They handed out loans to people that had no business getting them. Now that the housing market has shit, a lot of people are defaulting on their loans. So now they have all these houses that are not worth as much. Beyond that, I don't know.
Some are blaming the families receiving the loans, and not the banks that issued the loans as the root cause of this problem. It's up to the people seeking the loans out to do their homework; but it's also more the responsibility of the loan institutions to do the right thing and give loans to those who can manage them. I've been waiting for years to get an acceptable credit score in order to be approved. My mortgage broker has been thankfully, dishing out the tough love; telling me it's not time yet to apply.

Also, it seems pretty arrogant that top executives are getting huge payouts in the mutli-millions while thousands of others are getting the shaft. Also, secretary Paulson has inserted a non-reviewable clause into the bail out.....WTF??