NEW YORK (Fortune) -- Washington is tying itself in knots trying to shore up confidence in the financial sector.
In just the past week, officials have moved to curtail short-selling, promised a crack down on market rumormongers and cooked up a rescue plan for beleaguered mortgage companies Fannie Mae and Freddie Mac - while taking pains to argue that the institutions are sound even as investors dump shares.
Trouble is, banks and brokerage stocks aren't being done in by a cabal of bad guys on trading desks. Bankers who made increasingly reckless bets on the housing market engineered this train wreck. And the damage they wrought on their companies' balance sheets is going to take time - and a lot more pain - to undo.
"This is the unwinding of our bubble economy," says Euro Pacific Capital strategist Peter Schiff, a longtime critic of U.S. fiscal policy and credit market excesses. "Anybody can make loans. But banks are finding the problem right now is getting the money back."...whole article
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