If you're following the news coverage on today's primary elections in Florida, you've likely noticed that the subprime mortgage crisis is one of the big issues for voters in the Sunshine State. According to the Washington Post, Florida has the third highest foreclosure rate in the nation. Of course, Florida's crisis is reflected in spiking foreclosure rates across the country that have spooked financial markets around the world.

At the annual meeting of the World Economic Forum last week, the CEO of Moody's Investor Services said that part of the reason that we're now scrambling to forestall a global recession is because companies in the housing sector lied about their financial health.

Given all of that, it's not surprising to learn that several US federal and state law enforcement agencies have launched criminal investigations involving corporations, hedge funds and other parties accused of lying about the risks attached to their subprime lending. The investigating agencies include the FBI and the US Attorney's office in Brooklyn. The US Securities and Exchange Commission has dozens of civil investigations going as well. Not only mortgage lenders, but developers and major investment banks such as Morgan Stanley, Bear Stearns and MBIA are being probe. An FBI spokesperson said the charges expected to emerge from their investigations might include fraud and insider trading.

Alison Contignola points to a helpful 60 Minutes segment that explains how we got into this mess. It's called "House of Cards" and it's about 15 minutes long:

Pres. Bush and Congressional leaders are trying to staunch our financial wounds with an $146 billion economic stimulus package consisting of tax rebates, reduced rates on some loans, and accelerated depreciation for business investments. Pres. Bush urged quick passage of the package in last night's State of the Union address, and the measure cleared the House of Representatives today with bipartisan support.

Linda Beale at A Taxing Matter notes that the plan has lots of critics:

"[A] more focused package would have given the rebate to those at the low end of the income distribution and then would have also included a number of spending measures that meet real needs at the same time that they provide immediate stimulus. Food stamps and unemployment compensation have been used in the past because they serve both those functions so well. The other spending priority that could make an immediate difference is infrastructure spending--bridges, schools, highways and similar much-needed projects that would also employ the construction workers who have seen their livelihood drop away with the subprime mortgage crisis and drop in home sales."

Discussion continues about further measures that might be taken to help homeowners prevent foreclosure. The Center for Responsible Lending wants Congress to give bankruptcy judges the power to modify the terms of mortgages to help subprime borrowers keep their homes:

"
We urgently need legislation that would allow lenders and loan servicers to modify mortgages to allow families to continue paying on their loans and keep their home. This would provide judges the authority to modify harmful mortgages marketed by subprime lenders in recent years, and would help more than 600,000 financially-troubled families keep their homes.[3]"

But some observers feel any bailout measure is wrong on principle. Robbie at UrbanGrounds is unsympathetic:

"Blame “greedy” or “predatory” lenders all you want — but almost all of the responsibility for taking out a loan that you can’t repay falls on the person who took out that loan. Period."

By the way, Docuticker notes that the crisis confronting financial firms tied to the subprime mess didn't get in the way of those companies' spending on Washington lobbyists and poltical donations, according to a new report from the non-partisan public interest group, Common Cause:

"The report shows that even as record numbers of people began home foreclosure proceedings after receiving mortgages they could not afford, the mortgage lending industry spent nearly $32 million in 2007 lobbying the federal government and donating to Members of Congress and the national political parties. That came on the heels of $187 million the industry spent lobbying in Washington from 1999 to 2006, and likely contributed to Congress’ hands off approach to oversight or regulation, even as consumer advocates predicted problems with subprime lending."