the subprime mortgage crisis that could cause 2.2 million homeowners to lose their homes''. However, this “pattern of neglect” has been obvious for several years. It is pity that he did not identify this “pattern” sooner. He might have done something about it, like insist on effective banking regulation,

Meanwhile, Massachusetts Democratic Rep. Barney Frank is targeting late 2007 for passage of a bill to curtail predatory lending like that seen behind the widening mortgage market crunch.
Both initiatives are welcome, but sadly, they are way too late to prevent the unfolding subprime crisis.

Now comes the clean-up. It won't be long before the subprime crisis will fade into the background. A new, politically more explosive, default problem is about to hit the mainstream mortgage market. Soon, the banking system as a whole will be under stress. There is only one organisation with a check book big enough to sort the mess out - Uncle Sam.

Get ready for the biggest taxpayer financed banking bail-out in history.