The real reason for the banking and housing failures

My wife and I, in our search for our first home, have encountered first-hand what I believe is the real reason for our economy's banking and housing woes. Here's our situation: we found a home near the end of March that fit our budget and put an offer in. The home was a short sale, in pre-foreclosure, so our offer had to be accepted by the first and second lien holders of the current mortgage. The real estate agent had listed the home at a certain amount, so that's the amount we offered. The seller's agent came back saying the first lien-holder, Taylor, Bean, and Whitaker, required us to up our bid. We checked that we'd still qualify and upped our offer the the maximum we could afford, $4,100 more. Four days later, the second lien holder, WaMu, approved our offer. Feeling we were on the right track, we ordered the appraisal and home inspection and filled out the requisite paperwork for our loan. Then we waited. And waited some more. Two months went by of us checking every day to see if we were approved. We had our agent call the bank directly to check on the wait, and the bank representative yelled at our agent for calling. Finally, Taylor, Bean, and Whitaker came back with an approval. But the WaMu approval had expired. So we finalize our loan documents, ready for another 4-day wait and we'd be ready to close. Makes sense, doesn't it? Well, while we were waiting for TB&W, Chase acquired WaMu. They had a longer wait. So we waited some more. Our loan lock expired, so we extended it. The approval from TB&W expired, so we extended it. Our credit reports expired, so we reordered them. Weeks and weeks later, today rolls around. Lo and behold, Chase won't approve our offer. They demand an additional $5,000. We don't have it. We can't get it. We are out hundreds of dollars in loan fees. We are out the basic repairs we did to the home to qualify it for FHA financing. The way I understand it, when our offer falls through (we haven't told them yet), TB&W will have no choice but to foreclose on the property, wipe out Chase's lien (they will get nothing) and sell the house at auction. And here we are left, without a home we've invested so much work and thought in - not because we can't afford it and not because we didn't try, but because of the greed and sloth of these two banks, who are both guaranteed to lose way more money on this deal by shutting us out then they would have by approving us. That's why things are so bad in this economy. That's why regular people like us can't get into a home and everyone else is getting kicked out.