The government can not fix this problem, but it doesn't mean that they will not try.....


Fevered talk in the capital of possible government fixes for the mortgage crisis belies an inconvenient truth of the credit market: banks simply are not eager to lend money. Congress and the government may have a limited capacity to ease the crisis because it has gotten too advanced, experts say.

The latest signpost: Even a relatively modest legislative proposal to tighten the government's reins on mortgage finance companies Fannie Mae and Freddie Mac won't be coming together soon in the Senate Banking Committee, its chairman Sen. Christopher Dodd said Thursday.

Even with the Federal Reserve cutting a key interest rate five times in recent months, banks have been retrenching on lending. Many have suffered billions of dollars in losses from subprime mortgage securities that have sucked their capital dry.

On a retail level, 55 percent of U.S. banks recently reported tightening their lending standards for mortgages to creditworthy borrowers, not those with tarnished credit histories considered high risk. Distress in the credit markets rippled further Thursday when Alabama's most populous county teetered toward becoming the nation's largest municipal bankruptcy. Two major financial companies said they received default notices from banks nervously looking for loan payments