I realize that businesses will do whatever they think best serves their own interests, and I don't think this is necessarily evil.

However, I also think creditors should realize that the whole country has problems. They should also realize that they're only able to collect on their Credit Default Swaps because of Uncle Sam's support of failed CDS sellers.

Taxpayers are getting pretty miffed about financial companies getting billions in government support to help them through problems they created, while at the same time millions of Americans are now out of work. I don't think Americans are going to put up with much more of this.

In other words, maybe they shouldn't push their luck.

Heh. The 426 Hemi was an engine my friends and I drooled over back in high school.

Aw crap, now I've revealed that I'm an old fart...

Let's send the plans for our tanks to China and have them build them for us instead of Chrysler!!!

China probably has the plans already, thanks to outsourcing of work by companies seeking higher profits.

On the other hand, letting a company fail rather than taking a haircut on your loan so you can collect insurance is pretty douchey, especially if the party paying that insurance (AIG) can only pay because it got money from the government.

IMO, if the government is covering AIG's bad CDS bets, then the government should have more say about which of those bets will get paid.

I think there's a lot of hanky-panky going on with CDS claims. In addition to the scenario being discussed here, I think there are also parties who are "double-dipping" by collecting full face value on their CDS's and then selling the worthless toxic debt that was covered by the CDS's to the government at near-face value.

If a party collects on a CDS claim, they should have to surrender their interest in the insured securities to the government for NO payment. They collected the insurance and that's all they get. No party should ever collect more than the hypothetical 100% performance value of any security just because they held CDS(s).

I think the government should tell "naked" CDS holders (parties who don't have any stake in the securities that were insured) to fsck off, but maybe refund their premium payments.

Just my $0.02

I agree that it isn't a Democratic vs. Republican issue. IMO, both parties show far more willingness to cooperate with powerful special interests than they should, and both have a hand in creating this mess.

That said, I will rebut that Republicans and conservatives seem to be the loudest voices trying to blame the mess on Democrats and more generally on government meddling. My previous post in this thread addressed yet another mention of the old "This was caused by CRA" line of BS. I think conservatives are blindly dedicated to the dogma of deregulation and will continue to advance that agenda no matter how bad the results.

If we dump the CRA and stop trying to merge social engineering and financial markets we could end this nonsense in a heartbeat.

I don't think so.

The conservative effort to blame this on CRA is an excellent example of an old Jewish proverb: A half-truth is a whole lie. It is true that plenty of people were buying houses that they couldn't afford, but the CRA had nothing to do with it.

Nobody had to put a gun to any lender's head to make them write subprime loans during the housing boom. They were writing those loans as fast as they could because they wanted to.

First, the CRA didn't require anyone to make risky loans. It just made lenders treat borrowers equally. Lenders were prohibited from practices like "redlining", and they were no longer allowed to demand more interest or down payment because the borrower was in a minority group.

Second, the CRA only applied to commercial banks, but the big culprits in the subprime mess were mortgage companies like Countrywide that were outside of CRA's scope. Companies like Countrywide didn't have any exposure to bad debt risk because they'd sell the loans as soon as they closed. They made all their money when the loans were sold. The reason Countrywide and other mortgage companies tanked was that the market for their loans disappeared and they couldn't sell them anymore.

Third, the financail industry is consistenty one of the biggest providers of campaign contributions and one of the biggest employers of lobbyists. They usually get what they want. You might remember how congress rewrote personal bankruptcy law not too long ago when the credit card companies smelled trouble coming. If banks were feeling pain because of CRA, they'd have fired up the lobbyists and congress would have fixed it, pronto.

So please, knock it off with the nonsense about how CRA caused this mess. It didn't. That line of crap is just a fiction contrived by conservatives who can't bear to admit that deregulation created this mess.

The curious thing is that strenghening the anti-redlining provisions of the Commmunity Reinvestment Act was one of the concessions made by Republicans to gain Democratic support for Gramm-Leach-Bliley. The resulting bill passed in the Senate by a 90-8 margin and in the House by a 362-57 margin, both easily sufficient to override a presidential veto.

Despite all this, conservatives still try to blame both Gramm-Leach-Bliley and the CRA changes entirely on Bill Clinton.

...I can live with that if it means the rest of the country becomes free to routinely elect presidents who can read at the eighth grade level.

There's an added benefit: With Texas's schoolbook purchasing power out of the picture, "eight grade level" will likely become a much higher standard.