Yes, and they failed. The ratings agencies even got a monopoly granted by the government - some funds that hold pension funds cannot invest in securities under a certain grade, and for a grade to be valid it must come from an “established” agency. By abusing their grading, the rating agencies make boatloads of money during the run-up of the housing market. How could they, the most guilty part, be punished now? A small, but obvious punishment would be removing their monopoly.

But you hit the nail on the head. Cheap money means nothing if it isn’t being lent.

Money needs to get into the hands of the qualified, but the Country Wides need to go away and the credit card companies need to bring their interest rates down to reality.

WASHINGTON — Sales of existing homes fell 2.2% in December, closing out a horrible year for housing in which sales of single-family homes plunged 13%, the most in 25 years. The median home price dropped 1.8% for the year, first time that has occurred in four decades.

http://www.usatoday.com/money/economy/housing/2008-01-24-existing-home-sales_N.htm