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could assess the risk involved with a loan and since the mortgage was going to be held by the bank the underwriter's reputation was on line.

Liquidity in mortgage backed securities led to the easing of loan standards as the risk involved with a loan could be transferred to the next institution in line waiting to buy it. This meant that a mortgage company could make substantial profits selling the mortgages it underwrote. However, after it sold a mortgage in order to keep profits rising the mortgage company needed more product. This led to the weakening of underwriting standards because everyone in the mortgage food chain, appraisers, buyers, sellers and brokers succumbed to the greed bug.

Liquidity flooded into the mortgage market and helped new homeowners into the system. This caused a significant rise in demand for housing and subsequent price inflation on a scale unseen in modern times. From 1997 to 2006 US home prices increased on average 125%. The bubble was perpetuated by the Bush administrations lax oversight and Congress' preoccupation with socialistic home buying for nave, unqualified and unstable home buyers with an eye on winning in the real estate bubble game.

The dirty bubble began to burst as deadbeat homebuyers couldn't make rising payments and credit began to tighten. In order to keep selling the foul smelling mortgage backed securities on the market investment bankers began to sell insurance "known as credit swaps" on bonds so that their investors would keep returning to the bubble watering hole. However, the "credit swaps" were not backed with the correct amounts of capital to pay off if things went south.

When sub-par mortgages began to fail the dominoes of the credit crisis began to topple each other. Suddenly, large amounts of capital had to be obtained to support deteriorating assets. The balance sheets of over extended investment banks encouraged by lax oversight began to hemorrhage even though the companies continued to turn profits on operations. As banks began to fail, trust faded between lenders and the last domino, better known as confidence tumbled to the ground.

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