Today's housing troubles just don't compare to those of the Great Depression. There are several differences, but I will focus on those in mortgage products.

Before and during the Great Depression of 1929, home mortgages were short-term loans. In addition, the loans had a balloon payment due at the end of the loan. Today, most mortgages are long-term amortizing loans. Why the difference?

During the 1920s, lenders were willing to refinance the short-term mortgage, but when banks were failing or in need of money, they limited refinancing options. Also, as homeowners became unemployed, the situation worsened.

The government stepped in, assumed many of the mortgages and refinanced them as longer-term amortizing loans. Later, Fannie Mae was established to purchase these mortgages, becoming the industry standard.

Many complain that the subprime market is the cause of all the current problems. But by some estimates, the lack of housing or residential construction accounts for a loss of about 1 percent of gross domestic product. While that is sizable, it is not all the growth.

Of course, the economy is slowing down and may go into a recession because of decline in residential construction and a credit crunch. In fact, the National Bureau of Economic Research committee may say later that we were in one now or last month or even last quarter.

There is no doubt businesses are struggling to survive during this slowdown. Part of the slowdown is a result of the subprime crisis and the tightening of credit. With that said, to point the finger at the recession is absurd, and even more so to make the comparison to the Depression.

For businesses to assume that the economy will never slow down is the same fallacy that many financial institutions had in rating mortgage securities that contributed to the subprime crisis.

Businesses must evolve and survive through the economic cycle. This is in the best interest of consumers over the long run. In addition, businesses and managers must understand historical events and plan appropriately for future actions.

To look back and place blame is the easy part. Learning from our mistakes and evolving is the true test. There are many examples of innovation bringing about instability. This is no more apparent than in the mortgage industry.

Adjustable rate mortgages and other alternative mortgage instruments have played a significant role in affordable housing and increased homeownership. However, we have all heard of the securitization of subprime mortgages contributing to the financial crisis because of the way investors, and rating agencies, evaluated such products.

While the lax lending standards are a major component, the innovative financial instruments should not be quickly dismissed because of the current situation. The idea behind most of these instruments is good.

So, what went wrong? The risk associated with these new financial products was not fully accounted for. One area is the securitization of subprime mortgages. Rating agencies took a historical approach in evaluating these portfolios and the risk of defaults associated with them. What they missed was asking what would happen if home prices no longer appreciated at their historical rate? What would happen when home prices slowed or declined when variable rates get reset?

Of course, hindsight makes this easy. These new instruments have a place. Lenders and borrowers need to understand the risks associated with them better.

These financial instruments have facilitated many subprime individuals to get home loans who otherwise would not have been able to using conventional mortgage products. Many of these individuals are in good standing, now building their credit and may become prime lending candidates in the future.

While we hear of consumers defaulting on their mortgages for a variety of reasons, don't lose sight of the many borrowers who are not delinquent. Individuals who made poor decisions by taking on too much debt or not adequately evaluating the situation should not penalize the other group by completely restricting the use of these financial products.

Mark A. Thompson is the Cree-Walker professor of business administration at Augusta State University. He can be reached at mthompson@aug.edu.