Perhaps the largest question currently unanswered in this shitpile is "How bad is it?" For the lack of an answer, we have to look at the public accountants who were supposed to provide forewarning. They have failed miserably in their only real reason for existance. To the best of my lnowledge, none of the failed financial services firms have ever been given an audit opinion that was qualified based on the "going concern" rule. Yet within three months, we see that they are not in fact going concerns.

One of the chief reasons for the failure is that they are selected and paid by the board of directors that they are supposed to report on. As we saw during the Enron scandal, and as I personally know from my time as an internal auditor, the outside CPA firms feel obliged to cover management’s ass.Everyone agrees that the government has failed in its regulatory role. However, the outside auditors were intended to be the first line of defense.
They were supposed to warn of problems, supposed to prevent the king of irresponsible behavior on the part of CEOs that got us here. They were supposed to be on our side. Instead, they got bought off.
I believe that any remedy for this mess should include provisions that remove the choice of auditors from the company being audited and prohibit long-term relationships. I also think that CPA firms must be restricted to auditing practice only and be barred from management consultation contracts where they will end up passing judgement on the advice that they offered.

The other un-noticed villain in the shitpile is the appraisal profession. One of the chief exacerbating factors to the erosion of the housing market is the effect on housing prices from waves of foreclosures.This is caused by the use of foreclosure prices in comparison values.
The foundation of appraisal is the question "What would be the sales prices of this item in an armslength transaction between a typically motivated buyer and seller?" A typical foreclosure cannot be considered an armslength transaction because one of the arms has a gun at the end. The sale following the actual foreclosure is very often by the mortgage bank trying to get the physical asset off their books by the end of the quarter. The banking term for these properties is "REO" for "Real Estate, Owned", and every piece of REO is an admission of a lending mistake.
For the reasons above, it is fundamentally wrong to use these prices in appraising other properties. If appraisers are prohibited from using foreclosures as valid comparison prices, the slide in neighborhood values will be arrested and hopefully, the result will be fewer upside down homeowners and fewer foreclosures.