Greatest financial crisis since the Great Depression - Subprime Mess - solutions and explanations

Ye gods!!!! The US House of Reps has voted against the subprime bailout. @#$!!!!

I know many of them hate President Bush and each other. But the problem didn't just occur during his tenure.

And most importantly, if they don't bail out the banks its going to cause a massive financial panic similar to the Great Depression of 1930 - where the whole world virtually became bankrupt.

This is @#$ing serious.

Just to cap it off - what has happened was thus: back in the 1990s when Bill Clinton was President, and Alan Greenspan was the Federal Reserve chairman - interest rates were kept artificially low. Banks were doing a good business in the mortgage market. There was plenty of money to loan out. Housing prices were going up.

And confident fools were saying - why not allow the banks to lower their regulation standards and loan money to (poor) people who can't afford the deposit??? Then they can buy a house, and in 10+ years time, the house price would have doubled (yeah!!!) and everyone can be millionaires.

Unfortunately, the house prices didn't double - esp. in places hit by natural disasters - Hello Katrina. And worse, the poor people - well, most of them, let themselves become bankrupt and defaulted on the mortgages.

So now the banks in effect are holding mortgages to property that's worth less or maybe even worthless. So the clever bastards then sell the debt to other banks. Suspiciously, the Rating agencies - that value and assess this debt (in the similar way as a building inspector hecks out the home you want to buy)  certified that the debt was a-ok!!! So other banks and financial institutions around the world buy into this debt.

Its a bit like the children's "Passing the parcel" game. In this case, Bank X sells the debt to Bank Y who sells it to... Eventually, the music stops, and the person holding the parcel will have to open it. And he's not happy and the game comes to an abrupt end.

The problem is that innocent parties who were not involved in the scheme are being dragged into this horrid mess. And it can't be helped.

This is a major financial crisis. If the banks fail - how the hell can society operate? People's life savings and superannuations will be wiped out. Imagine going to the bank, ATM, and trying to withdraw money - and the banks has closed down. Total disaster.

The politicians (and their constituents) who voted against the bill - want revenge. Everyone is sickened by how the banks give out obscene amounts of money to their CEOs - even when they fail. Over here in Australia, the CEO of NAB resigned after making terrible financial mistakes - and was rewarded with $17 million dollars as severence pay! That's FUBAR!!!! He should have been sacked and had his stock options cancelled.
 
So simple. Add a clause in the bailout plan - appoint a well known politician/prosecutor - ie Rudolph Guliani - to go after the bankers responsible for the mess. Invoke draconian laws to prosecute the bastards. Jail them - or place them in protective custody. Shoot them if you have to. People want blood. Give it to them.