What exactly is the financial crisis going on at this time

In a nutshell, too many banks gave too many bad mortgages to people that were unable to pay them. The collateral, the houses, has been greatly overvalued for a long time. So the ''real estate bubble'' bursted and the houses lost a great majority of value. The mortgages went bad and the banks can not get enough for the houses to cover them. So the banks are losing a lot of money.

Here is a news story about it.

In short.too many banks approved too many loans to moderate to low income earners, who did not have or had no intention of paying the loan off. This initially was speared on by the Democratic controlled Congress. These banks & lenders then bought insurance on these mortgages to hedge against the possibility that the loans would go into default. This is referred to as bad paper or risky mortgage backed securities. The net worth of these banks & lenders then began to come into question as more & more homes went into foreclosure. Banks, Lending institutions & Insurance companies them found themselves having to lay people off to save capital/money. A lot of these laid off employees r still out of work. They become delinquent on their home, auto & credit card payments. The people who borrowed the money also found themselves falling behind in these same credit payments. It is had a snow ball effect that we still have not seen the end to.

As Brad & Barney said - these low income, poor credit people - many have even left the country, as they were here illegally. Now these houses stand vacant & r owned by the banks & financial institutions, who is management got paid millions to lie & keep the losses off the books & from showing up, until it got too bad to hide, & now want the American people to pay for thier poor judgement & criminal activities. The Republicans r refusing this, the Democrats want to keep the handout going.