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Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: Ann Corrigan who wrote (51208)	10/12/2008 9:45:59 AM
From: cirrus	1 Recommendation Read Replies (1) \| Respond to of 224694

Interesting. However, I suspect, as I'm sure you do, that there are multiple causes to this mess. For example, I have posted of my annoyance that subprime CDOs were given investment grade ratings by credit rating agencies such as Moodys, encouraging funds that would not have otherwise touched them to buy in. Had the securities been properly rated the market for these securities would have reached saturation long before it became so large that it posed a danger to the economy as a whole. Of course, credit rating agencies are paid by the issuer of the CDO so they had a financial incentive to give a higher rating to this junk. That's one area where government regulation needs to be considered and a way found to eliminate this obvious conflict of interest. Despite the claims that the government pushed institutions into making junk loans, many banks subject to lending laws had the good sense not to do so in ways that endangered their solvency. PNC Bank, for example, is doing quite well, thank you. Wachovia, for on the other hand, tried to sell me on a variable rate refinancing loan that I turned down because it was absurdly risky - and I'm not a subprime borrower by any means. I'm sure you remember the ads... $250,000 home equity loans for $549/mo... 110% equipt loans! Crazy like that. They encouraged middle income folks to put up their homes to gamble on interest rates. Then there there is the completely unregulated debt swap market and other incomphehensible derivatives markets that did in AIG and others. Astute investors like Warren Buffett have studied these instruments and expressed concern that after reading many pages of documentation they had no clue as to what they were. At this point everyone is in a circle pointing at one another. Perhaps after the election cooler heads will prevail and each segment of the problem can be objectively analyzed independently and in total.