Towards the end of 2008, the meltdown in the financial and mortgage markets led to a credit crisis that froze lending nationwide. For a while now analysts have been forecasting another looming credit crisis — this time it has to do with the commercial real estate market. Finance and economic blogger Calculated Risk predicted declines back in December 2008.

However, what makes this “latest” threat to U.S. lending institutions particularly dangerous, is that several Federal entities — from the Federal Reserve, to the Treasury, to the FDIC — are financially stretched to their limits, and may be unable or unwilling to provide adequate support to lenders if or when the time arises.

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Last week CNBC’s Jerry Bowyer asked “why isn’t America hiring?”

…given the political mood in Washington during the past two years which has been far more focused on job creation (or savings) than on general economic growth. The stimuli plans were supposed to be job plans. The auto/bank bailouts cum nationalizations were supposed to be about saving jobs, not ‘Wall Street’. So given two record breaking stimuli within two years, why isn’t America hiring?

Bowyer answers his own question by speculating that “America isn’t hiring precisely because of government policy.” He concludes by writing “Jobs aren’t languishing despite the government’s best efforts. They’re languishing because of them.”

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The bleeding among the secondary market entities goes on. Fannie Mae lost another $23 billion in the first quarter of the year, and is back asking for more money:

Fannie Mae, operating under a federal conservatorship, asked the U.S. Treasury for a $19 billion capital investment and raised the possibility that its long-term survival may be dependent on continued government funding.

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That’s the question some increasingly nervous market watchers are asking. Stuart Varney answers with an emphatic Yes:

I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn’t much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street’s black hole. So why no cheering as the cash comes back?

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The NY Times has a somewhat different look of the implications of banks taking TARP money than the article we blogged earlier. As the Times puts it, the list of demands from the government keeps getting longer:

Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens.

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Our previous post on President Obama’s Housing Affordability and Stability Plan asked “Will only deserving homeowners get help?”. We pointed out, among other things, that the head of the FDIC acknowledges that “it’s not likely aid will be denied to all homeowners who overstated their income or assets”.

A recent editorial in The Wall Street Journal suggested this possibility even more strongly.

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President Obama’s HASP program promises to help “responsible” borrowers with their mortgage. We’ve already recorded our first impressions about the Housing Affordability and Stability Plan. And last week, we wondered: Will only truly deserving homeowners get help?

Today’s Wall Street Journal has the same concerns:

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Bank of America’s Chief Executive Ken Lewis said today that the $20 billion his institution received in order to secure their takeover of Merrill Lynch was a “tactical mistake.”

While not regretting taking the money, Lewis said he acted far too cautious, and should have requested less. The result caused market observers to view the bank as weak as their competitor Citigroup:

“In hindsight, it was a tactical mistake because it put us in the same category as Citigroup,” said Mr Lewis. “We could still have had 8 per cent tier 1 capital after a $15bn loss but we wanted a cushion.”

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We’ve already expressed our initial thoughts about the Housing Affordability and Stability Plan announced last week. We also weren’t shy in expressing our unfavorable reaction in the HSH Market Trends newsletter:

We also don’t see anything to like in either of the “incentive” provisions. Paying servicers $1000 per year for up to three years because the borrower made payments on time is ludicrous. Servicers exist to service loans. What additional services will they perform to warrant a bonus?

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We noted previously that cramdowns are coming, courtesy of legislative action moving through Congress. To refresh your memory, it’s an involuntary loan modification: a cramdown happens when a bankruptcy judge reduces the principal amount of an outstanding mortgage.

In a recent interview on National Public Radio, the head of the Federal Deposit Insurance Corp. admitted that she supports cramdowns:

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