While Congress continues to balk at rescuing homeowners, for zero taxpayer cost, with judicial mortgage modification, the banks they bailed out with our money continue to speculate on derivatives, as reported by Shahien Nasiripour on the Huffington Post.
Derivatives from the bad mortgage loans the banks made are a major cause of the worldwide economic crisis.
I have seen estimates of 55 to 65 trillion, yes, trillion, dollars as the worldwide exposure on these investments.
Bank regulators allowed them to use SIVs, Special Investment Vehicles, to carry the risky investments off their books.
This made them look healthier than they are.
All that TARP money Congress was panicked into sending to the banks last year, they just kept, without disclosing their actual financial condition.
Letting the banks to continue risky investing is not good, this is the result of the “moral hazard”, rescuing private companies from their bad decisions only allows them to continue to make risky bets without fear of losing money.
Because, Congress will bail them out with our money.
Banks Still Making Risky Bets
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