Description: The crisis has spread due to a systematic failure of the regulatory system. Over the last 20 years, regulations that fostered market stability were eliminated and new financial instruments were allowed to propagate without any real oversight. Instead of bailing out weak financial firms, we should be liquidating them. All doubtful asses need to be written-downs. We need accurate and transparent accounting.

Description: The roots of the crisis are understood on a simplified basis, by 3 Ls: a Lack of accountability b Leverage and c Liquidity. Historically, people requiring mortgages sought their mortgages from local institutions that would conduct the evaluation and hold the risk. Loan officers of these institutions were accountable for the outcomes of their decisions – defaults were a direct reflection on their judgment. Leverage was a second key factor. Institutions guaranteed mortgages against default. The third L, liquidity, because a problem. When property values eventually evidenced their inevitable fall, defaults occurred at historically high rates.