Financial Crisis

[Shaun @ Tru6]

Interesting interview, hopefully can get to the book over Thanksgiving. I always thought the linch pin was the AAA ratings, that if these instruments had been rated properly, the crisis would have been contained to just bad mortgages, not the worldwide economic crash. There is no doubt that CDS's magnified the value, and therefore crash potential, of bad mortgages exponentially, but without the ratings, no one would have bought them anyway. enjoy.

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[Mo_Gearhead]

Saw her interviewed by Brian Lamb (C-Span) last weekend.

What is interesting is how so much of this Wall Street 'game' keeps coming back to Goldman Sachs (she used to work there also). We had a thread here some time back - I listed all the G.S. players ...many now in positions of power in this Administration.

The GOLDEN RULE - still applies. **yawn**

But I do agree - she feels the rating agencies got to a point where they wanted to be "liked" by the companies they rated - to hell with impartial analysis and proper reporting.

P.S. - she also stated that while the public is properly outraged and wants some heads to roll and perp-walks, she feels there were never any actual laws broken, IE: we get the government oversite we deserve? Sad - but true. So Madoff goes to prison - Wall Street gets Golden parachutes and we (taxpayers) get handed one LARGEAZZ bill!

[djmcmath]

As a footnote, Liar's Poker (Michael Lewis) documents the crash of the 80's, published in the early 90's. Want to know the scary part? It was the same thing -- collateralized mortgage obligations rated by Fannie/Freddie, sold and re-sold in a money-frenzy.

Anyone want to bet we'll be playing this game again in 20 years ... and people will still be surprised then?

Dan