ALMOST NO ACCOUNTABILITY

I've been reading Frank Partnoy's Infectious Greed and he notes that the problem with seemingly inpossible to evaluate securities (derivatives, swaps, etc.) was also a problem that peaked back in 1994. The Masters of the Universe by and large made a great deal of money on this earlier meltdown, almost no one went to jail and a large fine for an individual was $100,000. These individuals often made millions or 10s of millions, so the risk of operating either outside the rules or frankly dishonestly paid off for them.

(Via Atrios) Tanta at Calculated Risk writes that some pretty big mortgage fish off-loaded risk onto a small fry firm that couldn't possibly cover the losses. This is similar to the off-loading of default risk of mortgage-backed securities onto tiny insurance firms that couldn't possibly cover the enormous losses. We could call this "passing the buck," "a sucker born every minute," or more simply, fraud.

This House of Mathematically-clever Cards still has a long way to collapse.