Ask most people about the causes of the current financial meltdown and the proposed massive Federal bailout and it comes down to two factors. First, sub-prime mortgages were made to households unable to pay for them when rates readjusted upward. Second, these mortgages were subdivided, given dubious credit ratings, and dumped on unsuspecting investors. The beauty of this explanation is there is a beginning, middle (where we supposedly are now) and end-when the sub-primes have all readjusted. It portrays the crisis as a cyclical downturn; more brutal than most but ending in 2-3 years. Unfortunately, no end is in sight. Sub-primes are just the beginning. The financial crisis actually represents the need for a structural shift in investment in the built environment, which is comprised of real estate and the infrastructure that connects it. The real estate industry and the financial system supporting it have built too much of the wrong product in the wrong location. This pain has spread from Main Street to Wall Street, not the other way around. Fannie and Freddie did not engage in sub-prime mortgages, but have been taken over for financing development on the fringe. AIG have insured too many sub-prime mortgages, but that does not completely explain its meltdown. Sub-prime mortgages have resulted in $500-$600 billion in write downs-just 5% of the $12 trillion mortgage market. How much more damage would 10-20% write down in the mortgage market mean to the US financial system? Many of the mortgages the Bush administration is proposing to take over are worth more than the houses they are financing. Time will not cure that problem. There are ways to reverse this decline and give Americans what we want. As Congress considers a Stimulus II package and the 2009 reauthorization of the transportation bill, it should fund rail transit and bike and walking paths that provide alternatives to the transportation monoculture. This is not to dismiss highways; they need crucial maintenance. But we must add choice to our transportation system. Such investment will spark real estate development around rail transit stations, like metro DC has seen around Ballston, King Street, Columbia Heights, the Stadium and Hyattsville. This means jobs and a way out of our financial crisis. This country has a low-density development hangover. America needs to put in place the infrastructure for multiple transportation options and build walkable communities, which use a fraction of the energy and emit far fewer green house gases while giving households of all income levels what they want. What do you think? Leave us a comment. ---------- Christopher B. Leinberger is a land use strategist, developer, teacher, consultant and author, helping to make progressive development profitable. He is currently a Visiting Fellow at the Brookings Institution in Washington, D.C. He is the author of The Option of Urbanism: Investing in a New American Dream from Island Press.