Mortgage Time Bomb

If you were in the business, but not making money hand over fist, you knew this was all going to implode just about the way it did.

Before Washington Mutual collapsed in the largest bank failure in U.S. history, its executives knowingly created a "mortgage time bomb" by making subprime loans they knew were likely to go bad and then packaging them into risky securities, a congressional investigation has found.

In some cases, the bank took loans in which it had discovered fraudulent activity -- such as misstated income by borrowers -- and rolled them into mortgage securities sold to investors without disclosing the fraud, according to the report released Monday by the Senate's Permanent Subcommittee on Investigations.

Bottom line is this...more houses were selling for $750,000 a pop than there were people who could afford them.