The economy wreckers are looking for a way back

NATIONAL HARBOR, Md. - The financial wizards who concocted the complicated mortgage-linked investments that nearly brought down the world economy are trying to come back from the dead.

Thousands of them trooped to a conference center eight miles south of the nation's capital this week, looking for another chance. The difference this time: They promise to back loans to borrowers with real jobs, real incomes and solid credit scores.

They have no choice, of course. The financial meltdown wiped out most of their business.

"We are still living through the painful aftermath of a financial and economic crisis sparked, at least partially, by the past practices of our industry," said Ralph Daloisio, chairman of the American Securitization Forum, which runs the annual event.

The crowd, had to confront an unsettling truth. They aren't masters of the universe anymore. The government is.

More than 90 percent of home loans at the moment have some form of government backing, compared with about 30 percent at the peak of the housing boom. More worrying, the Obama administration has no exit strategy.

Many at the conference expect some business to trickle back this year as the housing market recovers. But investors will be extremely cautious. They are likely to buy only the safest of mortgages: those made to buyers with down payments of 30 to 40 percent, rock-solid credit scores and proof of income. No more $500,000 mortgages for taxicab drivers.

Some in the industry want the government out as soon as possible. Investors would be more willing to pour more money into mortgages "if there wasn't a lot of meddling going on," said Wellington Denahan Norris, chief investment officer of Annalay Capital Management, a New York-based investment firm.

But Armando Falcon, formerly the top regulator for Fannie Mae and Freddie Mac, doubted that idea. "We wouldn't have a mortgage market if it wasn't for government intervention."