An underlying factor in the current economic collapse is the regulatory neglect in Washington. While conservatives use the term "deregulation," it is in fact neglect by elected officials and government officials responsible for watching out for all Americans. The question that I am pondering is, "Why?" We all have our beliefs and suspicions about what caused this mess but let’s take a look at some of the facts here, particularly those related to money and influence in Washington DC. See Preemption, Deregulation, Disclosure, Oh My at Global Investment Watch.
AIG’s Rap Sheet and How it Made "Bail"
AIG is the world’s biggest insurer. It was also a huge Credit Default Swap insurer/underwriter. The terms of CDS require collateral to be posted, depending upon such factors as credit rating and credit spreads. As home prices fell, spreads widened, and companies went down, AIG’s collateral requirements went up significantly.
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