Over the protests of housing advocates, the Federal Reserve has been accused of overstepping its charter on two key points. It's allowing Wall Street investment banks to borrow money from the central bank and it's guaranteeing $29 billion in Bear Stearns assets to JPMorgan Chase in a takeover bid.

So, to silence objections, the government is looking at proposals to expand the Federal Reserve's role in determining monetary policy.

Two hundred billion in Treasuries will be auctioned over time to Wall Street while the bulls get to use their worthless mortgage-backed securities for collateral. Are they out of their minds?

There are so many things wrong with this picture, beginning with the fact that taxpayers are going to be on the hook for bailing out a publicly held company partially responsible for the mortgage meltdown we're having now. As housing advocates point out, there's nothing to prevent troubled homeowners from defaulting.

But there's really nothing for the people actually extending the credit -- taxpayers, except that crashing markets hurt everyone. It's in their interest to help stabilize the financial markets.

But aren't there any other good ideas out there?

How about this one? Make every top-level Bear Stearns executive who participated in the packaging and reselling of faulty mortgage-backed securities repay their bonuses and stock options from the last five years. Audit the other big investment banks that haven't gone under yet, and get their executives to do the same.

They knew that there was big money in selling these stinkbombs, and they encouraged banks to slide on qualifying homebuyers to get more loans through the pipeline.

And let's stop crying over the homebuyers -- they weren't so innocent either. They were hoping to cash out with a profit before the music stopped just like everybody else.

With the exception of people who were defrauded, most of the borrowers who defaulted were buying beyond their means, putting little or no equity in their homes, and walking away when their subprime teasers reset to rates that would make a loan shark blush.

This cycle of greed has put us in the worst housing crisis since the Great Depression. Over 10 percent of all homeowners owe more than their homes are worth.

For those investors who are cheerleading falling home prices, be careful what you wish for. There are pundits out there suggesting that home prices should drop 20 to 30 percent. If they've dropped 10 percent already and we split the different another 15 percent, then one-third of all homeowners are underwater and could walk away from their homes.

That would make the Great Depression look like a mild recession. And that could be the very reason why the Federal Reserve is acting so boldly.

Like it or not, we are going to have to stick together to work through the problems caused by a few.

Published: April 1, 2008

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.