Financial Resource

for the chaos, the government  is now taking ownership  of the banks.

Why is the government the most responsible for this collapse?  Primarily they are responsible, for their complete lack of oversight of the pseudo government entities Freddie Mac, and Fannie Mae.  They refused to listen to regulators that demanded better oversight.  These companies were allowed to make ridiculously irresponsible loans and sell the loans in unregulated bundles to countries and companies all over the world with the US government giving their unofficial but very real backing to the product.  If the companies were private they would of simply collapsed under the weight of their own stupidity but because they were semi government entities they were given the backing of the American Tax Payer.  The people, who are now calling for regulations of our banking system, are the same people who were in charge of regulating Freddie and Fannie.  The reason AIG nearly died is because of Credit Default swaps or insurance policies they had written on companies that traded in these giant Mortgage bundles.  AIG was made out to be the bad guy by the media but their only crime was insuring companies that had long track records of success.  In hindsight it is easy to see they should not have sold those policies but can you really fault them for selling policies on companies that the government had loaned billions of dollars to and were invested in the safest investment known to exist at the time the Credit default swaps were written.

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