Hey Brad, thank you for your well-thought out comments. Kudos on that....
First of all, if you were confused, don't apologize. Nobody has a firm grip on 1) what actually happened and 2) how to fix it. Don't let anyone tell you that they have the tell-all fix-all solution. For the most part, any solutions will come at such a complex level that only bankers/lenders/etc. will be able to comprehend the implications. This, by no means, indicates citizens shouldn't make an attempt to comprehend the details. To put it bluntly, it's OUR job to do that, and to call out the injustices wherever we see them.
In a similar post, somewhere in here, I've briefly touched on the effect that the nationalization of banks has had on the average consumer. Essentially, banks 30 years ago were local things: managers knew the demographics of neighborhoods, the local risks, and they helped support the local economy whenever they could by providing loans to small businesses and home-buyers. Leveraged buyouts of banks started to occur at breakneck speed once the Savings and Loan scandal broke. While we were busy wiping the sweat from the near-miss, banks stopped becoming small local banking institutions, loans were sold in bundles to foreign-states and later to foreign-countries. Inside of these bundles were many questionable loans, but because they involved a tangible asset (a home, or business), they were eagerly bought and sold at their bargain-basement prices. Many people complained loudly that heretofore agreed payment arrangements for their homes were invalidated by the new owner of their mortgage, and foreclosures started going up up up. No longer could the lender walk into a lobby, shake hands with a manager, and make special arrangements. Instead, the new larger franchised banks went after the bottom line, and didn't see the face behind the dollar signs.
In my city of about 1,000,000, there are huge skyscrapers carrying a bank's name. Only thing is, I don't even know what they are called now, since they used to be called the names of the local banks. I've seen this same building and bank sold and renamed four or five times: so many times I can't even tell you the names of the top banks in my area anymore. Luckily, I belong to a Credit Union. I don't pay 90% of the fees that other lending/banking institutions pay. I've spent hours talking with my banking friends to gain an insider's edge on what has been happening. In a nutshell, they are scared to the bone. Sallie Mae, with student loans, will probably one of the next big victims, and that is a pity that education will be given an early wake service.
Oh heck, I almost forgot: thank you Balladeer for your great links and logic substantiation. Most excellent, amigo!