This is in the WSJ.
The US government - which means the US taxpayers - is responsible, directly or indirectly, for close to two-thirds of all bad mortgages in the United States.
This is what happens when you distort markets for political purposes. To reiterate: the attempts by the US government to spread home ownership downwards along the economic and financial chain distorted market actions and reactions severely, bringing about the real estate bubble we have seen deflate, and the US taxpayer picks up the bill.
Hey, for the politicians it's a win-win situation: they have boasted for the last thirty years that they're helping out the little guy, making those mean and nasty banks lend him money, and now while those actions are killing the financial system because the little guy could never afford them, they're taking credit for saving the system that they themselves created.
The only thing failing for a perfect trifecta is for the government to take over the banks who were forced, by law, to make subprime loans and then need to be bailed out ...
The real story of what is happening here is that the markets have finally reached a point where the system created by the government couldn't work anymore. The current market value for subprime mortgages and their derivatives is virtually nil (actually, there's not much of a market at all, since no one can afford to sell and admit they hold worthless paper...hence there is virtually no supply and hence, while demand is there to pick up distressed real estate at market prices, there are virtually no transactions except at the relatively few auctions around), which is not the market solution that the government and the apologists for this whole system either expected or wanted.
But it is the market solution to the problem. It's just not one that is a very happy one for anyone except those folks who have the capital to buy up distressed real estate.
Right now the banks can't afford to put the assets of their bad loan portfolio on the market the way they should be doing, since it would depress housing prices even further and the cycle of selling assets at a loss, taking write-downs on existing assets and forcing currently performing assets into a debt hole would snowball into further collapse of the housing finance industry (bringing down, as well, the housing market). However, the question then becomes: how long can the banks afford not to do this, given that their bad mortgage portfolios are growing and gradually destroying what equity is left at the banks.
For those in the real world, paying for the win-win situation for the politicians, it's a lose-lose situation that is increasingly destroying local banks, the backbone of the banking system in the US. One might almost be tempted to think that the final result of the current trend - that only those banks "too big to fail" will be left - is actually the desired trend: after all, such banks would be significantly easier to control (given that they are already at least partially owned by the government) and to exploit for personal gain; but this would attribute to those ultimately responsible for this tragedy competence beyond their wildest dreams.