Debt/mortgage double whammy

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Debt/mortgage double whammy - 10/5/2008 7:39:39 AM

thornhappy

Posts: 8596
Joined: 12/16/2006
Status: offline

Hi folks--

Looks like there were a few practises that led to a double whammy on the markets.

1) Pressured to take more risk, Fannie hit a tipping point, and
2) SEC's '04 rule let banks pile up new debt

Risk assessments were ignored, or risk was improperly modeled (in the case of default rate models used in several large trading firms.)

Another article that chronicles the events leading up to the bailout can be found here.

Made for some interesting reading.

thornhappy