Some housing bubble news from Wall Street and Washington. Fortune, "Barney Frank and Hank Paulson and Ben Bernanke want everyone to know this: They are not engaging in morally hazardous behavior. 'Nothing being contemplated rises to the level,' said Frank, chairman of the House Financial Services Committee. 'I don't see a moral hazard,' said Paulson, secretary of the Treasury. 'I see no problem,' said Bernanke, chairman of the Federal Reserve Board."

"No one wants to be accused of bailing out greedy lenders or irresponsible borrowers."

"There was only one Presidential candidate at his hearing Thursday, though this '08 prospect wasn't buying into the morality play Frank was eager to sketch. Libertarian Republican Ron Paul of Texas complained that 'abnormally low interest rates' -- including the Fed's rate cut this week -- led to a morally questionable bailout of Wall Street."

"'We talk about market discipline, but there's no possibility to have market discipline,' the candidate declared. 'What moral justification do we have to deliberately devalue the dollar?'"

From Bloomberg. "Bear Stearns Cos., the securities firm hit the hardest by the collapse of the subprime-mortgage market, reported its biggest profit decline in more than a decade Thursday."

"Bear Stearns wrote down the value of mortgage assets and leveraged loan commitments by $700 million, after using financial-market hedges to mitigate the loss, according to Bear Stearns Chief Financial Officer Samuel Molinaro."

The Orlando Sentinel. "Bear Stearns and its rivals may benefit from the Federal Reserve lowering its benchmark short-term interest rate Tuesday by a half-point to 4.75 percent. The cut reduced the cost of financing trades and loans for the securities industry."

"Bear Stearns' largest shareholder is now billionaire Joe Lewis. Lewis paid $860.4 million from July to September to quietly acquire more than 8 million shares of the investment-banking company."

"'The worst is definitely behind us,' Molinaro said during a conference call with investors."

The LA Times. "Yields on long-term Treasury bonds jumped, the U.S. dollar sank and the price of gold surged Thursday, intensifying questions about whether the Federal Reserve's move this week to stimulate the economy could backfire."

"'The cost of getting a mortgage has gone up, not down, since rates were cut,' said Jim Keegan, a bond fund manager at American Century Investments. 'So far the market's voting that [the Fed cut was] not the right thing to do.'"

"Former Federal Reserve Chairman Alan Greenspan said the odds of a recession remain 'somewhat more' than one in three even after this week's cut in interest rates, with home prices likely to drop further and hurt consumer spending."

"'Remember, we still have a problem out there, which is a large overhang of unsold newly constructed homes,' Greenspan said. Home prices 'are down only about 3 percent, but they are clearly moving lower.'"

"Greenspan said home values are 'very important' because they contribute to household wealth and support borrowing to finance consumer spending. Prices are unlikely to drop more than 10 percent, he said."

"The former Fed chief reiterated he was wary of the Fed taking part in regulating the mortgage market, adding 'I don't know the answer' of whether it is proper for the central bank to increase regulation of the market."

"Bernanke indicated no doubt, repeating a pledge to lawmakers to come up with new consumer protections. 'We are looking closely at some mortgage lending practices,' Bernanke said in his remarks. 'We will use our rulemaking authority' to 'propose additional consumer protections later this year.'"

"Greenspan said 'it is fundamentally a job for state attorneys general,' he added, citing fraud as a particular problem. 'I think what you need is experts in criminal acts.'"

The BBC. "The US Federal Reserve chairman, Ben Bernanke has told a US finance committee that losses from sub-prime mortgages are worse that 'even the most pessimistic estimates.'"

"Mr Bernanke went on to say that the loses were set to continue and estimated some 320,000 foreclosures - or repossessions adding 'We are committed to preventing problems from recurring, while still preserving responsible sub-prime lending.'"

The Associated Press. "The government is casting a wide net in its scrutiny of Wall Street banks, investors, credit-rating agencies and others and the role they played in the subprime mortgage crisis."

"'We look at all the players' to determine whether there were missteps in accounting and disclosure and possible insider trading, says Walter Ricciardi, deputy enforcement director at the Securities and Exchange Commission."

"Ricciardi said the SEC is asking mutual fund managers, lawyers, company executives and credit-rating analysts for details of their involvement in trading of securities that came from bundled mortgages."

"As housing market conditions worsen, regulators are realizing how hard it is to track the trail of transactions from home borrower to lender to investor, and that it may be even harder to determine blame and liability on some of the players."

"'They've thrown this dragnet out, trying to find out what these relationships are,' said James Cox, a professor at Duke University who specializes in securities law. He called the undertaking 'staggering.'"

"'It is time those responsible are held accountable ---- and until now, Wall Street has been getting a free ride,' said Sen. Robert Menendez, a member of the Senate Banking Committee. 'We need to question what it will take to make sure we do not end up here again.'"

From Hedge Fund Net. "The month after it triumphantly announced it had anticipated the subprime meltdown and its clients would be rewarded, Australian hedge fund firm HFA said it had posted its largest loss in 10 years."

"CEO Paul Jensen announced he would resign in the wake of the miserable performance. Fellow Australian hedge fund firms Basis Capital and Mariner Bridge have also been hurt in recent months. Both have cited fallout from the collapse in U.S. subprime."

Frm Reuters. "HSBC Holdings Plc, Europe's biggest bank, said on Friday that it would close its U.S. subprime mortgage unit, cutting 750 jobs and taking an $880 million writedown, because the business is no longer sustainable."

"For HSBC, it was the latest blow from the meltdown in the U.S. market for loans to home buyers with poor credit histories."

The Baltimore Business Journal. "All year-end delivery homes reduced by thousands. Live FREE for a year, Really. The Smart Home Savings event. Deal of the Century."

"Those are just a few of the full-page advertising slogans home builders are trying out in newspapers throughout the region in the hopes of kick-starting the Baltimore area's housing market. Across Baltimore, home sales are down and foreclosures are up, prompting nationwide home builders to try out the new sales techniques."

"At the High View at Hunt Valley in Baltimore County, starting home prices were recently cut back by about $15,000, and home buyers will also get $2,500 toward their closing costs. Josh Brandt, a sales associate for High View, said the offers are helping to sustain interest from potential buyers even in the depressed housing market."

"'We've actually been doing very well' Brandt said. 'Part of the reason is the incentives. I think right now, in this market, people do expect some seller concessions.'"

"In Baltimore City, Pulte Homes has reduced prices at its McHenry Pointe townhome development in South Baltimore, with three-bedroom townhouses cut back from $618,485 to $549,990."

"A record 26 percent of U.S. homeowners say the value of their homes has fallen during the past year, above the previous peak of 24 percent seen in 1992, a survey released on Friday showed."

"'Overall, the data indicate no let-up in the slump in home prices,' said Richard Curtin, director of the consumer surveys, in a statement."

"While the Federal Reserve's half-percentage-point interest rate cut on Tuesday would help homeowners whose mortgage rates are about to reset, shrinking home values and tougher credit requirements would overwhelm the positive impact from cash-out refinancing in the coming year, according to Curtin."

"Homeowners in the western United States, where some of the most dramatic home appreciation had occurred, have been especially hard hit by the real estate downturn."

"In the third quarter, 33 percent of homeowners surveyed in the West said their home value fell during the past year, up from 23 percent in the second quarter. Nearly a quarter expect home prices to fall further in the coming year, up from 17 percent in the second quarter, said Reuters/University of Michigan."