Lemming Watch
This blog has said before the bankers are lemmings. This article proves it. Why stop all lending and slow the economy? Why not make better loans? Bankers need to get better documentation on their borrowers and make sure their loan-to-value ratios are accurate (get tougher on appraisers). This take-away from the article cracked me up:

The fright among investors is forcing lenders to go back to more-conservative practices that were the norm before the housing boom of the first half of this decade. Many now are focusing on loans to borrowers who are willing to document their income, can make a down payment of at least 5% and have a history of paying bills on time.

Documenting a 95% loan-to-value loan is conservative? Verifying a payment history is conservative? It is scary to think what is considered risky. Maybe the lending mess really is only at the tip of the iceberg. It is naive to think that the lemming mentality will stop at subprime and Alt-A mortgages. These bankers are going to choke off all credit - mortgage, corporate, asset-backed, you name it you won't be able to borrow against it - for the next couple of months.