With the time advancement and through the vicissitude of the formation and modification of the American economic infrastructure, the fear of credit crisis and financial loss is very much evident due to some wrong judgment in the matter of taking wrong economic policies. Credit shortcomings in the broader market enhance the rapidity of the financial decline. The sub-prime sarcoma is very much palpable in all loan divisions and these are also sieved into the banking systems. This is compelling the banking sectors to garner reserves to hoodwink their potential losses.

It is also seen that credit worthy persons are being shifted to new mortgages. Simultaneously, nearly half of the borrowers having adjustable rate mortgages were not competent enough to approach for refinancing their loans. It is a vital concern for those policy makers because an estimated 2.5 million mortgages supplied to borrowers having weak and poor credit will proceed for resetting at higher rates by the end of the coming year. However it is also seen that people with good credit rating are also relinquished because of the tendency of the banks to hoard the capital. This can indicate at the hidden tendency of the banking sectors to harbor their losses which they can’t reveal publicly. Therefore one can find lot of difficulty to get a mortgage which will accelerate the possibility of the housing crash.

There is no certainty of saving economy and financial markets from downfall in spite of the new monetary policy being taken by the Federal government. The Fed offered the liquidity to banking sectors but it can’t offer direct liquidity to hedge funds, investment banks with the inclusion of other high graded leveraged institutions inclusive of parts of the credit markets like asset backed commercial paper which there is the much palpability of the severity of the crisis.