MAKORisk

FBI Investigates Victims of the Financial Fallout

I agree completely with succinct litany of the blameworthy. However, I can't agree that the shareholders are innocent victims. Unfortunately, in our system, the shareholders are deemed to be in control of the corporation through their representatives on the board. Anyone with any smarts/sophistication knew long ago that housing was bubbling, that underwriting & documentation were getting sketchy, that appraisal fraud was rampany, that "Alt-A" was a black hole . . . and that credit quality spreads would inevitably gap back out. The boards of AIG, ABK are chargeable with that knowledge, yet they allowed their managers to load the boat with highly leveraged exposures to mortgage risk via synthetic multi-sector CDOs. And in AIG's case inexplicably also promoted the boat-loading by permitting the trades to be supported with collateral obligations. The results should not be surprising, but still the shareholders have not thrown the rascals out.