Saturday, June 6, 2009

Basis for Meltdown

The Office of Thrift Supervision, created in 1989, was supposed to help with regulation of institutions. Trouble was it was also given responsibility for unregulated derivatives, given little power and was poorly staffed. It's only source of income was from the institutions it supervised such as AIG, IndyMac, WaMu, etc.
Also the credit rating agencies such as Standard and Poor's had been given too much power. Their funds also came from the institutions whose instruments they rated. Rate us high or we go to the rating agency down the block and you do not get paid.

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