Phil Gramm, CDSs and Our Economy

One of the more interesting things I read this morning was a piece over at BloggingStocks about investment vehicles known as credit default swaps (CDSs). These little investments, along with CDOs, are among the reasons that we are having a major meltdown on the stock market this morning.
Here’s why: CDOs and CDSs are major reasons that mortgage lenders started going crazy with approving borrowers. These investment vehicles made it very easy for banks to package their loans into securities and transfer the risk elsewhere. Loan officers get the commission, investors get the risk.
Nice.
And one of the architects of the CDS …read more