David Streitfeld and Louise Story of The New York Times reported yesterday that the FHA might need a bailout.  You can read the article here.

We bailed out and shored up two large Government Sponsored Enterprises (GSEs) -- Fannie Mae and Freddie Mac.

Now we may have to bailout the FHA?  Don't forget about TARP and the bailout of the banking sector and associated firms.  Don't forget about loan modifications.  Don't forget about the auto industry.

There have been many posts here in the Rain about the subsequent waves of foreclosures coming with even prime rate mortgage defaults on the rise, adjustable rates continuing their resest and associated defaults to rise, and the list goes on.

Perhaps this could be the watershed moment to re-think how the interplay between the federal government and the private sector.  If the fallout continues, what's next? 

While I doubt any major changes will come about due to the lack of competencies that exists on many levels across the board, this concept of "shared risk" for major industries when at the end of the day, the little guy is left holding the bag while there is little accountability at the top as measured by the pain experienced by the average American trying to eek out a living versus the the individual at the top 10%, this "shared risk" is starting to feel less attractive to me.  Mortgage backed securities where the feds can't even figure out how to identify good assets from toxic assets, just doesn't seem that great of an idea anymore.

Until there is personal accountability at ALL levels, the average taxpayer is going to bear the overwhelming brunt of any mess cooked up by the inventions of a few.