Moon Kil Woong

CRA and Fannie & Freddie: Betes Noires

Your assessment is quite good. The Brokerages wanting to play CDS infinite leverage games were the ones that catapulted the whole thing off a cliff and we Know Goldman was principal in that when Paulson was around because most of AIG's CDS were made for Goldman Sacs. Although CRA is a bit anti-free market, the root cause for the whole collapse is banks lining up with brokerages and Insurance companies to increase their safe leverage under 10x to leverage of 30-40x and then their attampts to use CDS contracts with no down payment and liability for failed mortgages to only occur after 20-30 years in the future. They thought that gave them 0% current cash flow payout, allowed them unlimited leverage with no regulation, and freed them from collateralization of any sort. Also there is no one to enforce payout anyway. What a great deal for crooks. Gordon Gecko would be proud. Paulson and him both have a lot in common since Goldman figured out the worse mortgages they sold the more they made. So they bought more than 100% CDO coverage to make extra loot. Too bad AIG couldn't pay for it, or can they. Yep, the Fed's bailout of AIG goes straight to Goldman... Sweet for Paulson... No conflict of interest there.