Credit Default Swaps/No Skin in the Game
First, let me say that I consider myself a conservative Republican -- though I'm sure the Wall Street crowd will be calling for my skin soon ...more »
First, let me say that I consider myself a conservative Republican -- though I'm sure the Wall Street crowd will be calling for my skin soon enough:
AIG wrote credit-default-swap "insurance" for people who didn't even OWN a mortgage. And I believe that THOSE people should NOT be paid with taxpayer funds. I bet they already have been paid, and I think Congress should consider retroactively taxing those benefits at 100%
For the average person out there who didn't understand it all when it was happening and is now left holding the bag -- i.e. the taxpayer -- here is the problem in a nutshell:
AIG wrote insurance policies for banks in case the person who owned the house didn't pay their mortgage. No problem so far. But THEN they started writing insurance policies for others -- who had no "skin in the game", so to speak. It turns out that a majority (4 out of 5?) dollars of bailout money to AIG went to pay these "bettors".
Consider this: Would we allow an insurance company to write fire insurance policies an any particular house to anyone else? No, because an arsonist could come along and insure twenty houses on his block -- he doesn't own any of them, but he's betting they burn down -- and then get rich when they mysteriously turn up charred.
I know this will be an unpopular idea with those people who UNDERSTOOD that bailing out AIG without stipulations that the money only go to those who actually OWNED a mortgage and who also realized that even though the average Joe KNEW defaults were going to increase, they didn't know HOW to make a bet on the market going south -- much less have the power to ensure that when the "house" couldn't cover their bets they could vote or make policy to have the US treasury step in to cover the bet. I'm sure there are PLENTY of those B*ST*RDS in Congress (the old and new), the last administration, and YOURS, quite frankly.
And if you want to go one better, find out the hedge funds who bought these things -- and DID NOT own a mortgage or a mortgage portfolio for the insured value, and see if the lawmakers voting for this had a substantial stake in them. If they did, put them up for ethics investigations. If it was an administrative official, NAME THEM.
We HAVE to put a stop to this legalized, taxpayer-supported theft -- or there will blood in the streets when the people find out how they've been ripped off!
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