ANybody who has worked in corporate american knows the level of Keystone cops activity in a US corporation is only exceeded by the keystone cop activity US Government.

These guys companies count pull off this kind of “Conspiracy” if they wanted to.

The AAA Mortgage backed securities that were closer to junk bonds got those ratings thru regulated rating agencies. They all committed a type of fraud.

You can bet against the housing bubble, and you can buy into the bubble and both are legal. Its only illegal when you do both===especially when you do the first with your money and the second with other people’s money.

So many things really are crystal clear here including the fact that no one has gone to jail other than those who confessed, the bubble is being rebuilt, laws to prevent this in the future are being avoided in favor of laws that will mandate this all happens again.

Yes, all very plain to see.

So what will you do about it now?

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Getting your ex-employees to make sure you get your “insurance” paid off is also distasteful, but whatever.

My big qualm is why the taxpayer is funding and backstopping this activity. The huge money used to do these deals is now done with, nearly, free money provided by the gov’t. As long as you make more than .5% you make a profit, and if you make a big loss you can always go back and get more.

The biggest necessary step is to reimpose Glass-Steagall. Deposit taking banks need to be protected, but investment banks need to be risking their own dollars. I would also like to see these institutions be forced back into a partnership model, where the traders bacon was really on the block. Goldman made plenty of money under the old ways. When ultimate risk belongs to the shareholders or, today, taxpayers things start to get a bit hinky.

Can any committed free marketeer explain to me how forcing investment banks to face real market discipline constitutes socialism?

The methodology they used was to have different tiers of risk, whereby the least risky were used to shore up the other tiers and make their grades better. AIG screwed up by insuring the grades with the assumption that the overall pie was solid. However, the whole thing was based on assumptions of continuing equity increases in the market and relatively low foreclosure rates, which is why it started falling apart so quickly.

Sachs and some of the others decided at one point that they didn’t have the balls to continue the bets and started selling things off quietly to pull their capital back.

In any case, there is blame for everyone involved, including the mortgagees. If you’re stupid enough to take a mortgage that you KNOW you can’t pay after a year or so unless you can sell the house for a profit, you deserve to lose everything you own.

The only people I have real compassion for are those who worked hard to keep up their payments and do the right thing — they are the ones getting screwed, as opposed to the asses that ran from their obligations as soon as they could.

I am mostly disgusted at the underwriters though… there are long-term formulae for risk determination with all this, and they decided to ignore them. The government is bailing them out and we’ll end up hurting for probably a decade because of it. If an engineer did crap like that they’d lose their cert, be fired AND be sued up the ass.