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To: carranza2 who wrote (296715)	3/17/2009 1:53:33 AM
From: Nadine Carroll	1 Recommendation Read Replies (3) \| Respond to of 793963

The real outrage is that CDS payoffs are much larger than the value paid for them. Isn't this the usual nature of an insurance claim? I'm missing the distinction between insurance and betting that you seem to be making. Some of the CDSs were bought as 'bets' by the few smart guys who understood that the system could fall down, but most I think were bought as insurance for a derivative, usually by a bank or municipality who was assured that they were buying AAA rate instruments on that basis. How you propose to tell one from the other I don't understand.

To: carranza2 who wrote (296715)	3/17/2009 5:59:53 PM
From: rich evans	Read Replies (1) \| Respond to of 793963

AIG's CDSs to Barkleys, Societe, Deutsche were issued against real CDO investments so they would meet regulatory capital requirements which are not counted against AAA insured securities. Do not know albout Goldman. But one of the real culprits here are the rating agencies which should did not do their due diligence and rated these CDOs AAA. At 2% capital , these banks would fail without the AIG payments. They would be saved by their governments who would want us to reimburse them. Same with the GICs by the state pensions . This was a pay me now or pay me later scenario. Hopefully AIG can earn it back for us taxpayers but it will take time. Rich