August 10, 2007 (LPAC)--Injecting a dose of financial reality into the Bush Administration, Bloomberg columnist Bob Ivry today attacked Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Henry Paulson, as "wrong" in their rosy claim that the subprime mortgage market's problems were "contained;" developments show it is in fact spreading, with global fallout.

Not only is the $2-trillion market for mortgages that aren't backed by government-sponsored agencies frozen, but the firms and banks that package the debt for investors as asset-backed securities are suffering; while central banks in Europe and Asia pumped in money as credit seized up in the mortgage market.

Ivry quotes analysts, contradicting Bernanke and Paulson. Among them: "The subprime mess is now spreading to banks," says the chief economist at Global Insight. "Most of the market has shut down," says the Mortgage Bankers Assocation's chief economist. According to the president of Wholesale Access Mortgage Research & Consulting, one-third of the U.S. home-loan sector will go out of business, including all the lenders who make alt-a loans, citing "the most difficult mortgage environment I've seen in my 40 years in the business."