Comment

Live Video: CPAC 2010

382
subsailor682/18/2010 12:05:20 pm PST

re: #370 webevintage

I thought the melt down had way more to do with derivitives .

Hi webevintage! IIRC, it was almost a cascade. The CRA - which had teeth put into it in 1996 or so, resulted in the issuance of what came to be called toxic mortgages (and there’s a ton of blame to go around there). Many of these were bundled into what were called Mortgage Backed Securities - basically a bundle of numerous mortgages that were offered as investments. When MBS’s were born, someone came up with the idea of “insuring” those investments with Credit Default Swaps (CDS).

When the mortgages started to go into default, the whole house of cards collapsed.

BTW, I’m no expert in this, but that’s pretty much my understanding of the overall picture.

;-)