kirkpepm

Larry Kudlow is Dead Wrong: CRA Didn't Start the Meltdown

Charles, I generally agree with you that it’s chicken and egg. Having been a CRA lender, Kudlow’s CRA argument is exaggerated in that it’s not one law, but the entire regulatory and legal environment that encourages price distortion. CRA is harmless without FNMA, FRE, the GSE's, the environmental lobby seeking land use restrictions, the local counsels who bend to create building codes that increase scarcity and the city's and states who subsidize.

All the “group of five wall streeters” did was exploit an opportunity created by government overreach. All the unscrupulous brokers are again doing is taking advantage of government regulations which force markets to price incorrectly and allow them to sell assets to people not equipped to manage the risk.

When we get over the need to use the government as a tool to manage pricing we will move beyond this mess. There will be a buyers market (and, I know this is a bad word but renters) at all levels of demand, with prices that are accurate for those markets.

Ambac, MBIA Finally Get the Rating They Deserve

Your argument falls apart in the second sentence: "You have to trust that the person or company you do business with will fulfill their part of the deal." The rating agencies may have violated the trust of the relationship by rating ABS higher than deserved, or even the insurers themselves. But what does any of this have to do with MBI or ABK? They are paying on policies for defaulted bonds. Therefore they have not violated the trust with their clients. Like previous people have commented, you should have just saved us a big read and just wrote: "I'm shorting MBI"