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Politics : Formerly About Advanced Micro Devices
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To: Tenchusatsu who wrote (422927)10/6/2008 12:53:58 PM
From: TigerPaw  Read Replies (2) of 1575781
 
The problem with John McCain taking that tact is that it isn't true and he already has enough problems saying things that aren't true.

The economic crisis was not caused by bad mortgages. The market has dealt with junk loans for years and devotes whole sub-industries to the practice. The problem was that they normally deal with risky loans by insuring the loans against default.

Under Republican pushed deregulation the insurance companies, like AIG, no longer had to have any capital reserves to back up the insurance. It became faith based insurance. When the time came to make claims on the insurance policies there wasn't any money to cover them. That is the crisis.

Had the insurance been regulated, it would have cost more, that would have raised the price of the mortgages and the most risky bets wouldn't have been made. That's the way a well run market works.

TP
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