Economic News

[BigPapaVol]

As I understand it, its TARP being paid back and value of remaining stock pledged/required for the loans.

And I agree with droski, as I always have on this issue, that Bush deserved credit for believing the advisors who came to him and said we were hours, maybe days, from a complete meltdown and that the federal government had to give assurances that it would be the financial rock for these companies.

Obama likewise believed these claims and supported Bush's decision on it.

I think both deserve credit for getting past the momentary political problems created by the action and seeing the potential real crisis had there not been action taken.

I remain of the opinion that much of the cause of the problem in the first place was under-regulated trading and manipulation of the entire credit industry. I acknowledge that individual people went out and borrowed too much money for dubious investment purposes. Greed got the better of both the top business people and the little guys, too.

Underregulated trading?

The whole thing started when the mountains of faux insurance represented by CDSs bellied up. Those things were insuring mountains of shoddy mortgages and when the market corrected, the note holders called in their swaps. Hedge funds all said no because they were broke.

Aside from gov't paper, mortgage paper has always been a safe haven and the timing suits huge investors well. When those crapped and gov't paper went to free, swarms of cash ran to, well, cash. It's an ugly story, but the investors who allowed the swaps to pretend to be insurance, heavily Fannie and Freddie, they got killed. They started a run as those portfolios went to junk status.
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