Many of the banks that have repaid their TARP funds didn't need them, they took them as a hedge. When things leveled out, they had excess capital, so they paid off their commitment.

Othe banks did stock offerings and used this capital to pay of their TARP debt.

We never made one of these option ARM loans. We saw them for what they were, a ticking time bomb. The large national banks started them, then packaged them and sold them, and forgot about them.

Yes, the consumers who got caught up in "flip that house" have a lot of responsibility in this mess as well.

Of all of the development projects out there, I can think of only a few that are actually doing fairly well. Seabrook in Pacific Beach, of all places, is doing well with 40 homes sold this year.