The “Put Back” crisis

So what happens when Wall Street firms are required to buy back securities that were done improperly? This could run into the trillions of dollars. No one has a handle on the width and breadth of the problem. All we need is this “Sword of Damocles” hanging over the head of the economy.

It isn’t hard to imagine sloppy paperwork being done during the feeding frenzy of selling tranched mortgage securities as AAA rated bonds.

I’ve been reading “All the Devils are Here,” by McClean and Nocera, and IT IS fascinating. So far, I haven’t seen any mention of Nancy, Barney, the CRA, or ACORN causing the meltdown of the financial system. According to the authors, the DNA of the Reagan administration and Phil Gramm are all over the ultimate meltdown as they systematically loosened regulation.

http://www.nytimes.com/2010/11/21/business/21gret.html?pagewanted=all

http://www.law.com/jsp/article.jsp?id=1202473989048

http://www.moneynews.com/FinanceNews/Banks-Battle-Bad-Mortgages/2010/10/21/id/374379