Standard & Poor's made a tiny $2 trillion mistake when rating the US economy

[Final-Fan]

mrstickball said:

Krusnik said:

its not as cut and dry as u put it but thats  the gist of it. The underlying cause of the melt down was due to dishonesty of financial institution that exploited the loop holes caused by decades of constant deregulation (financial Lib.)

There were tons of instances where derivatives were placed on the market and were exposed to the same "toxic" debt by financial institutions (Fannie May/Freddie Mac?). Come to think of it was these same credit rating agencies that gave these derivatives AAA ratings.....hmm

For the record, Fannie May/Freddie Mac are a government creation. The government incentiivized the creation of toxic assets by first pushing the banks to loan to minorities/poor people that could ill-afford houses. Certainly, the ratings agencies and banks played a part, but they didn't star the mess, government did.

The way I remember it is that the loans I believe you're referring to didn't fail at the rate you're implying and that the actual problem was securitizing all the loans until banks had no idea WTF they were even trading and couldn't effectively renegotiate to avoid defaults.  I guess you could blame government for allowing them to do that.