Housing crisis still looms, analysts say

WASHINGTON, Sept. 22 (UPI) -- The $700 billion bailout plan being debated in Washington will not fix the housing crisis that caused the problem, various analysts said Monday.

"The nub of the problem is mortgage-backed securities that people have a hard time valuing, and (the rescue plan) doesn't address that," James Lothian, a professor of finance at Fordham University told the Los Angeles Times.

"But the basic thing that needs to be done is to provide liquidity to the banking system and markets so we don't have bank runs going on," Lothian said.

"You need the ultimate sheriff to come into town to cool things down, and that's a role only the government can play," said Eugene Ludwig, a former U.S. comptroller of the currency.

Some economists predict that the value of mortgage-backed securities has fallen so low, the government could make a profit on their purchases. But, the plan still does not touch the housing bubble directly, analyst said.

"There's nothing you can do to prevent the future meltdown of the housing bubble and nothing you can or should do to keep home prices from falling further," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.